| | • | | YadkinUB Bancorp has terminated the merger agreement in order to enter into an unsolicited acquisition proposal that the YadkinUB Bancorp board of directors concluded was a superior proposal (for additional information, see the thirdfirst bullet point under“—Termination of the Merger Agreement—Right of YadkinUB Bancorp to Terminate” above); |
the merger agreement is terminated by either party for any other reason permitted under the merger agreement after a tender offer or exchange offer for 25% or more of Yadkin’s common stock was initiated, and Yadkin failed to recommend rejection of the offer within ten business days; or
during any time that an acquisition proposal made by a party other than F.N.B. has not been withdrawn, the merger agreement is terminated for any of the reasons given below, and within 12 months after that termination, YadkinUB Bancorp has entered into an agreement to be acquired or is acquired by anothersuch other party (whether by merger, an acquisition of substantially all of Yadkin’sUB Bancorp’s assets, or an acquisition of more than 50% of the outstanding YadkinUB Bancorp common stock).:
F.N.B. has terminated the merger agreement because the closing conditions which depend on the accuracy of Yadkin’sUB Bancorp’s representations and warranties or Yadkin’sUB Bancorp’s performance of its obligations under the merger agreement could not be satisfied due to a breach by Yadkin;UB Bancorp;
F.N.B. has terminated the merger agreement because the merger has not occurred before 5:00 p.m. Eastern Time on MayMarch 31, 2017,2023, and the requisite vote from the YadkinUB Bancorp shareholders approving the merger agreement and the merger has not been obtained; or
Either F.N.B. or YadkinUB Bancorp has terminated the merger agreement because the Yadkin hasUB Bancorp convened a special meeting of its shareholders for the purpose of obtaining their approval of the merger agreement and the merger, but failed to obtain such approval.approval at such meeting or any adjournment or postponement thereof.
Expenses
In general, F.N.B. and YadkinUB Bancorp each are responsible for the expenses which it incurs in connection with the negotiation and completion of the merger. F.N.B. and YadkinUB Bancorp will share equally in the cost of the SEC registration fee and costs and expenses associated with filing the Form S-4 registration statement, andthe printing of this joint proxy statement/prospectus. However, each party will bear its own expenses associated withprospectus, and the mailing of the joint proxy statement/prospectus to itsthe UB Bancorp shareholders. F.N.B. also agreed to reimburse UB Bancorp for all documented out-of-pocket costs and expenses incurred by UB Bancorp as a result of actions taken at the direction of F.N.B. in order to support the conversion of the data processing and related electronic informational systems of Union Bank.
In addition, if a party breaches any of its representations and warranties or performance obligations to a degree that would prevent a closing condition from being satisfied, and the other party terminates the merger agreement as a result, the breaching party must pay the out-of-pocket expenses incurred by the terminating party in connection with the merger (including fees of legal counsel, financial advisors and accountants), up to a maximum amount of $1.5 million.$600,000. However, if YadkinUB Bancorp becomes liable for payment of the termination fee, it will not also be liable for the payment of F.N.B.’s out-of-pocket expenses.
Amendment of the Merger Agreement; Waiver
The parties may amend the merger agreement and either party may waive a requirement for the other party to comply with any provision in the merger agreement. However, once Yadkin’sUB Bancorp’s shareholders have approved the merger agreement and the merger, the merger agreement may not be amended except as permitted under applicable law, and any waiver that changes the form or amount of the merger consideration will require the approval of Yadkin’sUB Bancorp’s shareholders.
OTHER MATERIAL AGREEMENTS RELATING TO THE MERGER
Voting Agreements
The following description of the voting agreements is subject to, and qualified in its entirety by reference to, the formsform of voting agreements,agreement, which we include as AppendicesAppendix B and C to this joint proxy statement/prospectus and
incorporate by reference in this joint proxy statement/prospectus. We encourage you to read the forms of voting agreementsagreement carefully and in their entirety.
In connection with the merger agreement, and solely in their capacities as YadkinUB Bancorp shareholders, the following persons and entities have entered into voting agreements with F.N.B.: J. Adam Abram, Michael S. Albert, David S. Brody, Harry M. Davis, Barry Z. Dodson, Thomas J. Hall, Thierry Ho, Steven J. Lerner, Michael S. Patterson, Mary E. Rittling, HarryAnne R. Corey, C. Spell, Joseph H. Towell, RichardBoyd Sturges, III, C. Dwight Howard, Cameron McRae, Chandler T. Currin, Jr., Crawford A. Urquhart, III,Knott, Donna C. McClatchey, Dr. Raymond C. Ball, Jr., Dr. William A. Keyes, IV, F. Wills Hancock, IV, James T. Hill, Jr., Lawrence Davenport, Robert Lee Burrows, Jr., Scott C. McLean, Stephen K. Zaytoun, Susan W. Barrett, T. Gray Yancey, and Nicholas D. Zerbib,V. Robert Jones, each of whom serves as a director or an executive officer of Yadkin; Scott M. Custer, who serves as a directorUB Bancorp, and the President and Chief Executive Officer of Yadkin; Terry S. Earley and Steven W. Jones, who serve as the Chief Financial Officer and the Chief Banking Officer, respectively, of Yadkin; and Lightyear Fund II, L.P., Lightyear Co-Invest Partnership II, L.P., Trident IV Depository Holdings LLC, and Trident IV PF Depository Holdings LLC.Franklin Street Trust Company. F.N.B. did not request voting agreements from any other shareholders of Yadkin.UB Bancorp. In the voting agreements, each of these shareholders has agreed to vote all shares of YadkinUB Bancorp common stock that they own of record or beneficially, and that they subsequently acquire,are entitled to vote in favor of approval of the adoption of the merger agreement and the merger.
In addition, except under limited circumstances, these shareholders agreed not to sell, assign, transfer or otherwise dispose of or encumber their respective shares of YadkinUB Bancorp common stock prior to the record date for the special meeting of the YadkinUB Bancorp shareholders called for the purpose of voting on the approval of the adoption of the merger agreement and the merger. The voting agreements terminate immediately upon the earliest to occur of: Yadkin’sUB Bancorp’s receipt of the requisite shareholder approval of the merger agreement and the merger; a change in the UB Bancorp board of directors recommendation to the UB Bancorp shareholders in a manner adverse to F.N.B.; the termination of the merger agreement in accordance with its terms; or the mutual written agreement of F.N.B. and the individual shareholder.
As of October 12, 2016,August 5, 2021, there were 6,073,4181,016,228 shares of YadkinUB Bancorp common stock entitled to vote subject to the voting agreements (excluding stock options), which represented approximately 11.74 %17.0% of the outstanding shares of YadkinUB Bancorp common stock entitled to vote as of that date.
ACCOUNTING TREATMENT
F.N.B. will account for the merger as an “acquisition,” as that term is used under U.S. generally accepted accounting principles, or GAAP, for accounting and financial reporting purposes. Under acquisition accounting, Yadkin’sUB Bancorp’s assets, including identifiable intangible assets, and liabilities, including executory contracts and other commitments, as of the effective time of the merger will be recorded at their respective fair values and added to the balance sheet of F.N.B. Any excess of the purchase price over the fair values will be recorded as goodwill. Financial statements of F.N.B. issued after the merger will include these fair values and Yadkin’sUB Bancorp’s results of operations from the effective time of the merger.
U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following is a discussion of the U.S. federal income tax consequences of the merger that apply generally to “U.S. holders” (as defined below) of YadkinUB Bancorp common stock.stock who exchange such stock for shares of F.N.B. common stock pursuant to the merger. This discussion is based on the Code, Treasury Regulations promulgated under the Code, judicial and administrative authorities, rulings and decisions, all as in effect as of the date of this joint proxy statement/prospectus, all of which are subject to change, possibly with retroactive effect. Accordingly, the U.S. federal income tax consequences of the merger to the holders of YadkinUB Bancorp common stock could differ from those described below.
For purposes of this discussion, a U.S. holder is a beneficial owner of YadkinUB Bancorp common stock who for United States federal income tax purposes is:
a citizen or resident of the United States;
a corporation, or an entity treated as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States or any state or political subdivision thereof;
a trust that (1) is subject to (A) the primary supervision of a court within the United States and (B) the authority of one or more United States persons to control all substantial decisions of the trust or (2) has a valid election in effect under applicable U.S. Department of Treasury regulations to be treated as a United States person;person for federal income tax purposes; or
an estate that is subject to United States federal income tax on its income regardless of its source.
If a partnership (including for this purpose any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds shares of YadkinUB Bancorp common stock, the tax treatment of a partner generally will depend on the status of the partner and the activities of the partnership. If you are a partner of a partnership holding shares of YadkinUB Bancorp common stock, you should consult your tax advisor.
This discussion assumes that you hold your shares of YadkinUB Bancorp common stock as a capital asset within the meaning of Section 1221 of the Code. This discussion does not address all aspects of U.S. federal income taxation that may be relevant to U.S. holders of YadkinUB Bancorp common stock in light of their particular circumstances, nor does it address the U.S. federal income tax consequences to U.S. holders of YadkinUB Bancorp common stock that are subject to special rules, including:
dealers in securities or foreign currencies;
tax-exempt organizations;
expatriates or holders who have a “functional currency” other than the U.S. dollar;
pass-through entities and investors in those entities;
holders who acquired their shares in connection with the exercise of stock options or other compensatory transactions or through exercise of warrants;
holders who hold their shares as a hedge or as part of a straddle, constructive sale, conversion transaction or other risk management transaction; and
traders in securities that elect to use the mark-to-market method of accounting.
In addition, this discussion does not address any alternative minimum tax, unearned income Medicare contribution tax pursuant to the Health Care and Education Reconciliation Act of 2010, U.S. federal estate or gift
tax, or foreign, state or local tax consequences. Neither F.N.B. nor YadkinUB Bancorp has obtained or sought to obtain a ruling from the IRS regarding any matter relating to the merger and no assurance can be given that the IRS will not assert, or that a court will not sustain, a position contrary to any aspect of this discussion. We urge holders to consult their own tax advisors as to the U.S. federal income tax consequences of the merger, as well as the effects of state, local and foreign tax laws in light of their own situations.
The closing of the merger is conditioned on the delivery of opinions of Reed Smith LLP and Skadden, Arps, Slate, Meagher & FlomFenimore Kay Harrison LLP, dated the closing date of the merger, to the effect that, based on U.S. federal income tax law in effect as of the date of such opinions, the merger will be treated as a reorganization within the meaning of Section 368(a) of the Code. In the opinion of Reed Smith LLP and Skadden, Arps, Slate, Meagher & FlomFenimore Kay Harrison LLP, the merger will be treated as a reorganization within the meaning of Section 368(a) of the Code.Code, with the tax consequences described below. An opinion of counsel is not binding on the IRS or any court. In rendering their respective opinions, including the opinions delivered in connection with the filing of this Registration Statement on Form
S-4 of which this proxy statement/prospectus forms a part, Reed Smith LLP and Skadden, Arps, Slate, Meagher & FlomFenimore Kay Harrison LLP will rely on certain assumptions, including assumptions regarding the absence of changes in existing facts and the completion of the merger strictly in accordance with the merger agreement and this joint proxy statement/prospectus. The opinions will also rely upon certain representations and covenants made by the management of F.N.B. and YadkinUB Bancorp and will assume that these representations are true, correct and complete, and that F.N.B. and Yadkin,UB Bancorp, as the case may be, will comply with these covenants. If any of these assumptions or representations is inaccurate in any way, or any of the covenants are not satisfied, the U.S. federal income tax consequences of the merger could be adversely affected.
The discussion below as to the material U.S. federal income tax consequences of the merger to holders of Yadkin common stock constitutes the opinion of Reed Smith LLP and Skadden, Arps, Slate, Meagher & Flom LLP, subject to the limitations, qualifications, exceptions and assumptions set forth above.
Exchange of YadkinUB Bancorp common stock for F.N.B. common stock. Each holder of YadkinUB Bancorp common stock who receives F.N.B. common stock in the merger generally will not recognize gain or loss (except to the extent of cash received in lieu of fractional shares and for UB Bancorp shareholders who exercise their appraisal rights with respect to the merger, as discussed below).
In general, the aggregate tax basis in the shares of F.N.B. common stock that YadkinUB Bancorp shareholders will receive upon the merger will equal such holders’ aggregate tax basis in the shares of YadkinUB Bancorp common stock surrendered, decreased by the amount of basis allocated to any fractional share such holder was deemed to receive and subsequently sell. A YadkinUB Bancorp shareholder’s holding period for the shares of F.N.B. common stock that are received in the merger, including any fractional share deemed received and sold as described below, generally will include such holder’s holding period for the shares of YadkinUB Bancorp common stock surrendered in the merger. The amount of F.N.B. common stock received in the merger includes any fractional share of F.N.B. common stock deemed to be received prior to the exchange of such fractional share for cash. See “— Cash Received in Lieu of a Fractional Share” below.
If U.S. holders of YadkinUB Bancorp common stock acquired different blocks of shares of YadkinUB Bancorp common stock at different times or at different prices, such holders’ basis and holding period in their shares of F.N.B. common stock may be determined with reference to each block of shares of YadkinUB Bancorp common stock. Any such holders should consult their tax advisors regarding the manner in which shares of F.N.B. common stock received in the exchange should be allocated among different blocks of shares of YadkinUB Bancorp common stock and with respect to identifying the bases or holding periods of the particular shares of F.N.B. common stock received in the merger. Because these rules are complex, we recommend that each YadkinUB Bancorp shareholder who may be subject to these rules consult his, her, or its own tax advisor.
Cash Received in Lieu of a Fractional Share. YadkinUB Bancorp shareholders who receive cash instead of fractional shares of F.N.B. common stock will be treated as having received the fractional shares in the merger and then as having exchanged the fractional shares for cash. These holders will generally recognize gain or loss equal to the difference between the amount of cash received and the tax basis allocable to the fractional shares. The gain or
loss will be capital gain or loss and long-term capital gain or loss if the holder has held the shares of YadkinUB Bancorp common stock exchanged for more than one year at the effective time of the merger. The deductibility of capital losses is subject to limitations.
Cash Received upon the Exercise of Appraisal Rights. Upon its exercise of appraisal rights, a holder of UB Bancorp common stock will exchange all of such shareholder’s UB Bancorp common stock for cash. Such a dissenting U.S. holder will recognize gain or loss equal to the difference between the amount of cash received and such U.S. holder’s aggregate tax basis in the UB Bancorp common stock. This gain or loss generally will be capital gain or loss, and will be long-term capital gain or loss if the holder’s holding period with respect to the UB Bancorp common stock surrendered therefor exceeds one year. The deductibility of capital losses is subject to limitations.
Backup Withholding. Backup withholding on any cash payments received in the merger in lieu of fractional shares or upon the exercise of appraisal rights at the applicable rate (currently at a rate of 24%) may, under certain circumstances, apply unless a U.S. holder (a) is a corporation or is within certain other exempt categories and, when required, demonstrates this fact, or (b) provides a correct taxpayer identification number, certifies as to no loss of exemption from backup withholding and otherwise complies with applicable requirements of the
backup withholding rules. A U.S. holder who does not provide his, her or its correct taxpayer identification number may be subject to penalties imposed by the IRS. Any amounts withheld under the backup withholding rules are not an additional tax and generally may be allowed as a refund or a credit against the U.S. holder’s U.S. federal income tax liability, provided such U.S. holder timely furnishes the required information to the IRS.
Reporting Requirements. AU.S. holders are required to retain permanent records and make such records available to any authorized IRS officers and employees. In addition, a “significant holder” of shares of YadkinUB Bancorp stock for U.S. federal income tax purposes who receives shares of F.N.B. common stock upon completion of the merger will be required to retain records pertaining to the merger and to file with such holder’s U.S. federal income tax return for the year in which the merger takes place a statement setting forth certain facts relating to the merger. For this purpose, a YadkinUB Bancorp shareholder is only a “significant holder” if the person, immediately before the merger, owns at least 5% of the outstanding stock of YadkinUB Bancorp or has a basis of $1,000,000 or more in securities of Yadkin.UB Bancorp. Such statement must include the holder’s tax basis in and fair market value of Yadkin’sUB Bancorp’s shares surrendered in the merger.
THE FOREGOING SUMMARY IS NOT A SUBSTITUTE FOR AN INDIVIDUAL ANALYSIS OF THE TAX CONSEQUENCES OF THE MERGER TO YOU. WE URGE YOU TO CONSULT A TAX ADVISOR REGARDING THE PARTICULAR FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE MERGER TO YOU.
DESCRIPTION OF F.N.B. CAPITAL STOCK
As a result of the merger, YadkinUB Bancorp shareholders who receive shares of F.N.B. common stock in the merger will become shareholders of F.N.B. The following summary of F.N.B. capital stock, including the common stock to be issued in the merger, is not complete and is qualified by reference to the F.N.B. articles of incorporation and the F.N.B. bylaws. You are encouraged to read the applicable provisions of Pennsylvania law, the F.N.B. articles of incorporation and the F.N.B. bylaws and U.S. federal law governing bank holding companies carefully and in their entirety.
Common Stock
F.N.B. is authorized to issue up to 500,000,000 shares of common stock, par value $0.01 per share. As of October 12, 2016,August 5, 2022, there were 210,224,194350,735,526 shares of F.N.B. common stock outstanding. Pursuant to the Capital Purchase Program of the U.S. Department of the Treasury (the “U.S. Treasury”), F.N.B. issued to the U.S. Treasury a warrant expiring on January 9, 2019, which is exercisable for up to 651,042 shares of F.N.B. common stock at an exercise price of $11.52 per share. A second warrant to purchase F.N.B. common stock, which was issued to the U.S. Treasury in connection with F.N.B.’s acquisition of Annapolis Bancorp, Inc., also remains outstanding. Upon completion of this acquisition in April 2013, the warrant of Annapolis Bancorp that was issued to the U.S. Treasury in connection with the Capital Purchase Program was converted into a warrant to purchase up to 342,564 shares of F.N.B. common stock at an exercise price of $3.57 per share. This warrant expires in 2019. Subsequent adjustments related to actual dividends paid by F.N.B. have increased the amount of shares subject to this warrant to 383,491, with a resulting lower exercise price of $3.19 per share as of June 30, 2016. Both warrants described above are immediately exercisable by the warrant holders that purchased the warrants from the U.S. Treasury in an auction process.
Voting and Other Rights. The holders of F.N.B. common stock are entitled to one vote per share, and in general a majority of the votes cast with respect to a matter is sufficient to authorize action upon such matter. In an uncontested director election, each director is elected by a majority of votes cast. If an incumbent director fails to obtain enough votes to be re-elected and a successor director is not elected at the same meeting, the director who failed to be re-elected will promptly tender his or her resignation to the board of directors. The board of directors will accept or reject the resignation, taking into account the recommendation of its nominating and corporate governance committee. In a contested election, directors are elected by a plurality of the votes cast. Shareholders do not have the right to cumulate their votes in elections of directors.
In the event of a liquidation, holders of F.N.B. common stock are entitled to receive pro rata any assets legally available for distribution to shareholders with respect to shares held by them, subject to any prior rights of the holders of any of shares of F.N.B. preferred stock then outstanding. For a description of the F.N.B. preferred stock currently outstanding, see “—Preferred Stock” below.
F.N.B. common stock does not carry any preemptive rights, redemption privileges, sinking fund privileges or conversion rights.
Distributions. The holders of F.N.B. common stock are entitled to receive such dividends or distributions as the F.N.B. board of directors may declare out of funds legally available for such payments, subject to any prior rights of any of F.N.B.’s then outstanding preferred stock. F.N.B.’s payment of distributions is subject to the restrictions of Pennsylvania law applicable to the declaration of distributions by a business corporation. A corporation generally may not authorize and make distributions if, after giving effect thereto, it would be unable to meet its debts as they become due in the usual course of business or if the corporation’s total assets would be less than the sum of its total liabilities plus the amount that would be needed, if it had been dissolved at the time of distribution, to satisfy claims upon dissolution of shareholders who have rights superior to the rights of the holders of its common stock. F.N.B. may pay stock dividends, if any are declared, from authorized but unissued shares.
As a holding company, F.N.B. relies primarily on dividends from its subsidiaries as a source of funds to meet its corporate obligations. F.N.B.’s ability to pay dividends to shareholders is largely dependent on dividends from its subsidiaries, principally its banking subsidiary, First National Bank of Pennsylvania. The right of F.N.B. to participate in any distribution of earnings or assets of its subsidiaries is subject to the prior claims of creditors of those subsidiaries. Under U.S. federal law, the amount of dividends that a national bank such as First National Bank of Pennsylvania may pay in a calendar year is dependent on the amount of net income for the current year combined with its retained net income for the two preceding years. Also, bank regulators have the authority to prohibit First National Bank of Pennsylvania from paying dividends if the bank regulators determine that it is in an unsafe or unsound condition or that the payment would be an unsafe and unsound banking practice.
Transfer Agent. The transfer agent and registrar for F.N.B.’s common stock is Computershare Trust Company, N.A.Broadridge Corporate Issuer Solutions, Inc., P.O. Box 30170, College Station, TX 77842;1342, Brentwood, New York 11717, telephone number (800) 368-5948.1-844-877-8750 (inside U.S. and Canada) and 1-720-414-6883 (outside U.S. and Canada).
For more information regarding the rights of holders of F.N.B. common stock, see “Comparison of Shareholders’ Rights” beginning on page 132.98.
Preferred Stock
F.N.B.’s board of directors is authorized to provide for the issuance by F.N.B. of up to 20,000,000 shares of preferred stock, par value $0.01 per share, without shareholder approval unless otherwise required. F.N.B.’s board of directors is authorized to determine the rights, qualifications, limitations and restrictions of each series of F.N.B. preferred stock at the time of issuance, including, without limitation, rights as to dividends, voting, liquidation preferences and convertibility into shares of F.N.B. common stock. If so determined by F.N.B.’s board of directors, shares of F.N.B. preferred stock may have dividend, redemption, voting and liquidation rights that take priority over its common stock, and may be convertible into F.N.B. common stock.
Series E Preferred Stock. On October 31, 2013, pursuant to action by its board of directors, F.N.B. amended its articles of incorporation to fix the designations, preferences, limitations and relative rights of its Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series E (the “Series E Preferred Stock”). There currently are 110,877 shares of Series E Preferred Stock issued and outstanding.
The terms of the Series E Preferred Stock provide that holders of the Series E Preferred Stock are entitled to receive, if, when and as declared by the F.N.B. board of directors, non-cumulative cash dividends at a rate per annum equal to 7.25% payable quarterly in arrears. No dividends may be paid on F.N.B.’s common stock or other junior stock unless all the full dividends for the latest dividend period have been declared and paid on all outstanding shares of the Series E Preferred Stock. F.N.B. may, at its option, redeem the Series E Preferred Stock on or after February 15, 2024, in whole or in part, at a redemption price equal to the liquidation amount per share ($1,000) plus the per share amount of any declared and unpaid dividends. The Series E Preferred Stock is also redeemable at F.N.B.’s option upon the occurrence of certain events affecting the treatment of the Series E Preferred Stock for purposes of the capital adequacy guidelines or regulations of the Federal Reserve Board or other appropriate federal banking agency. In the event of a liquidation, dissolution or winding-up of F.N.B., the holders of the Series E Preferred Stock will be entitled to receive an amount per share equal to the liquidation amount per share ($1,000), plus any declared and unpaid dividends prior to the payment of the liquidating distribution, after satisfaction of liabilities or obligations to creditors and subject to the rights of holders of any shares of capital stock ranking senior to the Series E Preferred Stock, but before any distribution of assets is made to holders of F.N.B. common stock or any other class or series of F.N.B. capital stock ranking junior to the Series E Preferred Stock with respect to distributions on liquidation, dissolution or winding-up.
Holders of the Series E Preferred Stock have no voting rights except in limited circumstances, including: the right to elect two directors, whose seats will be automatically added to the then-current board of directors of F.N.B. in certain circumstances where dividends have not been paid for six or more quarterly dividend periods; the right to vote on the authorization, creation or issuance of shares of a class or series of stock that is senior to
the Series E Preferred Stock with respect to payment of dividends or as to distributions upon the liquidation, dissolution or winding-up of F.N.B.; the right to vote on amendments to the F.N.B. articles of incorporation which adversely affect the rights, preferences, privileges or special powers of the Series E Preferred Stock; and the right to vote on a binding share exchange or re-classification involving the Series E Preferred Stock or a merger or consolidation of F.N.B. unless the Series E Preferred Stock remains outstanding or is exchanged for preference securities that are not materially less favorable than the terms of the Series E Preferred Stock.
COMPARISON OF SHAREHOLDERS’ RIGHTS
After the merger, the YadkinUB Bancorp shareholders will become shareholders of F.N.B. and their rights will be governed by F.N.B.’s articles of incorporation, F.N.B.’s bylaws and the Pennsylvania Business Corporation Law and Pennsylvania Entity Transactions Law. The following is a summary of the material differences between (1) the current rights of YadkinUB Bancorp shareholders under the North Carolina Business Corporation Act, or the “NCBCA,” and Yadkin’sUB Bancorp’s articles of incorporation and bylaws, and (2) the current rights of F.N.B. shareholders under the Pennsylvania Business Corporation Law and Pennsylvania Entity Transactions Law and F.N.B.’s articles of incorporation and bylaws. For information as to how to get the full text of each party’s respectiveF.N.B’s articles of incorporation or bylaws or UB Bancorp’s articles of incorporation and bylaws, see“Where You Can Find More Information”Information” beginning on page 143.110.
The following summary is not intended to be a complete statement of the differences affecting the rights of Yadkin’sUB Bancorp’s shareholders who become F.N.B. shareholders, but rather as a summary of the more significant differences affecting the rights of those shareholders and certain important similarities. The following summary is qualified in its entirety by reference to the articles of incorporation and bylaws of F.N.B. and the articles of incorporation and bylaws of Yadkin.UB Bancorp. F.N.B. and YadkinUB Bancorp encourage you to read F.N.B.’s articles of incorporation and bylaws, Yadkin’sUB Bancorp’s articles of incorporation and bylaws, and the Pennsylvania Business Corporation Law and Pennsylvania Entity Transactions Law, the North Carolina Business Corporation ActMGCL and federal law governing bank holding companies.
Quorum of Shareholders
| | |
YadkinUB Bancorp
Under the North Carolina Business Corporation ActNCBCA and
Yadkin’s UB Bancorp’s bylaws, the holders of shares entitled to cast a
majority of the votes which all shareholders are entitled
to cast on a matter to be considered, whether represented
in person or by proxy, constitute a quorum for action on
the matter, except as otherwise required by Yadkin’s
law or UB Bancorp’s articles of incorporation or a bylaw adopted by the
shareholders.incorporation. | | F.N.B. Under the Pennsylvania Business Corporation Law
and F.N.B.’s bylaws, the holders of shares entitled to
cast a majority of the votes entitled to be cast on a
matter to be considered, whether represented in
person or by proxy, constitute a quorum for action on
the matter, except as otherwise required by law or the
articles of incorporation. |
Adjournment of Shareholder Meetings
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YadkinUB Bancorp
Under the North Carolina Business Corporation ActNCBCA and Yadkin’sUB Bancorp’s bylaws, if a quorum is not present, the holders of a majority of the shares represented who would be entitled to vote if a quorum were present, may adjourn such meeting from time to time. | | F.N.B. Under the Pennsylvania Business Corporation Law and F.N.B.’s bylaws, if a quorum is not present, the holders of a majority of the shares represented who would be entitled to vote if a quorum were present, may adjourn such meeting from time to time. |
Call of Special MeetingsMeeting of Shareholders
| | |
YadkinUB Bancorp
Yadkin’sUB Bancorp’s bylaws provide that special meetings of shareholders may be called by the Chair of the Board, the Chief Executive Officer, the President, the Chairman, the Secretary or Yadkin’sUB Bancorp’s board of directors. Shareholders do not have authoritydirectors, or the holders of at least 10% of all the votes entitled to call a special meeting unless authorized by a corporation’s articles of incorporation or bylaws.be cast at such eligible meeting. The notice of a special meeting must provide the nature of the business to be transacted.
| | F.N.B. F.N.B.’s bylaws provide that special meetingsmeeting of shareholders may be called by the Chairman of the Board; the Chief Executive Officer; the President; a majority of the F.N.B. board of directors; or the holders of not less than 25% of the outstanding shares of F.N.B. entitled to vote on the issue proposed. |
Shareholder Consent in Lieu of Meeting
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YadkinUB Bancorp
Under the North Carolina Business Corporation Act,NCBCA, any action that may be taken at a meeting of the shareholders of YadkinUB Bancorp may be taken without a meeting and without prior notice, if one or more unrevoked written consents, describing the action to be taken and delivered to YadkinUB Bancorp for inclusion in the minutes with corporate records, are signed by the holders of all the shares entitled to vote on such action within a 60 day period. | | F.N.B. Any action that may be taken at a meeting of the shareholders of F.N.B. may be taken without a meeting, if one or more written consents describing the action are signed by the holders of the minimum number of votes that would be required to authorize that action at a meeting. An action taken by consent will only become effective upon compliance with certain delivery and notice requirements. |
Dissenters’ Rights
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YadkinUB Bancorp
The North Carolina Business Corporation ActNCBCA provides that a shareholder is entitled to appraisal rights and to obtain payment of the fair value of that shareholder’s shares in connection with certain types of corporate actions which could be adverse to the shareholder, such as a merger in which the shareholder’s shares will be cancelled; a share exchange in which the shareholder’s shares will not be exchanged; a disposition of all or substantially all of the assets of the corporation outside of the ordinary course of business; or an amendment of the articles of incorporation to effect a reverse stock split. Dissenters’Appraisal rights generally are not be available if the shares (1) are listed on NYSE or NASDAQ or another national securities exchange, (2) are held by at least 2,000 shareholders and (3) have a market value of at least $20 million.million (excluding insider shares). However, dissenters’appraisal rights will be available in any case if shareholders are required to accept in exchange for their shares anything other than cash or shares of another corporation or entity that would satisfy the same standards above under which dissenters’appraisal rights would not be available.
| | F.N.B. Under the Pennsylvania Business Corporation Law, shareholders have dissentersdissenters’ rights in connection with certain mergers, share exchanges, sales or other dispositions of all or substantially all of the property of the corporation other than in the ordinary course of business and special treatment of a class or series of shares. DissentersDissenters’ rights generally are not available if the shares are listed on a national securities exchange or if the corporation’s shares are held beneficially of record by at least 2,000 persons. Additionally, dissentersdissenters’ rights are not available in certain mergers where shareholder approval is not required.
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Derivative Actions
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YadkinUB Bancorp
Under the North Carolina Business Corporation Act,NCBCA, a person may bring a derivative action only if the person was a shareholder of the corporation at the time of the occurrence of the transaction complained of, or became a shareholder through transfer by operation of law from one who was a shareholder at such time, and if the person fairly and adequately representrepresents the interests of the corporation in enforcing the right of the corporation. | | F.N.B. Under the Pennsylvania Business Corporation Law, a shareholder may maintain a derivative suit, even if the shareholders was not a shareholder at the time of the alleged wrongdoing, if there is a strongprima facie case in favor of the claim asserted and if the court determines in its discretion that serious injustice would result without such suit. |
Dividends and Distributions
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YadkinUB Bancorp
Under the North Carolina Business Corporation Act,NCBCA, a corporation may make distributions to its shareholders unless, after giving it effect: • the corporation would not be able to pay its debts as they become due in the usual course of business; or • the corporation’s total assets would be less than the sum of its total liabilities plus (unless the articles of incorporation provide otherwise) the amount that would be needed upon its dissolution to satisfy any preferential rights of shareholders. Yadkin’sUB Bancorp’s articles of incorporation do not contain any restrictions on the payment of dividends or the making of distributions to holders of its common stock, except restrictions that benefit certain classes or series of preferred stock.
| | F.N.B. Under the Pennsylvania Business Corporation Law, subject to any restrictions in a corporation’s articles of incorporation, a corporation may make distributions to its shareholders unless, after giving effect thereto: • the corporation would not be able to pay its debts as they become due in the usual course of business; or • the corporation’s total assets would be less than the sum of its total liabilities plus the amount that it would need upon its dissolution to satisfy any preferential rights of shareholders. F.N.B.’s articles of incorporation do not contain any restrictions on the payment of dividends or the making of distributions to holders of its common stock, except restrictions that benefit certain classes or series of preferred stock. |
Classes of Stock with Preferential Rights
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YadkinUB Bancorp
The articles of incorporation of YadkinUB Bancorp permit the board of directors to create common stock as well as multiple series of preferred stock having rights and preferences which are senior to or have priority over the YadkinUB Bancorp common stock. | | F.N.B. The articles of incorporation of F.N.B. permit the board of directors to create multiple classes and series of stock having rights and preferences which are senior to or have priority over the F.N.B. common stock. |
Issuance of Shares
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YadkinUB Bancorp
Under the North Carolina Business Corporation Act,NCBCA, the board of directors may authorize shares to be issued for consideration after determining the consideration is adequate. The YadkinUB Bancorp articles of incorporation and bylaws do not amend this right. | | F.N.B. Under the Pennsylvania Business Corporation Law, an issuance of stock is approved by the board of directors upon the affirmative vote of a majority of directors present at a meeting if a quorum is present at the time the vote is taken. |
Election of Directors; Number and Term
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YadkinUB Bancorp
Yadkin’s bylawsUB Bancorp’s articles of incorporation provide that YadkinUB Bancorp shall have such number of directors as provided by the board of directors may determine,bylaws, which number shall be not less than five nor more than 25. Yadkin’s bylaws further provide that Yadkin’s board of directors shall be elected annually at Yadkin’s annual meeting of shareholders and that no more than two additional directorships may be authorized at any one meeting. Directors are elected by a plurality of the votes cast.
| | F.N.B. F.N.B.’s bylaws provide that F.N.B. shall have such number of directors as the board of directors may determine, which number shall be not less than five |
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than seven nor more than 21. The bylaws permit the Board of Directors to fix the number of directors from time to time within those parameters. The articles of incorporation and bylaws further provide that if the number of directors is nine or more, the directors will be divided into three classes as nearly equal as possible. The current number of directors of UB is 16, and the board is currently classified. UB Bancorp’s articles of corporation and bylaws further provide that at each annual meeting of the shareholders of UB Bancorp, if the board is classified, one class of the Board of Directors shall be elected such that each director serves a term of three years. If the board is not classified, the board of directors shall be elected annually at UB Bancorp’s annual meeting of shareholders. Directors are elected by a plurality of the votes cast. | | nor more than 25. F.N.B.’s bylaws further provide that F.N.B.’s board of directors shall be elected annually at F.N.B.’s annual meeting of shareholders. F.N.B.’s bylaws provide that in an uncontested director election, each director is elected by a majority of votes cast, and that if an incumbent director fails to be re-elected and a successor director is not elected at the same meeting, the director who failed to be re-elected will promptly tender his or her resignation to the board of directors. The board of directors will accept or reject the resignation, taking into account the recommendation of the nominating and corporate governance committee of the board of directors. In a contested election, the directors will be elected by a plurality of the votes cast. |
Qualification of Directors
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UB Bancorp The bylaws of UB Bancorp require that no person may serve as a director unless he or she owns at least $50,000 worth of UB Bancorp’s common stock, at market value as of the date of election. The articles of incorporation further provide that no director may stand for election once he or she has attained age 79, except for directors that currently serve as the chair of a committee of the board. Directors are not required to be residents of the state of North Carolina. | | F.N.B. The bylaws of F.N.B. require that directors shall be natural persons of at least 21 years of age that do not need to be residents of the state of Pennsylvania. |
Nomination of Directors
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YadkinUB Bancorp
Yadkin’sUB Bancorp’s bylaws provide that directors may be nominated for election to Yadkin’sUB Bancorp’s board of directors by either the Nominating Committee of theUB Bancorp’s board of directors or Nominating Committee, or by a shareholder of Yadkin. Yadkin’sUB Bancorp that complies with the procedures set forth therein.
UB Bancorp’s bylaws provide that a shareholder must make nominations for director by providing YadkinUB Bancorp with written notice of the shareholder’s intention to nominate a director. YadkinUB Bancorp must receive the written notice not later than the 60th50th calendar day nor earlier than the 90th75th calendar day before the anniversary of the prior year’s annual meeting. Inproxy statement with respect to the case of anprior annual meeting that is not scheduled within 30 days of the anniversary of the prior year’s annual meeting, notice must be given by the later of the 60th calendar day before the annual meeting or the 10th day following the public announcement of the date of the annual meeting.shareholders. The notice of a shareholder’s intention to nominate a director must include certain information, as specified in Yadkin’s bylaws. | | F.N.B. F.N.B.’s bylaws provide that directors may be nominated for election to F.N.B.’s board of directors by either a resolution of the board of directors or by a shareholder of F.N.B. F.N.B.’s bylaws provideF.N.B and that a shareholder must make nominations for director by providing F.N.B. with written notice of the shareholder’s intention to nominate a director. F.N.B. must receive the written notice not later than the close of business on the 90th calendar day nor earlier than the close of business on the 120th calendar day before the first anniversary of the date of the proxy statement released to shareholders in connection with its annual meeting of shareholders in the immediately preceding year. The notice of a shareholder’s intention to nominate a |
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| notice of a shareholder’s intention to nominate a director must include certain information, as specified in UB Bancorp’s bylaws. | | director must include certain information, as specified in F.N.B.’s bylaws. |
Removal of Directors; Filling Vacancies on the Board of Directors
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YadkinUB Bancorp
The North Carolina Business Corporation Act providesUB Bancorp’s bylaws provide that unless otherwise provided in a bylaw adopted by the shareholders or in the articles of incorporation, a corporation’sits shareholders may remove, with or without cause, the entire board of directors, or any individual director, upon the affirmative vote of shareholders entitled to elect directors. Under Yadkin’sUB Bancorp’s bylaws, a director may only be removed by the shareholders if the notice for the meeting at which the director is removed included the removal as one of the purposes thereof. New directors may be elected at the same meeting to fill the unexpired term of the removed director.
Vacancies on the board of directors, including by virtue of an increase in the size of the board, may be filled by a majority of the remaining directors or the shareholders, and any such directors shall serve until the next annual meeting at which directors are elected. | | F.N.B. F.N.B.’s articles of incorporation provide that the affirmative vote of 75% of the outstanding shares of F.N.B. common stock is required to remove any director or the entire board of directors without cause. Under the Pennsylvania Business Corporation Law and F.N.B.’s bylaws, the remaining directors, even though less than a quorum, may, by majority vote, fill vacancies on the board of directors, including vacancies resulting from an increase in the number of directors or resulting from a removal from office. |
Cumulative Voting
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YadkinUB Bancorp
The North Carolina Business Corporation Act provides that shareholders do not have the right to cumulate votesUB Bancorp articles of incorporation prohibit
cumulative voting in the election of directors unless provided otherwise in the corporation’s articles of incorporation. The Yadkin articles of incorporation do not contain a provision authorizing cumulative voting.directors. | | F.N.B. Under the Pennsylvania Business Corporation Law,
shareholders may cumulate their votes in the election
of directors unless a corporation’s articles of
incorporation do not permit cumulative voting.
F.N.B.’s articles of incorporation do not permit
cumulative voting. |
Indemnification of Officers and Directors
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YadkinUB Bancorp
Under its articles of incorporation and bylaws, YadkinUB Bancorp shall indemnify any director, officer, employee or agent of Yadkin and hold harmless any person who at Yadkin’s requestany time serves or has served as a director or officer partner, trustee, employeeof UB Bancorp or agentany of anotherits wholly owned subsidiaries, or in such capacity at the request of UB Bancorp for any other foreign or domestic corporation, partnership, joint venture, trust or other enterprise, or as thea trustee or administrator under anany employee benefit plan of UB Bancorp or any of its wholly owned subsidiaries to the fullest extent permitted by law against all liabilityliabilities and litigation expenses including reasonable legal fees, judgments, fines and amounts paid in settlement, which were incurred by himthe event a claim is made or herthreatened against that person in, connection with any threatened, pending or completed action, suit or proceeding (including a proceeding brought by or on behalf of the corporation), whether civil, criminal, administrative or investigative, that person is broughtmade or threatened to be brought against him or her by reason of the fact that such person is or was a director, officer or employee of Yadkin if he/she acted in good faith and in a manner he/she reasonably believed to be in, or not opposed to, the best interests of Yadkin, and with respect to any criminal action or proceeding, had no reasonable cause to believe his/her conduct was | | F.N.B. Under its bylaws, F.N.B. shall indemnify any director or officer of F.N.B. or its subsidiaries against expenses, including legal fees, judgments, fines and amounts paid in settlement, which were actually and reasonably incurred by him or her in connection with any threatened, pending or completed action, suit, investigation or proceeding, whether derivative or nonderivative, and whether civil, criminal, administrative or investigative, that is brought or threatened to be brought against him or her by reason of his or her performance or status as a director or officer of F.N.B. or one of its subsidiaries or |
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made a party to, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, and whether or not brought by or on behalf of UB Bancorp, including all appeals thereform arising out of that person’s status as such or that person’s activities in any such capacity; provided, however, that such indemnification shall not be available with respect to (a) that portion of any liabilities or litigation expenses with respect to which such person is entitled to receive payment under any insurance policy or (b) any liabilities or litigation expenses incurred on account of any of such person’s activities which were at the time taken known or believed by such person to be clearly in conflict with the best interests of UB Bancorp. Such person may also request advancement of litigation expenses from UB Bancorp upon the undertaking by or on behalf of such person to repay to UB Bancorp such amount unless it is ultimately determined that such person is entitled by UB Bancorp to be indemnified against such expenses. Such request will be approved or denied by the majority vote of the disinterested directors of UB Bancorp. The board of directors may also extend the same rights to any person other than an officer or director who serves as an employee or agent of UB Bancorp or any of its wholly owned subsidiaries or in such capacity for another entity at the request of UB Bancorp. | | affiliates. Before making that indemnity available to a director or officer, F.N.B.’s board of directors is required to determine that the director or officer acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to the best interests of F.N.B. and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. F.N.B.’s bylaws also provide that F.N.B. |
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unlawful. Yadkin’s articles of incorporation and bylaws also provide that Yadkin shall advance expenses incurred in defending a civil or criminal action, suit or proceeding upon receipt of an undertaking by or on behalf of the director, officer or employee to repay the amount advanced unless it is ultimately determined that he or she is entitled to indemnification by Yadkin. Yadkin will also pay for reasonable expenses incurred in connection with the enforcement of rights to indemnification. | | shall advance expenses incurred in defending or investigating a threatened or pending action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay the amount advanced if it is ultimately determined that he or she is not entitled to indemnification by F.N.B. With respect to derivative actions, the Pennsylvania Business Corporation Law does not allow a corporation to indemnify a director or officer who is adjudged to be liable to the corporation in respect of the claim, issue or matter for which the director or officer seeks indemnification, unless a court determines that he or she is fairly and reasonably entitled to indemnity. |
Director Liability
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YadkinUB Bancorp
Yadkin’sUB Bancorp’s articles of incorporation and bylaws provide that, to the fullest extent permitted by the laws of North Carolina, no director of YadkinUB Bancorp shall be personally liable to UB Bancorp or any of its shareholders for monetary damages for any action taken in such individual’s capacity as director unless (i) the director acted or failed to act not in good faith and knew or believed that such actions were in conflict with the best interestsbreach of Yadkin; (ii) the director violated the unlawful distribution section of the North Carolina Business Corporation Act; or (iii) the director derived improper personal benefit from such action (not including compensation or other incidental benefit of servingduty as a director).director.
| | F.N.B. The bylaws of F.N.B. provide that a director is not personally liable for monetary damages for any statement, vote, decision or failure to act regarding corporate management or policy, unless the director breached or failed to perform his or her duties as a director, as described under Chapter 17, Subchapter B of the Pennsylvania Business Corporation Law, and the director’s breach of, or failure to perform, those duties constitutes self-dealing, willful misconduct or recklessness. However, the Pennsylvania Business Corporation Law does not permit a corporation to eliminate personal liability of a director under any criminal statute or with respect to payment of taxes pursuant to federal, state or local laws. |
Amendment of Articles of Incorporation and Bylaws
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YadkinUB Bancorp
The North Carolina Business Corporation ActNCBCA provides that an amendment to a corporation’s articles of incorporation generally requires that, after adopting an amendment, the board of directors must submit the amendment to the shareholders for their approval and that the amendment must be approved by either a majority of all shares entitled to vote thereon or a majority of the votes cast thereon, depending on the amendment’s nature, unless the articles of incorporation, a bylaw adopted by the shareholders or the board of directors require a greater vote. If the amendment will change the number, rights, preferences or limitations of a particular class or series of shares or create a new class or series that will have equal or superior rights or preferences to a particular class or series of stock, the affected class or series must approve the amendment separately. In accordance with the NCBCA, the board of directors may condition the proposed amendment’s submission on any basis. UB Bancorp’s Articles of Incorporation provide that they may be amended in accordance with the NCBCA, except for certain provisions related to potential business combination transactions described below, which may be amended or repealed by (i) the affirmative vote of at least 80% of the outstanding voting stock of the Company, or (ii) the affirmative vote of at least a majority of the outstanding voting stock of the Company if at least two-thirds of the board of directors approve such amendment or repeal (or in the case where there is a holder of at least 10% of the shares of the outstanding voting stock, at least two-thirds of the Continuing Directors, as defined below in “—Interested Shareholder Transactions”). UB Bancorp’s bylaws may be amended or repealed and new bylaws may be adopted by the affirmative vote of a majority of the directors then holding office at any regular or special meeting of the board of directors, or by UB Bancorp’s shareholders. | | F.N.B. The Pennsylvania Business Corporation Law requires that, unless the articles of incorporation provide for a greater vote, an amendment to the articles of incorporation which has been approved by the board of directors will be adopted upon receiving the affirmative vote of a majority of the votes cast by all shareholders entitled to vote on the matter. The Pennsylvania Business Corporation Law does not require shareholder approval for certain non-material amendments to the articles of incorporation. |
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directors require a greater vote. If the amendment will change the number, rights, preferences or limitations of a particular class or series of shares or create a new class or series that will have equal or superior rights or preferences to a particular class or series of stock, the affected class or series must approve the amendment separately. In accordance with the North Carolina Business Corporation Act, the board of directors may condition the proposed amendment’s submission on any basis.
Yadkin’s bylaws may be amended or repealed and new bylaws may be adopted by the affirmative vote of a majority of the directors then holding office at any regular or special meeting of the board of directors. The board of directors does not have power to adopt a bylaw: (a) requiring more than a majority of the voting shares for a quorum at a shareholders’ meeting or more than a majority of the votes cast to constitute action by the shareholders, except where higher percentages are required by law; or (b) providing for the management of Yadkin other than by the board of directors or its Executive Committee. The shareholders may make, alter, amend or repeal the Yadkin bylaws at any annual meeting or at a special meeting called for such purpose, and bylaws adopted by the directors may be altered or repealed by the shareholders. No bylaw adopted or amended by the shareholders can be altered or repealed by the board of directors, unless specific authority to do so is provided to the board of directors by the shareholders.
| | F.N.B.’s bylaws provide that the affirmative vote of at least 75 percent of the members of F.N.B.’s board of directors or the affirmative vote of at least 75 percent of the shares entitled to vote is required to alter or amend or adopt new bylaws. |
Vote Required for Extraordinary Corporation Transactions
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YadkinUB Bancorp
Under the North Carolina Business Corporation Act,NCBCA, a merger, share exchange dissolution or sale of all or substantially all of a corporation’s assets other than in the usual and regular course of business must be approved by the board of | | F.N.B. Under the Pennsylvania Business Corporation Law and Pennsylvania Entity Transactions Law, a merger, share exchange, dissolution or sale of all or substantially all of a corporation’s assets other than |
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directors and a majority of all votes entitled to be cast. Under UB Bancorp’s articles of incorporation, certain business combination transactions must either be approved by (i) the affirmative vote of at least 80% of the outstanding voting stock of the Company, or (ii) the affirmative vote of at least a majority of the outstanding voting stock of the Company if at least two-thirds of the board of directors approve the transaction. Note that slightly different requirements apply for business transactions involving an existing shareholder of UB Bancorp that holds at least 10% of the outstanding voting stock. See “—Interested Shareholder Transactions” below. However, approval of a plan of merger by shareholders of the surviving corporation is not required if (1) the articles of incorporation will not be changed except for certain amendments not needing shareholder approval, (2) following the merger, the shareholders before and after the transaction will hold the same shares with identical preferences, limitations and relative rights, (3) the number of voting shares outstanding immediately after the transaction plus the number of shares issuable as a result of the transaction will not exceed by more than 20 percent20% of the number of voting shares outstanding of the surviving corporation immediately before the transaction, and (4) the number of shares participating in corporate distributions outstanding immediately after the transaction plus the number of shares participating in corporate distributions issuable as a result of the transaction, will not exceed by more than 20% the number of shares participating in corporate distributions outstanding immediately before the transaction. | | F.N.B.
Under the Pennsylvania Business Corporation Law and Pennsylvania Entity Transactions Law, a merger, share exchange, dissolution or sale of all or substantially all of a corporation’s assets other than in the ordinary course of business must be approved by the board of directors and a majority of the votes cast by all shareholders entitled to vote on the transaction, unless the corporation’s articles of incorporation require a higher vote. F.N.B.’s articles of incorporation require a supermajority vote of at least 75% of the outstanding shares of F.N.B. common stock to approve a merger, consolidation or sale, lease, exchange or other disposition, in a single transaction or series of related transactions, of all or substantially all or a substantial part of the properties or assets of F.N.B., only if the board of directors of F.N.B. has not approved and recommended the transaction.
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outstanding of the surviving corporation immediately before the transaction, and (4) the number of shares participating in corporate distributions outstanding immediately after the transaction plus the number of shares participating in corporate distributions issuable as a result of the transaction, will not exceed by more than 20 percent the number of shares participating in corporate distributions outstanding immediately before the transaction. | | The Pennsylvania Entity Transactions Law provides that shareholder approval is not required for a plan of merger or sale of all or substantially all of the assets of the corporation if: • the surviving entity is a Pennsylvania corporation and its articles of incorporation will be identical (except for certain minor amendments) to the articles of incorporation of the corporation for which shareholder approval is not required; and • each share of the corporation outstanding prior to the transaction will continue as or be converted into an identical share of the surviving entity; and • the plan of merger provides that immediately after the transaction, the shareholders of the corporation will hold in the aggregate sufficient shares of the surviving entity to cast at least a majority of the votes entitled to be cast for the election of directors. |
Interested Shareholder Transactions
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YadkinUB Bancorp
Under the North Carolina Business Corporation ActNCBCA any person who, together with such person’s affiliates and associates, beneficially owns 20 percent or more of any voting stock of the corporation requires the approval of 95 percent of all voting shares to enact (1) a merger, consolidation, share exchange or division or (2) a sale, lease, mortgage, pledge or other disposition of assets having a fair market value above a specified threshold. | | F.N.B. The F.N.B. articles of incorporation provide that an interested shareholder is any person who, together with such person’s affiliates and associates, beneficially owns 10% or more of any voting stock of the corporation. Approval by the holders of two-thirds of the voting shares of the corporation, other than shares beneficially owned by the interested shareholder, is required in certain types of transactions that benefit the interested shareholder, |
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Under UB Bancorp’s articles of incorporation, certain proposed business combination transactions between UB Bancorp and a related person holding at least 10% of the outstanding voting stock of the company must be approved (1) by the affirmative vote of at least 80% of the outstanding voting stock, or (2) by a majority vote of the outstanding voting stock if at least two-thirds of the Continuing Directors have approved the transaction. For purposes of this provision, “Continuing Directors” means any director who is unaffiliated with the related person and was a member of the board of directors prior to the time the related person acquired at least 10% of the outstanding voting stock of the company, or a successor thereof recommended by the other Continuing Directors. | | such as the following: (1) a merger or consolidation, (2) a sale, lease, mortgage, pledge or other disposition of assets having a fair market value above a specified threshold, or (3) an issuance of shares having a fair market value above a specified threshold. However, that approval is not required in certain situations, including the following: • a majority of the disinterested directors has approved the interested person transaction; or • the consideration that shareholders will receive meets certain minimum “fair price” requirements, as determined by a formula specified in the articles of incorporation. |
Fiduciary Duty
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YadkinUB Bancorp
Under the North Carolina Business Corporation Act,NCBCA, a director is required to discharge his or her duties in good faith, in a manner he or she reasonably believes to be in the best interests of the corporation and with such care, including reasonable inquiry, skill and diligence, as a person of ordinary prudence would use under similar circumstances. In discharging his or her duties, a director is entitled to rely in good faith on information, opinions, reports or statements, including financial statements and other financial data, if presented or prepared by:. • officers or employees of the corporation whom the director reasonably believes to be reliable and competent in the matters presented; and • legal counsel, public accountants or other persons as to matters the director reasonably believes are within the person’s professional or expert competence; or • a committee or subcommittee of the board of which the director is not a member if the director reasonably believes the committee merits confidence. Yadkin’s articles of incorporationUB Bancorp’s bylaws also provide that in determining what is in the best interests of the corporation and its shareholders, in addition to considering the long-term and short-term interests of the shareholders, the board of directors may consider any factor which they deemmust, in consideration of certain business combination transactions, give due consideration to all relevant factors, including without limitation the social and economic effects of the matter on the corporationemployees, customers and other constituents of UB Bancorp and its subsidiaries employees, depositors, customers and creditors and the communities in which the corporation and its subsidiaries operate or are located, and, when evaluating a business combination, (1) the business and financial condition and earnings prospects of any person seeking to acquire Yadkin, (2) the competence, experience, and integrity of the acquiring person and its management, and (3) the prospects for the successful conclusion of the business combination.
| | F.N.B. Under the Pennsylvania Business Corporation Law, a director is required to discharge his or her duties in good faith, in a manner reasonably believed to be in the best interests of the corporation, and with such care, including reasonable inquiry, skill and diligence, as a person of ordinary prudence would use under similar circumstances. In discharging his or her duties, a director is entitled to rely in good faith on information, opinions, reports, or statements, including financial statements and other financial data, if presented or prepared by: • officers or employees of the corporation whom the director reasonably believes to be reliable and competent in the matters presented; and • legal counsel, public accountants or other persons as to matters the director reasonably believes are within the person’s professional or expert competence; or • a committee of the board of which the director is not a member if the director reasonably believes the committee merits confidence. F.N.B.’s articles of incorporation provide that the board of directors of F.N.B., in evaluating a proposal for an extraordinary corporate transaction, shall give due consideration to all relevant factors, including, without limitation, the long-term prospects and interests of F.N.B. and its shareholders, the social, |
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| and on the communities in which they operate or are located. | | economic, legal or other effects of any action on the employees, suppliers and customers of F.N.B. and its subsidiaries, the communities and societies in which F.N.B. and its subsidiaries operate and the economy of the state and the nation. |
Provisions with Possible Anti-Takeover Effects
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YadkinUB Bancorp
YadkinUB Bancorp is subject to statutory “anti-takeover” provisions under North Carolina statutes. These include (i) the protection provided pursuant to the North Carolina Control Share Acquisition Act, which blocks the voting rights of an acquiring person who makes or proposes to make a control-share acquisition, which is defined as increasing ownership in the corporation above certain thresholds, (ii) the protection provided pursuant to the North Carolina Shareholder Protection Act,, which subjects persons who acquire at least 20% of the voting power in a “control transaction” the obligation to pay objecting shareholders the fair value for their shares.
In addition, Yadkin’sUB Bancorp’s articles of incorporation and bylaws contain various provisions that may serve as anti-takeover protections, which include: • the limitation on the increase in the numberclassified board of directors in any given meeting;directors; • the supermajority voting requirements described above for certain business combination and other corporate transactions; and • the broad range of factors that Yadkin’sUB Bancorp’s board of directors maymust consider in discharging its duties;evaluating business combination transactions; and • provisions in Yadkin’sUB Bancorp’s articles of incorporation which authorize Yadkin’sUB Bancorp’s board of directors, without shareholder action, to issue from time to time, up to 1,000,0005,000,000 shares of preferred stock. The board of directors of YadkinUB Bancorp has the power to determine the voting powers, preferences, limitations and relative rights of the shares of any series so established. | | F.N.B. F.N.B. has opted out of thecertain statutory “anti-takeover” provisions under Chapter 25 of the Pennsylvania Business Corporation Law. However, other provisions of such Chapter 25, and F.N.B.’s articles of incorporation and bylaws, contain various provisions that may serve as anti-takeover protections, which, in addition to those set forth above, include: • the ability of F.N.B.’s board of directors to fill vacancies resulting from an increase in the number of directors; • the supermajority voting requirements for certain corporate transactions; • the broad range of factors that F.N.B.’s board of directors may consider in evaluating an unsolicited offer including a tender offer proposal; and • provisions in F.N.B.’s articles of incorporation which authorize F.N.B.’s board of directors, without shareholder action, to issue from time to time, up to 20,000,000 shares of preferred stock. The board of directors of F.N.B. has the power to divide any and all of the shares of F.N.B. preferred stock into series and to fix and determine the relative rights and preferences of the shares of any series so established. |
Exclusive Forum
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YadkinUB Bancorp
The bylaws of Yadkin do not mandateUB Bancorp provide that the state courts located in Greenville, North Carolina are the sole and exclusive form for (i) any directive action or proceeding brought on behalf of the company; (ii) any action asserting a specific forum for adjudicationclaim of claims involving internal corporate affairs.breach of a fiduciary duty owed by any director, officer, or other employee of the company to the company or its shareholders; (iii) any action asserting a claim against the company or any director, officer or other employee of the company pursuant to the NCBCA or state laws pertaining to the regulation of financial institutions; or (iv) any action asserting a claim against the company or any director, officer or other employee of the company. | | F.N.B. The bylaws of F.N.B. do not mandate a specific forum for adjudication of claims involving internal corporate affairs. |
LEGAL MATTERS
Reed Smith LLP, Pittsburgh, Pennsylvania, has passed upon the validity of the F.N.B. common stock being registered in connection with the merger for F.N.B. Reed Smith LLP and Skadden, Arps, Slate, Meagher & FlomFenimore Kay Harrison LLP New York, New York, have delivered their opinions to F.N.B. and Yadkin,UB Bancorp, respectively, as to certain U.S. federal income tax consequences of the merger and will deliver updated opinions in connection with the closing of the merger. See“U.S. Federal Income Tax Consequences of the Merger” beginning on page 126.92.
EXPERTS
The consolidated financial statements of F.N.B. and subsidiaries appearing in F.N.B.’s Annual Report on Form 10-K for the year ended December 31, 20152021 and the effectiveness of F.N.B.’s internal control over financial reporting as of December 31, 20152021 have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon, included therein and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Yadkin appearing in its Annual Report on Form 10-K as of December 31, 2015, and for the three year period ended December 31, 2015, and the effectiveness of its internal control over financial reporting as of December 31, 2015, have been audited by Dixon Hughes Goodman LLP, independent registered public accounting firm, as set forth in its reports thereon, included therein, and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon the reports given on the authority of such firm as experts in accounting and auditing.
The audited consolidated balance sheets of NewBridge Bancorp as of December 31, 2015 and 2014, and the related statements of income, comprehensive changes in shareholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2015, and the related notes, have been incorporated by reference in this joint proxy statement/prospectus in reliance upon the report of Dixon Hughes Goodman LLP, independent registered public accounting firm, and upon the authority of said firm as experts in accounting and auditing.
OTHER MATTERS
As of the date of this joint proxy statement/prospectus, neither Yadkin nor F.N.B. knowsUB Bancorp is not aware of any matter that a YadkinUB Bancorp shareholder or a F.N.B. shareholder, respectively, will present for consideration at theirits special meeting other than the matters described in this document. However, if any other matter properly comes before either the Yadkin special meeting or the F.N.B.UB Bancorp special meeting or any adjournment or postponement of the special meeting, all executed proxy cards will be deemed to confer discretionary authority on the individuals named as proxies on those proxy cards to vote the shares represented by those proxy cards as to any such matters. The proxies will vote such shares in accordance with their best judgment.
This joint proxy statement/prospectus does not cover any resales of the F.N.B. common stock issued as common stock consideration pursuant to this joint proxy statement/prospectus by any shareholder deemed to be an affiliate of F.N.B. upon the consummation of the merger. F.N.B. has not authorized any person to make use of this joint proxy statement/prospectus in connection with any such resales.
WHERE YOU CAN FIND MORE INFORMATION
F.N.B. has filed with the SEC a registration statement on Form S-4 to register the shares of F.N.B. common stock to be issued pursuant to the merger agreement. This joint proxy statement/prospectus is part of that registration statement and constitutes the prospectus of F.N.B. in addition to being a proxy statementsstatement of F.N.B. and YadkinUB Bancorp for their respectiveits special meetings.meeting. The registration statement, including the attached exhibits and schedules, contains additional relevant information about F.N.B. and F.N.B. common stock. As permitted by SEC rules, F.N.B. and YadkinUB Bancorp have omitted from this joint proxy statement/prospectus certain information that is included in the registration statement.
F.N.B. and Yadkin
F.N.B. also filefiles reports, proxy statements and other information with the SEC under the Exchange Act. You may read and copy this information at the SEC’s public reference room at 100 F Street, NE, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. In addition, theThe SEC maintains an Internet website athttp://www.sec.gov that contains reports, proxy statements and other information about issuers who file electronically with the SEC, such as F.N.B. and Yadkin. You may also find the reports and other information filed by F.N.B. and Yadkin with the SEC at the respective Internet websiteswebsite of F.N.B. and Yadkin,, which areis http://www.fnbcorporation.com andhttps://www.yadkinbank.com. Information on thesethis Internet websites is not part of this joint proxy statement/prospectus.
The SEC allows F.N.B. and Yadkin to incorporate by reference information in this joint proxy statement/prospectus. This means that F.N.B. and Yadkin can disclose important information to you by referring you to another document filed separately with the SEC.
The following documents filed by F.N.B. with the SEC (File No. 001-31940) are hereby incorporated by reference:
Annual Report on Form 10-K for the year ended December 31, 2015, filed on February 26, 2016;
| • | | Annual Report on Form 10-K for the year ended December 31, 2021, filed on February 24, 2022; |
Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2016 and June 30, 2016, filed on May 6, 2016 and August 5, 2016, respectively;
| • | | Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2022 and June 30, 2022, filed on May 5, 2022 and August 5, 2022, respectively; |
Current Reports on Form 8-K filed on January 11, 2016, January 15, 2016, February 19, 2016, February 23, 2016, February 24, 2016, April 6, 2016, May 19, 2016, July 21, 2016 (two filings), August 16, 2016, August 25, 2016 and August 30, 2016, and a Current Report on Form 8-K/A filed on February 25, 2016 (in each case except to the extent furnished and not filed);
| • | | Current Reports on Form 8-K filed on January 20, 2022, January 24, 2022, April 19, 2022, April 19, 2022, May 12, 2022, May 12, 2022, June 1, 2022, June 1, 2022, and July 21, 2022 (other than the portions of those documents not deemed to be filed); |
The definitive proxy statement for the 2016 annual meeting of shareholders; and
| • | | The definitive proxy statement for the 2022 annual meeting of shareholders, filed on March 25, 2022, as amended; and |
The description of F.N.B. common stock contained in its Registration Statement on Form 8-A, filed on December 16, 2003 pursuant to Section 12 of the Securities Exchange Act, as amended, and any amendment or report filed for the purpose of updating such description.
The following documents filed by Yadkin with the SEC (File No. 000-52099) are hereby incorporated by reference:
Annual Reports on Form 10-K for the year ended December 31, 2015, filed on March 11, 2016;
Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2016 and June 30, 2016, filed on May 6, 2016 and August 5, 2016, respectively;
Current Reports on Form 8-K filed on January 28, 2016, February 16, 2016, February 23, 2016, March 1, 2016, April 21, 2016 (two filings), May 16, 2016, May 26, 2016 and July 21, 2016 (four filings) (in each case except to the extent furnished and not filed); and
The definitive proxy statement for the 2016 annual meeting of shareholders, filed on April 7, 2016.
The audited consolidated balance sheets of NewBridge Bancorp as of December 31, 2015 and 2014, and the related statements of income, comprehensive changes in shareholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2015, and the related notes, are also incorporated by reference in this joint proxy statement/prospectus from Yadkin’s Current Report on Form 8-K filed on May 16, 2016.
| • | | The description of F.N.B. common stock contained in its Registration Statement on Form 8-A/A, filed on August 30, 2016 pursuant to Section 12 of the Exchange Act, and any amendment or report filed for the purpose of updating such description. |
F.N.B. and Yadkin also incorporateincorporates by reference any additional documents filed with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act between the date of this joint proxy statement/prospectus and the respective datesdate of the F.N.B. and YadkinUB Bancorp special meetingsmeeting (other than, in each case, those documents, or the portions of those documents or exhibits thereto, deemed to be furnished and not filed in accordance with SEC rules). Those documents include periodic reports such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy statements.
Any statement contained in a document incorporated by reference herein shall be deemed to be modified or superseded for purposes of this joint proxy statement/prospectus to the extent that a statement contained herein or in any subsequently filed document which is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a party of this joint proxy statement/prospectus.
Statements contained in this proxy statement/prospectus as to the contents of any contract or other documents referred to in this proxy statement/prospectus are not necessarily complete. In each case, you should refer to the copy of the applicable contract or other document filed as an exhibit to the registration statement.
Documents incorporated by reference are available from F.N.B. and Yadkin without charge, excluding any exhibits to those documents unless the exhibit is specifically incorporated by reference as an exhibit in this joint proxy statement/prospectus. You can obtain documents incorporated by reference in this joint proxy statement/prospectus by requesting them in writing or by telephone from the applicable companyF.N.B at the following address and phone number:
| | |
F.N.B. CORPORATION | | YADKIN FINANCIAL CORPORATION |
One North Shore Center
12 Federal Street
Pittsburgh, Pennsylvania 15212
Attention: James G. Orie, Chief Legal Officer
Telephone: (724) 983-3317
| | 3600 Glenwood Avenue, Suite 300
Raleigh, North Carolina 27612
Attention: Terry Earley, Chief Financial Officer
Telephone: (919) 659-9015
|
F.N.B. and YadkinCORPORATION
12 Federal Street
One North Shore Center
Pittsburgh, Pennsylvania 15212
Attention: James G. Orie, Chief Legal Officer
Telephone: (724) 983-3317
UB Bancorp shareholders requesting documents must do so by December 2, 2016September 14, 2022 in order to receive them before their respective meetings.the UB Bancorp special meeting. You will not be chargecharged for any of these documents that you request.
You should rely only on the information contained in or incorporated by reference into this joint proxy statement/prospectus. Neither F.N.B. nor YadkinNo person has been authorized anyone to give any information or make any representation about the merger or the companiesF.N.B. or UB Bancorp that is differentdiffers from, or in additionadds to, that containedthe information in this joint proxy statement/prospectus or in documents that are publicly filed with the SEC. We take no responsibility for, and provide no assurance as to the reliability of, any of the materialsother information that have been incorporated into this joint proxy statement/prospectus.others may give you.
This joint proxy statement/prospectus does not constitute an offer to exchange or sell, or a solicitation of an offer to exchange or purchase, the F.N.B. common stock this joint proxy statement/prospectus offers, nor does it constitute the solicitation of a proxy in any jurisdiction in which Yadkin or F.N.B.UB Bancorp is not authorized to make such offer or solicitation or to or from any person to whom it is unlawful to make such offer or solicitation.
The information contained in this joint proxy statement/prospectus speaks as of the date of this joint proxy statement/prospectus unless we specifically indicate otherwise. The delivery of this joint proxy statement/prospectus shall not, under any circumstances, create any implication that there has been no change in the affairs of F.N.B. or YadkinUB Bancorp since the date of this proxy statement/prospectus or that the information in this joint proxy statement/prospectus or in the documents Yadkin or F.N.B. incorporates by reference into this joint proxy statement/prospectus is correct at any time subsequent to the date of such information.
UB Bancorp
UB Bancorp does not file reports or other information with the SEC. If you would like to request documents from UB Bancorp, please send a request in writing or by telephone to UB Bancorp at the following address:
UB BANCORP
1011 Red Banks Road
Greenville, NC 27858
Attention: Scott C. McLean
Telephone: (866) 638-0552
FUTURE SHAREHOLDER PROPOSALS
UB Bancorp Annual Meeting
If the merger occurs, there will be no UB Bancorp annual meeting of shareholders for 2023. In that case, shareholder proposals must be submitted to F.N.B. in accordance with the procedures described below. If the merger is not completed, then UB Bancorp will hold an annual meeting in 2023 in accordance with its current governing documents and as required by North Carolina law.
F.N.B. Annual Meeting
If you are a F.N.B. shareholder andshareholders who would like to include youra proposal in F.N.B.’s notice of the 20172023 Annual Meeting and related proxy materials, you must follow SEC Rule 14a-8 under the Exchange Act. In submitting your proposal, the Corporate Secretary must receive your proposal, in writing, at F.N.B.’s principal executive offices at One North Shore Center, 12 Federal Street, Pittsburgh, Pennsylvania 15212, no later than December 2, 2016.November 25, 2022. If you do not follow SEC Rule 14a-8, your proposal will not be considered for inclusion in the proxy statement for next year’s annual meeting.
Pursuant to Article I, Section 1.11 of the F.N.B. bylaws, a shareholder who wishes to nominate an individual for election to the board of directors directly at an annual meeting, or to propose any business to be considered at an annual meeting, must deliver advance notice of such nomination or business to the Corporate Secretary of F.N.B. The notice must be delivered in person, by first-class United States mail postage prepaid or by reputable overnight delivery service to the attention of the Corporate Secretary, at F.N.B.’s principal executive offices at F.N.B. Corporation, One North Shore Center, 12 Federal Street, Pittsburgh, Pennsylvania 15212 during the period commencing on December 2, 2016,November 25, 2022, and ending on January 1, 2017.December 26, 2022. The shareholder must be a shareholder of record as of the date the notice is delivered and at the time of the annual meeting and must be entitled to vote at the meeting. The notice must be in writing and contain the information specified in F.N.B.’s bylaws for a director nomination or other business. The notice must contain certain information about the proposal or nominee, as applicable, which is generally equivalent to the information that would be required to be disclosed under the proxy rules of the SEC if proxies were solicited for shareholder consideration of the matter at a meeting of shareholders, as well as certain information about the shareholder who is making the proposal or nomination. Nominees also will be required to submit a completed and signed questionnaire. The questionnaire will be provided by the Corporate Secretary upon request and is similar to the annual questionnaire completed by all of F.N.B. directors regarding their background, experience and independence.
Only shareholder proposals and nominations submitted in accordance with the F.N.B. bylaw provisions will be eligible for presentation at F.N.B.’s 20172023 Annual Meeting, and any other matter not submitted to the board of directors of F.N.B. in accordance with such provisions will not be considered or acted upon at F.N.B.’s 20172023 Annual Meeting. The Chairman of the Board of F.N.B. is authorized to determine whether a nomination or proposal was made in accordance with F.N.B. bylaws and to declare that a defective nomination or proposal be disregarded.
Yadkin Annual Meeting
If the merger occurs, there will be no Yadkin annual meeting of shareholders for 2017. In that case, shareholder proposals must be submitted to F.N.B. in accordance with the procedures described above.
If the merger is not completed, then Yadkin will hold an annual meeting in 2017.
APPENDIX A
EXECUTION VERSION
AGREEMENT AND PLAN OF MERGER
between
F.N.B. CORPORATION
and
YADKIN FINANCIAL CORPORATIONUB BANCORP
Dated as of July 20, 2016May 31, 2022
TABLE OF CONTENTS
| | | | | | |
| | | | | Page | |
ArticleARTICLE 1 THE MERGER
| | | A-1 | |
1.1 | | The Merger | | | A-1 | |
1.2 | | Effective Time | | | A-1 | |
1.3 | | Effects of the Merger | | | A-2 | |
1.4 | | Conversion of YDKNUBNC Common Stock | | | A-2 | |
1.5 | | FNB Capital Stock | | | A-3 | |
1.6 | | YDKNUBNC Equity Awards | | | A-3 | |
1.7 | | Articles of Incorporation and Bylaws of the Surviving Company | | | A-4A-5 | |
1.8 | | The Bank Merger | | | A-4A-5 | |
1.9 | | Right to Revise Structure | | | A-4A-5 | |
ArticleARTICLE 2 EXCHANGE OF SHARES
| | | A-5 | |
2.1 | | FNB to Make Merger Consideration Available | | | A-5 | |
2.2 | | Exchange Shares | | | A-5A-6 | |
2.3 | | Adjustments for Dilution and Other Matters | | | A-6A-7 | |
2.4 | | Withholding Rights | | | A-7 | |
ArticleARTICLE 3 REPRESENTATIONS AND WARRANTIES OF YDKNUBNC
| | | A-7A-8 | |
3.1 | | Corporate Organization | | | A-7A-8 | |
3.2 | | Capitalization | | | A-9 | |
3.3 | | Authority; No Violation | | | A-9A-10 | |
3.4 | | Consents and Approvals | | | A-10A-11 | |
3.5 | | Reports | | | A-10A-11 | |
3.6 | | SEC Reports; Financial Statements | | | A-11 | |
3.7 | | Broker’s Fees | | | A-12 | |
3.8 | | Absence of Certain Changes or Events | | | A-12 | |
3.9 | | Legal ProceedingsProceeding | | | A-12A-13 | |
3.10 | | Taxes and Tax Returns | | | A-12A-13 | |
3.11 | | Employee Benefits | | | A-14 | |
3.12 | | Compliance with Applicable Law | | | A-17 | |
3.13 | | Contracts | | | A-17 | |
3.14 | | YDKNUBNC Regulatory Matters | | | A-17 | |
3.15 | | Undisclosed Liabilities | | | A-18 | |
3.16 | | Environmental Liability | | | A-18 | |
3.17 | | Real Property | | | A-19 | |
3.18 | | State Takeover Laws | | | A-19 | |
3.19 | | Opinion | | | A-20 | |
3.20 | | Insurance | | | A-20 | |
3.21 | | Investment Securities | | | A-20 | |
3.22 | | Intellectual Property | | | A-20 | |
3.23 | | Loans; Nonperforming and Classified Assets | | | A-21 | |
3.24 | | Fiduciary Accounts | | | A-23 | |
3.25 | | Bank Secrecy Act, Foreign Corrupt Practices Act and U.S.A. Patriot Act | | | A-23 | |
3.26 | | Dissenters Rights | | | A-23 | |
3.27
| | No Other Representations or Warranties | | | A-23 | |
ArticleARTICLE 4 REPRESENTATIONS AND WARRANTIES OF FNB
| | | A-23 | |
4.1 | | Corporate Organization | | | A-23 | |
4.2 | | Capitalization | | | A-24 | |
4.3 | | Authority; No Violation | | | A-25 | |
4.4 | | Consents and Approvals | | | A-25 | |
4.5 | | Reports | | | A-25 | |
4.6 | | SEC Reports; Financial Statements | | | A-26 | |
A-i
| | | | | | |
| | | | | Page | |
4.6
| | SEC Reports; Financial Statements | | | A-26 | |
4.7 | | Broker’s Fees | | | A-27 | |
4.8 | | Absence of Certain Changes or Events | | | A-27 | |
4.9 | | Legal Proceedings | | | A-27 | |
4.10 | | Taxes and Tax Returns | | | A-27 | |
4.11 | | Employee Benefits | | | A-29A-28 | |
4.12 | | Compliance with Applicable Law | | | A-30 | |
4.13 | | Contracts | | | A-31 | |
4.14 | | FNB Regulatory Matters | | | A-31 | |
4.15 | | Undisclosed Liabilities | | | A-32A-31 | |
4.16 | | Environmental Liability | | | A-32 | |
4.17 | | Reorganization | | | A-32 | |
4.18 | | Insurance | | | A-32 | |
4.19 | | Investment Securities | | | A-32 | |
4.20 | | Intellectual Property | | | A-32 | |
4.21 | | Loans; Nonperforming and Classified Assets | | | A-33 | |
4.22 | | Fiduciary Accounts | | | A-34 | |
4.23 | | Ownership of YDKNUBNC Shares | | | A-34 | |
4.24 | | Bank Secrecy Act, Foreign Corrupt Practices Act and U.S.A. Patriot Act | | | A-34 | |
4.25 | | No Other Representations or Warranties | | | A-34 | |
ArticleARTICLE 5 COVENANTS RELATING TO CONDUCT OF BUSINESS
| | | A-34 | |
5.1 | | Conduct of Businesses Prior to the Effective Time | | | A-34 | |
5.2 | | YDKNUBNC Forbearances | | | A-35 | |
5.3 | | FNB Forbearances | | | A-39 | |
ArticleARTICLE 6 ADDITIONAL AGREEMENTS
| | | A-40 | |
6.1 | | Regulatory Matters | | | A-40 | |
6.2 | | Access to Information | | | A-42 | |
6.3 | | Shareholder ApprovalsApproval | | | A-43 | |
6.4 | | Reasonable Best Efforts; Cooperation | | | A-43 | |
6.5 | | NYSE Approval | | | A-43 | |
6.6 | | Benefit Plans | | | A-43 | |
6.7 | | Indemnification; Directors’ and Officers’ Insurance | | | A-45 | |
6.8 | | Additional Agreements | | | A-46 | |
6.9 | | Advice of Changes | | | A-46 | |
6.10 | | Dividends | | | A-46A-47 | |
6.11 | | Certain Actions | | | A-47 | |
6.12 | | Transition | | | A-49 | |
6.13 | | Tax Representation Letters | | | A-49 | |
6.14 | | Rule 16b-3 | | | A-50A-49 | |
6.15 | | Advisory Board[Reserved | | | A-50 | |
6.16 | | Informational Systems Conversion | | | A-50 | |
6.17 | | Control of Operations | | | A-50 | |
6.18 | | FNB ReincorporationUBNC Debentures Consents | | | A-51A-50 | |
ArticleARTICLE 7 CONDITIONS PRECEDENT
| | | A-51A-50 | |
7.1 | | Conditions to Each Party’s Obligation to Effect the Merger | | | A-51A-50 | |
7.2 | | Conditions to Obligation of FNB to Effect the Merger | | | A-51 | |
7.3 | | Conditions to Obligation of YDKNUBNC to Effect the Merger | | | A-52 | |
ArticleARTICLE 8 TERMINATION AND AMENDMENT
| | | A-53 | |
8.1 | | Termination | | | A-53 | |
8.2 | | Effect of Termination | | | A-55 | |
8.3 | | Amendment | | | A-55 | |
8.4 | | Extension; Waiver | | | A-56A-55 | |
A-ii
| | | | | | |
| | | | | Page | |
ArticleARTICLE 9 GENERAL PROVISIONS
| | | A-56 | |
9.1 | | Closing | | | A-56 | |
9.2 | | Nonsurvival of Representations, Warranties and Agreements | | | A-56 | |
9.3 | | Expenses | | | A-56 | |
9.4 | | Notices | | | A-57A-56 | |
9.5 | | Interpretation | | | A-57 | |
9.6 | | Counterparts | | | A-58 | |
9.7 | | Entire Agreement | | | A-58 | |
9.8 | | Governing Law; Jurisdiction; Specific Performance | | | A-58 | |
9.9 | | Severability | | | A-59 | |
9.10 | | Assignment; Third Party Beneficiaries | | | A-59 | |
SCHEDULES:
Schedule I
EXHIBITS:
| | | | | | |
Exhibit A-1A | | Form of Voting Agreement (Individuals) | | | B-1 | |
Exhibit A-2
| | Form of Voting Agreement (Entities) | | | C-1 | |
Exhibit B | | Form of Bank Merger Agreement | | | A-62A-61 | |
A-iii
INDEX OF DEFINED TERMS
| | |
Section | | |
401(k) Plans | | 5.2(v)(iv) |
Acquisition Proposal | | 6.11(e)(i) |
Affiliate | | 3.23(b) |
Agreement | | Preamble |
Average Closing Price | | 1.4(g)1.4(e) |
Bank Merger | | 1.8 |
Bank Merger Agreement | | 1.8 |
Bank Merger Certificates | | 1.8 |
BHC Act | | 3.14(a) |
Break-up Fee | | 6.11(f) |
business day | | 9.5 |
Cash ConsiderationCertificates | | 1.4(b)1.4(c) |
Cash Election | | 1.4(b) |
Certificates | | 1.4(e) |
Change in YDKNUBNC Recommendation | | 6.11(b) |
Chosen Courts | | 9.8(b) |
Claim | | 6.7(a) |
Closing | | 9.1 |
Closing Date | | 9.1 |
Code | | Recitals |
Confidentiality Agreement | | 6.2(b) |
Contamination | | 3.16(b) |
Control | | 3.23(b) |
Controlled Group Liability | | 3.11 |
Determination Date | | 8.1(j)(iii)(B) |
DP Contracts | | 3.22(d) |
DRSP Plan | | 1.4(f)1.4(d) |
Effective Time | | 1.2 |
Environmental Laws | | 3.16(b) |
Environmental Liability | | 3.16(b) |
ERISA | | 3.11 |
ERISA Affiliate | | 3.11 |
Exchange ActETL | | 3.6(a)1.1 |
Exchange Act | | 3.5 |
Exchange Agent | | 2.1 |
Exchange Fund | | 2.1 |
Exchange Ratio | | 1.4(a) |
FBCAExercised UBNC Stock Option | | 1.11.6(a) |
FDIC | | 3.1(c) |
Federal Reserve Board | | 3.14(a) |
Final Index Price | | 8.1(j)(iii)(C) |
Florida Articles of Merger | | 1.2 |
FNB | | Preamble |
FNB Bank | | 1.8 |
FNB Benefit Plan | | 4.11 |
FNB Bylaws | | 4.1(b) |
FNB Charter | | 4.1(b) |
| FNB Common Stock | | 1.4(a) |
| FNB Disclosure Schedule | | Article 4 |
| FNB Eligible Plans | | 6.6(a) |
A-iv
| | |
Section
| | |
| FNB Employment Agreement | | 4.11 |
| FNB Intellectual Property | | 4.20(b) |
FNB Market Value | | 8.1(j)(iii)(A) |
FNB Preferred Stock | | 4.2(a) |
| FNB Qualified Plans | | 4.11(d) |
A-iv
FNB Ratio | | |
Section | | 8.1(j)(ii) |
FNB Recommendation | | 6.3(b) |
| FNB Reports | | 4.6(a) |
FNB Shareholders Meeting | | 6.3(b) |
| FNB Stock Plans | | 4.2(a) |
| FNB Subsidiaries | | 3.1(d) |
| FNB Warrants | | 4.2(a) |
| GAAP | | 3.1(d) |
| Governmental Entity | | 3.4 |
| Hazardous Substance | | 3.16(b) |
Inactive YDKNUBNC Employees | | 3.11(i)3.11(h) |
| Indemnified Parties | | 6.7(a) |
Index | | 8.1(j)(iii)(D) |
Index Ratio | | 8.1(j)(ii) |
Initial FNB Market Value | | 8.1(j)(iii)(E) |
Initial Index Price | | 8.1(j)(iii)(F) |
| Insurance Amount | | 6.7(c) |
| Intellectual Property | | 3.22(b) |
| Intended Tax Treatment | | Recitals |
| IRS | | 3.10(a) |
| IT Assets | | 3.22(c) |
Joint Proxy Statement | | 3.4 |
| knowledge | | 9.5 |
| Law | | 3.3(b) |
| Leased Properties | | 3.17(c) |
| Leases | | 3.17(b) |
| Liens | | 3.2(b) |
| Loan | | 3.23(a) |
| made available | | 9.5 |
| Material Adverse Effect | | 3.1(d) |
| Materially Burdensome Regulatory Condition | | 6.1(d) |
| Merger | | Recitals |
| Merger Consideration | | 1.4(a) |
| Multiemployer Plan | | 3.11 |
| Multiple Employer Plan | | 3.11(f)3.11(e) |
| NCBCA | | 1.1 |
| NCCOB | | 3.1(c)3.4(c) |
| NCRB | | 1.1 |
| North Carolina Articles of Merger | | 1.2 |
| NYSE | | 3.1(d) |
| OCC | | 3.4 |
| Option Shares | | 1.6(a) |
| OREO | | 3.23(b) |
| Outside Date | | 8.1(c) |
| Owned Properties | | 3.17(a) |
| Pandemic | | 3.1(d) |
| Pandemic Measures | | 3.1(d) |
Payment Event | | 6.11(g) |
PBGCPennsylvania Articles of Merger | | 3.11(e)1.2 |
Person | | 3.9(a) |
Plan Termination Date | | 6.6(e) |
Proxy Statement | | 3.4 |
Registration Statement | | 3.4 |
Regulatory Agencies | | 3.14(c) |
Requisite UBNC Vote | | 3.3(a) |
Requisite Regulatory Approvals | | 7.1(c) |
Sarbanes-Oxley Act | | 4.6(a) |
Securities Act | | 3.6(a) |
SRO | | 3.4 |
A-v
| | |
Section | | |
Piedmont PEP | | 1.4(d) |
Plan Termination Date | | 6.6(e) |
Rabbi Trust Agreement | | 1.4(d) |
Registration Statement | | 3.4 |
Regulatory Agencies | | 3.14(c) |
Reincorporation | | 6.18 |
Requisite FNB Vote | | 4.3(a) |
Requisite Regulatory Approvals | | 7.1(c) |
Requisite YDKN Vote | | 3.3(a) |
Sarbanes-Oxley Act | | 3.6(a) |
Securities Act | | 3.6(a) |
SRO | | 3.4 |
Subsidiary | | 3.1(d) |
Superior Proposal | | 6.11(e)(ii) |
Surviving Company | | Recitals |
Takeover Laws | | 3.18(a) |
Tax | | 3.10(b) |
Tax Representation Letters | | 6.13(a) |
Tax Return | | 3.10(c) |
Third Party | | 6.11(e)(iii) |
Third Party Leases | | 3.17(d) |
Treasury Regulations | | Recitals |
Treasury Shares | | 1.4(c)1.4(b) |
Withdrawal LiabilityUBNC | | Preamble |
UBNC Articles | | 3.1(b) |
UBNC Bank | | 1.8 |
UBNC Benefit Plan | | 3.11 |
YDKN | | Preamble |
YDKN ArticlesUBNC Bylaws | | 3.1(b) |
YDKN BankUBNC Common Stock | | 1.81.4(a) |
YDKN Benefit Plan | | 3.11 |
YDKN Bylaws | | 3.1(b) |
YDKN Common Stock | | 1.4(b) |
YDKN Designee | | 1.3(b) |
YDKNUBNC Disclosure Schedule | | Article 3 |
YDKNUBNC Employees | | 3.11(i)3.11(h) |
YDKNUBNC Employment Agreement | | 3.11 |
YDKNUBNC Equity Awards | | 1.6(b) |
YDKNUBNC Equity Plans | | 1.6(a) |
YDKNUBNC Intellectual Property | | 3.22(b) |
YDKN Non-Voting Common Stock | | 1.4(b) |
YDKNUBNC Qualified Plans | | 3.11(d) |
YDKNUBNC Recommendation | | 6.3(a)6.3 |
YDKNUBNC Reports | | 3.6(a) |
YDKNUBNC Representatives | | 6.11(a) |
YDKNUBNC Restricted Stock Unit Award | | 1.6(b) |
YDKNUBNC Shareholders Meeting | | 6.3(a)6.3 |
YDKNUBNC Stock Option | | 1.6(a) |
YDKNUBNC Subsidiaries | | 3.1(d) |
YDKN Voting Common StockWithdrawal Liability | | 1.4(a)3.11 |
A-vi
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 20, 2016May 31, 2022 (this “Agreement”), between F.N.B. CORPORATION, a FloridaPennsylvania corporation (“FNB”), and YADKIN FINANCIAL CORPORATION,UB BANCORP, a North Carolina corporation (“YDKNUBNC”).
W I T N E S S E T H:
WHEREAS, the Boards of Directors of YDKNUBNC and FNB have determined that it is in the best interests of their respective companies and their shareholders to consummate the strategic business combination transaction provided for in this Agreement pursuant to which YDKNUBNC will, on the terms and subject to the conditions set forth in this Agreement, merge with and into FNB (the “Merger”), so that FNB is the surviving company in the Merger (hereinafter sometimes referred to in such capacity as the “Surviving Company”); and
WHEREAS, as a material inducement to FNB to enter into this Agreement, each of the Persons set forth onSchedule I attached hereto have entered into a voting agreement with FNB dated as of the date hereof, substantially in the formsform attached hereto asExhibit A-1 and Exhibit A-2A, pursuant to which each such Person has agreed, among other things, to vote all shares of YDKNUBNC Common Stock (as defined herein) owned or controlled by such Person in favor of the approval of this Agreement and the transactions contemplated hereby, upon the terms and subject to the conditions set forth in this Agreement; and
WHEREAS, for U.S. federal income tax purposes, it is intended that (i) the Merger shall qualify as a reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations of the U.S. Department of the Treasury promulgated thereunder (as such regulations may be amended from time to time, including corresponding provisions of successor rules and regulations thereto, the “Treasury Regulations”), (ii) FNB and YDKNUBNC each be a party to the reorganization within the meaning of Section 368(b) of the Code (clauses (i) and (ii), the “Intended Tax Treatment”), and (iii) this Agreement be and is adopted as a plan of reorganization for purposes of Sections 354 and 361 of the Code and within the meaning of Treas. Reg. § 1.368-2(g); and
WHEREAS, the parties desire to make certain representations, warranties, covenants and agreements in connection with the Merger and also to prescribe certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows:
ARTICLE 1
THE MERGER
1.1The Merger. Subject to the terms and conditions of this Agreement, in accordance with the bank and bank holding company lawsSection 55-11-01 of North Carolina (N.C.G.S. § 53C-7-201 et seq. and N.C.G.S. §53C-10-201 et seq.) and the North Carolina Business Corporation Act (the(as amended or supplemented hereafter, the “NCBCA”), and Section 331 of the Florida Business Corporation Act (the “FBCA”Pennsylvania Entity Transactions Law (as amended or supplemented hereafter, “ETL”), at the Effective Time, YDKNUBNC shall merge with and into FNB. FNB shall be the surviving company in the Merger, and shall continue its corporate existence under the laws of the StateCommonwealth of Florida.Pennsylvania. As of the Effective Time, the separate corporate existence of YDKNUBNC shall cease.
1.2Effective Time. The Merger shall become effective as set forth in the articles of merger that shall be filed with the Secretary of State of the State of North Carolina (the “North“North Carolina Articles of Merger”Merger”) andin
accordance with the NCBCA and the articles of merger that shall be filed with the Secretary of State of the StateCommonwealth of FloridaPennsylvania (the “Florida“Pennsylvania Articles of Merger”Merger”), respectively, on or before the Closing Date. The term “Effective Time”“Effective Time” shall mean the date and time when the Merger becomes effective as set forth in the North Carolina Articles of Merger and the FloridaPennsylvania Articles of Merger.
1.3Effects of the Merger.
(a)Effects Under NCBCA and FBCAETL. At and after the Effective Time, the Merger shall have the effects set forth in the applicable provisions of (i) Section 55-11-06 of the NCBCA, and the bank and bank holding company laws of North Carolina, and (ii) the FBCA.ETL.
(b)Directors and Executive Officers of the Surviving Company. The directors of the Surviving Company at and immediately after the Effective Time shall be (i) the directors of FNB immediately prior to the Merger, and (ii) one (1) current member of YDKN’s Board of Directors designated by FNB in consultation with YDKN (the “YDKN Designee”). The YDKN Designee will have a term expiring at the first annual meeting of FNB shareholders following the Effective Time.Merger. The executive officers of the Surviving Company at and immediately after the Effective Time shall be the executive officers of FNB immediately prior to the Merger.
1.4Conversion of YDKNUBNC Common Stock. At the Effective Time, by virtue of the Merger and without any action on the part of YDKN,UBNC, FNB or the holder of any of the following securities:
(a) Subject to the provisions of this Agreement, each share of Voting Common Stock, no par value, $1.00 per share, of YDKNUBNC (the “YDKN VotingUBNC Common Stock”) issued and outstanding immediately prior to the Effective Time, other than Treasury Shares and Dissenting Shares (as defined below), shall, by virtue of the Merger, no longer be outstanding and shall as of the Effective Time automatically be converted into and shall thereafter represent the right to receive as consideration in the Merger, 2.161.61 shares (the “Exchange Ratio”) of common stock,Common Stock, $0.01 par value, of FNB (“FNB Common Stock”) (the “Merger Consideration”).
(b) Subject to the provisions of this Agreement, each share of Non-Voting Common Stock, par value $1.00 per share, of YDKN (the “YDKN Non-Voting Common Stock” and, together with the Yadkin Voting Common Stock, the “YDKN Common Stock”) issued and outstanding immediately prior to the Effective Time, other than Treasury Shares, shall, by virtue of the Merger, no longer be outstanding and shall as of the Effective Time automatically be converted into and shall thereafter represent the right to receive, at the election of the holders of Yadkin Non-Voting Common Stock, either (i) the Merger Consideration or (ii) an amount in cash (the “Cash Election”), rounded up to the nearest $0.01, equal to the Average Closing Price multiplied by the Exchange Ratio (the “Cash Consideration”).
(c) At and after the Effective Time, each Treasury Share shall be cancelled and retired and no shares of FNB Common Stock or other consideration shall be issued in exchange therefor. “Treasury Shares” means the shares of YDKNUBNC Common Stock held by YDKN,UBNC, any YDKNUBNC Subsidiaries, FNB or any FNB Subsidiaries, in each case other than shares of YDKNUBNC Common Stock held in YDKNUBNC Benefit Plans or related trust accounts, managed accounts, mutual funds and the like, or otherwise held in a fiduciary, including custodial or agency, capacity or as a result of debts previously contracted in good faith.
(d) The parties acknowledge(c) Notwithstanding anything in this Agreement to the contrary, all shares of UBNC Common Stock that are issued and outstanding immediately prior to the Effective Time and which are held by a UBNC shareholder who did not vote in favor of the Merger constitutes a “Change(or consent thereto in writing) and who is entitled to demand and properly demands the fair value of Control,” as definedsuch shares pursuant to, and who complies in all respects with, the Piedmont Community Bank Holdings, Inc. Phantom Equity Planprovisions of Article 13 of the NCBCA, shall not be converted into or be exchangeable for the right to receive the Merger Consideration (the “Piedmont PEPDissenting Shares”). Immediately prior, but instead the holder of such Dissenting Shares (hereinafter called a “Dissenting Shareholder”) shall be entitled to payment of the fair value of such shares in accordance with the applicable provisions of the NCBCA (and at the Effective Time, YDKN, throughsuch Dissenting Shares shall no longer be outstanding and shall automatically be cancelled and shall cease to exist and such holder shall cease to have any rights with respect thereto, except the Rabbi Trust established pursuant to that certain Rabbi Trust Agreement, made as of July 4, 2014, by and between YDKN and U.S. Bank National Association (the “Rabbi Trust Agreement”), shall pay in shares of YDKN Common Stock all amounts due to plan participants and, if applicable, their beneficiaries under Section 4.3 of the Piedmont PEP and all remaining shares of YDKN Common Stock in the Rabbi Trust shall be distributed to legacy stockholders of Piedmont Community Bank Holdings, Inc.rights provided for pursuant to the termsapplicable provisions of the Rabbi Trust AgreementNCBCA and this Section 1.4(c)), unless and until such Dissenting Shareholder shall have failed to perfect such holder’s right to receive, or shall have effectively withdrawn or lost rights to demand or receive, the fair value of such shares of UBNC Common Stock under the applicable provisions of the NCBCA. If any Dissenting Shareholder shall fail to perfect or effectively withdraw or lose such UBNC shareholder’s dissenter’s rights under the applicable provisions of the NCBCA, each such Dissenting Share shall be treateddeemed to have been converted into and to have become exchangeable for, the purposesright to receive the Merger Consideration, without any interest thereon, in accordance with the applicable provisions of this AgreementAgreement. UBNC shall give FNB (i) prompt notice, and a copy, of any written notices to exercise dissenters’ rights in the same manner as all other issued and outstandingrespect of any shares of YDKNUBNC Common Stock, includingattempted withdrawals of such notices and any other instruments and documents served pursuant to the NCBCA and received by UBNC relating to dissenters’ rights and (ii)Section 1.4(a). the opportunity to
(e)participate in negotiations and proceedings with respect to demands for fair value under the NCBCA. UBNC shall not, except with the prior written consent of FNB or as otherwise required by applicable Law, make any payment with respect to, or settle, or offer or agree to settle, any such demand for payment. Any portion of the Exchange Fund (as defined herein) made available to the Exchange Agent pursuant to Article 2 to pay for shares of UBNC Common Stock for which dissenters’ rights have been perfected shall be returned to FNB upon demand. If the amount paid to a Dissenting Shareholder exceeds the value of such Dissenting Shareholder’s pro rata portion of the Exchange Fund, such excess amount shall not reduce the Merger Consideration paid to other UBNC shareholders.
(d) At the Effective Time, the stock transfer books of YDKNUBNC shall be closed as to holders of YDKNUBNC Common Stock immediately prior to the Effective Time and no transfer of shares of YDKNUBNC Common Stock by any such holder shall thereafter be made or recognized. If, after the Effective Time, certificates representing shares of YDKNUBNC Common Stock (“Certificates,” it being understood that any reference herein to “Certificates” shall be deemed to include reference to shares of YDKNUBNC Common Stock held in book entry form) are properly presented pursuant toSection 2.2(a) of this Agreement to the Exchange Agent, such Certificates shall be cancelled and exchanged for FNB Common Stock held in book entry form representing the number of whole shares into which the shares of YDKNUBNC Common Stock represented by the Certificates was converted in the Merger, plus, if applicable pursuant toSection 1.4(g)1.4(f), any payment for any fractional share of FNB Common Stock (without any interest thereon) and any dividends or distributions to which the holder of such Certificates is entitled pursuant toSection 2.2(b).
(f)(e) Each holder of YDKNUBNC Common Stock shall have the option of enrolling the whole shares of FNB Common Stock issuable to such shareholder upon the consummation of the Merger in FNB’s Dividend Reinvestment and Direct Stock Purchase Plan (the “DRSP Plan”), as long as such shareholder enrolls with a minimum of fifty (50) whole shares of FNB Common Stock. Each YDKNUBNC shareholder electing to enroll in the DRSP Plan shall be issued FNB Common Stock held in book entry form representing the number of whole shares received in the Merger.
(g)(f) Notwithstanding any other provision of this Agreement, each holder of YDKNUBNC Common Stock who would otherwise be entitled to receive a fractional share of FNB Common Stock, after taking into account all shares of YDKNUBNC Common Stock owned by such holder as of immediately prior to the Effective Time, shall receive an amount in cash, without interest, rounded to the nearest cent, equal to the product obtained by multiplying (a) the Average Closing Price by (b) the fraction of a share (calculated to the nearest ten-thousandth when expressed in decimal form) of FNB Common Stock, to which such holder would otherwise be entitled. No such holder shall be entitled to dividends or other rights in respect of any such fractional shares. “Average Closing Price” means the average composite closing price of FNB Common Stock as reported by the NYSE for each of the twenty (20) consecutive trading days ending on and including the fifth (5th) such trading day prior to the Closing Date rounded to the nearest ten-thousandth.
1.5FNB Capital Stock. At and after the Effective Time, each share of FNB capital stock issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding and shall not be affected by the Merger.
1.6YDKNUBNC Equity Awards.
(a)YDKNUBNC Stock OptionsOptions. (i). Each outstanding and unexercised option immediately prior to the Effective Time that was granted to purchase shares of YDKNUBNC Common Stock (each, a “YDKNUBNC Stock Option”) under an equity-based compensation plan identified inSection 1.6(a) of the YDKNUBNC Disclosure Schedule (collectively, the “YDKNUBNC Equity Plans”), that remains unexercised immediately prior to the Effective Time shall, at the Effective Time, cease to represent a right to acquire shares of YDKNUBNC Common Stock and (except for Exercised UBNC Stock Options, which shall be treated as set forth in clause (ii) below) shall be assumed by FNB and converted automatically into an option to acquire that number of whole shares of FNB Common Stock (rounded down to the nearest whole share) equal to the
product obtained by multiplying (a) the number of shares of YDKNUBNC Common Stock subject to such YDKNUBNC Stock Option immediately prior to the Effective Time and (b) the Exchange Ratio, with an exercise price per share (rounded up to the nearest whole cent) obtained by dividing (i) the per share exercise price under each such YDKNUBNC Stock Option immediately prior to the Effective Time by (ii) the Exchange Ratio. Each such YDKNUBNC Stock Option as so assumed and converted shall continue to have, and shall be subject to, the same terms and conditions as applicable immediately prior to the Effective Time, including without limitation any vesting upon the occurrence of the Effective Time, except as provided in thisSection 1.6(a) and that from and after the Effective Time, FNB and the Compensation Committee of the FNB Board of Directors, including, if applicable, the entire Board of Directors of FNB, shall be substituted for YDKNUBNC and the Compensation Committee of the Board of Directors of YDKN,UBNC, including, if applicable, the entire Board of Directors of YDKN,UBNC, administering such YDKNUBNC Equity Plans. Notwithstanding the foregoing, each YDKNUBNC Stock
Option that is an “incentive stock option” shall be adjusted as required by Section 424 of the Code and the Treasury Regulations promulgated thereunder, so as not to constitute a modification, extension or renewal of the option within the meaning of Section 424(h) of the Code and each UBNC Stock Option that is an option not intended to qualify as an “incentive stock option” shall be adjusted as required by Section 409A of the Code and the Treasury Regulations promulgated thereunder, so as to not be treated as the grant of a new stock right or change in the form of payment for purposes of Section 409A of the Code. FNB and YDKNUBNC agree to take all reasonable and necessary steps to effect the provisions of thisSection 1.6(a). Promptly following the Effective Time, FNB shall issue to each holder of each outstanding YDKNUBNC Stock Option that has been assumed by FNB a document evidencing the conversion and assumption of such YDKNUBNC Stock Option by FNB pursuant to thisSection 1.6(a).
(b)YDKN Restricted(ii) With respect to each UBNC Stock. At Option that, pursuant to the Effective Time, eachapplicable award in respect of a share of YDKN Common Stock subject to vesting, repurchase or other lapse restriction granted under a YDKNagreement and UBNC Equity Plan, that is outstandingbecome fully vested as of immediately prior to the Effective Time, (a “YDKN Restricted Stock Award” and, together with the YDKNall holders of such UBNC Stock Options that are vested prior to the Effective Time shall be afforded a reasonable opportunity to exercise such UBNC Stock Option, with such exercise effective immediately prior, and conditioned upon, to the Effective Time and with any such elections due not later than five (5) business days prior to the Effective Time (any UBNC Stock Option that is so exercised, an “YDKN Equity AwardsExercised UBNC Stock Option”). Any shares of UBNC Common Stock issued or due as a result of any such exercise of an Exercised UBNC Stock Option (“Option Shares”) shall fully vest and shall be converted, as of the Effective Time, into the right to receive, without interest, the Merger Consideration payable pursuant toSection 1.4 and shall entitle the shares of YDKN Common Stock subjectholder thereof to such YDKN Restricted Stock Award shall be treated for the purposes of this Agreement in the same manner as all other holders of shares of YDKNUBNC Common Stock.Stock outstanding immediately prior to the Effective Time.
(b) UBNC Restricted Stock. Immediately prior to the Effective Time, each restricted stock award in respect of a share of UBNC Common Stock granted under a UBNC Equity Plan that is outstanding immediately prior to the Effective Time (a “UBNC Restricted Stock Award” and, together with the UBNC Stock Options, the “UBNC Equity Awards”) shall, if and to the extent provided pursuant to the terms of the applicable agreement and UBNC Equity Plan, become fully vested immediately prior to the Effective Time and each share of UBNC Common Stock issued pursuant to a UBNC Restricted Stock Award issued and outstanding immediately prior to the Effective Time shall be converted, as of the Effective Time, into the right to receive, without interest, the Merger Consideration payable pursuant to Section 1.4 and shall entitle the holder thereof to be treated for the purposes of this Agreement in the same manner as all other holders of shares of UBNC Common Stock outstanding immediately prior to the Effective Time. At the Effective Time, any other UBNC Restricted Stock Awards that have not fully vested pursuant to the terms of the applicable award agreement and UBNC Equity Plan shall be converted into FNB restricted stock awards (and adjusted so that its holder will be entitled to receive upon vesting of such award that number of whole shares of FNB Common Stock (rounded down to the nearest whole share) equal to the product of (A) the number of shares of UBNC Common Stock subject to such UBNC Restricted Stock Award immediately prior to the Effective Time multiplied by (B) the Exchange Ratio) and shall otherwise continue to have, and shall be subject to, the same terms and conditions as applicable immediately prior to the Effective Time except as provided in this Section 1.6(b) and that from and after the Effective Time, FNB and the Compensation Committee of the FNB Board of Directors, including, if applicable, the entire Board of Directors of FNB, shall be substituted for UBNC and the Compensation
Committee of the Board of Directors of UBNC, including, if applicable, the entire Board of Directors of UBNC, administering such UBNC Equity Plans.
1.7Articles of Incorporation and Bylaws of the Surviving Company. At the Effective Time, the FNB Charter, as in effect immediately prior to the Effective Time, shall be the articles of incorporation of the Surviving Company until thereafter amended in accordance with its terms and applicable Law. At the Effective Time, the FNB Bylaws, as in effect immediately prior to the Effective Time, shall be the bylaws of the Surviving Company until thereafter amended in accordance with its terms and applicable Law.
1.8The Bank Merger. As soon as practicable after the execution of this Agreement, YDKNUBNC and FNB shall cause YadkinUnion Bank (“YDKNUBNC Bank”), a North Carolina state-chartered bank and a wholly owned subsidiary of YDKN,UBNC, and First National Bank of Pennsylvania (“FNB Bank”), a national banking association and wholly owned subsidiary of FNB, respectively, to enter into a bank merger agreement substantially in the form attached to this Agreement asExhibit B (the “Bank Merger Agreement”), which provides for the merger of YDKNUBNC Bank with and into FNB Bank, immediately following the Merger, with FNB Bank being the surviving entity (the “Bank Merger”). Prior to filing applications for the Requisite Regulatory Approvals: (i) (A) YDKNUBNC shall cause YDKNUBNC Bank to obtain approval from the Board of Directors of YDKNUBNC Bank for the Bank Merger Agreement, (B) YDKN,UBNC, as the sole shareholder of YDKNUBNC Bank, shall approve the Bank Merger Agreement and (C) YDKNUBNC shall cause the Bank Merger Agreement to be duly executed by YDKNUBNC Bank and delivered to FNB; and (ii) (A) FNB shall cause FNB Bank to obtain approval from the Board of Directors of FNB Bank for the Bank Merger Agreement, (B) FNB, as the sole shareholder of FNB Bank, shall approve the Bank Merger Agreement and (C) FNB shall cause the Bank Merger Agreement to be duly executed by FNB Bank and delivered to YDKN.UBNC. Prior to the Effective Time, YDKNUBNC shall cause YDKNUBNC Bank, and FNB shall cause FNB Bank, to execute such articles or statement of merger and such other documents and certificates as are necessary or desirable to make the Bank Merger effective (the “Bank Merger Certificates”) immediately following the Effective Time.
1.9Right to Revise Structure. At FNB’s election delivered to YDKNUBNC in writing, FNB may at any time alternatively structure the Merger so that any direct or indirect wholly owned subsidiary of FNB is merged with and into YDKN;UBNC; provided, however, that no such change shall (i) alter or change the amount or kind of the Merger Consideration or treatment of the shares YDKNUBNC Common Stock or YDKNUBNC Equity Awards provided for in this Agreement, (ii) prevent the parties from obtaining the opinions of counsel referred to inSections 7.2(d) and7.3(d) or adversely affect the Tax treatment for YDKN’sUBNC’s shareholders as a result of receiving the Merger Consideration or the Tax treatment of either party pursuant to this Agreement, or (iii) be reasonably likely to impede or delay consummation of the transactions this Agreement contemplates. In the event of such an election, the parties agree to execute an appropriate amendment to this Agreement (to the extent such amendment only changes the method of effecting the business combination and does not substantively affect this Agreement or the rights and obligations of the parties or their respective shareholders) in order to reflect such election.
ARTICLE 2
EXCHANGE OF SHARES
2.1FNB to Make Merger Consideration Available. At or as promptly as practicable following the Effective Time, FNB shall deposit, or shall cause to be deposited, with Computershare Trust Company, N.A.Broadridge Corporate Issuer Solutions, Inc., as exchange agent (“Exchange Agent”), for the benefit of the holders of Certificates and for exchange in accordance with thisArticle 2,, (i) book entry shares representing the aggregate number of shares of FNB Common Stock issuable pursuant to this Agreement in exchange for the shares of YDKNUBNC Common Stock outstanding immediately prior to the Effective Time of the Merger and (ii) immediately available funds sufficient in amount to pay (x) any Cash Consideration issuable in accordance withSection 1.4(b), (y) any dividends or distributions payable in accordance withSection 2.2(b)(i)(i), and (z)(y) cash in lieu of any fractional shares of FNB Common Stock to be issued pursuant toSection 1.4(g)1.4(f), and paid pursuant toSection 2.2(a) in exchange for outstanding shares of YDKNUBNC Common Stock (such immediately available funds
and book entry shares of FNB Common Stock, collectively being referred to as the “Exchange Fund”). The Exchange Agent shall invest any cash included in the Exchange Fund as directed by FNB, provided that no such investment or losses thereon shall affect the amounts payable to the holders of Certificates.
2.2Exchange Shares.
(a) As soon as practicable after the Effective Time, but in no event later than five (5)seven (7) business days thereafter, the Exchange Agent shall mail to each holder of record of YDKNUBNC Common Stock a letter of transmittal in customary form as prepared by FNB and reasonably acceptable to YDKNUBNC (which shall specify, among other things, that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Exchange Agent) and instructions for use in effecting the surrender of the Certificates in exchange for the Merger Consideration and any cash in lieu of fractional shares into which the shares of YDKNUBNC Common Stock represented by such Certificate or Certificates shall have been converted pursuant to this Agreement and any dividends or distributions to which such holder is entitled pursuant toSection 2.2(b). After the Effective Time of the Merger, each holder of a Certificate formerly representing shares of YDKNUBNC Common Stock, other than Treasury Shares, who surrenders or has surrendered such Certificate or customary affidavits and indemnification regarding the loss or destruction of such Certificate if in physical form, together with duly executed transmittal materials to the Exchange Agent, shall, upon acceptance thereof, be entitled to: (i) book entry shares representing FNB Common Stock into which the shares YDKNUBNC Common Stock shall have been converted pursuant toSection 1.4, (ii) any cash in lieu of any fractional share of FNB Common Stock to which such holder would otherwise be entitled and (iii) any dividends or distributions to which such holder is entitled pursuant toSection 2.2(b); provided however, that if the holder of Yadkin Non-Voting Common Stock has made the Cash Election and has surrendered such Certificate or customary affidavits and indemnification regarding the loss or destruction of such Certificate, together with duly executed transmittal materials to the Exchange Agent, then such holder shall, upon acceptance thereof, be entitled to the Cash Consideration.. The Exchange Agent shall accept such Certificate upon compliance with such reasonable and customary terms and conditions as the Exchange Agent may impose to effect an orderly exchange thereof in accordance with normal practices. Subject to applicable Law, until surrendered as contemplated by thisSection 2.2, each Certificate representing shares of YDKNUBNC Common Stock shall be deemed from and after the Effective Time of the Merger to evidence only the right to receive the Merger Consideration, any cash in lieu of fractional shares into which the shares of YDKNUBNC Common Stock represented by such Certificate or Certificates shall have been converted pursuant to this Agreement, any dividends or distributions to which such holder is entitled pursuant toSection 2.2(b) and, if applicable, the Cash Consideration.. Subject to applicable Law, FNB shall not be obligated to deliver the Merger Consideration, any cash in lieu of fractional shares and/or any declared but unpaid dividends or, if applicable, the Cash Consideration to which any former holder of YDKNUBNC Common Stock is entitled as a result of the Merger until such holder surrenders his Certificate or Certificates for exchange as provided in thisSection 2.2. If any shares of FNB Common Stock, or any cash in lieu of fractional shares and/or declared but unpaid dividends, are to be issued in a name other than that in which a Certificate surrendered for exchange is issued, the Certificate so
surrendered shall be properly endorsed and otherwise in proper form for transfer and the person requesting such exchange shall affix any requisite stock transfer tax stamps to the Certificate surrendered or provide funds for their purchase or establish to the satisfaction of the Exchange Agent that such taxes are not payable. If any Certificate shall have been lost, stolen or destroyed, then upon the making of an affidavit, in form and substance reasonably acceptable to FNB, of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by FNB or the Exchange Agent, the posting by such Person of a bond in such amount as FNB and the Exchange Agent may determine is reasonably necessary as indemnity against any claim that may be made against it, FNB or the Surviving Company with respect to such Certificate, the Exchange Agent will deliver in exchange for such lost, stolen or destroyed Certificate the Merger Consideration payable in respect thereof pursuant to this Agreement.
(b) Following surrender of any such Certificate, there shall be paid to the record holder of the whole shares of FNB Common Stock issued in exchange therefor, without interest, (i) at the time of such surrender, the amount of any dividends or distributions, if any, with a record date prior to the Effective Time that have been declared by YDKNUBNC in respect of shares of YDKNUBNC Common Stock after the date of this Agreement in accordance with the terms of this Agreement and which remain unpaid at the Effective Time, (ii) at the time of such surrender, the amount of any cash payable in lieu of a fractional share of FNB Common Stock to which such holder is entitled pursuant toSection 1.4(g)1.4(f) and the amount of dividends or other distributions with a record
date after the Effective Time of the Merger and which had become payable with respect to such whole shares of FNB Common Stock prior to the time of surrender, and (iii) at the appropriate payment date, the amount of dividends or other distributions, with a record date after the Effective Time of the Merger but prior to surrender and a payment date subsequent to surrender payable with respect to such whole shares of FNB Common Stock.
(c) After the Effective Time, there shall be no transfers on the stock transfer books of YDKNUBNC of the shares of YDKNUBNC Common Stock that were issued and outstanding immediately prior to the Effective Time other than to settle transfers of shares of YDKNUBNC Common Stock that occurred prior to the Effective Time. If, after the Effective Time, Certificates are presented to FNB for any reason, they shall be cancelled and exchanged as provided in this Agreement. All shares of FNB Common Stock, cash in lieu of fractional shares of FNB Common Stock and/or declared but unpaid dividends issued or paid upon the surrender for exchange of shares of YDKNUBNC Common Stock (or the provision of customary affidavits and indemnification for lost or mutilated Certificates in accordance with the terms hereof) and the letter of transmittal, shall be deemed to have been issued in full satisfaction of all rights pertaining to such shares of YDKNUBNC Common Stock.
(d) Any portion of the Exchange Fund, including any interest thereon, that remains undistributed to the shareholders of YDKNUBNC following the passage of twelve (12) months after the Effective Time of the Merger shall be delivered to FNB, upon demand, and any shareholdersformer holders of YDKNUBNC Common Stock who have not theretofore complied with thisSection 2.2 shall thereafter look only to FNB for payment of their claim for FNB Common Stock, any cash in lieu of fractional shares of FNB Common Stock and any unpaid dividends or distributions payable in accordance withSection 2.2(b).
(e) Neither YDKNUBNC nor FNB shall be liable to any holder of shares of YDKNUBNC Common Stock or FNB Common Stock, as the case may be, for such shares, any dividends or distributions with respect thereto, or cash from the Exchange Fund delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.Law.
(f) The Exchange Agent shall not be entitled to vote or exercise any rights of ownership with respect to the shares of FNB Common Stock held by it from time to time hereunder, except that it shall receive and hold all dividends or other distributions paid or distributed with respect to such shares of FNB Common Stock for the account of the Persons entitled thereto.
2.3Adjustments for Dilution and Other Matters. If prior to the Effective Time of the Merger, (a) FNB shall declare a stock dividend or distribution on FNB Common Stock with a record date prior to the Effective
Time of the Merger, or subdivide, split up, reclassify or combine FNB Common Stock, or make a distribution other than a regular quarterly cash dividend, on FNB Common Stock or on any security convertible into FNB Common Stock, in each case with a record date prior to the Effective Time of the Merger, or (b) the outstanding shares of FNB Common Stock shall have been increased, decreased, changed into or exchanged for a different number or kind of shares or securities in each case as a result of a reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar change in FNB’s capitalization, then a proportionate adjustment or adjustments will be made to the Exchange Ratio and, as applicable, the Average Closing Price to give holders of YDKNUBNC Common Stock the same economic effect as contemplated by this Agreement prior to such event, which adjustment may include, as appropriate, the issuance of securities, property or cash on the same basis as that on which any of the foregoing shall have been issued, distributed or paid to holders of such class of FNB Common Stock generally.
2.4Withholding Rights. The Exchange Agent or, subsequent to the first anniversary of the Effective Time, FNB, shall be entitled to deduct and withhold from any cash in lieu of fractional shares of FNB Common Stock, cash dividends or distributions payable pursuant toSection 2.2(b) and any other cash amounts otherwise payable pursuant to this Agreement to any holder of YDKNUBNC Common Stock or YDKNUBNC Equity Awards such amounts as the Exchange Agent or FNB, as the case may be, is required to deduct and withhold under the Code, or any provision of state, local or foreign Tax law, with respect to the making of such payment. To the extent the
amounts are so withheld by the Exchange Agent or FNB, as the case may be, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of shares of YDKNUBNC Common Stock or YDKNUBNC Equity Awards in respect of whom such deduction and withholding was made by the Exchange Agent or FNB, as the case may be.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF YDKNUBNC
Except as (i) disclosed in the disclosure schedule delivered by YDKNUBNC to FNB prior to the execution of this Agreement (the “YDKNUBNC Disclosure Schedule”) or (ii) as disclosed in any YDKN Reports filed by YDKN prior to the date hereof (but disregarding risk factor disclosures contained under the heading “Risk Factors,” or disclosures of risks set forth in any “forward-looking statements” disclaimer or any other statements that are similarly non-specific or cautionary, predictive or forward-looking in nature), YDKNUBNC hereby represents and warrants to FNB as follows:
3.1Corporate Organization.
(a) YDKNUBNC is a corporation duly organized, validly existing and in good standing under the laws of the State of North Carolina. YDKNUBNC has the corporate power and authority and has all licenses, permits and authorizations of applicable Governmental Entities required to own or lease all of its properties and assets and to carry on its business as it is now being conducted, and is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary, except where such failure to be so licensed or qualified would not have a Material Adverse Effect upon YDKN.UBNC.
(b) True and complete copies of the articles of incorporation of YDKNUBNC (the “YDKNUBNC Articles”) and the bylaws of YDKNUBNC (the “YDKNUBNC Bylaws”), each as amended, supplemented, restated and/or otherwise modified and in effect as of the date of this Agreement, have previously been made available to FNB.
(c) YDKNUBNC Bank is a state-chartered bank and is regulated by the Federal Deposit Insurance Corporation (“FDIC”) and the North Carolina Commissioner of Banks (“NCCOB”). YDKNUBNC Bank is duly organized, and validly existing and in good standing under the laws of the State of North Carolina and has the
requisite power and authority, corporate or otherwise, to own its property and carry on its business as presently conducted, butand is not qualified to do business in any other jurisdiction or required to be qualified to do business in any other jurisdiction except where the failure to be so qualified would not have a Material Adverse Effect on YDKN. Each of YDKN’s other Subsidiaries (i) was duly organized, (ii) is validly existing and in good standing under the laws of its jurisdiction of organization, (iii) is duly licensed or qualified to do business in, and in good standing under the laws of, all jurisdictions, whether federal, state, local or foreign, where its ownership or leasing of property or the conduct of its business requires it to be so qualified, and (iv)UBNC. Except for UBNC Bank, UBNC has all requisite corporate power and authority, and has all licenses, permits and authorizations of applicable Governmental Entities required to own or lease its properties and assets and to carry on its business as now conducted, except for purposes of clause (iii) only, as would not be reasonably likely to have, either individually or in the aggregate, a Material Adverse Effect on YDKN.no Subsidiaries. The articles of incorporation, bylaws and similar governing documents of each Subsidiary of YDKN,UBNC Bank, copies of which have been made available to FNB, are true and correct copies of such documents as amended, supplemented, restated and/or otherwise modified and in effect on the date of this Agreement.
(d) As used in this Agreement, (i) the word “Subsidiary” when used with respect to either party, means any corporation, partnership, joint venture, limited liability company or any other entity (A) of which such party, or a subsidiary of such party, is a general partner, or (B) at least a majority of the securities or other interests of which having by their terms ordinary voting power to elect a majority of the board of directors or persons performing similar functions with respect to such entity is directly or indirectly owned by such party and/or one or more Subsidiaries thereof, and the terms “YDKNUBNC Subsidiaries” and “FNB Subsidiaries” shall mean any direct or indirect Subsidiary of YDKNUBNC or FNB, respectively; and (ii) the term “Material Adverse Effect” means, with respect to FNB, YDKNUBNC or the Surviving Company, as the case may be, any event, circumstance, development, change or effect that alone or in the aggregate with other events, circumstances, developments, changes or effects, (A) is materially adverse to the business, results of operations or financial condition of such party and its Subsidiaries taken as a whole; provided, however, that, with respect to this clause (A), Material Adverse Effect shall not be deemed to include effects to the extent resulting from (1) changes, after the date of this Agreement, in U.S. generally accepted accounting principles (“GAAP”) or regulatory accounting requirements applicable to banks or savings associations and their holding companies generally, (2) changes,
after the date of this Agreement, in Laws of general applicability or interpretations thereof by courts or any Governmental Entity, (3) actions or omissions of (x) FNB or (y) YDKN, UBNC, in each case, taken at the request of, or with the prior written consent of, the other or required hereunder, (4) changes, events or developments, after the date of this Agreement, in the regional, national or world economy, or financial or securities markets generally, or changes, events or developments, after the date of this Agreement, in general economic conditions or other changes, events or developments, after the date of this Agreement that affect banks or savings associations or their holding companies generally, except to the extent that such changes have a materially disproportionate adverse effect on such party relative to other similarly situated participants in the markets or industries in which they operate, (5) consummation or public disclosure of the transactions this Agreement contemplates, including the resignation of employment of employees or any impact on such party’s business, customer relations, condition or results of operations, in each case as a result therefrom, (6) any outbreak or escalation of war or hostilities, any occurrence or threats of terrorist acts or any armed hostilities associated therewith, and any national or international calamity, disaster or emergency or any escalation thereof, and any outbreaks, epidemics or pandemics (including with respect to SARS-CoV-2 or COVID-19) or any evolutions or mutations thereof, or any other viruses (including influenza) (the “Pandemic”), and any Pandemic Measures (as defined below)), (7) any changes in interest rates or foreign currency rates, (8) any claim, suit, action, audit, arbitration, investigation, inquiry or other proceeding or order which in any manner challenges, seeks to prevent, enjoin, alter or delay, or seeks damages as a result of or in connection with, the transactions this Agreement contemplates, (9) any failure by such party to meet any published, whether by such party or a third party research analyst, or internally prepared estimates of revenues or earnings, (10) a decline in the price, or a change in the trading volume of, such party’s common stock on the New York Stock Exchange (including any successor exchange, the “NYSE”) or the Over-the-Counter Market, as applicable, and (11) any matter to the extent that (x) it is disclosed in reasonable detail in the party’s disclosure schedules delivered to the other party pursuant to this Agreement or in the YDKN ReportsUBNC Financial Statements or FNB Reports prior to the date hereof (except for risk factor disclosures contained under the heading “Risk Factors,” or disclosures of risks set forth in any “forward-looking statements” disclaimer or any other statements that are similarly non-specific or cautionary, predictive or
forward-looking in nature), as applicable, and (y) such disclosed matter does not worsen in a materially adverse manner, or (B) materially delays or impairs the ability of such party to timely consummate the transactions this Agreement contemplates. “Pandemic Measures” means any quarantine, “shelter in place”, “stay at home”, workforce reduction, social distancing, shut down, closure, sequester or other directives, guidelines, orders, or recommendations promulgated by any Governmental Entity, including the Centers for Disease Control and Prevention and the World Health Organization, in each case, in connection with or in response to the Pandemic.
3.2Capitalization.
(a) The authorized capital stock of YDKNUBNC consists of 76,000,000 shares of capital stock, which are divided into 75,000,00024,000,000 shares of common stock, (of which 73,333,334 shares are designated as voting common stock and 1,666,666 are designated as non-voting common stock),no par value, $1.00 per share and 1,000,0005,000,000 shares of preferred stock, no par value. As of the date of this Agreement, there are (i) 51,453,9775,980,882 shares of YDKN VotingUBNC Common Stock issued and outstanding, (which for the avoidance of doubt, includes the shares referenced in (iv) below), (ii) 199,663including 136,123 shares of YDKN Non-Voting Common Stock outstanding that are held of record by the Persons set forth inSection 3.2(a)(ii) of the YDKN Disclosure Schedule, (iii) no shares of preferred stock outstanding, (iv) 195,000 shares of YDKN VotingUBNC Common Stock issued in respect of outstanding YDKNpursuant to UBNC Restricted Stock Awards (v) 265,050and subject to vesting restrictions, (ii) 60,990 shares of YDKN VotingUBNC Common Stock reserved for issuance upon the exercise of outstanding YDKNUBNC Stock Options, (vi) 114,621(iii) no shares of YDKN Voting Common Stock reserved for issuance pursuant to future grants under a YDKN Equity Planpreferred stock are issued and (vii)outstanding and (iv) no other shares of capital stock or other equity securities of YDKNUBNC issued, reserved for issuance or outstanding. All of the issued and outstanding shares of YDKNUBNC Common Stock have been, and all shares of UBNC Common Stock that may be issued upon the exercise of the UBNC Stock Options will be, when issued in accordance with the terms thereof, duly authorized, validly issued, fully paid and nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof. Other than YDKNUBNC Equity Awards issued prior to the date of this Agreement and as provided by Section 5.2(a) of the UBNC Disclosure Schedule, as of the date of this Agreement, there are no outstanding subscriptions, options, warrants, puts, calls, rights, exchangeable or convertible securities or other commitments or agreements obligating YDKNUBNC to issue, transfer, sell, purchase, redeem or otherwise acquire, any such securities. ThereExcept for the voting agreements contemplated by this Agreement, there are no voting trusts, shareholder agreements, proxies or other agreements in effect, to which UBNC is a party, with respect to the voting or transfer of the shares of YDKNUBNC Common Stock or other equity interests of YDKN.UBNC. As of the date of
this Agreement, no bonds, debentures, notes or other indebtedness having the right to vote on any matters on which shareholders of YDKNUBNC may vote are issued or outstanding. The subordinated debt securities of UBNC and UBNC Bank set forth in Section 3.2(a) of the UBNC Disclosure Schedule are referred to as the “UBNC Debentures.”
(b) All of the issued and outstanding shares of capital stock or other equity ownership interests of each YDKNUBNC Subsidiary are owned by YDKN,UBNC, directly or indirectly, free and clear of any material liens, pledges, charges and security interests and similar encumbrances, other than liens for property Taxes not yet due and payable (“Liens”), and all of such shares or equity ownership interests are duly authorized and validly issued and are fully paid, nonassessable (except, with respect to bank Subsidiaries that are insured depository institutions, as provided under 12 U.S.C. § 55 or any comparable provision of applicable state law) and free of preemptive rights. No such Subsidiary has or is bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of any shares of capital stock or any other equity security of such Subsidiary or any securities representing the right to purchase or otherwise receive any shares of capital stock or any other equity security of such Subsidiary or any securities representing the right to purchase or otherwise receive any shares of capital stock or any other equity security of such Subsidiary.
3.3Authority; No Violation.
(a) YDKNUBNC has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions this Agreement contemplates, subject to the receipt of the Requisite YDKNUBNC Vote and Requisite Regulatory Approvals. The execution and delivery of this Agreement and the consummation of the transactions this Agreement contemplates have been duly and validly approved by the Board of Directors of YDKN.UBNC. Except for the approval of the Merger pursuant to this Agreement as required under North Carolina law by the affirmative vote of a majority of the outstanding shares of YDKN VotingUBNC Common Stock entitled to vote thereon (such affirmative shareholder vote, the “Requisite YDKNUBNC Vote”), no other corporate approvals on the part of YDKNUBNC are necessary to approve this Agreement or consummate the Merger. Other than those set forth inSection1.8, no corporate approvals on the part of YDKNUBNC or YDKNUBNC Bank are necessary to approve the Bank Merger Agreement or consummate the Bank
Merger. This Agreement has been duly and validly executed and delivered by YDKNUBNC and, assuming the due authorization, execution and delivery of this Agreement by FNB, constitutes the valid and binding obligation of YDKN,UBNC, enforceable against YDKNUBNC in accordance with its terms, except in all cases as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization or similar laws of general applicability relating to or affecting the rights of insured depository institutions or the rights of creditors generally and the availability of equitable remedies.
(b) Neither the execution and delivery of this Agreement by YDKNUBNC nor the consummation by YDKNUBNC of the transactions this Agreement contemplates, nor compliance by YDKNUBNC with any of the terms or provisions of this Agreement, will (i) violate any provision of the YDKNUBNC Articles or the YDKNUBNC Bylaws or (ii) assuming that the consents, approvals and filings referred to inSection3.4 are duly obtained and/or made and are in full force and effect, (A) violate any law, statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction issued, promulgated or entered into by or with any Governmental Entity (each, a “Law”) applicable to YDKN,UBNC, any of the YDKNUBNC Subsidiaries or any of their respective properties or assets, or (B) violate, conflict with, result in a breach of any provision of, constitute a default or an event which, with notice or lapse of time, or both, would constitute a default under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or result in the creation of any Lien upon any of the respective properties or assets of YDKNUBNC or any of the YDKNUBNC Subsidiaries under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which YDKNUBNC or any of the YDKNUBNC Subsidiaries is a party, or by which they or any of their respective properties or assets may be bound or affected, except for such violations, conflicts, breaches, defaults, terminations, cancellations, accelerations or creations with respect to clause (ii) that are not reasonably likely to have, either individually or in the aggregate, a Material Adverse Effect on YDKN.UBNC.
3.4Consents and Approvals. Except for (a) the filing of applications and notices, as applicable, with the Federal Reserve Board under the BHC Act, with the NCCOB under Chapters 53 and 53C of the North Carolina General StatutesRegulation of Banks and Other Financial Services and with the Office of the Comptroller of the Currency (the “OCC”) under the National Bank Act and Bank Merger Act, and approval of such applications and notices, (b) the filing with the Securities and Exchange Commission (“SEC”) and declaration of effectiveness of the registration statement on Form S-4 (the “Registration Statement”) including a jointprospectus relating to the issuance of shares of FNB common stock in connection with the transactions contemplated by this Agreement and a notice and proxy statement in definitive form relating to the meeting of YDKN’sUBNC’s shareholders to be held in connection with this Agreement (the “Joint Proxy Statement”) and of a registration statement on Form S-4 (the “Registration Statement”) in which the Joint Proxy Statement will be included as a prospectus, and the declaration of effectiveness of the Registration Statement,, (c) the filing of the North Carolina Articles of Merger with, and its acceptance for record by, the Secretary of State of the State of North Carolina pursuant to the NCBCA, the filing of the FloridaPennsylvania Articles of Merger with, and its acceptance for record by, the Secretary of State of the StateCommonwealth of FloridaPennsylvania pursuant to the FBCA,ETL, and the filing of the Bank Merger Certificates, (d) the filing of notice by UBNC with the Financial Industry Regulatory Authority, Inc. under Rule 6490, and (d) such filings and approvals as are required to be made or obtained under the securities or “Blue Sky” laws of various states in connection with the issuance of the shares of FNB Common Stock pursuant to this Agreement and approval of the listing on the NYSE of such shares of FNB Common Stock issuable in the Merger, no consents or approvals of, or filings or registrations with any court, administrative agency or commission or other governmental authority or instrumentality of any federal, state, local or foreign government (each, a “Governmental Entity”) or any industry self-regulatory organization, including the Financial Industry Regulatory Authority, Inc. (“SRO”), are necessary in connection with (i) the execution and delivery by YDKNUBNC of this Agreement and (ii) the consummation by YDKNUBNC of the Merger and the other transactions this Agreement contemplates. No event has occurred, nor has any circumstance arisen, that, to the knowledge of YDKN,UBNC, would reasonably be likely, either individually or together with any other event or circumstance, to impair the ability to obtain or materially delay the receipt of the Requisite Regulatory Approvals on a timely basis or result in the imposition of a Materially Burdensome Regulatory Condition.
3.5Reports. YDKNUBNC does not have a class of securities registered under Section 12 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) and is not subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act and does not file documents and reports with the SEC thereunder. UBNC and each of the YDKNUBNC Subsidiaries have in all material respects timely filed all reports, registrations and statements, together with any amendments required to be made with respect thereto, that they were required to file since January 1, 20142020 with the applicable Regulatory Agencies (other than the OCC) and with each other applicable Governmental Entity, and all other reports and statements required to be
filed by them since January 1, 2014,2020, including any report or statement required to be filed pursuant to the laws, rules or regulations of the United States, any state, any local government, any foreign entity, or any Regulatory Agency (other than the OCC), and have paid all fees and assessments due and payable in connection therewith.
3.6SEC Reports; Financial Statements.
(a) YDKN and each YDKN SubsidiaryUBNC has filedpreviously delivered or furnished on a timely basismade available to the SEC, all material forms, reports, schedules, statements and other documents required to be filed or furnished by it to the SEC under the Securities ActFNB copies of 1933, as amended (the “(i)Securities Act”), under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or under the securities regulations of the SEC since January 1, 2014 (all such filed or furnished documents, together with all exhibits and schedules thereto and all information incorporated therein by reference, the “YDKN Reports”). As of their respective filing dates (and, in the case of registration statements and proxy statements, as of the dates of effectiveness and the dates of mailing, respectively), except to the extent that any YDKN Report has been amended by a subsequently filed YDKN Report prior to the date hereof, in which case, as of the date of such amendment, (i) the YDKN Reports complied in all material respects with the applicable requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), as the case may be, and (ii) none of the YDKN Reports contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of YDKN’s Subsidiaries is required to file periodic reports with the SEC pursuant to Section 13 or 15(d) of the Exchange Act.
(b) The UBNC’s audited consolidated financial statements (including the related notes and schedules thereto) included (or incorporatedfor the year ended December 31, 2021 and 2020, accompanied by reference) in the YDKN Reports complyunqualified audit reports of Dixon Hughes Goodman LLP, independent registered accountants (the “UBNC Audited Financial Statements”), (ii) Union Bank’s audited financial statements (including the related notes and schedules thereto) for the year ended December 31, 2019, accompanied by the unqualified audit reports of Dixon Hughes Goodman LLP, independent registered accountants (the “Union Bank 2019 Audited Financial Statements” and, collectively with the UBNC Audited Financial Statements, the “Audited Financial Statements”) and (iii) UBNC’s unaudited interim consolidated financial statements as of and for the three months ended March 31, 2022 (collectively with any unaudited consolidated financial statements for periods subsequent to formMarch 31, 2022 upon their delivery to FNB, the “Unaudited Financial Statements” and collectively with the Audited Financial Statements, the “UBNC Financial Statements”). The UBNC Financial Statements (including any related notes and schedules thereto) are accurate and complete in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP (except, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except, in each case, as may be expressly indicated in such statements or in the notes thereto) and fairly present in all material respects the consolidated financial position of YDKNcondition and its Subsidiaries as of the dates thereof and their respective consolidated
results of operations, changes in shareholders’ equity, and changes in cash flows of UBNC and its consolidated Subsidiaries as of the respective dates of and for the periods then ended (subject,referred to in the case of unauditedsuch financial statements, to year-end normal and recurring audit adjustments that were not, or are not expected to be, material in amount), all in accordance with GAAP, consistently applied, subject, in the case of the Unaudited Financial Statements, to (i) the absence of consolidated statements of changes in shareholders’ equity, consolidated statements of comprehensive income (loss), and consolidated statements of cash flow, (ii) normal, recurring year-end adjustments (the effect of which has not had, and would not reasonably be expected to have, individually or in the applicable rules and regulations promulgated by the SEC.
(c) There are no outstanding comments from or material unresolved issues raised by the SEC staffaggregate, a Material Adverse Effect with respect to UBNC), and (iii) the YDKN Reports.absence of notes and schedules as permitted by GAAP (that, if presented, would not differ materially from those included in the Audited Financial Statements). No financial statements of any entity or enterprise other than UBNC’s Subsidiaries are required by GAAP to be included in the consolidated financial statements of UBNC. Neither UBNC nor any of its Subsidiaries has any liabilities or obligations of a nature that would be required by GAAP to be set forth on its consolidated balance sheet or in the notes thereto except for those which are reflected or reserved against in the UBNC Financial Statements and those which have been incurred in the ordinary course of business since December 31, 2021 or in connection with this Agreement and the transactions contemplated hereby. True, correct and complete copies of the UBNC Financial Statements have been made available to FNB.
(d)(b) The books and records of YDKNUBNC and its Subsidiariessubsidiaries have been since January 1, 2014,2020, and are being, maintained in all material respects in accordance with applicable legal and accounting requirements and reflect only actual transactions. The records, systems, controls, data and information of YDKNUBNC and its Subsidiaries are recorded, stored, maintained and operated under means (including any electronic, mechanical or photographic process, whether computerized or not) that are under the exclusive ownership and direct control of YDKNUBNC or its Subsidiaries or accountants (including all means of access thereto and therefrom), except for any non-exclusive ownership and non-direct control that would not reasonably be likely to have a material adverse effect on the system of internal accounting controls described in the following sentence. YDKN. UBNC and its Subsidiaries have implemented and maintain a system of internal accounting controls effective to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. YDKN (i) has implemented and maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) effective to ensure that material information relating to YDKN, including its consolidated Subsidiaries, is made known to the Chief Executive Officer and the Chief Financial Officer of YDKN by others within those entities to allow timely decisions regarding required disclosure and to make the certifications required by the Exchange Act with respect to the YDKN Reports and
(ii)UBNC has disclosed, based on its most recent evaluation priorevaluations, to the date of this Agreement, to YDKN’sits outside auditors and the audit committee of the Boardboard of Directorsdirectors of YDKN (A) anyUBNC (i) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that would bewhich are reasonably likely to adversely affect YDKN’sUBNC’s ability to accurately record, process, summarize and report financial information and (B)(ii) any fraud, whether or not material, that involves management or other employees who have a significant role in YDKN’sUBNC’s internal control over financial reporting.
(e)(c) Since January 1, 2014, (A)2020, neither YDKNUBNC nor any of its Subsidiaries nor, to theUBNC’s knowledge, of YDKN, any director, officer, employee, auditor, accountant or representative of YDKNUBNC or any of its Subsidiaries has received, or otherwise had or obtained knowledge of, any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of YDKNUBNC or any of its Subsidiaries or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that YDKNUBNC or any of its Subsidiaries has engaged in questionable accounting or auditing practices, and (B) no attorney representing YDKN or any of its Subsidiaries, whether or not employed by YDKN or any of its Subsidiaries, has reported evidence of a material violation of securities laws, breach of fiduciary duty or similar violation by YDKN or any of its officers, directors, employees or agents to the YDKN Board of Directors or any committee thereof or, to the knowledge of YDKN, to any of YDKN’s directors or officers.practices.
3.7Broker’sBroker’s Fees. Except for Piper Sandler O’Neill + Partners, L.P.& Co., neither YDKNUBNC nor any YDKNUBNC Subsidiary nor any of their respective officers or directors has employed any broker or finder or incurred any liability for any broker’s fees, commissions or finder’s fees in connection with the Merger or related transactions this Agreement contemplates.
3.8Absence of Certain Changes or Events. Since December 31, 2015,2021, (i) YDKNUBNC and the YDKNUBNC Subsidiaries have, except in connection with the negotiation and execution and delivery of this Agreement, carried on their respective businesses in all material respects in the ordinary course consistent with past practice and (ii) there has not been any Material Adverse Effect with respect to YDKN.UBNC. For purposes of this Agreement, the term “ordinary course,” with respect to either UBNC and any UBNC Subsidiaries, or FNB and any FNB Subsidiaries, shall take into account the commercially reasonable actions taken by such parties in response to the Pandemic and the Pandemic Measures.
3.9Legal ProceedingsProceeding.s.
(a) There is no pending, or, to YDKN’sUBNC’s knowledge, threatened, litigation, action, suit, proceeding, investigation or arbitration by any individual, partnership, corporation, trust, joint venture, organization, Governmental Entity or other entity (each, a “Person”) relating to YDKN,UBNC, any of the YDKNUBNC Subsidiaries or any of their respective properties or permits, licenses or authorizations that has had, or is reasonably likely to have a Material Adverse Effect on YDKN.UBNC.
(b) There is no judgment or order of any Governmental Entity or regulatory restriction, other than those of general application that apply to similarly situated financial or bank holding companies or their Subsidiaries, that has been imposed upon YDKN,UBNC, any of the YDKNUBNC Subsidiaries or the assets of YDKNUBNC or any of the YDKNUBNC Subsidiaries, that has had, or is reasonably likely to have, a Material Adverse Effect on YDKN.UBNC.
3.10Taxes and Tax Returns.
(a) Each of YDKNUBNC and the YDKNUBNC Subsidiaries has duly and timely filed, including all applicable extensions, all income and other material Tax Returns required to be filed by it on or prior to the date of this Agreement, all such Tax Returns being accurate and complete in all material respects, has timely paid or withheld and timely remitted all Taxes shown thereon as arising and has duly and timely paid or withheld and timely remitted all material Taxes, whether or not shown on any Tax Return, that are due and payable or claimed to be due from it by a Governmental Entity, other than Taxes that (i) are not yet delinquent or are being contested in good faith, which have not been finally determined, and (ii) have been adequately reserved against in accordance with GAAP. All required estimated Tax payments sufficient to avoid any underpayment penalties or
interest have been made by or on behalf of each of YDKNUBNC and the YDKNUBNC Subsidiaries. Neither YDKNUBNC nor any of the YDKNUBNC Subsidiaries has granted any extension or waiver of the limitation period for the assessment or collection of Tax that remains in effect. There are no disputes, audits, examinations or proceedings in progress or pending, including any notice received of any intent to conduct an audit or examination, or claims asserted, for Taxes upon YDKNUBNC or any of the YDKNUBNC Subsidiaries. No claim has been made by a Governmental Entity in a jurisdiction where YDKNUBNC or any of the YDKNUBNC Subsidiaries has not filed Tax Returns such that YDKNUBNC or any of the YDKNUBNC Subsidiaries is or may be subject to taxation by that jurisdiction. All deficiencies asserted or assessments made as a result of any examinations by any Governmental Entity of the Tax Returns of, or including, YDKNUBNC or any of the YDKNUBNC Subsidiaries have been fully paid. No issue has been raised by a Governmental Entity in any prior examination or audit of each of YDKNUBNC and the YDKNUBNC Subsidiaries which, by application of the same or similar principles, could reasonably be expected to result in a proposed deficiency in respect of such Governmental Entity for any subsequent taxable period. There are no Liens for Taxes, other than statutory liens for Taxes not yet due and payable, upon any of the assets of YDKNUBNC or any of the YDKNUBNC Subsidiaries. Neither YDKNUBNC nor any of the YDKNUBNC Subsidiaries is a party to or is bound by any Tax sharing, allocation or indemnification agreement or arrangement, other than such an agreement or arrangement exclusively between or among YDKNUBNC and the YDKNUBNC Subsidiaries. Neither YDKNUBNC nor any of the YDKNUBNC Subsidiaries (A) has been a member of an affiliated group filing a consolidated federal income Tax Return, other than a group the common parent of which was YDKN,UBNC, or (B) has any liability for the Taxes of any Person, other than YDKNUBNC or any of the YDKNUBNC Subsidiaries, under Treas. Reg. § 1.1502-6, or any similar provision of state, local or foreign Law, or as a transferee or successor, by contract or otherwise. Neither YDKNUBNC nor any of the YDKNUBNC Subsidiaries has been, during the two-year period ending on the date hereof, a “distributing corporation” or a “controlled corporation”, within the meaning of Section 355(a)(1)(A) of the Code in a distribution of stock intended to be governed in whole or in part by Sections 355 of the Code. YDKNUBNC is not and has not been a “United States real property holding corporation” within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. Neither YDKN,UBNC, nor any of the YDKNUBNC Subsidiaries or any other Person on their behalf has executed or entered into any written agreement with, or obtained or applied for any written consents or written clearances or any other Tax rulings from, nor has there been any written agreement executed or entered into on behalf of any of them with any Governmental Entity, relating to Taxes, including any private letter rulings of the U.S. Internal Revenue Service (“IRS”IRS”) or comparable
rulings of any Governmental Entity and closing agreements pursuant to Section 7121 of the Code or any predecessor provision thereof or any similar provision of any applicable Law, which rulings or agreements would have a continuing effect after the Effective Time. Neither YDKNUBNC nor any of the YDKNUBNC Subsidiaries has engaged in any transaction that is the same as or substantially similar to one of the types of transactions that the U.S. Internal Revenue Service (“IRS”) has determined to be a tax avoidance transaction and identified by notice, regulation or other form of published guidance as a “listed transaction”, as set forth in Treas. Reg. § 1.6011-4(b)(2). YDKN UBNC has made available to FNB complete copies of (i) all federal, state, local and foreign income or franchise Tax Returns of YDKNUBNC and the YDKNUBNC Subsidiaries relating to all taxable periods beginning on and after January 1, 2012,2017, and (ii) any audit report issued within the last three years relating to any Taxes due from or with respect to YDKNUBNC or the YDKNUBNC Subsidiaries. Neither YDKN,UBNC, any of the YDKNUBNC Subsidiaries nor FNB, as a successor to YDKN,UBNC, will be required to include any item of material income in, or exclude any material item of deduction from, taxable income for any taxable period or portion thereof ending after the Closing Date as a result of any (i) change in method of accounting for a taxable period ending on or prior to the Closing Date, (ii) installment sale or open transaction disposition made on or prior to the Effective Time, (iii) prepaid amount received on or prior to the Closing Date or (iv) deferred intercompany gain or any excess loss account of YDKNUBNC or any of the YDKNUBNC Subsidiaries for periods or portions of periods described in Treasury Regulations under Section 1502 of the Code, or any corresponding or similar provision of state, local or foreign Law, for periods or portions thereof ending on or before the Closing Date. Neither YDKNUBNC nor any of the YDKNUBNC Subsidiaries has taken any action, or knows of any fact or circumstance, that could reasonably be expected to prevent the Merger from qualifying for the Intended Tax Treatment.
(b) As used in this Agreement, the term “Tax” or “Taxes” means (i) all federal, state, local, and foreign income, excise, gross receipts, gross income, ad valorem, profits, gains, property, capital, sales, transfer,
use, payroll, bank shares tax, employment, severance, withholding, duties, intangibles, franchise, backup withholding, inventory, capital stock, license, employment, social security, unemployment, excise, stamp, occupation, and estimated taxes, and other taxes, charges, levies or like assessments, (ii) all interest, penalties, fines, additions to tax or additional amounts imposed by any Governmental Entity in connection with any item described in clause (i), and (iii) any transferee liability in respect of any items described in clauses (i) or (ii) payable by reason of contract, assumption, transferee liability, operation of Law, Treas. Reg § 1.1502-6(a) or any predecessor or successor thereof of any analogous or similar provision under Law or otherwise.
(c) As used in this Agreement, the term “Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof, supplied or required to be supplied to a Governmental Entity and any amendment thereof including, where permitted or required, combined, consolidated or unitary returns for any group of entities.
3.11Employee Benefits. For purposes of this Agreement, the following terms shall have the following meanings:
“Controlled Group Liability” means any and all liabilities (i) under Title IV of ERISA, (ii) under Section 302 of ERISA, (iii) under Sections 412 and 4971 of the Code and (iv) as a result of a failure to comply with the continuation coverage requirements of Section 601 et seq. of ERISA and Section 4980B of the Code.Code, other than failures that could not reasonably be expected to result, in the aggregate, in any material liability to UBNC or FNB, as applicable.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.
“ERISA Affiliate” means, with respect to any entity, trade or business, any other entity, trade or business that is, or was at the relevant time, treated as a member of a group described insingle employer under Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes or includedwith the first entity, trade or business, or that is, or was at the relevant time, a member of the same “controlled group” as the first entity, trade or business pursuant to Section 4001(a)(14) of ERISA.business.
“Multiemployer Plan” means any “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA.
“YDKNUBNC Benefit Plan” means any employee benefit or compensation plan, program, policy, practice, or other arrangement providing benefits to any current or former employee, officer, director or directorother service provider of YDKNUBNC or any of the YDKNUBNC Subsidiaries or any beneficiary or dependent thereof that is sponsored or maintained by YDKNUBNC or any of the YDKN SubsidiariesUBNC ERISA Affiliates or to which YDKNUBNC or any of the YDKN Subsidiaries contributes orUBNC ERISA Affiliates contribute, is obligated to contribute, or has any direct or indirect liability, whether or not written, including any employee welfare benefit plan within the meaning of Section 3(1) of ERISA, any employee pension benefit plan within the meaning of Section 3(2) of ERISA, whether or not such plan is subject to ERISA, and any bonus, incentive, deferred compensation, vacation, stock purchase, stock option, equity or equity-based compensation, severance, employment, change of control or fringe benefit plan, program, policy agreement or policy.arrangement, including UBNC Employment Agreements.
“YDKNUBNC Employment Agreement” means a contract, offer letter or agreement of YDKNUBNC or any of the YDKNUBNC Subsidiaries with or addressed to any individual who is rendering or has rendered services thereto as an employee pursuant to which YDKNUBNC or any of the YDKNUBNC Subsidiaries has any actual or contingent liability or obligation to provide compensation and/or benefits in consideration for past, present or future services.
“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as those terms are defined in Part I of Subtitle E of Title IV of ERISA.
(a)Section3.11(a) of the YDKNUBNC Disclosure Schedule includes a complete list of all YDKNUBNC Benefit Plans (other than offer letters for at-will employment that require no advance notice to terminate and all YDKN Employment Agreements.immaterial fringe benefits).
(b) With respect to each YDKNUBNC Benefit Plan, YDKNUBNC has delivered or made available to FNB, as applicable, a true, correct and complete copy of:of, as applicable: (i) each writing constituting a part of such YDKNUBNC Benefit Plan, including all current plan documents, trust agreements, and insurance contracts and other funding vehicles, (ii) the two most recent Annual Reports (Form 5500 Series) and accompanying schedules, if any, (iii) the current summary plan description and any summaries of material modifications thereto, (iv) the most recent annual financial report, if any, (v) the most recent actuarial report, if any, (vi) the most recent determination, advisory, or opinion letter from the IRS, if any, and (vii) the most recent minimum coverage and discrimination testing results, if any. YDKNUBNC has delivered or made available to FNB a true, correct and complete copy of each YDKNUBNC Employment Agreement.Agreement (or, where a standard form is used, a copy of such form).
(c) All contributions required to be made to any YDKNUBNC Benefit Plan by applicable Law or by any plan document or other contractual undertaking, and all premiums due or payable with respect to insurance policies funding any YDKNUBNC Benefit Plan, for the period six (6) years prior to and through the date of this Agreement, have been timely made or paid in full. Each YDKNUBNC Benefit Plan that is an employee welfare benefit plan under Section 3(1) of ERISA either (i) is funded through an insurance company contract and is not a “welfare benefit fund” within the meaning of Section 419 of the Code, (ii) is self-funded, or (iii) is unfunded.
(d) With respect to each YDKNUBNC Benefit Plan, YDKNUBNC and the YDKNUBNC Subsidiaries have complied in all material respects, with all provisions of ERISA, the Code and all Laws and regulations applicable to such YDKNUBNC Benefit Plans. Each YDKNUBNC Benefit Plan has been administered in all material respects in accordance with its terms. There are not now, nor do any circumstances exist that would reasonably be likely to give rise to, any requirement for the posting of security with respect to any YDKNUBNC Benefit Plan or the imposition of any material lien on the assets of YDKNUBNC or any of the YDKNUBNC Subsidiaries under ERISA or the Code.Section 3.11(d) of the YDKNUBNC Disclosure Schedule identifies each YDKNUBNC Benefit Plan that is intended to be a “qualified plan” within the meaning of Section 401(a) of the Code (the “YDKNUBNC Qualified Plans”). The IRS has issued a favorable
determination letter with respect to each YDKNUBNC Qualified Plan and the related trust which has not been revoked, or YDKNUBNC is entitled to rely on a favorable advisory or opinion issued by the IRS.IRS with respect to the preapproved plan document adopted in accordance with the requirements of such advisory or opinion. To the knowledge of YDKN,UBNC, there are no existing circumstances and no events have occurred that would reasonably be likely to adversely affect the qualified status of any YDKNUBNC Qualified Plan or the related trust. None of YDKNUBNC and the YDKNUBNC Subsidiaries nor, to YDKN’sUBNC’s knowledge, any other Person, including any fiduciary, has engaged in any “prohibited transaction”, as defined in Section 4975 of the Code or Section 406 of ERISA, which would reasonably be likely to subject YDKN,UBNC, any of the YDKNUBNC Subsidiaries or any Person that YDKNUBNC or any of the YDKNUBNC Subsidiaries has an obligation to indemnify, to any material Tax or penalty imposed under Section 4975 of the Code or Section 502 of ERISA.
(e) With respect to each YDKNNo UBNC Benefit Plan that is (i) subject to Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code, (i) there does not exist any accumulated funding deficiency within the meaning of Section 412 of the Code or Section 302 of ERISA, whether or not waived, and (ii) (A) no reportable event within the meaning of Section 4043(c) of ERISA for which the30-day notice requirement has not been waived has occurred, (B) all premiums, if any, to the Pension Benefit Guaranty Corporation (the “PBGC”) have been timely paid in full, (C) no liability, other than for premiums to the PBGC, under Title IV of ERISA has been or would reasonably be likely to be incurred by YDKN or any of the YDKN Subsidiaries and (D) the PBGC has not instituted proceedings to terminate any such YDKN Benefit Plan and, to YDKN’s knowledge, no condition exists that makes it reasonably likely that such proceedings will be instituted or which would reasonably be likely to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any such YDKN Benefit Plan.
(f) (i) No YDKN Benefit Plan is a Multiemployer Plan, or(iii) a plan that has two or more contributing sponsors at least two of whom are not under common control, within the meaning of Section 4063 of ERISA (a “Multiple Employer Plan”), (ii) none or (iv) a “multiple employer welfare arrangement” as defined in Section 3(40) of YDKN and its SubsidiariesERISA (a “MEWA”). None of UBNC nor any of their respective ERISA Affiliates
has, at any time during the last six (6) years, contributed to or been obligated to contribute to any Multiemployer Plan or Multiple Employer Plan and (iii) none of YDKN and the YDKN Subsidiaries nor any of their respectiveits ERISA Affiliates has incurred any Withdrawal Liability that has not been satisfied in full. There does not now exist, nor do any circumstances exist that would reasonably be likely to result in, any Controlled Group Liability that would be a liability of YDKNUBNC or any of the YDKN Subsidiariesits ERISA Affiliates following the Effective Time, other than such liabilities that arise solely out of, or relate solely to, the YDKN Benefit Plans or YDKN Employment Agreements.Time. Without limiting the generality of the foregoing, neither YDKNUBNC nor any of the YDKN Subsidiaries, nor, to YDKN’s knowledge, any of their respectiveits ERISA Affiliates, has engaged in any transaction described in Sections 4069, 4204 or 4212 of ERISA.
(g) YDKN(f) Except as set forth in Section 3.11(f) of the UBNC Disclosure Schedule, UBNC and the YDKN Subsidiariesits ERISA Affiliates have no liability for life, health, medical or other welfare benefits to former employees or beneficiaries or dependents thereof, except for health continuation coverage as required by Section 4980B of the Code, Part 6 of Title I of ERISA or applicable law and at no expense to YDKN andUBNC or its ERISA Affiliates.
(g) Except as set forth in Section 3.11(g) of the YDKN Subsidiaries.
(h) NeitherUBNC Disclosure Schedule, neither the execution nor the delivery of this Agreement nor the consummation of the transactions this Agreement contemplates will, either alone or in conjunction with any other event, whether contingent or otherwise, (i) result in any payment or benefit becoming due or payable, or required to be provided, to any director, employee or independent contractor of YDKNUBNC or any of the YDKNUBNC Subsidiaries, (ii) increase the amount or value of any benefit or compensation otherwise payable or required to be provided to any such director, employee or independent contractor, (iii) result in the acceleration of the time of payment, vesting or funding of any such benefit or compensation including deferred compensation or (iv) result in any amount failing to be deductible by reason of Section 280G of the Code or would be subject to an excise tax under Section 4999 of the Code or additional tax under Section 409A of the Code.
(i) YDKN(h) UBNC has delivered or made available to FNB a true and complete list of the corporate and functional titles, hire dates, incentive compensation, profit sharing and bonuses paid in 2015,2021, full or part-time status, 20162022 annual salaries or hourly rates, accrued and unused paid time off, and any accrued bonuses of all employees of YDKNUBNC or any of the YDKNUBNC Subsidiaries (“YDKNUBNC Employees”) as of the date hereof and, with respect to any YDKNUBNC Employee on a leave of absence or otherwise not actively employed (“Inactive YDKNUBNC Employees”), the date on which each such Inactive YDKNUBNC Employee is expected to return to active employment. Except as otherwise set forth inSection 3.11(i)3.11(h) of the YDKNUBNC Disclosure Schedule, (A) none of the YDKNUBNC Employees has a contract of employment with YDKNUBNC or any of the YDKNUBNC Subsidiaries, (B) all YDKNUBNC Employees are employees “at will” whose employment is terminable without liability therefor and (C) none of the YDKNUBNC Employees has a contract or arrangement with YDKNUBNC or any of the YDKNUBNC Subsidiaries relating to stay bonuses, retention or stay payments, severance pay or benefits or other material perquisites or benefits.
(j)(i) No labor union, labor organization or works council has made a demand for recognition or certification for representation of employees of YDKNUBNC or YDKNUBNC Subsidiaries, and there are no representations, certification proceedings, or petitions seeking a representation proceeding presently pending or, to YDKN’s UBNC’s
knowledge, threatened against YDKNUBNC or YDKNUBNC Subsidiaries. Each of YDKNUBNC and the YDKNUBNC Subsidiaries is in compliance in all material respects with all applicable Laws and collective bargaining agreements respecting employment and employment practices and terms and conditions of employment, including but not limited to wage and hour, worker classification, occupational safety and health, immigration, and the Worker Adjustment and Retraining Notification Act and any similar law.
(k) With respect to each YDKN Benefit Plan that is a “nonqualified deferred compensation plan” subject to Section 409A of the Code, each such nonqualified deferred compensation plan has since January 1, 2005 been operated in material compliance with Section 409A of the Code, and the applicable Treasury Regulations and IRS guidance thereunder and the document or documents that evidence such plan have, by January 1, 2009, conformed in all material respects to the provisions of Section 409A of the Code and the Treasury Regulations thereunder.
3.12Compliance with Applicable Law. YDKNUBNC and each of the YDKNUBNC Subsidiaries hold all licenses, franchises, permits and authorizations necessary for the lawful conduct of their respective businesses under, and are and have been in compliance in all material respects with, all Laws applicable to YDKNUBNC or any of the YDKNUBNC Subsidiaries, including the Equal Credit Opportunity Act and Regulation B, the United States Foreign Corrupt Practices Act, the Fair Housing Act, the Community Reinvestment Act, the Fair Credit Reporting Act, the Truth in Lending Act and Regulation Z, the Home Mortgage Disclosure Act, the Fair Debt Collection Practices Act, the Electronic Fund Transfer Act, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot) Act of 2001, the Bank Secrecy Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, Regulation O, any regulations promulgated by the Consumer Financial Protection Bureau or the OCC,NCCOB, the Interagency Policy Statement on Retail Sales of Nondeposit Investment Products, the SAFE Mortgage Licensing Act of 2008, the Real Estate Settlement Procedures Act and Regulation X, and any other law relating to bank secrecy, discriminatory lending, financing or leasing practices or the use of vendors in connection therewith, money laundering prevention, Sections 23A and 23B of the Federal Reserve Act, the Sarbanes-Oxley Act, and all agency requirements relating to the origination, sale and servicing of mortgage and consumer loans and applicable limits on loans to one borrower, except where such failure to hold or such noncompliance is not reasonably likely to have, either individually or in the aggregate, a Material Adverse Effect on YDKN. YDKN and each of the YDKN Subsidiaries have been and are in compliance in all material respects with (i) the applicable provisions of the Sarbanes-Oxley Act and (ii) the applicable listing and corporate governance rules and regulations of the NYSE.UBNC.
3.13Contracts. Except for matters that have not had and would not reasonably be likely to have, individually or in the aggregate, a Material Adverse Effect on YDKN,UBNC, (a) none of YDKNUBNC nor any of the YDKNUBNC Subsidiaries is, with or without the lapse of time or the giving of notice, or both, in breach or default in any material respect under any contract, lease, license or other agreement or instrument, (b) to the knowledge of YDKN,UBNC, none of the other parties to any such contract, lease, license or other agreement or instrument (excluding instruments or agreements relating to Loans) is, with or without the lapse of time or the giving of notice, or both, in breach or default in any material respect thereunder, and (c) neither YDKNUBNC nor any of the YDKNUBNC Subsidiaries has received any written notice of the intention of any party to terminate or cancel any such contract, lease, license or other agreement or instrument, whether as a termination or cancellation for convenience or for default of YDKNUBNC or any of the YDKNUBNC Subsidiaries.
3.14YDKNUBNC Regulatory Matters.
(a) YDKNUBNC is duly registered with the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) as a bank holding company under the Bank Holding Company Act of 1956, as amended (the “BHC Act”).
(b) The deposit accounts of YDKNUBNC Bank are insured by the FDIC through the Deposit Insurance Fund to the fullest extent permitted by Law, and all premiums and assessments required to be paid in connection therewith have been paid when due, and no proceedings for the termination of such insurance are pending or, to YDKN’sUBNC’s knowledge, threatened. YDKNUBNC Bank received a rating of “satisfactory” in its most recent examination under the Community Reinvestment Act.
(c) Since January 1, 2014,2020, neither YDKNUBNC nor any of its Subsidiaries has been a party to, or the subject of, any cease-and-desist order, consent order, written agreement, order for civil money penalty, refund pursuant to any matter requiring attention, restitution, prompt corrective action directive, memorandum of understanding, supervisory letter, individual minimum capital requirement, operating agreement, or any other formal or informal enforcement action issued or required by, or entered into with, either (i) the Federal Reserve
Board, (ii) the FDIC, (ii)(iii) the OCC, (iv) the NCCOB or any other state regulatory authority, (v) any foreign regulatory authority, (vi) any SRO or (vii) the SEC (collectively, “Regulatory Agencies”) or any other Governmental Entity. Neither YDKNSince January 1, 2020, neither UBNC nor any of its Subsidiaries has made, adopted, or implemented any commitment, board resolution, policy, or procedure at the request or recommendation of any Regulatory Agency or other Governmental Entity that limits in any material
respect the conduct of its business or that in any material manner relates to its capital adequacy, its payment of dividends or distribution of capital, its credit or risk management, its compliance program, its management, its growth, or its business. Neither YDKNUBNC nor any of its Subsidiaries has reason to believe that any Regulatory Agency or other Governmental Entity is considering issuing, initiating, ordering, requesting, recommending, or otherwise proceeding with any of the items referenced in this paragraph.
(d) Except for examinations of YDKNUBNC and its Subsidiaries conducted by their respective primary functional regulators in the ordinary course of business, no Regulatory Agency or other Governmental Entity has initiated, to the knowledge of UBNC, threatened, or has pending any proceeding, specially targeted examination, or, to the knowledge of YDKN,UBNC, any inquiry or investigation into the business or operations of YDKNUBNC or any of its Subsidiaries, except where such proceeding, inquiry, or investigation would not reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on YDKNUBNC or to prevent or materially delay receipt of the Requisite Regulatory Approvals.
(e) There is no unresolved violation, apparent violation, criticism, restitution, penalties, sanctions, matter requiring attention, recommendation, or exception cited, made, or threatened by any Regulatory Agency or other Governmental Entity in any report of examination, report of inspection, supervisory letter or other communication with YDKNUBNC or any of its Subsidiaries that (i) relates to anti-money laundering, economic sanctions, fair lending or consumer protection, (ii) would reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on YDKNUBNC or (iii) would reasonably be likely to prevent or materially delay the receipt of the Requisite Regulatory Approvals.
3.15Undisclosed Liabilities. Neither YDKNUBNC nor any of its Subsidiaries has, and since December 31, 2015,2021, neither YDKNUBNC nor any of its Subsidiaries has incurred, any liabilities or obligations, whether accrued, absolute, contingent or otherwise, known or unknown, whether due or to become due, except for (i) those liabilities properly accrued or reserved against in the unaudited consolidated balance sheet of YDKNUBNC and its Subsidiaries as of March 31, 20162022 included in the YDKN Reports,UBNC Financial Statements, (ii) liabilities and obligations incurred in the ordinary course of business consistent with past practice since March 31, 2016,2022, (iii) liabilities and obligations that are not material to YDKNUBNC and its Subsidiaries, taken as a whole, and (iv) any liabilities incurred with respect to the transactions contemplated by this Agreement.
3.16Environmental Liability.
(a) Except as set forth in Section 3.16(a) of the UBNC Disclosure Schedule or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on YDKNUBNC or any of its Subsidiaries, (i) YDKNUBNC and the YDKNUBNC Subsidiaries are in compliance, and since January 1, 20122017 have complied, with all applicable Environmental Laws, (ii) no Contamination exceeding applicable cleanup standards or remediation thresholds under any Environmental Law exists at any real property, including buildings or other structures, currently or formerly owned or operated by YDKNUBNC or any of the YDKNUBNC Subsidiaries, or on any property in which YDKNUBNC or any of the YDKNUBNC Subsidiaries has held a security interest, Lien, or a fiduciary or management role, that would reasonably be likely to result in an Environmental Liability for YDKNUBNC or the YDKNUBNC Subsidiaries, (iii) no Contamination exists at any real property owned by a third party that would reasonably be likely to result in an Environmental Liability for YDKNUBNC or the YDKNUBNC Subsidiaries, (iv) neither YDKNUBNC nor any of the YDKNUBNC Subsidiaries has received any written notice, demand letter, claim or request for information alleging any material violation of, or liability under, any Environmental Law, and (v) neither YDKNUBNC nor any of the YDKNUBNC Subsidiaries is subject to any order, decree, injunction or other agreement with any Governmental Entity or any third party under any Environmental Law that would reasonably be likely to result in
an Environmental Liability of YDKNUBNC or the YDKNUBNC Subsidiaries. YDKNUBNC has made available to FNB copies of all material environmental reports or studies, sampling data, correspondence and filings in its possession or relating to YDKN,UBNC, the YDKNUBNC Subsidiaries and any currently owned or leased property of YDKNUBNC which were prepared in the last four (4) years.
(b) As used in this Agreement, (i) the term “Environmental Laws” means collectively, any and all laws, ordinances, rules, regulations, directives, orders, authorizations, decrees, permits, or other mandates, of a
Governmental Entity relating to any Hazardous Substance, Contamination, protection of the environment or human health and safety as it relates to Hazardous Substance exposure, including those relating to emissions, discharges or releases or threatened emissions, discharges or releases to, on, onto or into the environment of any Hazardous Substance, (ii) the term “Hazardous Substance” means any element, substance, compound or mixture whether solid, liquid or gaseous that is subject to regulation by any Governmental Entity under any Environmental Law, or the presence or existence of which gives rise to any Environmental Liability, (iii) the term “Contamination” means the emission, discharge or release of any Hazardous Substance to, on, onto or into the environment and the effects of such emission, discharge or release, including the presence or existence of any such Hazardous Substance, and (iv) the term “Environmental Liability” means liabilities for response, remedial or investigation costs, and any other expenses, including reasonable attorney and consultant fees, laboratory costs and litigation costs, required under, or necessary to attain or maintain compliance with, applicable Environmental Laws or relating to or arising from Contamination or Hazardous Substances.
3.17Real Property.
(a) Each of YDKNUBNC and the YDKNUBNC Subsidiaries has good and marketable title, free and clear of all Liens, to all material real property owned by such entity (the “Owned Properties”), except for (i) Liens that do not materially detract from the present use of such real property or otherwise materially impair business operations at such properties, (ii) statutory Liens securing payments not yet due and (iii) Liens for real property Taxes not yet due and payable.
(b) A true and complete copy of each agreement pursuant to which YDKNUBNC or any of the YDKNUBNC Subsidiaries leases any real property (such agreements, together with any amendments, modifications and other supplements thereto, collectively, the “Leases”), has heretofore been made available to FNB. Assuming due authorization, execution and delivery by the counterparty thereto, each Lease is valid, binding and enforceable against YDKNUBNC or the YDKNUBNC Subsidiary party thereto, as the case may be, and, to the knowledge of UBNC, against any other party thereto, in accordance with its terms and is in full force and effect, except as may be limited by bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the rights of creditors generally and the availability of equitable remedies. There is not under any such Lease any material existing default by YDKNUBNC or any of the YDKNUBNC Subsidiaries or, to the knowledge of YDKN,UBNC, any other party thereto, or any event which with notice or lapse of time or both would constitute such a default. The consummation of the transactions this Agreement contemplates will not cause any default under the Leases, provided the consents and notices disclosed in thisSection3.17(b) of the YDKNUBNC Disclosure Schedule have been obtained or made, except for any such default which would not, individually or in the aggregate, have a Material Adverse Effect on YDKN.UBNC.
(c) The Owned Properties and the properties leased pursuant to the Leases (the “Leased Properties”) constitute all of the real estate on which YDKNUBNC and the YDKNUBNC Subsidiaries maintain their facilities or conduct their business as of the date of this Agreement, except for locations the loss of which would not result in a Material Adverse Effect on YDKN.UBNC.
(d) A true and complete copyNeither UBNC nor any Subsidiary of each agreement pursuant to which YDKN orUBNC leases any of the YDKN Subsidiaries leases real property to a third party (such agreements, together with any amendments, modifications and other supplements thereto, collectively, the “Third Party Leases”) has heretofore been made available to FNB. Assuming the due authorization, execution and delivery by the counterparty thereto, each Third Party Lease is valid, binding and enforceable in accordance with its terms and is in full force and effect, except as may be limited by bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the rights of creditors generally and the availability of equitable remedies. To the knowledge of YDKN, there are no existing defaults by the tenant under any Third Party Lease, and no event has occurred which with notice or lapse of time or both would constitute such a default or which individually or in the aggregate would have a Material Adverse Effect on YDKN.party.
3.18State Takeover Laws.
(a) YDKNUBNC has taken all actions necessary to exempt this Agreement and the transactions contemplated hereby and thereby from, and this Agreement is exempt from, the requirements of any Takeover
Law applicable to it. As used in this Agreement, “Takeover Laws” shall mean any “moratorium,” “control share acquisition,” “fair price,” “supermajority,” “affiliate transactions,” or “business combination statute or regulation” or other similar state anti-takeover laws and regulations, including those of the State of North Carolina.
(b) Neither YDKNUBNC nor any of the YDKNUBNC Subsidiaries have any shareholders’ rights plan or similar plan or arrangement in effect.
3.19Opinion. Prior to the execution of this Agreement, YDKNUBNC has received an opinion from Piper Sandler O’Neill & Partners, L.P. to the effect that as of the date thereof and based upon and subject to the factors, assumptions and limitations set forth therein, the Exchange Ratio is fair to the shareholders of YDKNUBNC from a financial point of view. Such opinion has not been amended or rescinded as of the date of this Agreement.
3.20Insurance. YDKNUBNC and the YDKNUBNC Subsidiaries are insured with reputable insurers against such risks and in such amounts as are set forth inSection 3.20 of the YDKNUBNC Disclosure Schedule and as their management reasonably have determined to be prudent in accordance with industry practices.
3.21Investment Securities. Except where failure to be true would not reasonably be likely to have a Material Adverse Effect on YDKN,UBNC, (a) each of YDKNUBNC and the YDKNUBNC Subsidiaries has good title to all securities owned by it, except those securities sold under repurchase agreements securing deposits, borrowings of federal funds or borrowings from thea Federal Reserve BanksBank or the Federal Home Loan BanksBank or held in any fiduciary or agency capacity, free and clear of any Liens, except to the extent such securities are pledged in the ordinary course of business to secure obligations of YDKNUBNC or the YDKNUBNC Subsidiaries, and (b) such securities are valued on the books of YDKNUBNC in accordance with GAAP in all material respects.
3.22Intellectual Property.
(a) (i) YDKNUBNC and the YDKNUBNC Subsidiaries own or have a valid license to use all material YDKNUBNC Intellectual Property, free and clear of all Liens, royalty or other payment obligations (except for royalties or payments with respect to off-the-shelf software at standard commercial rates), (ii) to the knowledge of YDKN, YDKNUBNC, UBNC Intellectual Property constitutes all of the Intellectual Property necessary to carry on the business of YDKNUBNC and the YDKNUBNC Subsidiaries as currently conducted, (iii) YDKNUBNC Intellectual Property that is registered and owned by YDKNUBNC or any of the YDKNUBNC Subsidiaries, and to the knowledge of YDKN,UBNC, all other registered YDKNUBNC Intellectual Property, has not been cancelled, forfeited, expired or abandoned, (iv) YDKNUBNC Intellectual Property that is registered is valid, and neither YDKNUBNC nor any of the YDKNUBNC Subsidiaries has received written notice challenging the validity or enforceability of YDKNUBNC Intellectual Property, and (v) to the knowledge of YDKN,UBNC, the conduct of the business of YDKNUBNC and the YDKNUBNC Subsidiaries does not violate, misappropriate or infringe upon the Intellectual Property rights of any other Person, nor to the knowledge of YDKNUBNC has YDKNUBNC or any of the YDKNUBNC Subsidiaries received any written communications alleging that any of them has infringed, diluted, misappropriated or violated any of the Intellectual Property of any other Person. To YDKN’sUBNC’s knowledge, no other Person is infringing, diluting, misappropriating or violating, nor has YDKNUBNC or any of the YDKNUBNC Subsidiaries sent any written communications alleging that any person has infringed, diluted, misappropriated or violated, any of the YDKNUBNC Intellectual Property owned by YDKNUBNC or a YDKNUBNC Subsidiary.
(b) For purposes of this Agreement, the term “Intellectual Property” means (i) trademarks, service marks, trade names and Internet domain names, together with all registrations and applications related to the foregoing; (ii) patents and patent applications; (iii) copyrights (including any registrations and applications for any of the foregoing); and (iv) computer programs, whether in source code or object code form (including any and all software implementation of algorithms, models and methodologies), databases and compilations; and the term “YDKNUBNC Intellectual Property” means all Intellectual Property used or held for use in the operation of the business of YDKNUBNC or any of its Subsidiaries.
(c) At all times, (i) YDKN UBNC and each of the YDKNUBNC Subsidiaries have taken commercially reasonable actions to protect and maintain (A) all YDKNUBNC Intellectual Property and (B) the security and integrity of their software, databases, networks, systems, equipment and hardware and protect the same against unauthorized use, modification, or access thereto, or the introduction of any viruses or other unauthorized or damaging or corrupting elements, (ii) YDKN’s UBNC’s and the YDKNUBNC Subsidiaries’ computers, computer software, firmware, middleware, servers, workstations, routers, hubs, switches, data communication lines and all other information technology equipment and all associated documents (the “IT Assets”) operate and perform in all material respects in accordance with their documentation and functional specifications and otherwise as required by YDKNUBNC in connection with its business, and have not materially malfunctioned or failed within the past two (2) years, (iii) to YDKN’sUBNC’s knowledge, no Person has gained unauthorized access to the IT Assets and (iv) YDKN UBNC has implemented commercially reasonable backup and disaster recovery technology consistent with industry practices.
(d) YDKNUBNC Bank obtains its material data processing services, ATM and other information technology services exclusively through the contracts or agreements with the Persons described inSection 3.22(d) of the YDKNUBNC Disclosure Schedule (“DP Contracts”). A true and correct executed copy of each DP Contract, as in effect on the date hereof, has been made available to FNB. Other than the DP Contracts, YDKNneither UBNC nor UBNC Bank has noany agreement with any other Person for material data processing, ATM or other technology services.
3.23Loans; Nonperforming and Classified Assets.
(a) Each loan, loan commitment, letter of credit or other extension of credit (“Loan”) on the books and records of YDKNUBNC or any YDKNUBNC Subsidiary (i) was made and has been serviced in all material respects in accordance with their customary lending standards in the ordinary course of business, (ii) is evidenced in all material respects by appropriate and sufficient documentation, (iii) to the extent secured, has been secured or is in the process of being secured, by valid Liens, which have been perfected or are in the process of being perfected, in accordance with all applicable Laws and, (iv) to the knowledge of YDKN,UBNC, constitutes the legal, valid and binding obligation of the obligor named in the contract evidencing such Loan subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditor’s rights or by general equity principles.
(b) YDKNUBNC has made available to FNB a listing as to YDKNUBNC and each YDKNUBNC Subsidiary as of the latest practicable date, which shall be a date no earlier than March 31, 2016:2022: (i) any Loan with an outstanding balance of $5,000,000or$500,000or more and under the terms of which the obligor is ninety (90) or more days delinquent in payment of principal or interest, or to YDKN’sUBNC’s knowledge, in default of any other material provision thereof, (ii) any Loan that is on non-accrual status, (iii) any Loan that is a troubled debt restructuring under GAAP, (iv) any Loan for which a specific reserve exists in connection therewith, (v) each Loan that has been classified as “substandard”, “doubtful”, “loss” or “special mention” or words of similar import by YDKN,UBNC, a YDKNUBNC Subsidiary or an applicable Regulatory Agency, (iii)(vi) a listing of the real estate classified as “Other Real Estate Owned” (“OREO”) acquired by foreclosure or by deed-in-lieu thereof, including the book value thereof and (iv)(vii) each written or oral loan agreement, note or borrowing arrangement, including leases, credit enhancements, commitments, guarantees and interest-bearing assets, with any Affiliate.Affiliate. For purposes of this Agreement, “Affiliate” means, with respect to either party, any director, executive officer or five percent or greater shareholder of such party or such party’s Subsidiaries, or to the knowledge of such party, any other Person controlling, controlled by or under common control with any of the foregoing. “Control”, with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or any other means.
(c) All reserves or other allowances for loan losses reflected in YDKN’sUBNC’s financial statements included in the YDKN ReportsUBNC Financial Statements as of and for the year ended December 31, 20152021 and as of and for the
three (3) months ended March 31, 2016,2022, comply in all material respects with the standards established by Governmental Entities and GAAP. Neither YDKNUBNC nor YDKNUBNC Bank has been notified in writing by any state or federal bank regulatory agency that YDKN’sUBNC’s reserves are inadequate or that the practices and policies of YDKNUBNC in
establishing its reserves for the year ended December 31, 20152021 and the three (3) months ended March 31, 2016,2022, and in accounting for delinquent and classified assets, fail to comply with applicable accounting or regulatory requirements.
(d) All Loans owned by YDKNUBNC or any YDKNUBNC Subsidiary, or in which YDKNUBNC or any YDKNUBNC Subsidiary has an interest, comply in all material respects with applicable Laws, including applicable usury statutes, underwriting and recordkeeping requirements, Regulation O and the Truth in Lending Act, the Equal Credit Opportunity Act, and the Real Estate Settlement Procedures Act.
(e) At the date of this Agreement, YDKN’sUBNC’s and YDKNUBNC Bank’s respective allowances for loan losses are sufficient for their reasonably anticipated loan losses, are in compliance with the standards established by applicable Governmental Entities and are adequate under GAAP. YDKNUBNC and each YDKNUBNC Subsidiary hold the mortgages contained in its loan portfolio for its own benefit to the extent of its interest shown therein; such mortgages evidence liens having the priority indicated by the terms of such mortgages, including the associated loan documents, subject, as of the date of recordation or filing of applicable security instruments, only to such exceptions as are discussed in attorneys’ opinions regarding title or in title insurance policies in the mortgage files relating to the Loans secured by real property or are not material as to the collectability of such Loans, and all Loans owned by YDKNUBNC and each YDKNUBNC Subsidiary are with full recourse to the borrowers, and neither of YDKNUBNC nor any YDKNUBNC Subsidiary has taken any action which would reasonably be likely to result in a waiver or negation of any rights or remedies available against the borrower or guarantor, if any, on any Loan. To the knowledge of YDKN,UBNC, all applicable remedies against all borrowers and guarantors are enforceable except as may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting creditors’ rights and except as may be limited by the exercise of judicial discretion in applying principles of equity.
(f) Each outstanding loan participation sold by YDKNUBNC or any YDKNUBNC Subsidiary was sold with the risk of non-payment of all or any portion of that underlying loan to be shared by each participant proportionately to the share of such loan represented by such participation without any recourse of such other lender or participant to YDKNUBNC or any YDKNUBNC Subsidiary for payment or repurchase of the amount of such loan represented by the participation or liability under any yield maintenance or similar obligation.
(g)Section 3.23(g) of the YDKNUBNC Disclosure Schedule sets forth a list of all Loans by YDKNUBNC Bank outstanding as of the date of this Agreement to any director, executive officer or principal shareholder (as such terms are defined in 12 C.F.R. Part 215) of YDKNUBNC or the YDKNUBNC Subsidiaries and there has been no default on, or forgiveness or waiver of, in whole or in part, any such Loan during the two (2) years immediately preceding the date hereof.
(h) YDKNUBNC has made available to FNB a listing, as of the latest practicable date, which shall be a date no earlier than March 31, 2016,2022, by account, of: (i) all Loans, including loan participations, of YDKNUBNC or any other YDKNUBNC Subsidiary that have had their respective terms to maturity accelerated during the past twelve (12) months, (ii) all loan commitments or lines of credit of YDKNUBNC that have been terminated by YDKNUBNC during the past twelve (12) months by reason of a default or adverse developments in the condition of the borrower or other events or circumstances affecting the credit of the borrower, (iii) each borrower, customer or other party that has notified YDKNUBNC during the past twelve (12) months of, or has asserted against YDKN,UBNC, in each case in writing, any “lender liability” or similar claim, and each borrower, customer or other party that has given YDKNUBNC any oral notification of, or orally asserted to or against YDKN,UBNC, any such claim, (iv) all Loans, (A) that are contractually past due ninety (90) days or more in the payment of principal and/or interest, (B) that are on non-accrual status, (C) that as of the date of this Agreement are classified as “Other Loans Specially Mentioned”, “Special Mention”, “Substandard”, “Doubtful”, “Loss”, “Classified”, “Criticized”, “Watch List” or words of similar import, together with the principal amount of and accrued and unpaid interest on each such loan and the
identity of the obligor thereunder, (D) that are troubled debt restructurings under GAAP, or (E) where a specific reserve allocation exists in connection therewith and (v) all assets classified by YDKNUBNC as OREO and all other assets currently held that were acquired through foreclosure or in lieu of foreclosure.
(i) Except as would not, either individually or in the aggregate, reasonably be likely to have a Material Adverse Effect on YDKN, neither YDKN nor any of its Subsidiaries is bound by an agreement pursuant to which Loans or pools of Loans or participations in Loans have been sold that contains any obligation of YDKN or any of its Subsidiaries to repurchase such Loans or interests therein or that would entitle the buyer to pursue any other recourse against YDKN or any of the YDKN Subsidiaries.
3.24Fiduciary Accounts. YDKN and each of the YDKN Subsidiaries have properly administered allUBNC Bank does not administer any accounts for which it acts as a fiduciary, including accounts for which it serves as a trustee, agent, custodian, personal representative, guardian, conservator or investment advisor, in all material respects in accordance with the terms of the governing documents and applicable Laws. To YDKN’s knowledge, neither YDKN nor any of the YDKN Subsidiaries, nor any of their respective directors, officers or employees, has committed any breach of trust with respect to any fiduciary account and the records for each such fiduciary account are true and correct and accurately reflect the assets of such fiduciary account.advisor.
3.25Bank Secrecy Act, Foreign Corrupt Practices Act and U.S.A. Patriot Act. YDKNUBNC Bank is in compliance in all material respects with the Bank Secrecy Act, the United States Foreign Corrupt Practices Act and the International Money Laundering Abatement and Anti-Terrorist Financing Act and all regulations promulgated thereunder. Except as would not be material to YDKNUBNC and the YDKNUBNC Subsidiaries, taken as a whole, YDKNUBNC Bank (i) has properly certified all foreign deposit accounts and has made all necessary tax withholdings on all of its deposit accounts, (ii) has timely and properly filed and maintained all requisite Currency Transaction Reports and other related forms, including any requisite Custom Reports required by any agency of the U.S. Department of the Treasury, including the IRS, and (iii) has timely filed all Suspicious Activity Reports with the Financial Crimes Enforcement Network (U.S. Department of the Treasury) required to be filed by it pursuant to the laws and regulations referenced in this Section.
3.26Dissenters Rights. With respect to the transactions contemplated hereby, no holder of the capital stock of YDKN is entitled to exercise any appraisal rights provided for under Article 13 of the NCBCA or any successor statute, or any similar dissenters’ or appraisal rights.
3.27No Other Representations or Warranties.
(a) Except for the representations and warranties made by YDKNUBNC in thisArticle 3, neither YDKNUBNC nor any other person makes any express or implied representation or warranty with respect to YDKN,UBNC, its Subsidiaries, or their respective businesses, operations, assets, liabilities, conditions (financial or otherwise) or prospects, and YDKNUBNC hereby disclaims any such other representations or warranties.
(b) YDKNUBNC acknowledges and agrees that neither FNB nor any other person has made or is making any express or implied representation or warranty other than those contained inArticle 4.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF FNB
Except as (i) disclosed in the disclosure schedule delivered by FNB to YDKNUBNC prior to the execution of this Agreement (the “FNB Disclosure Schedule”) or (ii) as disclosed in any FNB Reports filed by FNB prior to the date hereof (but disregarding risk factor disclosures contained under the heading “Risk Factors,” or disclosures of risks set forth in any “forward-looking statements” disclaimer or any other statements that are similarly non-specific or cautionary, predictive or forward-looking in nature), FNB hereby represents and warrants to YDKNUBNC as follows:
4.1Corporate Organization.
(a) FNB is a corporation duly organized, validly existing and in good standing under the laws of the StateCommonwealth of Florida.Pennsylvania. FNB has the corporate power and authority and has all licenses, permits and authorizations
of applicable Governmental Entities required to own or lease all of its properties and assets and to carry on its business as it is now being conducted, and is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary, except where such failure to be so licensed or qualified would not have a Material Adverse Effect upon FNB.
(b) True and complete copies of the articles of incorporation (the “FNB Charter”) and bylaws of FNB (the “FNB Bylaws”), each as amended, supplemented, restated and/or otherwise modified and in effect as of the date of this Agreement, have previously been made available to YDKN.UBNC.
(c) FNB Bank is a national banking association organized under the National Bank Act and regulated by OCC. FNB Bank is duly organized, and validly existing and in good standing under the laws of the United States and has the requisite power and authority, corporate or otherwise, to own its property and carry on its business as presently conducted, but is not qualified to do business in any other jurisdiction or required to be qualified to do business in any other jurisdiction except where the failure to be so qualified would not have a Material Adverse Effect on FNB. Each FNB Subsidiary (i) was duly organized, (ii) is validly existing and in good standing under the laws of its jurisdiction of organization, (iii) is duly licensed or qualified to do business in, and in good standing under the laws of, all jurisdictions, whether federal, state, local or foreign, where its ownership or leasing of property or the conduct of its business requires it to be so qualified and (iv) has all requisite corporate power and authority, and has all licenses, permits and authorizations of applicable Governmental Entities required, to own or lease its properties and assets and to carry on its business as now conducted, except for purposes of clause (iii) only, as would not be reasonably likely to have, either individually or in the aggregate, a Material Adverse Effect on FNB. The charter documents and bylaws of each Subsidiary of FNB that is a “significant subsidiary” within the meaning of Rule 1-02 of Regulation S-X of the SEC, copies of which have been made available to YDKN,UBNC, are true and correct copies of such documents as amended, supplemented, restated and/or otherwise modified and in effect on the date of this Agreement.
4.2Capitalization.
(a) The authorized capital stock of FNB consists of 500,000,000 shares of FNB Common Stock, of which, as of JuneApril 30, 2016, 210,120,6012022, 351,470,171 shares were issued and outstanding, and 20,000,000 shares of preferred stock, $0.01 par value (the “FNB Preferred Stock”), of which, as of the date of this Agreement, 110,877 shares were issued and outstanding. As of JuneApril 30, 2016, 1,286,0252022, 13,705,273 shares of FNB Common Stock were held in FNB’s treasury. As of JuneApril 30, 2016,2022, no shares of FNB Common Stock or FNB Preferred Stock were reserved for issuance, except for (i) 10,562,311 11,282,012 shares of FNB Common Stock reserved for issuance upon exercise of options issued or available for issuance pursuant to employee and director stock plans of FNB in effect as of the date of this Agreement (the “FNB Stock Plans”), and (ii) 1,034,533 no shares of FNB Common Stock reserved for issuance pursuant to warrants issued to the Treasury Department (the “FNB Warrants”). All of the issued and outstanding shares of FNB Common Stock have been, and all shares of FNB Common Stock reserved for issuance as described in the foregoing clauses (i) – (ii), when issued in accordance with the terms of the stock plans, warrants and other instruments referred to in those clauses, will be duly authorized, validly issued, fully paid and nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof. Except pursuant to this Agreement, the FNB Stock Plans and the FNB Warrants, FNB is not bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of any shares of FNB Common Stock or any other equity securities of FNB or any securities representing the right to purchase or otherwise receive any shares of FNB Common Stock. The shares of FNB Common Stock to be issued pursuant to the Merger have been duly authorized and, when issued and delivered in accordance with the terms of this Agreement, will be validly issued, fully paid, nonassessable and free of preemptive rights.
(b) All of the issued and outstanding shares of capital stock or other equity ownership interests of each Subsidiary of FNB are owned by FNB, directly or indirectly, free and clear of any Liens, and all of such
shares or equity ownership interests are duly authorized and validly issued and are fully paid, nonassessable (except, with respect to bank Subsidiaries that are insured depository institutions, as provided under 12 U.S.C. § 55 or any comparable provision of applicable state law) and free of preemptive rights. No such Subsidiary has or is bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of any shares of capital stock or any other equity security of such Subsidiary or any securities representing the right to purchase or otherwise receive any shares of capital stock or any other equity security of such Subsidiary, or any securities representing the right to purchase or otherwise receive any shares of capital stock or any other equity security of such Subsidiary.
4.3Authority; No Violation.
(a) FNB has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions this Agreement contemplates, subject to the receipt of the Requisite FNB Vote and Requisite Regulatory Approvals. The execution and delivery of this Agreement and the consummation of the transactions this Agreement contemplates have been duly and validly approved by the Board of Directors of FNB. Except for the affirmative vote of a majority of votes cast at a meeting of FNB’s shareholders at which a quorum is present approving the issuance of FNB Common Stock pursuant to this Agreement in accordance with Section 312.03 of the New York Stock Exchange Listed Company Manual (such affirmative shareholder vote, the “Requisite FNB Vote”), no other corporate approvals on the part of FNB are necessary to approve this Agreement or consummate the Merger. Other than those set forth inSection1.8, no corporate approvals on the part of FNB or FNB Bank are necessary to approve the Bank Merger Agreement or consummate the Bank Merger. This Agreement has been duly and validly executed and delivered by FNB and, assuming the due authorization, execution and delivery of this Agreement by YDKN,UBNC, constitutes the valid and binding obligation of FNB, enforceable against FNB in accordance with its terms, except in all cases as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization or similar laws of general applicability relating to or affecting the rights of insured depository institutions or the rights of creditors generally and the availability of equitable remedies.
(b) Neither the execution and delivery of this Agreement by FNB, nor the consummation by FNB of the transactions this Agreement contemplates, nor compliance by FNB with any of the terms or provisions of this Agreement, will (i) violate any provision of the FNB Charter or the FNB Bylaws or (ii) assuming that the consents, approvals and filings referred to inSection4.4 are duly obtained and/or made and are in full force and effect, (A) violate any Law applicable to FNB, any of its Subsidiaries or any of their respective properties or assets, or (B) violate, conflict with, result in a breach of any provision of, constitute a default, or an event which, with notice or lapse of time, or both, would constitute a default under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or result in the creation of any Lien upon any of the respective properties or assets of FNB or any of its Subsidiaries under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which FNB or any of its Subsidiaries is a party, or by which they or any of their respective properties or assets may be bound or affected, except for such violations, conflicts, breaches, defaults, terminations, cancellations, accelerations or creations with respect to clause (ii) that are not reasonably likely to have, either individually or in the aggregate, a Material Adverse Effect on FNB.
4.4Consents and Approvals. Except for (a) the filing of applications and notices, as applicable, with the Federal Reserve Board under the BHC Act, with the NCCOB under Chapters 53 and 53C of the North Carolina General Statutes,Regulation of Banks and Other Financial Services and with the OCC under the National Bank Act and Bank Merger Act, and approval of such applications and notices, (b) the filing with the SEC of the Joint Proxy Statement and the filing and declaration of effectiveness of the Registration Statement including a prospectus relating to the issuance of shares of FNB common stock in connection with the transactions contemplated by this Agreement and the Proxy Statement and, (c) the filing of North Carolina Articles of Merger with, and its acceptance for record by, the Secretary of State of the State of North Carolina pursuant to the NCBCA, and the filing of the FloridaPennsylvania Articles of Merger with, and its acceptance for record by, the Secretary of State of the StateCommonwealth of FloridaPennsylvania pursuant to the FBCA,ETL, and the filing of the Bank Merger Certificates, and (d) such filings and approvals as are required to be made or obtained under the securities or “Blue Sky” laws of various
states in connection with the issuance of the shares of FNB Common Stock pursuant to this Agreement and approval of listing such FNB Common Stock issuable in the Merger on the NYSE, no consents or approvals of or filings or registrations with any Governmental Entity or SRO are necessary in connection with (i) the execution and delivery by FNB of this Agreement and (ii) the consummation by FNB of the Merger and the other transactions this Agreement contemplates. No event has occurred, nor has any circumstance arisen, that, to the knowledge of FNB, would reasonably be likely, either individually or together with any other event or circumstance, to impair the ability to obtain or materially delay the receipt of the Requisite Regulatory Approvals on a timely basis or result in the imposition of a Materially Burdensome Regulatory Condition.
4.5Reports. FNB and each of its Subsidiaries have in all material respects timely filed all reports, registrations and statements, together with any amendments required to be made with respect thereto, that they were required to file since January 1, 20142020 with the applicable Regulatory Agencies (other than the OCC)NCCOB) and
with each other applicable Governmental Entity, and all other reports and statements required to be filed by them since January 1, 2014,2020, including any report or statement required to be filed pursuant to the laws, rules or regulations of the United States, any state, any local government, any foreign entity, or any Regulatory Agency (other than the OCC)NCCOB), and have paid all fees and assessments due and payable in connection therewith.
4.6SEC Reports; Financial Statements.
(a) FNB has filed or furnished on a timely basis to the SEC, all material forms, reports, schedules, statements and other documents required to be filed or furnished by it to the SEC under the Securities Act of 1933, as amended (the “Securities Act”), under the Exchange Act, or under the securities regulations of the SEC, since January 1, 20142020 (all such filed or furnished documents, together with all exhibits and schedules thereto and all information incorporated therein by reference, the “FNB Reports”). As of their respective filing dates (and, in the case of registration statements and proxy statements, as of the dates of effectiveness and the dates of mailing, respectively), except to the extent that any FNB Report has been amended by a subsequently filed FNB Report prior to the date hereof, in which case, as of the date of such amendment, (i) the FNB Reports complied in all material respects with the applicable requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), as the case may be, and (ii) none of the FNB Reports contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of FNB’s Subsidiaries is required to file periodic reports with the SEC pursuant to Section 13 or 15(d) of the Exchange Act.
(b) The financial statements (including the related notes thereto) included (or incorporated by reference) in the FNB Reports comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP (except, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except, in each case, as may be expressly indicated in such statements or in the notes thereto) and fairly present in all material respects the consolidated financial position of FNB and its Subsidiaries as of the dates thereof and their respective consolidated results of operations, changes in shareholders’ equity and changes in cash flows for the periods then ended (subject, in the case of unaudited statements, to year-end normal and recurring audit adjustments that were not, or are not expected to be, material in amount), all in accordance with GAAP and the applicable rules and regulations promulgated by the SEC.
(c) There are no outstanding comments from or material unresolved issues raised by the SEC staff with respect to the FNB Reports.
(d) The books and records of FNB and its Subsidiaries have been since January 1, 2014,2020, and are being, maintained in all material respects in accordance with applicable legal and accounting requirements and reflect only actual transactions. The records, systems, controls, data and information of FNB and its Subsidiaries are recorded, stored, maintained and operated under means (including any electronic, mechanical or photographic process, whether computerized or not) that are under the exclusive ownership and direct control of FNB or its
Subsidiaries or accountants (including all means of access thereto and therefrom), except for any non-exclusive ownership and non-direct control that would not reasonably be likely to have a material adverse effect on the system of internal accounting controls described in the following sentence. FNB and its Subsidiaries have implemented and maintain a system of internal accounting controls effective to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. FNB (i) has implemented and maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) effective to ensure that material information relating to FNB, including its consolidated Subsidiaries, is made known to the Chief Executive Officer and the Chief Financial Officer of FNB by others within those entities to allow timely decisions regarding required disclosure and to make the certifications required by the Exchange Act with respect to the FNB Reports and (ii) has disclosed, based on its most recent evaluation prior to the date of this Agreement, to FNB’s outside auditors and the audit
committee of the Board of Directors of FNB (A) any significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that would be reasonably likely to adversely affect FNB’s ability to accurately record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in FNB’s internal control over financial reporting.
(e) Since January 1, 2014,2020, (A) neither FNB nor any of its Subsidiaries nor, to the knowledge of FNB, any director, officer, employee, auditor, accountant or representative of FNB or any of its Subsidiaries has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of FNB or any of its Subsidiaries or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that FNB or any of its Subsidiaries has engaged in questionable accounting or auditing practices, and (B) no attorney representing FNB or any of its Subsidiaries, whether or not employed by FNB or any of its Subsidiaries, has reported evidence of a material violation of securities laws, breach of fiduciary duty or similar violation by FNB or any of its officers, directors, employees or agents to the Board of Directors of FNB or any committee thereof or, to the knowledge of FNB, to any of FNB’s directors or officers.
4.7Broker’sBroker’s Fees. Except for RBC Capital Markets LLC,BofA Securities, Inc., neither FNB nor any FNB Subsidiary nor any of their respective officers or directors has employed any broker or finder or incurred any liability for any broker’s fees, commissions or finder’s fees in connection with the Merger or related transactions this Agreement contemplates.
4.8Absence of Certain Changes or Events. Since December 31, 2015,2021, (i) FNB and the FNB Subsidiaries have, except in connection with the negotiation and execution and delivery of this Agreement, carried on their respective businesses in all material respects in the ordinary course consistent with past practice and (ii) there has not been any Material Adverse Effect with respect to FNB.
4.9Legal Proceedings.
(a) There is no pending, or, to FNB’s knowledge, threatened, litigation, action, suit, proceeding, investigation or arbitration by any Person or Governmental Entity relating to FNB, any of its Subsidiaries or any of their respective properties or permits, licenses or authorizations that has had, or is reasonably likely to have, a Material Adverse Effect on FNB.
(b) There is no judgment or order of any Governmental Entity or regulatory restriction, other than those of general application that apply to similarly situated financial or bank holding companies or their Subsidiaries, that has been imposed upon FNB, any of its Subsidiaries or the assets of FNB or any of the FNB Subsidiaries, that has had, or is reasonably likely to have, a Material Adverse Effect on FNB.
4.10Taxes and Tax Returns. Each of FNB and the FNB Subsidiaries has duly and timely filed, including all applicable extensions, all income and other material Tax Returns required to be filed by it on or
prior to the date of this Agreement, all such Tax Returns being accurate and complete in all material respects, has timely paid or withheld and timely remitted all Taxes shown thereon as arising and has duly and timely paid or withheld and timely remitted all material Taxes, whether or not shown on any Tax Return, that are due and payable or claimed to be due from it by a Governmental Entity, other than Taxes that (i) are not yet delinquent or are being contested in good faith, which have not been finally determined, and (ii) have been adequately reserved against in accordance with GAAP. All required estimated Tax payments sufficient to avoid any underpayment penalties or interest have been made by or on behalf of each of FNB and its Subsidiaries. Neither FNB nor any of the FNB Subsidiaries has granted any extension or waiver of the limitation period for the assessment or collection of Tax that remains in effect. There are no disputes, audits, examinations or proceedings in progress or pending, including any notice received of any intent to conduct an audit or examination, or claims asserted, for Taxes upon FNB or any of the FNB Subsidiaries. No claim has been made by a Governmental Entity in a
jurisdiction where FNB or any of the FNB Subsidiaries has not filed Tax Returns such that FNB or any of the FNB Subsidiaries is or may be subject to taxation by that jurisdiction. All deficiencies asserted or assessments made as a result of any examinations by any Governmental Entity of the Tax Returns of, or including, FNB or any of its Subsidiaries have been fully paid. No issue has been raised by a Governmental Entity in any prior examination or audit of each of FNB and its Subsidiaries which, by application of the same or similar principles, could reasonably be expected to result in a proposed deficiency in respect of such Governmental Entity for any subsequent taxable period. There are no Liens for Taxes, other than statutory liens for Taxes not yet due and payable, upon any of the assets of FNB or any of its Subsidiaries. There are no Liens for Taxes, other than statutory liens for Taxes not yet due and payable, upon any of the assets of FNB or any of the FNB Subsidiaries. Neither FNB nor any of the FNB Subsidiaries is a party to or is bound by any Tax sharing, allocation or indemnification agreement or arrangement, other than such an agreement or arrangement exclusively between or among FNB and the FNB Subsidiaries. Neither FNB nor any of the FNB Subsidiaries (A) has been a member of an affiliated group filing a consolidated federal income Tax Return, other than a group the common parent of which was FNB, or (B) has any liability for the Taxes of any Person, other than FNB or any of the FNB Subsidiaries, under Treas. Reg. § 1.1502-6, or any similar provision of state, local or foreign Law, or as a transferee or successor, by contract or otherwise. Neither FNB nor any of the FNB Subsidiaries has been, during the two-year period ending on the date hereof, a “distributing corporation” or a “controlled corporation”, within the meaning of Section 355(a)(1)(A) of the Code in a distribution of stock intended to be governed in whole or in part by Sections 355 of the Code. FNB is not and has not been a “United States real property holding corporation” within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. Neither FNB, its Subsidiaries nor any other Person on their behalf has executed or entered into any written agreement with, or obtained or applied for any written consents or written clearances or any other Tax rulings from, nor has there been any written agreement executed or entered into on behalf of any of them with any Governmental Entity, relating to Taxes, including any IRS private letter rulings or comparable rulings of any Governmental Entity and closing agreements pursuant to Section 7121 of the Code or any predecessor provision thereof or any similar provision of any applicable Law, which rulings or agreements would have a continuing effect after the Effective Time. Neither FNB nor any of the FNB Subsidiaries has engaged in any transaction that is the same as or substantially similar to one of the types of transactions that the IRS has determined to be a tax avoidance transaction and identified by notice, regulation or other form of published guidance as a “listed transaction,” as set forth in Treas. Reg. § 1.6011-4(b)(2). FNB has made available to YDKNUBNC complete copies of (i) all federal, state, local and foreign income or franchise Tax Returns of FNB and its Subsidiaries relating to the taxable periods beginning on and after January 1, 2012,2017, and (ii) any audit report issued within the last three years relating to any Taxes due from or with respect to FNB or its Subsidiaries. Neither FNB, nor any of the FNB Subsidiaries will be required to include any item of material income in, or exclude any material item of deduction from, taxable income for any taxable period or portion thereof ending after the Closing Date as a result of any (i) change in method of accounting for a taxable period ending on or prior to the Closing Date, (ii) installment sale or open transaction disposition made on or prior to the Effective Time, (iii) prepaid amount received on or prior to the Closing Date or (iv) deferred intercompany gain or any excess loss account of FNB or any of the FNB Subsidiaries for periods or portions of periods described in Treasury Regulations under Section 1502 of the Code, or any corresponding or similar provision of state, local or foreign Law, for periods, or portions thereof, ending on or before the Closing Date. Neither FNB nor any of the
FNB Subsidiaries has taken any action, or knows of any fact or circumstance, that could reasonably be expected to prevent the Merger from qualifying for the Intended Tax Treatment.
4.11Employee Benefits. For purposes of this Agreement, the following terms shall have the following meanings:
“FNB Benefit Plan” means any employee benefit or compensation plan, program, policy, practice, or other arrangement providing benefits to any current or former employee, officer, director or directorother service provider of FNB or any of itsthe FNB Subsidiaries or any beneficiary or dependent thereof, that is sponsored or maintained by FNB or any of its Subsidiariesthe FNB ERISA Affiliates or to which FNB or any of its Subsidiaries contributes orthe FNB ERISA Affiliates contribute, is obligated to contribute, or has any direct or indirect liability, whether or not written, including any employee
welfare benefit plan within the meaning of Section 3(1) of ERISA, any employee pension benefit plan within the meaning of Section 3(2) of ERISA, whether or not such plan is subject to ERISA, and any bonus, incentive, deferred compensation, vacation, stock purchase, stock option, equity or equity-based compensation, severance, employment, change of control or fringe benefit plan, program, policy agreement or policy.arrangement, including FNB Employment Agreements.
“FNB Employment Agreement” means a contract offer letter or agreement of FNB or any of its Subsidiaries with or addressed to any individual who is rendering or has rendered services thereto as an employee pursuant to which FNB or any of its Subsidiaries has any actual or contingent liability or obligation to provide compensation and/or benefits in consideration for past, present or future services.
(a)Section 4.11(a) of the FNB Disclosure Schedule includes a complete list of all FNB Benefit Plans (other than offer letters for at-will employment that require no advance notice to terminate and all FNB Employment Agreements.immaterial fringe benefits).
(b) With respect to each FNB Benefit Plan, FNB made available to YDKNUBNC a true, correct and complete copy of:of, as applicable: (i) each writing constituting a part of such FNB Benefit Plan, including all current plan documents, trust agreements, and insurance contracts and other funding vehicles, and in the case of unwritten FNB Benefit Plans, written descriptions thereof, (ii) the two most recent Annual Reports (Form 5500 Series) and accompanying schedules, if any, (iii) the current summary plan description and any summaries of material modifications thereto, (iv) the most recent annual financial report if any, (v) the most recentand/or actuarial report, if any, (vi)(v) the most recent determination or opinion letter from the IRS, if any, and (vii)(vi) the most recent minimum coverage and discrimination testing results if any. FNB has delivered or made available to YDKN a true, correct and complete copy of each FNB Employment Agreement.for the three most recent plan years.
(c) All contributions required to be made to any FNB Benefit Plan by applicable Law or by any plan document or other contractual undertaking, and all premiums due or payable with respect to insurance policies funding any FNB Benefit Plan, for the period six (6) years prior to and through the date of this Agreement, have been timely made or paid in full. EachNo FNB Benefit Plan that is an employee welfare benefit plan under Section 3(1) of ERISA either (i) is funded through an insurance company contract and is not a “welfare benefit fund” within the meaning of Section 419 of the Code, (ii) is self-funded, or (iii) is unfunded.Code.
(d) With respect to eachEach FNB Benefit Plan FNBhas been established, funded and its Subsidiaries have compliedadministered in all material respects, in compliance with its terms and all provisions of ERISA, the Code and all Laws and regulations applicable to such FNB Benefit Plans. Each FNB Benefit Plan has been administered in all material respects in accordance with its terms. There are not now, nor do any circumstances exist that would reasonably be likely to give rise to, any requirement for the posting of security with respect to a FNB Benefit Plan or the imposition of any material lien on the assets of FNB or any of its Subsidiaries under ERISA or the Code. Section 4.11(d) of the FNB Disclosure Schedule identifies each FNB Benefit Plan that is intended to be a “qualified plan” within the meaning of Section 401(a) of the Code (“FNB Qualified Plans”). The IRS has issued a favorable determination letter with respect to each FNB Qualified Plan and the related trust which has not been revoked, or the FNB Benefit Plan is entitled to rely on a favorable advisory or opinion letter issued by the IRS.IRS with respect to the preapproved plan document adopted in accordance with the requirements for such reliance. To the knowledge of FNB, there are no existing circumstances and no events have occurred that would reasonably be likelyexpected to adversely affect the qualified status of any FNB Qualified Plan or the related trust. None of FNB and its Subsidiaries nor, to FNB’s knowledge, any other Person, including any fiduciary, has engaged in any “prohibited transaction”, as defined in Section 4975 of the Code or Section 406 of ERISA, which
would reasonably be likely to subject FNB, any of its Subsidiaries or any Person that FNB or any of its Subsidiaries has an obligation to indemnify, to any material Tax or penalty imposed under Section 4975 of the Code or Section 502 of ERISA.
(e) Each FNB Benefit Plan that constitutes in any part a nonqualified deferred compensation plan within the meaning of Section 409A of the Code has been operated and maintained in all material respects in operational and documentary compliance with Section 409A of the Code and applicable guidance thereunder. Neither FNB nor any of its ERISA Affiliates has any obligation to gross up, indemnify, or otherwise reimburse any Person for any Taxes (or potential Taxes) imposed (or potentially imposed) pursuant to Sections 409A or 4999 of the Code or otherwise.
(f) No FNB Benefit Plan that is subject to Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code has failed to satisfy the minimum funding standards contained in Section 302 of ERISA and Section 412 of the Code. With respect to such FNB Benefit Plans: (A) no reportable event within the meaning of Section 4043(c) of ERISA for which the 30-day notice requirement has not been waived has occurred, (B) all premiums to the Pension Benefit Guaranty Corporation (“PBGC”) have been timely paid in full, (C) no liability, other than for premiums to the PBGC, under Title IV of ERISA has been or would reasonably be likely to be incurred by FNB or any of its Subsidiaries and (D) the PBGC has not instituted proceedings to terminate any such FNB Benefit Plan and, to FNB’s knowledge, no condition exists that makes it reasonably likely that such proceedings will be instituted or which would reasonably be likely to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any such FNB Benefit Plan.
(f)(g) (i) No FNB Benefit Plan is a Multiemployer Plan or a Multiple Employer Plan, (ii) none of FNB and its Subsidiaries nor any of their respectiveits ERISA Affiliates has, at any time during the last six (6) years, contributed to or been obligated to contribute to any Multiemployer Plan or Multiple Employer Plan and (iii) none of FNB and its Subsidiaries nor any of their respectiveits ERISA Affiliates has incurred, during the last six (6) years, any Withdrawal Liability that has not been satisfied in full. There does not now exist, nor do any circumstances exist that would reasonably be likely to result in, any Controlled Group Liability that would be a liability of FNB or any of its SubsidiariesERISA Affiliates following the Effective Time, other than such liabilities that arise solely out of, or relate solely to, the FNB Benefit Plans or the FNB Employment Agreements.Plans. Without limiting the generality of the foregoing, neither FNB nor any of its Subsidiaries, nor, to FNB’s knowledge, any of their respective ERISA Affiliates, has engaged in any transaction described in Sections 4069, 4204 or 4212 of ERISA.
(g)(h) Other than as set forth inSection 4.11(g)4.11(h) of the FNB Disclosure Schedule, FNB and its SubsidiariesERISA Affiliates have no liability for life, health, medical or other welfare benefits to former employees or beneficiaries or dependents thereof, except for health continuation coverage as required by Section 4980B of the Code, Part 6 of Title I of ERISA or applicable Law.
(h)(i) No labor union, labor organization, or works council has made a demand for recognition or certification for representation of employees of FNB or its Subsidiaries, and there are no representations, certification proceedings, or petitions seeking a representation proceeding presently pending or, to FNB’s knowledge, threatened against FNB or its Subsidiaries. Each of FNB and its Subsidiaries is in compliance in all material respects with all applicable Laws and collective bargaining agreements respecting employment and employment practices and terms and conditions of employment, including but not limited to wage and hour, worker classification, occupational safety and health, immigration, and the Worker Adjustment and Retraining Notification Act and any similar law.
4.12Compliance with Applicable Law. FNB and each of the FNB Subsidiaries hold all licenses, franchises, permits and authorizations necessary for the lawful conduct of their respective businesses under, and have complied in all material respects with, all Laws applicable to FNB or any of the FNB Subsidiaries, including the Equal Credit Opportunity Act and Regulation B, the United States Foreign Corrupt Practices Act, the Fair Housing Act, the Community Reinvestment Act, the Fair Credit Reporting Act, the Truth in Lending Act and Regulation Z, the Home Mortgage Disclosure Act, the Fair Debt Collection Practices Act, the Electronic Fund Transfer Act, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot) Act of 2001, the Bank Secrecy Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, Regulation O, any regulations promulgated by the Consumer Financial Protection Bureau or the OCC, the Interagency Policy Statement on Retail Sales of Nondeposit Investment Products, the SAFE Mortgage Licensing Act of 2008, the Real Estate Settlement Procedures Act and Regulation X, and any other law relating to bank secrecy, discriminatory lending, financing or leasing practices, money laundering
prevention, Sections 23A and 23B of the Federal Reserve Act, the Sarbanes-Oxley Act, and all agency requirements relating to the origination, sale and servicing of mortgage and consumer loans and applicable limits on loans to one borrower, except where such failure to hold or such noncompliance is not reasonably likely to, either individually or in the aggregate, have a Material Adverse Effect on FNB. FNB and each of the FNB Subsidiaries have been and are in compliance in all material respects with (i) the applicable provisions of the Sarbanes-Oxley Act and (ii) the applicable listing and corporate governance rules and regulations of the NYSE.
4.13Contracts. Except for matters that have not had and would not reasonably be likely to have, individually or in the aggregate, a Material Adverse Effect on FNB, (a) none of FNB nor any of its Subsidiaries is, with or without the lapse of time or the giving of notice, or both, in breach or default in any material respect under any material contract, lease, license or other agreement or instrument, (b) to the knowledge of FNB, none of the other parties to any such material contract, lease, license or other agreement or instrument (excluding instruments or agreements relating to Loans) is, with or without the lapse of time or the giving of notice, or both, in breach or default in any material respect thereunder and (c) neither FNB nor any of its Subsidiaries has received any written notice of the intention of any party to terminate or cancel any such material contract, lease, license or other agreement or instrument, whether as a termination or cancellation for convenience or for default of FNB or any of its Subsidiaries.
4.14FNB Regulatory Matters.
(a) FNB is duly registered with the Federal Reserve Board as a bank holding company under the BHC Act. FNB has effectively elected to become, and continues to meetsmeet the criteria of, a financial holding company under the BHC Act.
(b) The deposit accounts of FNB Bank are insured by the FDIC through the Deposit Insurance Fund to the fullest extent permitted by Law, and all premiums and assessments required to be paid in connection therewith have been paid when due, and no proceedings for the termination of such insurance are pending or, to FNB’s knowledge, threatened. FNB Bank received a rating of “satisfactory”“outstanding” in its most recent examination under the Community Reinvestment Act.
(c) Since January 1, 2014,2020, neither FNB nor any of its Subsidiaries is party to, or the subject of, any cease-and-desist order, consent order, written agreement, order for civil money penalty, refund, restitution, prompt corrective action directive, memorandum of understanding, supervisory letter, individual minimum capital requirement, operating agreement, or any other formal or informal enforcement action issued or required by, or entered into with, any Regulatory Agency or other Governmental Entity. Neither FNB nor any of its Subsidiaries has made, adopted, or implemented any commitment, board resolution, policy, or procedure at the request or recommendation of any Regulatory Agency or other Governmental Entity that limits in any material respect the conduct of its business or that in any material manner relates to its capital adequacy, its payment of dividends or distribution of capital, its credit or risk management, its compliance program, its management, its growth, or its business. Neither FNB nor any of its Subsidiaries has reason to believe that any Regulatory Agency or other Governmental Entity is considering issuing, initiating, ordering, requesting, recommending, or otherwise proceeding with any of the items referenced in this paragraph.
(d) Except for examinations of FNB and its Subsidiaries conducted by their respective primary functional regulators in the ordinary course of business, no Regulatory Agency or other Governmental Entity has initiated, threatened, or has pending any proceeding or, to the knowledge of FNB, any inquiry or investigation into the business or operations of FNB or any of its Subsidiaries, except where such proceeding, inquiry, or investigation would not reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on FNB or to prevent or materially delay receipt of the Requisite Regulatory Approvals.
(e) There is no unresolved violation, apparent violation, criticism, matter requiring attention, recommendation, or exception cited, made, or threatened by any Regulatory Agency or other Governmental
Entity in any report of examination, report of inspection, supervisory letter or other communication with FNB or any of its Subsidiaries that (i) relates to anti-money laundering, economic sanctions, or consumer protection, (ii) would reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on FNB or (iii) would reasonably be likely to prevent or materially delay the receipt of the Requisite Regulatory Approvals.
4.15Undisclosed Liabilities. Neither FNB nor any of its Subsidiaries has, and since December 31, 2015,2021, neither FNB nor any of its Subsidiaries has incurred, any liabilities or obligations, whether accrued,
absolute, contingent or otherwise, known or unknown, whether due or to become due, except for (i) those liabilities properly accrued or reserved against in the unaudited consolidated balance sheet of FNB and its Subsidiaries as of March 31, 20162022 included in the FNB Reports, (ii) liabilities and obligations incurred in the ordinary course of business consistent with past practice since March 31, 2016,2022, (iii) liabilities and obligations that are not material to FNB and its Subsidiaries, taken as a whole, and (iv) any liabilities incurred with respect to the transactions contemplated by this Agreement.
4.16Environmental Liability. To FNB’s knowledge, (i) FNB and its Subsidiaries are in compliance in all material respects with applicable Environmental Laws, (ii) no Contamination exceeding applicable cleanup standards or remediation thresholds under any Environmental Law exists at any real property, including buildings or other structures, currently or formerly owned or operated by FNB or any of its Subsidiaries, that would reasonably be likely to result in a material Environmental Liability for FNB or its Subsidiaries, (iii) no Contamination exists at any real property owned by a third party that would reasonably be likely to result in a material Environmental Liability for FNB or its Subsidiaries, (iv) neither FNB nor any of its Subsidiaries has received any written notice, demand letter, claim or request for information alleging any material violation of, or liability under, any Environmental Law, (v) neither FNB nor any of its Subsidiaries is subject to any order, decree, injunction or other agreement with any Governmental Entity or any third party under any Environmental Law that would reasonably be likely to result in a material Environmental Liability of FNB or its Subsidiaries and (vi) FNB has made available to YDKNUBNC copies of all material environmental reports or studies, sampling data, correspondence and filings in its possession or relating to FNB, its Subsidiaries and any currently owned or leased property of FNB which were prepared in the last two (2) years.
4.17Reorganization. As of the date of this Agreement, to the knowledge of FNB, no fact or circumstance exists that would reasonably be likely to prevent the Merger from qualifying for the Intended Tax Treatment.
4.18Insurance. FNB and the FNB Subsidiaries are insured with reputable insurers against such risks and in such amounts as are set forth inSection 4.18 of the FNB Disclosure Schedule and as their management reasonably have determined to be prudent in accordance with industry practices.
4.19Investment Securities. Except where failure to be true would not reasonably be likely to have a Material Adverse Effect on FNB, (a) each of FNB and the FNB Subsidiaries has good title to all securities owned by it, except those securities sold under repurchase agreements securing deposits, borrowings of federal funds or borrowings from the Federal Reserve Banks or the Federal Home Loan Banks or held in any fiduciary or agency capacity, free and clear of any Liens, except to the extent such securities are pledged in the ordinary course of business to secure obligations of FNB or the FNB Subsidiaries, and (b) such securities are valued on the books of FNB in accordance with GAAP in all material respects.
4.20Intellectual Property.
(a) (i) FNB and the FNB Subsidiaries own or have a valid license to use all material FNB Intellectual Property, free and clear of all Liens, royalty or other payment obligations (except for royalties or payments with respect to off-the-shelf software at standard commercial rates), (ii) to the knowledge of FNB, FNB Intellectual Property constitutes all of the Intellectual Property necessary to carry on the business of FNB and the FNB Subsidiaries as currently conducted, (iii) FNB Intellectual Property that is registered and owned by
FNB or any of the FNB Subsidiaries, and to the knowledge of FNB, all other registered FNB Intellectual Property, has not been cancelled, forfeited, expired or abandoned, (iv) FNB Intellectual Property that is registered is valid, and neither FNB nor any of the FNB Subsidiaries has received written notice challenging the validity or enforceability of FNB Intellectual Property, and (v) to the knowledge of FNB, the conduct of the business of FNB and the FNB Subsidiaries does not violate, misappropriate or infringe upon the Intellectual Property rights of any other Person, nor to the knowledge of FNB has FNB or any of the FNB Subsidiaries received any written communications alleging that any of them has infringed, diluted, misappropriated or
violated any of the Intellectual Property of any other Person. To FNB’s knowledge, no other Person is infringing, diluting, misappropriating or violating, nor has FNB or any of the FNB Subsidiaries sent any written communications alleging that any person has infringed, diluted, misappropriated or violated, any of the FNB Intellectual Property owned by FNB or a FNB Subsidiary.
(b) For the purposes of this Agreement, the term “FNB Intellectual Property” means all Intellectual Property used or held for use in the operation of the business of FNB or any of its Subsidiaries
(c) At all times, (i) FNB and each of the FNB Subsidiaries have taken commercially reasonable actions to protect and maintain (A) all FNB Intellectual Property and (B) the security and integrity of their software, databases, networks, systems, equipment and hardware and protect the same against unauthorized use, modification, or access thereto, or the introduction of any viruses or other unauthorized or damaging or corrupting elements, (ii) FNB’s and the FNB Subsidiaries’ IT Assets operate and perform in all material respects in accordance with their documentation and functional specifications and otherwise as required by FNB in connection with its business, and have not materially malfunctioned or failed within the past two (2) years, (iii) to FNB’s knowledge, no Person has gained unauthorized access to the IT Assets and (iv) FNB has implemented commercially reasonable backup and disaster recovery technology consistent with industry practices.
4.21Loans; Nonperforming and Classified Assets.
(a) Each Loan on the books and records of FNB or any FNB Subsidiary (i) was made and has been serviced in all material respects in accordance with their customary lending standards in the ordinary course of business, (ii) is evidenced in all material respects by appropriate and sufficient documentation, (iii) to the extent secured, has been secured or is in the process of being secured, by valid Liens, which have been perfected or are in the process of being perfected, in accordance with all applicable Laws and, (iv) to the knowledge of FNB, constitutes the legal, valid and binding obligation of the obligor named in the contract evidencing such Loan subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditor’s rights or by general equity principles.
(b) FNB has made available to YDKNUBNC a listing as to FNB and each FNB Subsidiary as of the latest practicable date, which shall be a date no earlier than January 1, 2015:2022: (i) any Loan with an outstanding balance of $5,000,000$10,000,000 or more and under the terms of which the obligor is ninety (90) or more days delinquent in payment of principal or interest, or to FNB’s knowledge, in default of any other material provision thereof, (ii) each Loan that has been classified as “substandard”, “doubtful”, “loss” or “special mention” or words of similar import by FNB, a FNB Subsidiary or an applicable Regulatory Agency, (iii) a listing of the OREO acquired by foreclosure or by deed-in-lieu thereof, including the book value thereof and (iv) each written or oral loan agreement, note or borrowing arrangement, including leases, credit enhancements, commitments, guarantees and interest-bearing assets, with any Affiliate.
(c) All reserves or other allowances for loan losses reflected in FNB’s financial statements included in the FNB Reports as of and for the year ended December 31, 20152021 and as of and for the three (3) months ended March 31, 2016,2022, comply in all material respects with the standards established by Governmental Entities and GAAP. Neither FNB nor FNB Bank has been notified in writing by any state or federal bank regulatory agency that FNB’s reserves are inadequate or that the practices and policies of FNB in establishing its reserves for the year ended December 31, 20152021 and the three (3) months ended March 31, 2016,2022, and in accounting for delinquent and classified assets, fail to comply with applicable accounting or regulatory requirements.
(d) All Loans owned by FNB or any FNB Subsidiary, or in which FNB or any FNB Subsidiary has an interest, comply in all material respects with applicable Laws, including applicable usury statutes, underwriting and recordkeeping requirements, Regulation O and the Truth in Lending Act, the Equal Credit Opportunity Act, and the Real Estate Settlement Procedures Act.
4.22Fiduciary Accounts. FNB and each of its Subsidiaries has properly administered all accounts for which it acts as a fiduciary, including accounts for which it serves as a trustee, agent, custodian, personal representative, guardian, conservator or investment advisor, in all material respects in accordance with the terms of the governing documents and applicable Laws. To FNB’s knowledge, neither FNB nor any of its Subsidiaries, nor any of their respective directors, officers or employees, has committed any breach of trust with respect to any fiduciary account and the records for each such fiduciary account are true and correct and accurately reflect the assets of such fiduciary account.
4.23Ownership of YDKNUBNC Shares. As of the date hereof, neither FNB, nor, to the knowledge of FNB, any of its affiliates or associates (as such terms are defined under the Exchange Act), (i) beneficially owns, directly or indirectly, any shares of YDKNUBNC Common Stock, or (ii) is a party to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of, any shares of YDKNUBNC Common Stock. None of FNB or its Subsidiaries is now holds, nor at any time within the last three (3) years has been, anheld, “interested shareholder” or an affiliate of an interested shareholder,shares,” as such terms areis defined in Section 55-9-0255-9A-01 of the NCBCA.
4.24Bank Secrecy Act, Foreign Corrupt Practices Act and U.S.A. Patriot Act. FNB Bank is in compliance in all material respects with the Bank Secrecy Act, the United States Foreign Corrupt Practices Act and the International Money Laundering Abatement and Anti-Terrorist Financing Act and all regulations promulgated thereunder. Except as would not be material to FNB and its Subsidiaries, taken as a whole, FNB Bank (i) has properly certified all foreign deposit accounts and has made all necessary tax withholdings on all of its deposit accounts, (ii) has timely and properly filed and maintained all requisite Currency Transaction Reports and other related forms, including any requisite Custom Reports required by any agency of the U.S. Department of the Treasury, including the IRS, and (iii) has timely filed all Suspicious Activity Reports with the Financial Crimes Enforcement Network (U.S. Department of the Treasury) required to be filed by it pursuant to the laws and regulations referenced in this Section.
4.25No Other Representations or Warranties.
(a) Except for the representations and warranties made by FNB in thisArticle 4, neither FNB nor any other person makes any express or implied representation or warranty with respect to FNB, its Subsidiaries, or their respective businesses, operations, assets, liabilities, conditions (financial or otherwise) or prospects, and FNB hereby disclaims any such other representations or warranties.
(b) FNB acknowledges and agrees that neither YDKNUBNC nor any other person has made or is making any express or implied representation or warranty other than those contained inArticle 3.
ARTICLE 5
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1Conduct of Businesses Prior to the Effective Time.
(a) During the period from the date of this Agreement to the Effective Time or earlier termination of this Agreement, except as expressly contemplated or permitted by this Agreement (including as set forth in the UBNC Disclosure Schedule or the FNB Disclosure Schedule), as otherwise required by
Law or regulatory directive, or with the prior consent of the other party (which consent will not be unreasonably withheld, conditioned, or delayed), each of FNB and YDKNUBNC shall, and shall cause each of their respective Subsidiaries to (i) conduct its business in the ordinary course in all material respects, (ii) use reasonable best efforts, subject to the requirements of this Agreement, to maintain and preserve intact its business organization, employees and advantageous business relationships and retain the services of its key officers and key employees and (iii) take no action that would reasonably be likely to prevent or materially impede or delay the obtaining of, or materially
adversely affect the ability of the parties expeditiously to obtain, any necessary approvals of any Regulatory Agency, Governmental Entity or any other person or entity required for the transactions this Agreement contemplates or to perform its respective covenants and agreements under this Agreement or to consummate the transactions contemplated by this Agreement.
(b) Subject to applicable Law, including Laws with respect to the exchange of information, the disclosure of confidential supervisory information, the protection of personally identifiable information and the exercise of a controlling influence over the management or policies of another Person, YDKNUBNC agrees that between the date of this Agreement and the Effective Time:
(i) (1) the materials to be presented at the meetings of any YDKNUBNC Bank loan committee shall be provided to a designated representative of FNB at the same time such materials are provided to such loan committee; (2) YDKNUBNC shall provide the minutes of each such meeting to the designated FNB representative promptly after such meeting; (3) YDKNUBNC shall prepare and furnish to FNB at least quarterly an update of the reserves and other allowances for loan losses reflected in YDKN’sUBNC’s financial statements included in the YDKN ReportsUBNC Financial Statements as of and for the year ended December 31, 20152021 and for the three months ended March 31, 2016;2022; (4) YDKNUBNC shall promptly notify FNB if YDKNUBNC or any YDKNUBNC Subsidiary has been notified by any state or federal bank Regulatory Agency that its reserves are inadequate or that its practices for establishing its reserves or in accounting for delinquent and classified assets generally fail to comply with applicable accounting or regulatory requirements, or that any Regulatory Agency having jurisdiction over YDKNUBNC or any YDKNUBNC Subsidiary or YDKN’sUBNC’s independent auditor believes such reserves to be inadequate or inconsistent with the historical loss experience of YDKN;UBNC; and (5) YDKNUBNC shall prepare and furnish to FNB at least monthlyquarterly an updated list of all extensions of credit and OREO that have been classified by YDKNUBNC or any YDKNUBNC Subsidiary as other loans specifically mentioned, special mention, substandard, doubtful, loss, classified or criticized, credit risk assets, concerned loans or words of similar import; (6) YDKN shall provide the YDKN Bank underwriting materials and documentation to the designated FNB representative for each SBA Loan in excess of $2,500,000 at such time that such materials and documentation are presented to any YDKN or YDKN Bank director loan committee for review; (7) YDKN shall provide the YDKN Bank underwriting materials and documentation to the designated FNB representative for each Loan for residential development or to a builder or for land purchase or land development with a principal balance in excess of $3,000,000; and (8) YDKN acknowledges that FNB reserves the right to observe the loan approval process by the Board of Directors of YDKN Bank or any loan committee of YDKN or YDKN Bank;
(ii) upon request of FNB, YDKNUBNC shall furnish to FNB such information to which YDKNUBNC has access or prepares in the ordinary course of business as FNB may reasonably request regarding any loans, loan relationships and commitments of YDKNUBNC Bank entered into between June 30, 2016,March 31, 2022, and the date hereof; and
(iii) upon request of FNB, YDKNUBNC shall furnish to FNB such information to which YDKNUBNC has access or prepares in the ordinary course of business as FNB may reasonably request regarding any loans, loan relationships and commitments of YDKNUBNC Bank entered into after the date hereof in which the amount involved is equal to or greater than (i) $7,500,000$3,000,000 on a secured basis and (ii) $1,000,000$500,000 on an unsecured or undersecured basis.
5.2YDKNUBNC Forbearances. During the period from the date of this Agreement to the Effective Time or earlier termination of this Agreement, except as expressly contemplated or permitted by this Agreement, as set
forth inSection 5.2 of the YDKNUBNC Disclosure Schedule or as otherwise required by Law or regulatory directive, YDKNincluding Pandemic Measures, UBNC shall not, and shall not permit any of the YDKNUBNC Subsidiaries to, without the prior written consent of FNB, (which consent shall not be unreasonably withheld, conditioned or delayed):
(a) (i) other than (A)UBNC’s regular quarterlysemi-annual cash dividends by YDKN at a rate not in excessdividend of $0.10$0.11 per share of YDKNUBNC Common Stock or (B)and dividends and distributions by a direct or indirect Subsidiary of YDKNUBNC to YDKNUBNC or any direct or indirect wholly owned Subsidiaryto service subordinated notes outstanding as of YDKN,the date hereof, declare, set aside or pay any dividends on, make any other distributions in respect of, or enter into any agreement with respect to the voting of, any of its capital stock, (ii) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of its capital stock, except upon the exercise of YDKNUBNC Stock Options in accordance with their present terms or (iii) purchase, redeem or otherwise acquire any shares of capital stock or other securities of YDKNUBNC or any of the YDKNUBNC Subsidiaries, or any rights, warrants or options to
acquire any such shares or other securities, except for withholding of shares in satisfaction of tax obligations upon the settlementvesting of any YDKNUBNC Restricted Stock Award or the exercise of any YDKNUBNC Stock Option;
(b) grant any stock options, stock appreciation rights, restricted stock awards, phantom stock awards or performance share awards, or other equity or equity-based awards with respect to shares of YDKNUBNC Common Stock, except as required by an existing contract, plan, arrangement or policy, or grant any individual, corporation or other entity any right to acquire any shares of its capital stock, or issue any additional shares of capital stock or other securities, other than the issuance of shares of YDKNUBNC Common Stock upon the exercise of YDKNUBNC Stock Options;
(c) amend the YDKNUBNC Articles, YDKNUBNC Bylaws or other comparable organizational documents of any of the YDKNUBNC Subsidiaries;
(d) (i) acquire or agree to acquire by merging or consolidating with, or by purchasing any assets or any equity securities of, or by any other manner, any business or any Person, or otherwise acquire or agree to acquire any assets except (x)(v) with respect to securities (which shall be subject to Section 5.2(z)), (w) assets acquired upon foreclosure, (y)(x) assets acquired in the ordinary course of business consistent with past practice that do not exceed $1,000,000$100,000 in the aggregate, (y) mortgages and other third party loans acquired on the ordinary course of business consistent with past practice, or (z) with respect to capital expenditures (which shall be subject toSection 5.2(k)), or (ii) except as set forth inSection 5.2(d)(ii) of the YDKNUBNC Disclosure Schedule, open, acquire, close or sell any branches;
(e) except as set forth inSection 5.2(e) of the YDKNUBNC Disclosure Schedule, sell, transfer, mortgage, encumber or otherwise dispose of any of its properties or assets (except with respect to securities, which shall be subject to Section 5.2(z)) to any individual, corporation or other entity other than a wholly owned Subsidiary, or cancel, release or assign any indebtedness to any such person or any claims held by any such person, in each case other than in the ordinary course of business for an amount not in excess of $500,000$100,000 individually or $1,000,000and $250,000 in the aggregate;
(f) (i) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise become responsible for the obligations of any Person, other than YDKNto UBNC or any YDKNUBNC Subsidiary, except for (A) borrowings having a maturity of not more than 90 days under existing credit facilities, (B) renewals, extensions or replacements of such existing credit facilities that (1) are incurred in the ordinary course of business consistent with past practice, (2) do not increase the aggregate amount available thereunder, (3) do not provide for any termination fees or pre-payment penalties, (4) do not contain any new provisions limiting or otherwise affecting the ability of YDKNUBNC or any of the YDKNUBNC Subsidiaries or successors from terminating or pre-paying such facilities, and (5) do not contain financial terms materially less advantageous than existing credit facilities, or (C) ordinary advances and reimbursements to employees and endorsements of banking instruments, or (ii) make any capital contributions to, or investments in, any Person other than its wholly owned Subsidiaries;
(g) change in any material respect its accounting methods, except as may be necessary and appropriate to conform to changes in Tax law requirements, changes in GAAP or regulatory accounting principles or as required by YDKN’sUBNC’s independent auditors or its Regulatory Agencies;
(h) change in any material respect its underwriting, operating, investment or risk management or other similar policies, procedures or practices of YDKNUBNC or any of the YDKNUBNC Subsidiaries except as required by such policies, applicable lawLaw or policies imposed by any Regulatory Agency or any Governmental Entity;
(i) make, change or revoke any material Tax election, file any material amended Tax Return, enter into any closing agreement with respect to a material amount of Taxes, settle any material Tax claim or assessment or surrender any right to claim a refund of a material amount of Taxes;
(j) terminate or waive any material provision of any agreement, contract, lease or obligation that is material to YDKNUBNC or any of its Subsidiaries or enter into or renew any such agreement, contract, lease or obligation, including any bank owned life insurance policies;policies, that would obligate UBNC or any of its Subsidiaries to make aggregate payments in excess of $100,000 during the one (1) year period following the date hereof;
(k) incur any capital expenditures in excess of $250,000$100,000 individually and $500,000$250,000 in the aggregate;aggregate, except for capital expenditures that are disclosed in Section 5.2(k) of the UBNC Disclosure Schedule for which UBNC or UBNC Bank has entered into agreements obligating UBNC or UBNC Bank or otherwise committed to as of the date of this Agreement;
(l) except as required by agreements or instruments in effect on the date of this Agreement, alter in any material respect, or enter into any commitment to alter in any material respect, any material interest in any corporation, association, joint venture, partnership or business entity that is not a YDKNUBNC Subsidiary and in which YDKNUBNC directly or indirectly holds any equity or ownership interest on the date of this Agreement, other than any interest arising from any foreclosure, settlement in lieu of foreclosure or troubled loan or debt restructuring in the ordinary course of business consistent with past practice;
(m) agree or consent to any material agreement or material modifications of existing agreements with any Regulatory Agency or Governmental Entity in respect of the operations of its or its Subsidiaries’ businesses, except as required by applicable Law based upon the advice of Yadkin’sUBNC’s legal advisors;
(n) pay, discharge, settle or compromise any claim, action, litigation, arbitration, suit, investigation or proceeding, other than any such payment, discharge, settlement or compromise not(i) in excess of $200,000$50,000 individually or $500,000$100,000 in the aggregate;aggregate, with respect to claims, actions, litigations, arbitrations, suits, investigations or proceedings made, filed or instituted prior to the date hereof, and (ii) in excess of $250,000 in the aggregate, with respect to claims, actions, litigation, arbitrations, suits, investigations or proceedings made, filed or instituted on or after the date hereof;
(o) issue any broadly distributed communication of a general nature to employees, including general communications relating to benefits and compensation or customers, except for communications in the ordinary course of business that do not directly relate to (i) the Merger or other transactions contemplated by this Agreement, or (ii) to the NewBridge Bancorp conversion;Agreement;
(p) take any action, or knowingly fail to take any action, which action or failure to act would be reasonably likely to prevent the Merger from qualifying for the Intended Tax Treatment;
(q) take any action that would be reasonably likely to materially impede or delay the ability of the parties to obtain any necessary approvals of any Regulatory Agency or other Governmental Entity required for the transactions this Agreement contemplates;
(r) except as contemplated by this Agreement, take any action that is intended or is reasonably likely to result in any of the conditions to the Merger set forth in Article 7 not being satisfied, except, in every case, as may be required by applicable Law;
(s) which consent shall be deemed received unless FNB shall object thereto in writing within three (3)two (2) business days after receipt of written notice from YDKNUBNC (which notice shall be deemed delivered if provided
by email to FNB’s chief credit officer or his designee at the email address set forth inSection 5.2(s) of the FNB Disclosure schedule)Schedule) to (i) make, renew or otherwise modify any Loan (except for any Loan duly approved as of the date hereof) to any Person if the Loan is an existing credit on the books of YDKNUBNC and classified as “doubtful” or “loss”“loss,” or if the Loan is an existing credit on the books of YDKNUBNC and classified as “substandard”“substandard,” in excess of $2,000,000,$1,000,000, or if the Loan has been designated by the parties as “substandard” inSection 5.2(s) of the YDKN UBNC
Disclosure Schedule, or (ii) make, renew or otherwise modify any Loan (except for any Loan duly approved as of the date hereof) to any Person if the Loan is an existing credit on the books of YDKNUBNC and classified as “special mention” in excess of $3,000,000,$1,000,000, or if the Loan has been designated by the parties hereto as “special mention” inSection 5.2(s) of the YDKNUBNC Disclosure Schedule, or (iii) make, renew or otherwise modify any Loan or Loans (except for any Loan or Loans duly approved as of the date hereof) to any individual if immediately after making an unsecured Loan or Loans, such individual would be indebted to YDKNUBNC Bank in an aggregate amount in excess of $1,000,000$500,000 (or in the case of any other type of Person, such Person would be indebted to YDKNUBNC Bank in an aggregate amount in excess of $1,000,000)$500,000) on an unsecured basis or an under secured basis (i.e., the fair market value of the collateral securing such Loan and any replacements thereof is less than the principal value of such Loan and any replacements thereof), or (iv) make any fully secured Loan or Loans (except for any Loan or Loans duly approved as of the date hereof) to any Person, except for any Loan secured by a first mortgage on single family owner-occupied real estate, if, immediately after making a secured Loan, such Person would be indebted to YDKNUBNC Bank in an aggregate amount in excess of $7,500,000,$4,000,000; provided, however, that the restrictions contained in this subparagraph (iv) shall not apply to Loans in an individual amount of $750,000 or less made under a homebuilder guidance line approved by UBNC Bank, or (v) make, renew or otherwise modify any Loan or Loans (except for any Loan or Loans duly approved as of the date hereof) secured by an owner-occupied 1-4 single-family residence with a principal balance in excess of $1,250,000, or (vi) make, renew or otherwise modify any Loan (except for any Loan duly approved as of the date hereof) for general commercial construction with a principal balance in excess of $5,000,000, or (vii) make, renew or modify any Loan (except for any Loan duly approved as of the date hereof) for residential development or to a builder or for any land purchase or other land development with a principal balance in excess of $3,000,000,$750,000; or (viii) make any SBA Loan (except for any Loan duly approved as of the date hereof) in a gross amount (i.e., including any “sold” portion thereof) equal to or exceeding $2,500,000, or (ix)(vi) originate, make, participate in or purchase (1) any hotel or golf course or (2) any restaurant Loan (except for any Loan duly approved as of the date hereof) exceeding $1,000,000;$500,000;
(t) make any material changes in its policies and practices with respect to (A) underwriting, pricing, originating, acquiring, selling, servicing or buying or selling rights to service Loans or (B) its hedging policies and practices, in each case except as may be required by such policies and practices or by any applicable Laws; or (ii) make, renew, amend or modify, including by entering into any forbearance agreement with respect to, any Loan, in each case, other than in the ordinary course of business and consistent with the effective policies and practices of YDKNUBNC and the YDKNUBNC Subsidiaries;
(u) other than in the ordinary course of business consistent with past practice, originate, participate or purchase any new Loan (except for any Loan that was duly approved for origination, participation or purchase prior to the date hereof) that is (i) serviced by a third party or (ii) outside of the States of Maryland, North Carolina, South Carolina Pennsylvania, Ohio, West Virginia, Virginia, Tennessee and Kentucky and the District of Columbia;Virginia;
(v) enter into or amend or renew any employment, consulting, severance or similar agreements or arrangements with any director, officer or employee of YDKNUBNC or its Subsidiaries or grant any salary or wage increase or increase any employee benefit, including discretionary or other incentive or bonus payments or discretionary or matching contributions to any deferred compensation plan, make any grants of awards to newly hired employees or accelerate the vesting of any unvested stock options or stock awards, including phantom units, except (a) as required under the terms of any YDKNUBNC Benefit Plan or YDKN Employment Agreement existing as of the date hereof, (b) as contemplated by this Agreement or (c) for any of the following:
(i) merit or promotion based salary or wage increases for those employees (other than(including named executive officers) of YDKNUBNC and its Subsidiaries who would normally be eligible for a merit or promotion
based salary or wage increase during the period commencing on the date hereof through the Closing Date in the ordinary course of business consistent with past practice, not toand as set forth in Section 5.2(v)(i) of the aggregate exceed a 2.5% increase;UBNC Disclosure Schedule;
(ii) bonuses payable for 20162022 performance in accordance with YDKN’s short-term incentive plan andexisting UBNC Benefit Plans that are accrued in accordance with YDKN’sUBNC’s customary and normal practices and based upon achievement of actual performance levels, as determined by YDKN’sUBNC’s Compensation Committee;Committee, and as are set forth in Section 5.2(v)(ii) of the UBNC Disclosure Schedule;
(iii) payment of discretionary bonuses in such amounts as are approved by FNB in consultation with UBNC and that are disclosed in Section 5.2(v)(iii) of the UBNC Disclosure Schedule;
(iv) retention bonuses to such persons and in such amounts as are approved by FNB in consultation with UBNC and that are disclosed in Section 5.2(v)(iv) of the UBNC Disclosure Schedule, provided that such bonuses are linked to the dates determined by FNB following establishment of the conversion schedule, and subject to modification by FNB with respect to the medium of payment;
(v) changes that are required by applicable Law or are advisable in order to (A) comply with Section 409A of the Code or (B) prevent or reduce the imposition of an excise tax under Section 4999 of the Code, provided, that such changes shall have been provided to FNB with a reasonable opportunity for FNB to provide comments and consent regarding such changes; and
(iv)(vi) the making of required contributions under the YDKN Retirement SavingsUnion Bank 401(k) Plan and all other 401(k) plans of YDKNUBNC and its affiliatesERISA Affiliates (collectively, the “401(k) Plans”) as in existence on the date of this Agreement;
(w) hire any person as an employee of YDKNUBNC or any of the YDKNUBNC Subsidiaries or promote any employee, except (i) to satisfy contractual obligations existing as of the date of this Agreement, (ii) to fill any vacancies existing as of the date of this Agreement or (iii) to fill any vacancies arising after the date of this Agreement at a comparable level of compensation with persons whose employment is terminable at the will of YDKNUBNC or a YDKNUBNC Subsidiary of YDKN,UBNC, as applicable; provided, however, that the total salary and target bonus opportunity for any such person hired or promoted may not exceed $175,000;$125,000; provided, further that the total salary and wage expense for all such persons hired or promoted shall not cause UBNC to exceed, in the aggregate, the dollar amount for the budgeted salary and wage expense set forth in Section 5.2(v) of the UBNC Disclosure Schedule;
(x) agree to take, make any commitment to take, or adopt any resolutions of its Board of Directors in support of, any of the actions prohibited by any provision of thisSection 5.2; or
(y) engage in any new loan transaction with an officer or director or principal shareholder (as such terms are defined in 12 C.F.R. Part 215), it being acknowledged and agreed by YDKNUBNC that each such loan transaction that YDKNUBNC presents to FNB for approval pursuant to thisSection 5.2(y) shall be required to comply with Regulation O (as interpreted and enforced by the OCC); or
(z) manage YDKN’sUBNC’s securities portfolio in a manner materially inconsistent with YDKN’sUBNC’s policies in effect as of the date hereof; provided that, at least five (5) business days before the first day of each calendar month during the period from the date of this Agreement to the Effective Time, YDKNUBNC will provide to FNB a written summary reasonably detailing its investment strategy (and any changes therein) for the following three (3) consecutive calendar month period with respect to its investment securities, derivatives portfolio or its interest rate exposure.exposure; and provided further, UBNC will not purchase any debt securities other than (i) debt securities with a quality rating of “AAA” by either Standard & Poor’s Ratings Services or Moody’s Investor Services, and (iii) having a duration not exceeding two (2) years.
5.3FNB Forbearances. During the period from the date of this Agreement to the Effective Time, except as expressly contemplated or permitted by this Agreement, set forth inSection 5.3 of the FNB Disclosure Schedule or as otherwise required by Law or regulatory directive, FNB shall not, and shall not permit any of its Subsidiaries to, without the prior written consent of YDKNUBNC (which shall not be unreasonably withheld, conditioned or delayed):
(a) amend, repeal or otherwise modify any provision of the FNB Charter or the FNB Bylaws other than those that would not be adverse to YDKNUBNC or its shareholders or those that would not impede FNB’s ability to consummate the transactions this Agreement contemplates;
(b) (i) other than (A) regular quarterly cash dividends by FNB or (B) dividends and distributions by a direct or indirect Subsidiary of FNB to FNB or any direct or indirect wholly owned Subsidiary of FNB, declare,
set aside or pay any dividends on, make any other distributions in respect of, or enter into any agreement with respect to the voting of, any of its capital stock, (ii) split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of its capital stock, except upon the exercise of options to purchase shares of FNB Common Stock in accordance with their present terms or (iii) purchase, redeem or otherwise acquire any shares of capital stock or other securities of FNB or any of the FNB Subsidiaries, or any rights, warrants or options to acquire any such shares or other securities, except for withholding of shares in satisfaction of tax obligations upon the settlement of any restricted stock awards of FNB or the exercise of any options to purchase shares of FNB Common Stock;
(c) take any action, or knowingly fail to take any action, which action or failure to act would be reasonably likely to prevent the Merger from qualifying for the Intended Tax Treatment;
(d) except as contemplated by this Agreement, take any action that is intended or is reasonably likely to result in any of the conditions to the Merger set forth in Article 7 not being satisfied, except, in every case, as may be required by applicable Law;
(e) make any material investment either by purchase of stock or securities, contributions to capital, property transfers or purchase of any property or assets of any other individual, corporation or other entity, merger, consolidation, share exchange or other business combination, in any case to the extent such action would be reasonably likely to prevent, or impede or delay, the consummation of the transactions this Agreement contemplates;
(f) take any action that would be reasonably likely to impede or delay the ability of the parties to obtain any necessary approvals of any Regulatory Agency or other Governmental Entity required for the transactions this Agreement contemplates;contemplates, including, without limitation, taking any action to cause the closure of any branch office of FNB Bank in operation as of the date of this Agreement within the State of North Carolina; or
(g) agree to take, make any commitment to take, or adopt any resolutions of its Board of Directors in support of, any of the actions prohibited by thisSection 5.3.
ARTICLE 6
ADDITIONAL AGREEMENTS
6.1Regulatory Matters.
(a) FNB agrees to prepare and file, as soon as practicable (but in any case, within sixty (60)forty-five (45) calendar days of the date of this Agreement), the Registration Statement with the SEC in connection with the issuance of FNB Common Stock in the Merger including the Joint Proxy Statement and prospectus and other proxy solicitation materials of YDKNUBNC and FNB constituting a part thereof and all related documents. YDKNUBNC shall prepare and furnish to FNB such information relating to it and its Subsidiaries, directors, officers and shareholders as may be reasonably required in connection with the above referenced documents based on its knowledge of and access to the information required for said documents. YDKNUBNC and its legal, financial and accounting advisors shall have the right to review in advance and approve, which approval shall not be unreasonably withheld, conditioned or delayed, such Registration Statement prior to its filing. YDKNUBNC agrees to cooperate with FNB and FNB’s counsel and accountants in requesting and obtaining appropriate opinions, consents and letters from its financial advisor and independent auditor in connection with the Registration Statement and the Joint Proxy Statement. Each of YDKNUBNC and FNB agrees to use its reasonable best efforts to cause the Registration Statement to be declared effective under the Securities Act as promptly as reasonably practicable after the filing thereof. FNB also agrees to use its reasonable best efforts to obtain all necessary state securities law or “Blue Sky” permits and approvals required to carry out the transactions this Agreement contemplates.
After the SEC has declared the Registration Statement effective under the Securities Act, each of YDKN and FNBUBNC shall promptly mail the Joint Proxy Statement to their respectiveits shareholders, and the expenses in connection therewith shall be borne in accordance withSection 9.3(a).
(b) Each of YDKNUBNC and FNB agrees that none of the respective information supplied or to be supplied by it for inclusion or incorporation by reference in the Registration Statement shall, at the time the
Registration Statement and each amendment or supplement thereto, if any, becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading. Each of YDKNUBNC and FNB agrees that none of the information supplied or to be supplied by it for inclusion or incorporation by reference in the Joint Proxy Statement and any amendment or supplement thereto shall at the dates of mailing to YDKN’sthe UBNC shareholders and FNB’s shareholders, the YDKN Shareholders Meeting and the FNB Shareholders Meeting contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which such statements were made, not misleading. Each of YDKNUBNC and FNB further agrees that if such party shall become aware prior to the Effective Time of any information furnished by such party that would cause any of the statements in the Registration Statement or the Joint Proxy Statement to be false or misleading with respect to any material fact, or to omit to state any material fact necessary to make the statements therein not false or misleading, to promptly inform the other party thereof and an appropriate amendment or supplement describing such information shall be filed promptly with the SEC and, to the extent required by Law, disseminated to the shareholders of YDKN.UBNC.
(c) FNB agrees to advise YDKN,UBNC, promptly after FNB receives notice thereof, of the time when the Registration Statement has become effective or any supplement or amendment has been filed, of the issuance of any stop order or the suspension of the qualification of FNB Common Stock for offering or sale in any jurisdiction, of the initiation or, to the extent FNB is aware thereof, threat of any proceeding for any such purpose, or of any request by the SEC for the amendment or supplement of the Registration Statement or for additional information.
(d) The parties shall cooperate with each other and use their respective reasonable best efforts to promptly (but in any case, within sixty (60)forty-five (45) calendar days of the date of this Agreement) prepare and file all necessary documentation, to effect all applications, notices, petitions and filings, to obtain as promptly as practicable all permits, consents, approvals and authorizations of all third parties, Regulatory Agencies and Governmental Entities that are necessary or advisable to consummate the transactions this Agreement contemplates, including the Merger and the Bank Merger, and to comply with the terms and conditions of all such permits, consents, approvals and authorizations of all such Regulatory Agencies and Governmental Entities. YDKNUBNC and FNB shall have the right to review in advance, and, to the extent practicable, each will consult the other on, in each case subject to applicable Laws relating to the exchange of information, all the information relating to YDKNUBNC or FNB, as the case may be, and any of their respective Subsidiaries, which appear in any filing made with, or written materials submitted to, any third party, Regulatory Agency or any Governmental Entity in connection with the transactions contemplated by this Agreement. In exercising the foregoing right, each of the parties shall act reasonably and as promptly as practicable. The parties shall consult with each other with respect to the obtaining of all permits, consents, approvals and authorizations of all third parties, Regulatory Agencies and Governmental Entities necessary or advisable to consummate the transactions this Agreement contemplates and each party will keep the other apprised of the status of matters relating to completion of the transactions this Agreement contemplates. In furtherance and not in limitation of the foregoing, each of FNB and YDKNUBNC shall use their respective reasonable best efforts to (i) avoid the entry of, or to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order, whether temporary, preliminary or permanent, that would restrain, prevent or delay the Closing, and (ii) avoid or eliminate each and every impediment so as to enable the Closing to occur as soon as possible. Notwithstanding the foregoing, nothing in this Agreement shall be deemed to require FNB or YDKNUBNC to take any action, or commit to take any action, or agree to any condition or restriction, in connection with obtaining the foregoing permits, consents, approvals and authorizations of Regulatory Agencies or Governmental Entities that would reasonably be likely to have a Material Adverse Effect on the Surviving Company after giving effect to the Merger, after the Effective Time (a
“Materially Burdensome Regulatory Condition”). In addition, YDKNUBNC agrees to cooperate and use its reasonable best efforts to assist FNB in preparing and filing such petitions and filings, and in obtaining such permits, consents, approvals and authorizations of third parties, Regulatory Agencies and Governmental Entities, that may be necessary or advisable to effect any mergers and/or consolidations of Subsidiaries of YDKNUBNC and FNB following consummation of the Merger.
(e) Each of FNB and YDKNUBNC shall, upon request, furnish to the other all information concerning itself, its Subsidiaries, directors, officers and shareholders and such other matters as may be reasonably necessary or advisable in connection with the Joint Proxy Statement, the Registration Statement or any other statement, filing, notice or application made by or on behalf of FNB, YDKNUBNC or any of their respective Subsidiaries to any Regulatory Agency or Governmental Entity in connection with the Merger and the other transactions contemplated by this Agreement.
(f) Each of FNB and YDKNUBNC shall promptly provide each other with any written communications received from any Regulatory Agency or Governmental Entity with respect to the transactions contemplated by this Agreement and will promptly advise the other upon receiving any oral communication with respect to the transactions contemplated by this Agreement from any Regulatory Agency or Governmental Entity whose consent or approval is required for consummation of the transactions this Agreement contemplates.
(g) YDKNUBNC and FNB shall consult with each other before issuing any press release with respect to the Merger or this Agreement and shall not issue any such press release or make any such public statements without the prior consent of the other party, which shall not be unreasonably withheld, conditioned or delayed; provided, however, that a party may, without the prior consent of the other party, but after such consultation, to the extent practicable under the circumstances, issue such press release or make such public statements as may upon the advice of outside counsel be required by Law or the rules or regulations of the SEC, the Federal Reserve Board, the FDIC, the OCC, the NCCOB or the NYSE. In addition, the Chief Executive Officers of YDKNUBNC and FNB shall be permitted to respond to appropriate questions about the Merger from the press. YDKNUBNC and FNB shall cooperate to develop all public announcement materials and make appropriate management available at presentations related to the Merger as reasonably requested by the other party.
6.2Access to Information.
(a) Upon reasonable notice and subject to applicable Laws relating to the exchange of information, each of YDKNUBNC and FNB shall, and shall cause each of their respective Subsidiaries to, afford to the officers, employees, accountants, counsel and other representatives of the other, reasonable access, during normal business hours during the period prior to the Effective Time, to all its properties, books, contracts, commitments and records, and, during such period, the parties shall, and shall cause their respective Subsidiaries to, make available to the other party all other information concerning its business, properties and personnel as the other party may reasonably request. Each party shall use commercially reasonable efforts to minimize any interference with the other party’s regular business operations during any such access. YDKNUBNC shall, and shall cause each of its Subsidiaries to, provide to FNB a copy of each report, schedule and other document filed or received by it during such period pursuant to the requirements of federal or state banking laws other than reports or documents that such party is not permitted to disclose under applicable Law. Neither YDKNUBNC nor FNB nor any of their Subsidiaries shall be required to provide access to or to disclose information where such access or disclosure would be likely to jeopardize or prejudice the attorney-client privilege or attorney work-product protection of such party or its Subsidiaries or contravene any law, rule, regulation, order, judgment, decree, fiduciary duty or binding agreement entered into prior to the date of this Agreement, including laws relating to confidential supervisory information. The parties shall make appropriate substitute disclosure arrangements under circumstances in which the restrictions of the preceding sentence apply to the extent possible in light of those restrictions.
(b) All information and materials provided pursuant to this Agreement shall be subject to the provisions of the confidentiality agreement, dated April 7, 2016,March 29, 2022, between YDKNUBNC and FNB (the “Confidentiality Agreement”).
(c) No investigation by either of the parties or their respective representatives shall affect the representations and warranties of the other set forth in this Agreement.
6.3Shareholder ApprovalsApproval.
(a) YDKNUBNC shall call a meeting of its shareholders for the purpose of obtaining the Requisite YDKNUBNC Vote (the “YDKNUBNC Shareholders Meeting”), and shall use its reasonable best efforts to convene such meeting as soon as reasonably practicable following the Registration Statement being declared effective. Subject toSection 6.11(b), YDKNUBNC shall (i) through the Board of Directors of YDKN,UBNC, recommend that the shareholders of YDKNUBNC approve and adopt this Agreement, and approve the Merger and the other transactions this Agreement contemplates, (ii) include such recommendation in the Joint Proxy Statement (the “YDKNUBNC Recommendation”), and (iii) subject to the fiduciary duties of the Board of Directors of YDKN,UBNC, use its reasonable best efforts to obtain from its shareholders a vote approving and adopting the Merger and this Agreement. Without limiting the generality of the foregoing, YDKN’sUBNC’s obligations pursuant to the first sentence of thisSection 6.3 shall not be affected by the commencement, public proposal, public disclosure or communication to YDKNUBNC of any Acquisition Proposal or by any change in the YDKNUBNC Recommendation.
(b) FNB shall call a meeting of its shareholders for the purpose of obtaining the Requisite FNB Vote (the “FNB Shareholders Meeting”), and shall use its reasonable best efforts to convene such meeting as soon as reasonably practicable following the Registration Statement being declared effective. FNB shall (i) through the Board of Directors of FNB, recommend that the shareholders of FNB approve the issuance of FNB Common Stock pursuant to this Agreement, (ii) include such recommendation in the Joint Proxy Statement (the “FNB Recommendation”) and (iii) and use its reasonable best efforts to obtain from its shareholders a vote approving such issuance in accordance with Section 312.03 of the New York Stock Exchange Listed Company Manual. Notwithstanding anything to the contrary herein, the FNB Shareholders Meeting shall be convened and the issuance of FNB Common Stock pursuant to this Agreement shall be submitted to the shareholders of FNB at the FNB Shareholders Meeting for the purpose of voting on such issuance, and nothing contained herein shall be deemed to relieve FNB of such obligation.
(c) YDKN and FNB shall cooperate to schedule and convene the YDKN Shareholders Meeting and the FNB Shareholders Meeting on the same date.
6.4Reasonable Best Efforts; Cooperation. Each of YDKNUBNC and FNB agrees to exercise good faith and use its reasonable best efforts to satisfy the various covenants and conditions to Closing in this Agreement, and to consummate the transactions this Agreement contemplates as promptly as possible.
6.5NYSE Approval. FNB shall cause the shares of FNB Common Stock to be issued in the Merger to be approved for listing on the NYSE, subject to official notice of issuance, prior to the Effective Time.
6.6Benefit Plans.
(a) As soon as administratively practicable after the Effective Time, FNB shall take all reasonable action so that employees of YDKNUBNC and the YDKNUBNC Subsidiaries shall be entitled to participate in each FNB Benefit Plan of general applicability with the exception of FNB’s defined benefit pension plan and any other plan frozen to new participants (collectively, the “FNB Eligible Plans”) to the same extent as similarly-situated employees of FNB and its Subsidiaries, it being understood that inclusion of the employees of YDKNUBNC and the YDKNUBNC Subsidiaries in the FNB Eligible Plans may occur at different times with respect to different plans, provided that coverage shall be continued under corresponding YDKNUBNC Benefit Plans until such employees are permitted to participate in the FNB Eligible Plans and provided further, however, that nothing contained in this Agreement shall require FNB or any of its Subsidiaries to make any grants to any former employee of YDKNUBNC under any discretionary equity compensation plan of FNB or to provide the same level of (or any) employer contributions or other benefit subsidies as YDKNUBNC or the YDKNUBNC Subsidiaries have provided. Notwithstanding the foregoing, during the period commencing at the Effective Time and ending on the first anniversary thereof, FNB or its Subsidiaries shall provide severance payments and benefits to each employee of YDKNUBNC and the YDKNUBNC Subsidiaries (as of immediately prior to the Effective Time) that are no less favorable than the severance payments and benefits provided by FNB and its Subsidiaries to their similarly situated employees, as in effect as of the date hereof and as further described inSection 6.6(a) of the FNB Disclosure Schedule.Schedule.
(b) FNB shall cause each FNB Eligible Plan in which employees of YDKNUBNC and the YDKNUBNC Subsidiaries are eligible to participate, to recognize, for purposes of determining eligibility to participate in, and vesting of, benefits under the FNB Eligible Plans, the service of such employees with YDKNUBNC and the YDKNUBNC Subsidiaries to the same extent as such service was credited for such purpose by YDKNUBNC or the YDKNUBNC Subsidiaries, and, solely for purposes of FNB’s severance and vacation plans, policies and programs, for
purposes of determining the benefit amount, provided, however, that such service shall not be recognized to the extent that such recognition would result in a duplication of benefits. Except for the commitment to continue those YDKNUBNC Benefit Plans that correspond to FNB Eligible Plans until employees of YDKNUBNC and the YDKNUBNC Subsidiaries are included in such FNB Eligible Plans, nothing in this Agreement shall limit the ability of FNB to amend or terminate any of the YDKNUBNC Benefit Plans in accordance with and to the extent permitted by their terms.
(c) At and following the Effective Time, FNB and the Surviving Company shall honor and continue to be obligated to perform, in accordance with their terms, all benefit obligations to, and contractual rights of, current and former employees of YDKNUBNC and the YDKNUBNC Subsidiaries and current and former directors of YDKNUBNC and the YDKNUBNC Subsidiaries existing as of the Closing Date under any YDKNUBNC Benefit Plan.
(d) At such time as employees of YDKNUBNC and the YDKNUBNC Subsidiaries become eligible to participate in a medical, dental or health plan of FNB or its Subsidiaries, FNB shall, to the extent reasonably practicable and available from its insurers, cause each such plan to (i) waive any preexisting condition limitations to the extent such conditions were satisfied or waived under the analogous YDKNUBNC Benefit Plan, (ii) waive any waiting period limitation or evidence of insurability requirement that would otherwise be applicable to such employee or dependent on or after the Effective Time to the extent such employee or dependent had satisfied any similar limitation or requirement under an analogous YDKNUBNC Benefit Plan prior to the Effective Time and (iii) provide each such employee of YDKNUBNC and the YDKNUBNC Subsidiaries and his or her eligible dependents with credit for any co-payments or coinsurance and deductibles paid prior to the Effective Time under an YDKNUBNC Benefit Plan (to the same extent that such credit was given under the analogous YDKNUBNC Benefit Plan prior to the Effective Time) in satisfying any applicable deductible, co-payment, coinsurance or maximum out-of-pocket requirements under any medical, dental or health plan of FNB or its Subsidiaries.
(e) YDKNUBNC shall adopt such Board resolutions and take such other action as FNB may reasonably request at least thirty (30) days prior to the Effective Time to cause all 401(k) Plans to be terminated immediately prior to the Effective Time (the “Plan Termination Date”) and the accounts of all participants and beneficiaries in the 401(k) Plans as of the Plan Termination Date to become fully vested as of the Plan Termination Date. As soon as practicable after the Effective Time, but in no event later than six (6) months after the Plan Termination Date, FNB shall file or cause to be filed all necessary documents with the IRS for a determination letter that the termination of the 401(k) Plans as of the Plan Termination Date will not adversely affect the plan’s qualified status. FNB shall use its reasonable best efforts to obtain such favorable determination letter; including adopting such amendments to the 401(k) Plans as may be requested by the IRS as a condition to its issuance of a favorable determination letter. As soon as practicable following the receipt of a favorable determination letter from the IRS regarding the qualified status of the 401(k) Plans upon its termination, the account balances in the 401(k) Plans shall be distributed to participants and beneficiaries or transferred to an eligible tax-qualified retirement plan or individual retirement account as a participant or beneficiary may direct.direct (or, where no direction is received, to an individual retirement account as an automatic rollover). The Surviving Company shall take all other actions necessary to complete the termination of the 401(k) Plans, including filing a Final Form 5500, that arise after the Effective Time. FNB agrees, to the extent permitted by applicable Law, to permit the participants in the 401(k) Plans who become employees of FNB or its Subsidiaries to roll over their account balances in the 401(k) Plans and loans from the 401(k) Plans to the F.N.B. Corporation Progress Savings 401(k) Plan. Notwithstanding anything inSection6.6(a) to the contrary, employees of YDKNUBNC or any YDKNUBNC Subsidiary who continue in employment with the Surviving Company following the Effective Time shall be eligible as of the Effective Time to participate in the F.N.B. Corporation Progress Savings 401(k) Plans.
(f) Immediately prior to the Effective Time, YDKNUBNC shall, at the written request of FNB, (i) freeze or terminate each other YDKNUBNC Benefit Plan as requested by FNB, including without limitation, any employee
benefit pension plan within the meaning of Section 3(2) of ERISA and any non-qualified deferred compensation plans and make appropriate distributions therefrom; provided, however, that YDKN shall not distribute balances of less than $20,000 from employee benefit pension plans; and (ii) freeze all post-retirement benefits available under the YDKNUBNC Benefit Plans.Plans, provided that FNB shall not request UBNC to freeze or terminate any UBNC Benefit Plan that is continued in accordance with FNB’s commitment, as set forth in Section 6.6(b).
(g) YDKNUBNC shall take such action, and provide any required notices, as may be necessary or appropriate to cause any Person presently serving as a trustee or administrator to any YDKNUBNC Benefit Plan to be removed effective as of the Effective Time and to appoint FNB, First National Trust Company, or such other FNB Subsidiary or committee as FNB shall specify, to serve as successor trustee or administrator to such removed individual trustees or administrators effective as of the Effective Time.
(h) Nothing contained in this Agreement is intended to (i) be treated as an amendment of any YDKNUBNC Benefit Plan; (ii) prevent FNB, YDKNUBNC or any of their successors or Affiliates, after the Effective Time, from terminating the employment of any YDKNUBNC employee who remains employed with YDKNUBNC or any of the YDKNUBNC Subsidiaries; or (iii) create any third party beneficiary rights in any employee of YDKNUBNC or any of the YDKNUBNC Subsidiaries, or any beneficiary or dependent thereof, with respect to the compensation, terms and conditions of employment and/or benefits that may be provided to any YDKNUBNC employee by FNB, YDKNUBNC or any of their successors or Affiliates or under any benefit plan which FNB, YDKNUBNC or any of their successors or Affiliates may maintain.
(i) As soon as practicable following the Effective Time, FNB shall file a registration statement on Form S-8 (or any successor or other appropriate forms) with the SEC with respect to each of the UBNC Equity Plans assumed by FNB and the shares of FNB Common Stock subject to the assumed UBNC Stock Options that were originally granted under such UBNC Equity Plans. FNB shall use its commercially reasonable efforts to maintain the effectiveness of each such registration statement (and maintain the current status of the prospectus or prospectuses associated therewith) for so long as such assumed UBNC Stock Options remain outstanding.
6.7Indemnification; Directors’Directors’ and Officers’Officers’ Insurance.
(a) In the event of any threatened or actual claim, action, suit, proceeding or investigation, whether civil, criminal or administrative, including any such claim, action, suit, proceeding or investigation (each a “Claim”) in which any individual who is now, or has been at any time prior to the date of this Agreement, or who becomes prior to the Effective Time, a director or officer of YDKNUBNC or any of the YDKNUBNC Subsidiaries or who is or was serving at the request of YDKNUBNC or any of the YDKNUBNC Subsidiaries as a director, officer, employee, trustee or fiduciary of another Person (the “Indemnified Parties”), is, or is threatened to be, made a party based in whole or in part on, or arising in whole or in part out of, or pertaining to (i) the fact that he or she is or was a director or officer of YDKNUBNC or any of the YDKNUBNC Subsidiaries or was serving at the request of the YDKNUBNC or any of the YDKNUBNC Subsidiaries as a director, officer, employee, trustee or fiduciary of another Person or (ii) this Agreement or any of the transactions this Agreement contemplates, whether asserted or arising before or after the Effective Time, the parties shall cooperate and use their best efforts to defend against such Claim and respond thereto. From and after the Effective Time, FNB shall, and shall cause the Surviving Company to, (A) indemnify and hold harmless, as and to the fullest extent currently provided under applicable Law, the YDKNUBNC Articles and the YDKNUBNC Bylaws, each such Indemnified Party against any losses, claims, damages, liabilities, costs, expenses, including reimbursement for reasonable fees and expenses, including fees and expenses of legal counsel, and judgments, fines and amounts paid in settlement in connection with any such threatened or actual Claim and (B) advance expenses as incurred (including in advance of the final disposition of any Claim) by such Indemnified Party to the fullest extent permitted by applicable Law; provided that the Indemnified Party to whom expenses are advanced provides an undertaking (in a reasonable and customary form) if required by applicable Law to repay such advances if it is ultimately determined that such Indemnified Party is not entitled to indemnification.
(b) FNB and the Surviving Company agree that all rights to indemnification of liabilities, including advancement of expenses, and all limitations with respect thereto, existing in favor of any Indemnified Person, as provided underSection 6.7(a), shall survive the Merger and shall continue in full force and effect, without any amendment thereto; provided, however, that any determination required to be made with respect to whether an Indemnified Party’s conduct complies with the standards set forth under applicable Law, the YDKNUBNC Articles or the YDKNUBNC Bylaws, as the case may be, shall be made by independent legal counsel, whose fees and
expenses shall be paid by FNB and the Surviving Company, selected by such Indemnified Party and reasonably acceptable to FNB; and, provided further that nothing in thisSection 6.76.7(b) shall impair any rights or obligations of
any current or former director or officer of YDKNUBNC or its Subsidiaries, including pursuant to the respective organizational documents of YDKN,UBNC, or its Subsidiaries, under applicable Law or otherwise.
(c) Prior to the Effective Time, FNB shall obtain and FNB shallthereafter maintain for a period of six (6) years following the Effective Time, directors’ and officers’ liability insurance and fiduciary liability insurance policies covering the Indemnified Parties who as of the Effective Time are covered by YDKN’sUBNC’s directors’ and officers’ liability insurance or fiduciary liability insurance policies, in respect of acts or omissions occurring at or prior to the Effective Time, including the transactions this Agreement contemplates, provided that thesethe policies must be of at least the same coverage amounts (as set forth on Section 3.20 of the UBNC Disclosure Schedule)and contain coverage terms and conditions and that are not less advantageous than such policiespolicy of YDKN.UBNC. The provisions of the immediately preceding sentence shall be deemed to have been satisfied if a prepaid policies havepolicy has been obtained prior to the Effective Time from an insurer or insurers selected by FNB in consultation with YDKNUBNC that has or have an insurer financial strength rating by A.M. Best Co. of at least “A”, which policies providepolicy provides the Indemnified Parties with coverage, from the Effective Time to the sixth (6th) anniversary of the Effective Time, including in respect of the transactions this Agreement contemplates, on terms that are no less advantageous to the Indemnified Parties than YDKN’sUBNC’s directors’ and officers’ liability insurance or fiduciary liability insurance policiespolicy existing immediately prior to the date of this Agreement. If such prepaid policies have been obtained prior to the Effective Time, then FNB shall maintain such policies in full force and effect and continue the obligations thereunder. However, in no event shall FNB be required to expend, on an annual basis, an amount in excess of 300% of the annual premium paid by YDKNUBNC for such insurance (the “Insurance Amount”) on the date of this Agreement, and further provided that if FNB is unable to maintain or obtain the insurance called for by thisSection 6.7(c) as a result of the preceding provision, FNB shall use its reasonable best efforts to obtain policies containing coverage amounts, terms and conditions that are the most advantageous for the Indemnified Parties as is available for the maximum Insurance Amount.
(d) The provisions of thisSection 6.76.7(d) shall survive the Effective Time and are intended to be for the benefit of, and shall be enforceable by, each Indemnified Party and his or her heirs and representatives. If the Surviving Company, or any of its successors or assigns, consolidates with or merges into any other entity and is not the continuing or surviving entity of such consolidation or merger, transfers all or substantially all of its assets or deposits to any other entity or engages in any similar transaction, then in each case, the Surviving Company will cause proper provision to be made so that the successors and assigns of the Surviving Company will expressly assume the obligations of the Surviving Company set forth in thisSection 6.7.
6.8Additional Agreements. In case at any time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Agreement, including any merger between a Subsidiary of FNB, on the one hand, and a Subsidiary of YDKN,UBNC, on the other hand, or to vest the Surviving Company with full title to all properties, assets, rights, approvals, immunities and franchises of either party to the Merger, the proper officers and directors of each party and their respective Subsidiaries shall take all such necessary action as may be reasonably requested by, and at the sole expense of, FNB.
6.9Advice of Changes. Each of FNB and YDKNUBNC shall promptly advise the other of any change or event (i) having or reasonably likely to have a Material Adverse Effect on it or (ii) that it believes would or would be reasonably likely to cause or constitute a material breach of any of its representations, warranties or covenants contained in this Agreement; provided, however, that no such notification shall affect the representations, warranties, covenants or agreements of the parties, or remedies with respect thereto, or the conditions to the obligations of the parties under this Agreement or that reasonably could be expected to give rise, individually or in the aggregate, to the failure of a condition inArticle 7;7; provided, further, that a failure to comply with thisSection 6.9 shall not constitute the failure of any condition set forth inArticle 7 to be satisfied unless the underlying Material Adverse Effect or material breach would independently result in the failure of a condition set forth inArticle 7 to be satisfied.
6.10Dividends. Except for regular dividends paid atWithout the quarterly rate in effect asprior written consent of the date of this Agreement, after the date of this Agreement, YDKNFNB, UBNC shall not declare or pay any dividend in respect of shares of
YDKN UBNC Common Stock provided that, notwithstanding the foregoing provisionsother than UBNC’s regular semi-annual cash dividend of thisSection 6.10, after the date$0.11 per share of this Agreement YDKN shall coordinate the declarations of any dividends in respect of the YDKNUBNC Common Stock and the record dates and payment dates relating thereto with FNB’s declaration of regular quarterly dividends on FNB Common Stock and the record dates and payment dates relating thereto, it being the intention of YDKN and FNB that holders of YDKN Common Stock shall not receive two dividends, or fail to receive one dividend, in any quarter with respect to their shares of YDKN Common Stock and any shares of FNB Common Stock such holders receive in exchange therefor in the Merger.Stock.
6.11Certain Actions.
(a) From the date of this Agreement through the Effective Time, except as otherwise permitted by thisSection 6.11, YDKNUBNC will not, and will not authorize or permit any of its directors, officers, agents, employees, investment bankers, attorneys, accountants, advisors, agents, Affiliates or representatives (collectively, “YDKNUBNC Representatives”) to, directly or indirectly, (i) initiate, solicit, knowingly encourage or take any action to facilitate, including by way of furnishing information, any Acquisition Proposal or any inquiries with respect to or the making of any Acquisition Proposal, (ii) enter into or participate in any discussions or negotiations with, furnish any information relating to YDKNUBNC or any of the YDKNUBNC Subsidiaries or afford access to the business, properties, assets, books or records of YDKNUBNC or any of the YDKNUBNC Subsidiaries, to otherwise cooperate in any way with, or knowingly assist, participate in, facilitate or encourage any effort by any Third Party that is seeking to make, or has made, an Acquisition Proposal or (iii) except in accordance withSection 8.1(i)8.1(g), approve, endorse or recommend or enter into any letter of intent or similar document or any contract, agreement or commitment contemplating or otherwise relating to an Acquisition Proposal.
(b) Notwithstanding anything in this Agreement to the contrary, YDKNUBNC and its Board of Directors shall be permitted: (i) to comply with Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act with regard to an Acquisition Proposal provided that the Board of Directors of YDKNUBNC shall not withdraw or modify in a manner adverse to FNB the YDKNUBNC Recommendation except as set forth in subsection (iii) below, (ii) to engage in any discussions or negotiations with, and provide any information to, any Third Party in response to a bona fide Acquisition Proposal by any such Third Party, if (x) YDKN’s UBNC’s Board of Directors concludes in good faith, based on the information then available after consultation with outside counsel and, with respect to financial matters, its financial advisor that failure to do so would be reasonably likely to violate their fiduciary duties under applicable Law and that such Acquisition Proposal could reasonably be expected to lead to a Superior Proposal, (y) prior to providing any information or data to any Third Party in connection with such Acquisition Proposal by any such Third Party, YDKN’sUBNC’s Board of Directors receives from such Third Party an executed confidentiality agreement, which confidentiality terms shall be no less favorable to YDKNUBNC than those contained in the Confidentiality Agreement and (iii) to withdraw, modify, qualify in a manner adverse to FNB, condition or refuse to make the YDKNUBNC Recommendation (the “Change in YDKNUBNC Recommendation”) if YDKN’sUBNC’s Board of Directors concludes in good faith, based on the information then available after consultation with outside counsel and, with respect to financial matters, its financial advisor, that failure to do so would be reasonably likely to violate their fiduciary duties under applicable Law. Notwithstanding any Change in YDKNUBNC Recommendation, this Agreement shall be submitted to the shareholders of YDKNUBNC at the YDKNUBNC Shareholders’ Meeting for the purpose of voting on the approval of this Agreement and nothing contained herein shall be deemed to relieve YDKNUBNC of such obligation; provided, however, that if the Board of Directors of YDKNUBNC shall have effected a Change in YDKNUBNC Recommendation, then the Board of Directors of YDKNUBNC may submit this Agreement to YDKN’sUBNC’s shareholders without recommendation (although the resolutions adopting this Agreement as of the date hereof may not be rescinded), in which event the Board of Directors of YDKNUBNC may communicate the basis for its lack of a recommendation to YDKN’sUBNC’s shareholders in the Joint Proxy Statement or an appropriate amendment or supplement thereto to the extent required by applicable Law. In addition to the foregoing, YDKNUBNC shall not submit to the vote of its shareholders any Acquisition Proposal other than the Merger prior to the termination of this Agreement.
(c) YDKNUBNC will promptly, and in any event within twenty-four (24) hours, (i) notify FNB in writing of the receipt of any Acquisition Proposal or any information related thereto, which notification shall
include the material terms and conditions of the Acquisition Proposal, and (ii) notify FNB in writing of any related developments, discussions and negotiations on a current basis; including any amendments to or revisions of the terms of such Acquisition Proposal.
(d) YDKNUBNC agrees that it will, and will use its reasonable best efforts to cause the YDKNUBNC Representatives to, immediately cease and cause to be terminated any activities, discussions or negotiations existing as of the date of this Agreement with any parties conducted heretofore with respect to any Acquisition Proposal.
(e) For purposes of this Agreement:
(i) The term “Acquisition Proposal” means any inquiry, proposal or offer, filing of any regulatory application or notice, whether in draft or final form, or disclosure of an intention to do any of the foregoing by or from any Person relating to any (A) direct or indirect acquisition or purchase of a business that constitutes 20% or more of the total revenues, net income or total assets of YDKNUBNC and the YDKNUBNC Subsidiaries, taken as a whole, (B) direct or indirect acquisition or purchase of the shares of YDKNUBNC Common Stock after the date of this Agreement by a Person who on the date of this Agreement does not own 20% or more of the shares of YDKNUBNC Common Stock and such Person by reason of such purchase or acquisition first becomes the owner of 20% or more of the shares of YDKNUBNC Common Stock after the date of this Agreement, (C) tender offer or exchange offer that if consummated would result in any Person beneficially owning 20% or more of any class of equity securities of YDKNUBNC or (D) merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving YDKNUBNC other than the transactions this Agreement contemplates.
(ii) The term “Superior Proposal” means any bona fide, unsolicited written Acquisition Proposal made by a Third Party to acquire more than 50% of the combined voting power of the shares of YDKNUBNC Common Stock then outstanding or all or substantially all of YDKN’sUBNC’s consolidated assets for consideration consisting of cash and/or securities that is on terms that the Board of Directors of YDKNUBNC in good faith concludes, based on the information then available after consultation with its financial advisor and outside counsel, taking into account, among other things, all legal, financial, regulatory and other aspects of the proposal and the Person making the proposal, including any break-up fees, expense reimbursement provisions and conditions to consummation, (A) is on terms that the Board of Directors of YDKNUBNC in its good faith judgment believes to be more favorable to YDKNUBNC than the Merger, (B) for which financing, to the extent required, is then fully committed or reasonably determined to be available by the Board of Directors of YDKNUBNC and (C) is reasonably capable of being completed.
(iii) For purposes of thisSection 6.11, “Third Party” means any person as defined in Section 13(d) of the Exchange Act other than FNB or its Affiliates.
(f) If a Payment Event occurs, YDKNUBNC shall pay FNB by wire transfer of immediately available funds, within three (3) business days following such Payment Event, a fee of $45.0$4.0 million (the “Break-up Fee”), provided, however, that if a Payment Event occurs, YDKNUBNC shall have no obligation to pay FNB’s expenses underSection 9.3(b) and any amounts previously paid pursuant toSection 9.3(b) shall be credited against the Break-up Fee.
(g) The term “Payment Event” means any of the following:
(i) the termination of this Agreement by FNB pursuant toSection 8.1(g)8.1(f);
(ii) the termination of this Agreement by YDKNUBNC pursuant toSection 8.1(i)8.1(g);
(iii) the termination of this Agreement pursuant to any other Section following the commencement of a tender offer or exchange offer for 25% or more of the outstanding shares of
YDKN Common Stock and YDKN shall not have sent to its shareholders, within ten (10) business days after the commencement of such tender offer or exchange offer, a statement that the Board of Directors of YDKN recommends rejection of such tender offer or exchange offer;
(iv) the occurrence of any of the following events within twelve (12) months of the termination of this Agreement by FNB pursuant toSection 8.1(b)(i) or8.1(c)8.1(e) (in the case ofSection 8.1(c), without the Requisite YDKNUBNC Vote having been obtained), or by either FNB or YDKNUBNC pursuant toSection 8.1(e), in each case, provided that an Acquisition Proposal shall have been made by a Third Party after the date of this Agreement and prior to such termination that shall not have been withdrawn in good faith prior to such termination: (A) YDKN UBNC enters into an
agreement to merge with or into, or be acquired, directly or indirectly, by merger or otherwise by, such Third Party, (B) such Third Party, directly or indirectly, acquires substantially all of the assets of YDKNUBNC and the YDKNUBNC Subsidiaries, taken as a whole or (C) such Third Party, directly or indirectly, acquires more than 50% of the outstanding shares of YDKNUBNC Common Stock.
(h) Each of YDKNUBNC and FNB acknowledges that the agreements contained in thisSection 6.11 are an integral part of the transactions contemplated in this Agreement and that without these agreements YDKNUBNC and FNB, respectively, would not enter into this Agreement. Accordingly, in the event YDKN or FNB, as applicable, failUBNC fails to pay the Break-up Fee promptly when due, YDKN or FNB, as applicable,UBNC shall, in addition thereto, pay to the other partyFNB all costs and expenses, including attorneys’ fees and disbursements, incurred by the other partyFNB in collecting such Break-up Fee together with interest on the amount of the Break-up Fee, or any unpaid portion thereof, from the date such payment was due until the date such payment is received by FNB accrued at the fluctuating prime rate as quoted inThe Wall Street Journal as in effect from time to time during the period.
6.12Transition. Commencing on the date of this Agreement, FNB and YDKNUBNC shall, and shall cause their respective Subsidiaries to, reasonably assist each other to facilitate the integration, from and after the Closing, of YDKNUBNC and the YDKNUBNC Subsidiaries with the businesses of FNB and its Subsidiaries, without taking action that would, in effect, give FNB a controlling influence over the management or policies of YDKNUBNC or any of the YDKNUBNC Subsidiaries, or otherwise violate applicable Laws. Without limiting the generality of the foregoing, from the date of this Agreement through the Closing Date and consistent with the performance of their day-to-day operations, the continuous operation of YDKNUBNC and the YDKNUBNC Subsidiaries in the ordinary course of business and applicable Law, YDKNUBNC shall use reasonable efforts to cause the employees and officers of YDKNUBNC and the YDKNUBNC Subsidiaries, including YDKNUBNC Bank, to reasonably cooperate with FNB in performing tasks reasonably required in connection with such integration. Such tasks shall include making available the employees of YDKNUBNC and the YDKNUBNC Subsidiaries at mutually agreeable times for training with respect to FNB systems and products.
6.13Tax Representation Letters.
(a) Officers of FNB and YDKNUBNC shall execute and deliver to Reed Smith LLP, tax counsel to FNB, and Skadden, Arps, Slate, Meagher & FlomFenimore Kay Harrison LLP, tax counsel to YDKN,UBNC, tax representation letters or certificates of officers (“Tax Representation Letters”) substantially in the form agreed to by the parties and such law firms at such time or times as may be reasonably requested by such law firms, including at the time the Joint Proxy Statement and Registration Statement are declared effective by the SEC and at the Effective Time, in connection with such tax counsel’s delivery of opinions pursuant toSection 7.2(d) andSection 7.3(d) of this Agreement.
(b) FNB and YDKNUBNC shall each use its respective reasonable best efforts to cause the Merger to qualify for the Intended Tax Treatment, including (i) not taking any action that such party knows would reasonably be likely to prevent such qualification and (ii) considering and negotiating in good faith such amendments to this Agreement as may be reasonably required in order to obtain such qualification (it being understood that no party will be required to agree to any such amendment). For U.S. federal income tax purposes, FNB and YDKNUBNC shall each report the Merger in a manner consistent with such qualification.
(c) FNB and YDKNUBNC shall each use its reasonable best efforts to obtain the Tax opinions described inSections 7.2(d) and7.3(d), including by causing its officers to execute and deliver Tax Representation Letters to the law firms delivering such Tax opinions at such time or times as may reasonably be requested by such law firms. FNB and YDKNUBNC shall each use its reasonable best efforts not to take or cause to be taken any action that would cause to be untrue (or fail to take or cause not to be taken any action which inaction would cause to be untrue) any of the representations included in the certificates described in thisSection 6.13.
6.14Rule 16b-3. Prior to the Effective Time, FNB and YDKNUBNC shall take all steps as may be necessary or appropriate to cause the transactions contemplated byArticle 1 and any other dispositions of YDKNUBNC Equity
Awards (including derivative securities) or acquisitions of equity securities of FNB in connection with the consummation of the transactions contemplated by this Agreement to be exempt under Rule 16b-3 promulgated under the Exchange Act.
6.15Advisory Board[Reserved.
(a) As soon as practicable following the Effective Time, FNB shall establish a North Carolina Community Advisory Board to help FNB identify and engage with customers, civic leaders and nonprofit organizations throughout the North Carolina region. Six (6) directors of YDKN as of the date of this Agreement who shall be selected jointly by FNB and YDKN shall be invited to serve on the advisory board. Each advisory director shall serve for a minimum term of one (1) year. Such advisory board shall be operated in a manner that is consistent with FNB’s Community Bank Charter, including as to compensation for service as an advisory director.
(b) FNB shall take all appropriate action so that, as of the Effective Time, the number of directors constituting the Board of Directors of FNB and FNB Bank shall be increased by 1 and the YDKN Designee shall be appointed as a director of FNB and FNB Bank. FNB will nominate the YDKN Designee for election as a director at the annual meeting of FNB immediately following the Effective Time and solicit proxies for the YDKN Designee in the same manner as it does for all the other members of FNB’s slate of directors in connection with such meeting.]
6.16Informational Systems Conversion. From and after the date hereof, FNB and YDKNUBNC each shall use their commerciallyrespective reasonable best efforts to facilitate the integration of the business of YDKNUBNC into FNB in connection with the consummation of the transactions contemplated hereby, and shall meet on a regular basis to discuss and plan for the conversion of data processing and related electronic informational systems (the “Informational Systems Conversion”) to a single such system. It is the intent of the Parties that to the extent commercially reasonable, the systems of YDKN and the systems acquired by YDKN from NewBridge BancorpUBNC be converted to those used by FNB as soon as reasonably practicable after the Effective Time. Such planning shall include, but not be limited to: (a) discussion of the parties’ third-party service provider arrangements; (b) non-renewal of personal property leases and software licenses used in connection with the discontinued systems operations; (c) retention of outside consultants and additional employees to assist with the conversion; (d) outsourcing, as appropriate, of proprietary or self-provided system services; (e) staff augmentation for critical business functions; (f) providing copies of all system conversion planning and testing documents and related materials to FNB in advance of the development of the final systems conversions plans and observational rights for an FNB representative to attend YDKNUBNC conversion planning meetings concerning the systems conversions along with the right to observe data system conversion testing protocols and access to data required to effectively map systems; and (g) any other actions necessary and appropriate to facilitate the conversion, as soon as practicable following the Effective Time. In furtherance of such planning, UBNC shall take all such commercially reasonable actions as may be required so that its third-party processer will be able, from and after the Effective Time and prior to Informational Systems Conversion, to support ongoing deposit and loan transaction activity and related financial activity of UBNC Bank including, without limitation, providing a general ledger transaction file and secondary financial statements on a daily basis, reflecting the deposit and loan activity of UBNC Bank from the prior business day. FNB shall reimburse UBNC for all documented out-of-pocket costs and expenses incurred by UBNC as a result of actions taken at the direction of FNB pursuant to this Section 6.16.
6.17Control of Operations. Nothing contained in this Agreement shall give either FNB or YDKN,UBNC, directly or indirectly, the right to control or direct the operations of the other party prior to the Effective Time. Prior to the Effective Time, each party shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries’ respective operations.
6.18FNB ReincorporationUBNC Debentures Consents. YDKN acknowledges that priorPrior to the Effective Time, FNB and UBNC shall cooperate to take all steps as may change its state of incorporationbe necessary or appropriate to provide all notices to and obtain all consents from the State of Florida to the Commonwealth of Pennsylvania by converting from a Florida business corporation to a Pennsylvania business corporation (the “Reincorporation”); provided, however, that FNB may not effect the Reincorporation if (i) the Reincorporation is reasonably likely to impede or delay consummationholders of the transactions contemplated by this Agreement or (ii) FNB has not received the written opinion of its tax counsel, Reed Smith LLP, in form and substance reasonably satisfactory to FNB, prior to the consummation of the Reincorporation, to the effectUBNC Debentures that on the basis of facts, representations and assumptions set forth or referred to in such opinion, the Reincorporation will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. The Parties agree that from and after the effective date of the Reincorporation, all references in this Agreement to (a) “State of Florida,” (b) “Florida Business Corporation Act,” (c) “FBCA” and (d) “Florida Articles of Merger,” shallmay be amended and replaced, without any further action of the Parties,required by the terms (w) Commonwealth of Pennsylvania, (x) Pennsylvania Entity Transactions Law,the UBNC Debentures for FNB to validly assume UBNC’s obligations as amended, (y) “ETL” and (z) “Pennsylvania Statement of Merger,” respectively.the Effective Time.
ARTICLE 7
CONDITIONS PRECEDENT
7.1Conditions to Each Party’sParty’s Obligation to Effect the Merger. The respective obligations of the parties to effect the Merger shall be subject to the satisfaction or waiver, where permitted by applicable Law, at or prior to the Effective Time of the following conditions:
(a)Shareholder ApprovalsApproval. This Agreement and the Merger this Agreement contemplates shall have been approved and adopted by Requisite YDKN Vote; and the Requisite FNBUBNC Vote shall have been obtained.
(b)NYSE Listing. The shares of FNB Common Stock to be issued to the holders of YDKNUBNC Common Stock upon consummation of the Merger shall have been authorized for listing on the NYSE, subject to official notice of issuance.
(c)Regulatory Approvals. (i) All regulatory approvals set forth inSections 3.4 and4.4 required to consummate the Merger, shall have been obtained and shall remain in full force and effect and all statutory waiting periods in respect thereof shall have expired (all such approvals and the expiration of all such waiting periods being referred to as the “Requisite Regulatory Approvals”), and (ii) none of the Requisite Regulatory Approvals shall have resulted in the imposition of a Materially Burdensome Regulatory Condition.
(d)Registration Statement. The Registration Statement shall have become effective under the Securities Act and no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been initiated or threatened by the SEC.
(e)No Injunctions or Restraints; IllegalityRestraints.; Illegality. No order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Merger shall be in effect. No Law shall have been enacted, entered, promulgated or enforced by any Governmental Entity that prohibits or makes illegal the consummation of the Merger.
7.2Conditions to Obligation of FNB to Effect the Merger. The obligation of FNB to effect the Merger is also subject to the satisfaction or waiver by FNB, where permitted by applicable Law, at or prior to the Effective Time, of the following conditions:
(a)Representations and Warranties.
(i) Each of the representations and warranties of YDKNUBNC set forth in this Agreement (other than the representations and warranties in Sections3.1(a),3.1(c),3.2(a),3.3(a),3.3(b)(i),3.7 and
3.8(ii)) shall be true and correct as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (unless any representation and warranty is expressly made as of an earlier date, in which case that representation and warranty only shall be true and correct as of that earlier date), except in each case for inaccuracies of such representations or warranties which, individually or in the aggregate, have not had and would not reasonably be likely to have a Material Adverse Effect on YDKNUBNC (it being understood that for purposes of determining the accuracy of such representations and warranties, all materiality and “Material Adverse Effect” qualifications and exceptions contained in those representations and warranties shall be disregarded);
(ii) Each of the representations and warranties of YDKNUBNC set forth inSections 3.1(a),3.1(c),3.3(a),3.3(b)(i) and3.7 shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date;
(iii) The representations and warranties of YDKNUBNC set forth inSection 3.2(a) andSection 3.8(ii) shall be true and correct as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (unless any representation and warranty is expressly made as of an earlier date, in which case that representation and warranty only shall be true and correct as of that earlier date), except, in the case ofSection3.2(a), for inaccuracies that are de minimis.
(b)Performance of Obligations of YDKN.UBNC YDKN. UBNC shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date.
(c)Officer’s Certificate of YDKN.UBNC. FNB shall have received a certificate signed on behalf of YDKNUBNC by the Chief Executive Officer or the Chief Financial Officer of YDKNUBNC certifying as to the matters set forth inSections 7.2(a) and7.2(b).
(d)Federal Tax Opinion. FNB shall have received the written opinion of its tax counsel, Reed Smith LLP, in form and substance reasonably satisfactory to FNB, dated the Closing Date, to the effect that, on the basis of facts, representations and assumptions set forth or referred to in such opinion, the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. In rendering such opinion, counsel may require and rely upon representations contained in Tax Representation Letters executed by officers of YDKNUBNC and FNB.
(e) Dissenters’ Rights. Following compliance with the modification provisions of Section 55-13-20 of the NCBCA and the expiration of the time period for asserting dissenters’ rights thereunder, the number of Dissenting Shares shall not exceed five percent (5%) of the number of outstanding shares of UBNC Common Stock.
7.3Conditions to Obligation of YDKNUBNC to Effect the Merger. The obligation of YDKNUBNC to effect the Merger is also subject to the satisfaction or waiver by YDKN,UBNC, where permitted by applicable Law, at or prior to the Effective Time of the following conditions:
(a)Representations and Warranties.
(i) Each of the representations and warranties of FNB set forth in this Agreement (other than the representations and warranties inSections 4.1(a),4.1(c),4.2(a),4.3(a),4.3(b)(i),4.7 and4.8(ii)) shall be true and correct as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (unless any representation and warranty is expressly made as of an earlier date, in which case that representation and warranty only shall be true and correct as of that earlier date), except for inaccuracies of such representations or warranties which, individually or in the aggregate, have not had and would not reasonably be likely to have a Material Adverse Effect on FNB (it being understood that for purposes of determining the accuracy of such representations and warranties, all materiality and “Material Adverse Effect” qualifications and exceptions contained in those representations and warranties shall be disregarded);
(ii) Each of the representations and warranties of FNB set forth inSections 4.1(a),4.1(c),4.3(a),4.3(b)(i) and4.7 shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date;
(iii) The representations and warranties of FNB set forth inSection 4.2(a) andSection 4.8(ii) shall be true and correct as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date, except, in the case ofSection 4.2(a), for inaccuracies that are de minimis.
(b)Performance of Obligations of FNB. FNB shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date.
(c)Officer’s Certificate of FNB. YDKNUBNC shall have received a certificate signed on behalf of FNB by the Chief Executive Officer or the Chief Financial Officer of FNB certifying as to the matters set forth inSections 7.3(a) and7.3(b).
(d)Federal Tax Opinion. YDKNUBNC shall have received the written opinion of its tax counsel, Skadden, Arps, Slate, Meagher & FlomFenimore Kay Harrison LLP, in form and substance reasonably satisfactory to YDKN,UBNC, dated the Closing Date, to the effect that, on the basis of facts, representations and assumptions set forth or referred to in such opinion, the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. In rendering such opinion, counsel may require and rely upon Tax Representation Letters executed by officers of YDKNUBNC and FNB.
ARTICLE 8
TERMINATION AND AMENDMENT
8.1Termination. This Agreement may be terminated at any time prior to the Effective Date, whether before or after the obtainment of the Requisite YDKN Vote or the Requisite FNBUBNC Vote and the Merger may be abandoned:
(a)Mutual Consent. by the mutual consent in writing of FNB and YDKNUBNC if the Board of Directors of each so determines by vote of a majority of the members of its entire Board;
(b)Breach.
(i) by FNB, if (A) any of the representations and warranties of YDKNUBNC contained in this Agreement shall fail to be true and correct such that the condition set forth inSection 7.2(a) would not be satisfied or (B) YDKN UBNC shall have breached or failed to comply with any of its obligations under this Agreement such that the condition set forth inSection 7.2(b) would not be satisfied, in either case other than as a result of a material breach by FNB of any of its obligations under this Agreement, and such failure or breach with respect to any such representation, warranty or obligation cannot be cured, or, if curable, shall continue unremedied for a period of thirty (30) days after YDKNUBNC has received written notice from FNB of the occurrence of such failure or breach, but in no event shall such 30-day period extend beyond the Outside Date; provided, however, that FNB shall not have the right to terminate this Agreement pursuant to this Section 8.1(b)(i) if it is then in material breach of this Agreement so as to cause the conditions set forth in Section 7.1, Section 7.3(a) and Section 7.3(b) not to be capable of being satisfied;
(ii) by YDKN,UBNC, if (A) any of the representations and warranties of FNB contained in this Agreement shall fail to be true and correct such that the condition set forth inSection7.3(a) would not be satisfied or (B) FNB shall have breached or failed to comply with any of its obligations under this Agreement such that the condition set forth inSection 7.3(b) would not be satisfied, in either case other than as a result of a material breach by YDKN of any of its obligations under this Agreement, and such failure or breach with respect to any such representation, warranty or obligation cannot be cured, or, if curable, shall continue unremedied for a period of thirty (30) days after FNB has received written notice from YDKNUBNC of the occurrence of such failure or breach, but in no event shall such 30-day period extend beyond the Outside Date;
provided, however, that UBNC shall not have the right to terminate this Agreement pursuant to this Section 8.1(b)(ii) if it is then in material breach of this Agreement so as to cause the conditions set forth in Section 7.1, Section 7.2(a) and Section 7.2(b) not to be capable of being satisfied.(c)Delay. by FNB or YDKN,UBNC, if its Board of Directors so determines by vote of a majority of the members of its entire Board, in the event that the Merger is not consummated on or before 5:00 p.m., Eastern Time, on MayMarch 31, 20172023 (the “Outside Date”), unless the failure of the Merger to be consummated by the Outside Date shall have been due to the failure of the party seeking to terminate pursuant to thisSection8.1(c) to perform or observe the covenants and agreements of such party set forth in this Agreement;
(d)No Regulatory Approval. byBy FNB or YDKN,UBNC, if its respective Board of Directors so determines, in the event the approval of any Governmental Entity required for consummation of the Merger or the Bank Merger shall have been denied by final nonappealable action of such Governmental Entity, an application therefor shall have been permanently withdrawn at the request of any Governmental Entity or any Governmental Entity of competent jurisdiction shall have issued a final nonappealable order, injunction or decree permanently enjoining or otherwise prohibiting or making illegal the consummation of the Merger or the Bank Merger; provided, however, that no party shall have the right to terminate this Agreement pursuant to thisSection 8.1(d) if such denial shall be due to the failure of the party seeking to terminate this Agreement to perform or observe the covenants of such party set forth in this Agreement;
(e)No YDKNUBNC Shareholder Approval. by FNB, or by YDKNUBNC provided that YDKNUBNC shall not be in material breach of any of its obligations underSection6.3, if the Requisite YDKNUBNC Vote shall not have been
obtained by reason of the failure to obtain the Requisite YDKNUBNC Vote at the YDKNUBNC Shareholders Meeting or at any adjournment or postponement thereof;
(f)No FNB Shareholder Approval. by YDKN, if the Requisite FNB Vote shall not have been obtained by reason of the failure to obtain the Requisite FNB Vote at the FNB Shareholders Meeting or at any adjournment or postponement thereof;
(g)YDKNUBNC Failure to Recommend. at any time prior to such time as the Requisite YDKNUBNC Vote is obtained, by FNB if (i) YDKNUBNC shall have breachedSection6.11(a) –(d) in any respect materially adverse to FNB, (ii) the YDKNUBNC Board of Directors shall have failed to make the YDKNUBNC Recommendation or shall have effected a Change in YDKNUBNC Recommendation, (iii) the YDKNUBNC Board of Directors shall have approved, recommended or endorsed (or in the case of a tender or exchange offer, failed to recommend rejection of within the ten (10) business day period specified in Rule 14e-2 under the Exchange Act), or proposed or resolved to recommend or endorse an Acquisition Proposal, or (iv) YDKN UBNC shall have materially breached its obligations underSection 6.3(a)6.3 by failing to call, give notice of, convene and hold the YDKNUBNC Shareholders Meeting; or
(h)FNB Failure to Recommend. at any time prior to such time as the Requisite FNB Vote is obtained, by YDKN if (i) the FNB Board of Directors shall have failed to make the FNB Recommendation or withdrawn or modified in a manner adverse to YDKN the FNB Recommendation or (ii) FNB shall have materially breached its obligations underSection 6.3(b) by failing to call, give notice of, convene and hold the FNB Shareholders Meeting;
(i)(g) Superior Proposal. at any time prior to the such time as the Requisite YDKNUBNC Vote has been obtained, by YDKNUBNC in order to enter concurrently into an Acquisition Proposal that has been received by YDKNUBNC and the YDKNUBNC Board of Directors in compliance withSections 6.11(a) and(b) and that YDKN’sUBNC’s Board of Directors concludes in good faith, in consultation with its financial and legal advisors, that such Acquisition Proposal is a Superior Proposal; provided, however, that this Agreement may be terminated by YDKNUBNC pursuant to this Section 8.1(g) or thisSection 8.1(i) only after the third (3rd) business day following YDKN’sUBNC’s provision of written notice to FNB advising FNB that the YDKNUBNC Board of Directors is prepared to accept a Superior Proposal (it being understood, for the avoidance of doubt, that the delivery of such notice shall not entitle FNB to terminate this Agreement pursuant to thisSection 8.1(i)8.1(g)) and only if (i) during such three (3) business day period, YDKNUBNC has negotiated, and has used its reasonable best efforts to cause its financial and legal advisors to negotiate, with FNB in good faith to make such adjustments in the terms and conditions of this Agreement such that such Acquisition Proposal would no longer constitute a Superior Proposal and (ii) YDKN’s UBNC’s Board of
Directors has considered any such adjustments in the terms and conditions of this Agreement resulting from such negotiations and has concluded in good faith, based upon consultation with its financial and legal advisers, that such Acquisition Proposal remains a Superior Proposal even after giving effect to the adjustments proposed by FNB, and further provided that such termination shall not be effective until YDKNUBNC has paid the Break-up Fee provided bySection 6.11(f) to FNB; orFNB.
(j)(h) FNB Market Value. by YDKN,UBNC, if the YDKNUBNC Board of Directors so determines by a majority vote of its members at any time during the five (5) business day period commencing on the Determination Date if both of the following conditions (clauses (i) and (ii) immediately below) are satisfied:
(i) the FNB Market Value is less than 80% of the Initial FNB Market Value; and
(ii) the number obtained by dividing the FNB Market Value by the Initial FNB Market Value (“FNB Ratio”) shall be less than the quotient obtained by dividing the Final Index Price by the Initial Index Price, minus 0.20 (the “Index Ratio”“Index Ratio”).
(iii) For purposes of thisSection 8.1(j) 8.1(h), the following terms shall have the meanings indicated below:
(A) “FNB Market Value” shall be the average of the daily closing sales prices of a share of FNB Common Stock as reported on NYSE for the ten (10) consecutive trading days immediately preceding the Determination Date.
(B) “Determination Date” shall mean the date on which the last Requisite Regulatory Approval is obtained with respect to the transactions contemplated by this Agreement, without regard to a requisite waiting period.
(C) “Final Index Price” means the average of the closing price of the Index on each of ten (10) consecutive trading days immediately preceding the Determination Date.
(D) “Index” means the SNL Mid Cap U.S. BankKBW Nasdaq Regional Banking Index; provided, however, that if the SNL Mid Cap U.S. BankKBW Nasdaq Regional Banking Index is not available for any reason, “Index” shall mean the NASDAQKBW Nasdaq Bank Index.
(E) “Initial FNB Market Value” means the average of the daily closing sales prices of a share of FNB Common Stock, as reported on NYSE, for the ten (10) consecutive trading days immediately preceding the date of this Agreement.
(F) “Initial Index Price” means the average of the closing prices of the Index for the ten (10) consecutive trading days immediately preceding the date of this Agreement.
(iv) For purposes of thisSection 8.1(j) 8.1(h), if FNB or any company belonging to the Index declares or effects a stock dividend, reclassification, recapitalization, split-up, combination, exchange of shares or similar transaction between the date of this Agreement and the Determination Date, the prices for the common stock of such company shall be appropriately adjusted for the purposes of applying thisSection 8.1(j) 8.1(h).
If the UBNC Board of Directors determines to terminate this Agreement pursuant to this Section 8.1(h), UBNC shall give prompt written notice thereof to FNB (the “Notice of Termination”). This Agreement shall terminate at the end of the fifth (5th) day following the date the Notice of Termination was provided by UBNC to FNB (the “Termination Effective Time”); provided, however, that UBNC’s Notice of Termination may be withdrawn by UBNC at any time prior to the Termination Effective Time; and provided, further, that during the five-day period commencing with its receipt of the Notice of Termination, FNB shall have the option to increase the Exchange Ratio (calculated to the nearest one one-thousandth) so that the value of the Merger Consideration (calculated based on the FNB Market Value) equals the lesser of:
(x) the product of the Initial FNB Market Value, 0.80 and the Exchange Ratio (as in effect immediately prior to any increase in the Exchange Ratio pursuant to this Section 8.1(h)); and
(y) an amount equal to (1) the product of the Index Ratio, 0.80, the Exchange Ratio (as in effect immediately prior to any increase in the Exchange Ratio pursuant to this Section 8.1(h)), and the FNB Market Value, divided by (2) the FNB Ratio.
If FNB so elects within such five-day period, it shall give prompt (and in any event, prior to the Termination Effective Time) written notice to UBNC of such election and the revised Exchange Ratio, in which event no termination shall occur pursuant to this Section 8.1(h) and this Agreement shall remain in effect in accordance with its terms, provided that any references in this Agreement to the “Exchange Ratio” shall thereafter be deemed to refer to the Exchange Ratio as increased pursuant to this Section 8.1(h).
8.2Effect of Termination. In the event of termination of this Agreement by either FNB or YDKNUBNC as provided inSection8.1,, this Agreement shall forthwith become void and have no effect except (i)Sections6.2(b),6.11(f)-(h),8.2,,9.3 and9.8 shall survive any termination of this Agreement and (ii) notwithstanding anything to the contrary contained in this Agreement, no party shall be relieved or released from any liability or damages arising out of its fraud or willful breach of any of the provisions of this Agreement.
8.3Amendment. Subject to compliance with applicable Law, this Agreement may be amended by the parties, by action taken or authorized by their respective Boards of Directors at any time before or after the receipt of the Requisite YDKNUBNC Vote; provided, however, that after the receipt of the Requisite YDKNUBNC Vote, there may not be, without further approval of the YDKNUBNC shareholders, any amendment of this Agreement that
requires such further approval under applicable Law. This Agreement may not be amended except by an instrument in writing specifically designated as an amendment hereto, signed on behalf of each of the parties.
8.4Extension; Waiver. At any time prior to the Effective Time, the parties may, to the extent legally allowed, (i) extend the time for the performance of any of the obligations or other acts of the other party, (ii) waive any inaccuracies in the representations and warranties contained in this Agreement or in any document delivered pursuant hereto and (iii) waive compliance with any of the agreements or conditions contained in this Agreement; provided, however, that after the receipt of the Requisite YDKNUBNC Vote, there may not be, without
further approval of the YDKNUBNC shareholders, any extension or waiver that requires further approval under applicable Law or any portion of this Agreement that changes the amount or form of the consideration to be delivered to the holders of YDKNUBNC Common Stock under this Agreement, other than as this Agreement contemplates. Any agreement on the part of a party to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party, but such extension or waiver or failure to insist on strict compliance with an obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.
ARTICLE 9
GENERAL PROVISIONS
9.1Closing. On the terms and subject to the conditions set forth in this Agreement, the closing of the Merger (the “Closing”) shall take place at 10:00 A.M., Pittsburgh time, at the offices of Reed Smith LLP, on a date which shall be no later than five (5) businessfifteen (15) calendar days after the satisfaction or waiver, subject to applicable Law, of the latest to occur of the conditions set forth inArticle 7,, other than those conditions that by their nature can only be satisfied at the Closing, but subject to the satisfaction or waiver thereof,thereof; provided, however, in no event will the Closing take place earlier than September 30, 2022, unless the parties, by mutual written agreement, agree that the Closing shall occur on another date or place or at another time (the “Closing Date”), provided that in no event shall the Closing occur prior to January 2, 2017..
9.2Nonsurvival of Representations, Warranties and Agreements. None of the representations, warranties, covenants and agreements set forth in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Effective Time, except forSection 6.7 and for those other covenants and agreements contained herein and therein which by their terms apply or are to be performed, in whole or in part, after the Effective Time.
9.3Expenses.
(a) Each party to this Agreement will bear all fees and expenses incurred by it in connection with this Agreement and the transactions this Agreement contemplates, including fees and expenses of its own financial consultants, accountants and counsel, except (i) that expenses of printing the Joint Proxy Statement, mailing the Proxy Statement to UBNC’s shareholders in connection with the shareholders meetings contemplated by Section 6.3, and all filing and other fees to be paid to the SEC in connection with the Merger shall be shared equally between YDKNUBNC and FNB (it being understood that each party shall bear its own expenses in connection with mailing the Joint Proxy Statement to such party’s shareholders in connection with the shareholders meetings contemplatedand (ii) as provided bySection 6.36.16), and provided further that, in accordance withSection 8.2, nothing contained in this Agreement shall limit either party’s rights to recover any liabilities or damages arising out of the other party’s fraud or willful breach of any provision of this Agreement.
(b) In the event that this Agreement is terminated by:
(i) FNB pursuant toSection 8.1(b)(i); or
(ii) YDKNUBNC pursuant toSection 8.1(b)(ii),;
then the non-terminating party shall pay to the terminating party by wire transfer of immediately available funds, within three (3) business days following delivery of a statement of such expenses, all out-of-pocket costs and expenses, up to a maximum of $1.5 million,$600,000, including professional fees of legal counsel, financial advisors and accountants,accountants. and their expenses, actually incurred by the terminating party in connection with the Merger and this Agreement.
9.4Notices. All notices and other communications in connection with this Agreement shall be in writing and shall be deemed duly given if delivered personally, sent via facsimile, with confirmation, sent via email, with confirmation, so long as such email states it is a notice delivered pursuant to thisSection 9.4,, delivered by an express courier or mailed by
registered or certified mail, return receipt requested, to the parties at the following addresses or at such other address for a party as shall be specified by like notice:
(a) if to YDKN,UBNC, to:
Yadkin Financial Corporation1011A Red Banks Road
3600 Glenwood Avenue, Suite 300
Raleigh, NC 27612Greenville, North Carolina 27858
Attention: Scott M. Custer, President & Chief Executive OfficerRob Jones
Email: Scott.Custer@yadkinbank.comrjones@unionbanknc.com
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Meagher & FlomFenimore Kay Harrison LLP
Four Times Square191 Peachtree Street NE
New York, New York 10036Suite 849
Atlanta, Georgia 30303
Attention: Sven G. Mickisch
Facsimile: (917) 777-3554Jonathan S. Hightower
Email: Sven.Mickisch@skadden.comjhightower@fkhpartners.com
(b) if to FNB, to:
F.N.B. Corporation
One F.N.B. Boulevard
Hermitage, PA 16148
Attention: Vincent J. Delie, Jr., President and Chief ExecutiveLegal Officer
Facsimile: (724) 983-3515
Email: Delie@fnb-corp.comfnbcorporatesecretaryoffice@fnb-corp.com
with a copy (which shall not constitute notice) to:
Reed Smith LLP
Reed Smith Centre
225 Fifth Avenue
Pittsburgh, PA 15222
Attention: Gary R. Walker, Esq.
Facsimile: (412) 288-3063
Email: gwalker@reedsmith.com
9.5Interpretation. The parties have participated jointly in negotiating and drafting this Agreement. In the event that an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement. When a reference is made in this Agreement to
Articles, Sections, Exhibits or Schedules, such reference shall be to an Article or Section of or Exhibit or Schedule to this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The YDKN Disclosure Schedule and the FNB Disclosure Schedule, as well as all other schedules and all exhibits to this Agreement, shall be deemed part of this Agreement and included in any reference to this Agreement. Any matter disclosed pursuant to any section of either Disclosure Schedule shall be deemed disclosed for purposes of any other section ofArticle 3 orArticle 4, respectively, to the extent that applicability of the disclosure to such other section is reasonably apparent on the face, notwithstanding the absence of a specific cross-reference, of such disclosure. No item is required to be set forth in either Disclosure Schedule as an exception to a representation or warranty if its absence would not result in the related representation or warranty being deemed untrue or incorrect. The mere inclusion of an item in either Disclosure Schedule as an exception to a representation or warranty shall not be deemed an admission by either party that such item represents a material exception or fact, event or circumstance or that such item is reasonably likely to result in a Material Adverse Effect, or that any breach or violation of applicable Laws or any contract exists or has actually occurred. This Agreement shall not be interpreted or construed to require any person to take any action, or fail to take any action, if to do so would violate any applicable Law. As used in this Agreement, “knowledge” means the actual knowledge as of the date referenced of executive officers of the applicable party following reasonable inquiry of persons within their organization and its Subsidiaries who would be reasonably expected to be knowledgeable about the relevant subject matter. As used herein, (i) ”business day” means any day other than a Saturday, a Sunday or a day on which banks in Raleigh, North Carolina or Pittsburgh, Pennsylvania are authorized by law or executive order to be closed, (ii) the term “made available” means any document or other information that was (a) provided by one party or its representatives to the other party or its representatives prior to the date hereof, (b) included in the virtual data room of a party prior to the date hereof or (c) filed by a party with the SEC and publicly available on EDGAR prior to the date hereof, (iii) references to “the date hereof” shall mean the date of this Agreement, (iv) the word “or” is not exclusive and (v) terms defined in the singular have a comparable meaning when used in the plural, and vice versa.
9.6Counterparts. This Agreement, any signed agreement or instrument entered into in connection with this Agreement, and any amendments or waivers hereto or thereto, may be executed in two or more counterparts, including by facsimile or other electronic means, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties and delivered to the other party, it being understood that each party need not sign the same counterpart. No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine or e-mail delivery of a “.pdf” format data file to deliver a signature to this Agreement or any amendment hereto or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine or e-mail delivery of a “.pdf” format data file as a defense to the formation of a contract and each party hereto forever waives any such defense.
9.7Entire Agreement. This Agreement, including the documents and the instruments referred to in this Agreement, together with the Confidentiality Agreement, constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter of this Agreement.
9.8Governing Law; Jurisdiction; Specific Performance.
(a) This Agreement shall be governed and construed in accordance with the laws of the State of Delaware, without giving effect to any applicable conflicts of law.
(b) Each of the parties to this Agreement agrees that it shall bring any action or proceeding in respect of any claim arising out of or related to this Agreement or the transactions that are contemplated by this Agreement exclusively in any federal or state court sitting in Wilmington, Delaware (the “Chosen Courts”), and
solely in connection with claims arising under this Agreement or the transactions that are the subject of this Agreement, (i) irrevocably submits to the exclusive jurisdiction of the Chosen Courts, (ii) waives any objection to laying venue in any such action or proceeding in the Chosen Courts, (iii) waives any objection that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any party hereto and (iv) agrees that service of process upon such party in any such action or proceeding shall be effective if notice is given in accordance withSection 9.4.
(c) EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT: (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH PARTY MAKES THIS WAIVER VOLUNTARILY AND (IV) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THISSECTION 9.8.
(d) Each party agrees that irreparable damage would occur if any provision of this Agreement were not performed in accordance with its specific terms or were otherwise breached. Accordingly, the parties shall be entitled to specific performance of the terms hereof, including an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof (including the parties’ obligation to consummate the Merger), in addition to any other remedy to which they are entitled at law or in equity. Each of the parties further waives (i) any defense in any action for specific performance that a remedy at law would be adequate and (ii) any requirement under any law to post security or a bond as a prerequisite to obtaining equitable relief.
9.9Severability. Any term or provision of this Agreement that is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable. In all such cases, the parties shall use their reasonable best efforts to substitute a valid, legal and enforceable provision that, insofar as practicable, implements the original purposes and intents of this Agreement.
9.10Assignment; Third Party Beneficiaries. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned by either of the parties, whether by operation of law or otherwise, without the prior written consent of the other party. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of and be enforceable by each of the parties and their respective successors and assigns. Except as otherwise specifically provided inSection 6.7(d), this Agreement, including the documents and instruments referred to in this Agreement, is not intended to and does not confer upon any person other than the parties to this Agreement any rights or remedies under this Agreement, including the right to rely upon the representations and warranties set forth herein. The representations and warranties in this Agreement are the product of negotiations among the parties hereto and are for the sole benefit of the parties. Any inaccuracies in such representations and warranties are subject to waiver by the parties hereto in accordance herewith without notice or liability to any other person. In some instances, the representations and warranties in this Agreement may represent an allocation among the parties hereto of risks associated with
particular matters regardless of the knowledge of any of the parties hereto. Consequently, persons other than the parties may not rely upon the representations and warranties in this Agreement as characterizations of actual facts or circumstances as of the date of this Agreement or as of any other date.
[Remainder of page intentionally blank; signature page follows]
IN WITNESS WHEREOF, the duly authorized officers of F.N.B. Corporation and Yadkin Financial Corporation have executed this Agreement as of the date first above written.
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F.N.B. CORPORATION |
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By: | | /s/ Vincent J. Delie, Jr.
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Name: | | Vincent J. Delie, Jr. |
Title: | | President and Chief Executive Officer |
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YADKIN FINANCIAL CORPORATION |
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By: | | /s/ Scott M. Custer
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Name: | | Scott M. Custer |
Title: | | President and Chief Executive Officer |
[Signature Page to Agreement and Plan of Merger]
EXHIBIT B
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (“Bank Merger Agreement”), dated as of July 20, 2016, is by and between First National Bank of Pennsylvania (“FNB Bank”) and Yadkin Bank (“Yadkin Bank”). All capitalized terms used herein but not defined herein shall have the respective meanings assigned to them in the Agreement and Plan of Merger (the “Parent Merger Agreement”) dated as of July 20, 2016, between F.N.B. Corporation (“FNB”) and Yadkin Financial Corporation (“YDKN”).
WlTNESSETH:
WHEREAS, Yadkin Bank is a North Carolina banking institution and a wholly owned subsidiary of YDKN; and
WHEREAS, FNB Bank is a national banking association and a wholly owned subsidiary of FNB; and
WHEREAS, FNB and YDKN have entered into the Parent Merger Agreement, pursuant to which YDKN will merge with and into FNB (the “Parent Merger”); and
WHEREAS, FNB Bank and Yadkin Bank desire to merge on the terms and conditions herein provided immediately following the effective time of the Parent Merger.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained, the parties hereto, intending to be legally bound, agree as follows:
1.The Bank Merger. Subject to the terms and conditions of the Parent Merger Agreement and this Bank Merger Agreement, at the Effective Time (as defined in Section 2 below), Yadkin Bank shall merge with and into FNB Bank (the “Bank Merger”) under the laws of the United States and of the State of North Carolina. FNB Bank shall be the surviving bank of the Bank Merger (the “Surviving Bank”).
2.Effective Time. The Bank Merger shall become effective on the date and at the time (the “Effective Time”) specified in the Bank Merger approval to be issued by the Office of the Comptroller of the Currency (the “OCC”), which date and time shall not be earlier than the Effective Time provided for the Parent Merger pursuant to Section 1.2 of the Parent Merger Agreement.
3.Charter; Bylaws. The Charter and Bylaws of FNB Bank in effect immediately prior to the Effective Time shall be the Charter and Bylaws of the Surviving Bank, until altered, amended or repealed in accordance with their terms and applicable law.
4.Name; Offices. The name of the Surviving Bank shall be “First National Bank of Pennsylvania.” The main office of the Surviving Bank shall be the main office of FNB Bank immediately prior to the Effective Time.
5.Directors and Executive Officers. Upon consummation of the Bank Merger, (i) the directors of the Surviving Bank shall be the directors of FNB Bank immediately prior to the Effective Time and one (1) current member of the board of directors of YDKN, and (ii) the executive officers of FNB Bank immediately prior to the Effective Time shall serve as the executive officers of the Surviving Bank. Each of the directors and officers of the Surviving Bank immediately after the Effective Time shall hold office until his or her successor is elected and qualified in accordance with the charter and bylaws of the Surviving Bank or until his or her earlier death, resignation or removal.
6.Effects of the Merger. Upon consummation of the Bank Merger, and in addition to the effects set forth at 12 U.S.C. § 215a, the applicable provisions of the regulations of the OCC and other applicable law, (i) all assets of FNB Bank and Yadkin Bank as they exist at the Effective Time, shall pass to and vest in the Surviving Bank without any conveyance or other transfer; (ii) the Surviving Bank shall be considered the same business and corporate entity as each constituent bank with all the rights, powers and duties of each constituent bank and (iii) the Surviving Bank shall be responsible for all the liabilities of every kind and description, of each of FNB Bank and Yadkin Bank existing as of the Effective Time, all in accordance with the provisions of The National Bank Act.
7.Effect on Shares of Stock.
(a) Each share of FNB Bank common stock issued and outstanding immediately prior to the Effective Time shall be unchanged and shall remain issued and outstanding.
(b) At the Effective Time, each share of Yadkin Bank capital stock issued and outstanding prior to the Bank Merger shall, by virtue of the Bank Merger and without any action on the part of the holder thereof, be canceled. Any shares of Yadkin Bank capital stock held in the treasury of Yadkin Bank immediately prior to the Effective Time shall be retired and canceled.
8.Procurement of Approvals. This Bank Merger Agreement shall be subject to the approval of FNB as the sole shareholder of FNB Bank and YDKN as the sole shareholder of Yadkin Bank at meetings to be called and held or by consent in lieu thereof in accordance with the applicable provisions of law and their respective organizational documents. FNB Bank and Yadkin Bank shall proceed expeditiously and cooperate fully in the procurement of any other consents and approvals and in the taking of any other action, and the satisfaction of all other requirements prescribed by law or otherwise necessary for consummation of the Bank Merger on the terms provided herein, including without limitation the preparation and submission of such applications or other filings for the Bank Merger with the OCC, the North Carolina Commissioner of Banks and the North Carolina Department of the Secretary of State as may be required by applicable laws and regulations.
9.Conditions Precedent. The obligations of the parties under this Bank Merger Agreement shall be subject to: (i) the approval of this Bank Merger Agreement by FNB as the sole shareholder of FNB Bank and YDKN as the sole shareholder of Yadkin Bank at meetings of shareholders duly called and held or by consent or consents in lieu thereof, in each case without any exercise of such dissenters’ rights as may be applicable; (ii) receipt of approval of the Bank Merger from all governmental and banking authorities whose approval is required; (iii) receipt of any necessary regulatory approval to operate the main office and the branch offices of Yadkin Bank as offices of the Surviving Bank and (iv) the consummation of the Parent Merger pursuant to the Parent Merger Agreement at or before the Effective Time.
10.Additional Actions. If, at any time after the Effective Time, the Surviving Bank shall determine that any further assignments or assurances in law or any other acts are necessary or desirable to (a) vest, perfect or confirm, of record or otherwise, in the Surviving Bank its rights, title or interest in, to or under any of the rights, properties or assets of Yadkin Bank acquired or to be acquired by the Surviving Bank as a result of, or in connection with, the Bank Merger, or (b) otherwise carry out the purposes of this Bank Merger Agreement, Yadkin Bank and its proper officers and directors shall be deemed to have granted to the Surviving Bank an irrevocable power of attorney to (i) execute and deliver all such proper deeds, assignments and assurances in law and to do all acts necessary or proper to vest, perfect or confirm title to and possession of such rights, properties or assets in the Surviving Bank and (ii) otherwise to carry out the purposes of this Bank Merger Agreement. The proper officers and directors of the Surviving Bank are fully authorized in the name of Yadkin Bank or otherwise to take any and all such action.
11.Amendment. Subject to applicable law, this Bank Merger Agreement may be amended, modified or supplemented only by written agreement of FNB Bank and Yadkin Bank at any time prior to the Effective Time.
12.Waiver. Any of the terms or conditions of this Bank Merger Agreement may be waived at any time by whichever of the parties hereto is, or the shareholders of which are, entitled to the benefit thereof by action taken by the Board of Directors of such waiving party
13.Assignment. This Bank Merger Agreement may not be assigned by either FNB Bank or Yadkin Bank without the prior written consent of the other.
14.Termination. This Bank Merger Agreement may be terminated by written agreement of FNB Bank and Yadkin Bank at any time prior to the Effective Time, and in any event shall terminate upon the termination of the Parent Merger Agreement in accordance with its terms.
15.Governing Law. Except to the extent governed by federal law, this Bank Merger Agreement shall be governed in all respects, including, but not limited to, validity, interpretation, effect and performance, by the laws of the State of Delaware without regard to the conflicts of law provisions thereof.
16.Counterparts. This Bank Merger Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one agreement.
[Signature Page Follows.]
IN WITNESS WHEREOF, each of FNB Bank and Yadkin Bank have caused this Bank Merger Agreement to be executed on its behalf by their duly authorized officers.
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FIRST NATIONAL BANK OF PENNSYLVANIA |
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By: | | |
| | Vincent J. Delie, Jr. |
| | President and Chief Executive Officer |
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YADKIN BANK |
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By: | | |
| | Scott M. Custer |
| | President and Chief Executive Officer |
[Signature Page to Bank Merger Agreement]
APPENDIX B
FORM OF VOTING AGREEMENT
July 20, 2016
F.N.B. Corporation
One North Shore Center
12 Federal Street
Pittsburgh, PA 15212
Ladies and Gentlemen:
Concurrently with the execution of this letter agreement (“Voting Agreement”), F.N.B. Corporation, a Florida corporation (“FNB”), and Yadkin Financial Corporation, a North Carolina corporation (“Yadkin”), are entering into an Agreement and Plan of Merger, of even date herewith (the “Merger Agreement”), whereby Yadkin will merge with and into FNB (the “Merger”) and shareholders of Yadkin will receive the Merger Consideration as set forth in the Merger Agreement, subject to the closing of the Merger. All defined terms used but not defined herein shall have the meanings ascribed thereto in the Merger Agreement.
A condition to FNB’s interest in entering into the Merger Agreement is that I execute and deliver this Voting Agreement to FNB.
Intending to be legally bound hereby, I irrevocably agree and represent as follows:
(a) As of the date of this Voting Agreement, I have, and at all times during the term of this Voting Agreement will have, beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of, and good and valid title to, the number of shares of voting common stock, par value $1.00 per share, of Yadkin (the “Yadkin Common Stock”), that is set forth on Appendix A hereto, and I hold stock options or restricted stock awards to acquire or obtain the number of shares of Yadkin Common Stock set forth onAppendix A hereto. All of the securities listed on Appendix A are owned free and clear of any proxy or voting restriction, claims, liens, encumbrances and security interests and any other limitation or restriction whatsoever (including, except with respect to stock options or restricted stock awards, any restriction on the right to dispose of such securities). None of the securities listed onAppendix A is subject to any voting trust or other agreement or arrangement with respect to the voting rights of such securities.
(b) As of the date of this Voting Agreement, except for the securities set forth on Appendix A, I do not beneficially own any (i) shares of capital stock or voting securities of Yadkin, (ii) securities of Yadkin convertible into or exchangeable for shares of capital stock or voting securities of Yadkin or (iii) options or other rights to acquire from Yadkin any shares of capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of Yadkin. The Yadkin Common Stock listed on Appendix A, together with all Yadkin Common Stock that I subsequently acquire during the term of this Voting Agreement, including through the exercise of any stock options, warrants or similar instruments, are referred to herein as the “Shares”.
(c) During the term of this Voting Agreement, at the YDKN Shareholders Meeting and at any other meeting of Yadkin shareholders, however called, and on every action or approval by written consent of shareholders of Yadkin, I will vote or cause to be voted all Shares over which I have sole voting power, and I will use my reasonable best efforts to cause any Shares over which I share voting power to be voted in favor of (i) approval and adoption of the Merger Agreement and the transactions contemplated thereby, and (ii) any proposal to adjourn or postpone such meeting to a later date if there are not sufficient votes to approve the Merger Agreement. Determinations as to “sole” or “shared” voting power shall be made in accordance with Rule 13d-3 of the Exchange Act.
July 20, 2016
Page 2
(d) During the term of this Voting Agreement, I will not, directly or indirectly, offer, sell, transfer, pledge, encumber or otherwise dispose of (collectively, “Transfer”) any Shares over which I have sole dispositive power (or any interest therein), and I will use my reasonable best efforts to not permit the Transfer of any Shares over which I have shared dispositive power (or any interest therein), except to the extent permitted by paragraph (g) hereof.
(e) I agree that Yadkin shall not be bound by any attempted sale of any Yadkin Common Stock over which I have sole voting and dispositive power, and Yadkin’s transfer agent shall be given appropriate stop transfer orders and shall not be required to register any such attempted sale, unless the sale has been effected in compliance with the terms of this Voting Agreement.
(f) I represent that I have the legal capacity to enter into this Voting Agreement, that I have duly and validly executed and delivered this Voting Agreement and that this Voting Agreement is a valid and binding obligation enforceable against me in accordance with its terms, subject to bankruptcy, insolvency and other laws affecting creditors’ rights and general equitable principles; and further, that no consent of my spouse is necessary under any “community property” or other laws in order for me to enter into and perform my obligations under this Voting Agreement.
(g) Notwithstanding anything herein to the contrary, I may Transfer any or all of the Shares over which I have beneficial ownership to my spouse, ancestors or descendants or other transfers solely for estate planning purposes;provided,however, that in any such case, prior to and as a condition to the effectiveness of such Transfer, each person to which any of such Shares or any interest in any of such Shares is or may be Transferred shall have executed and delivered to FNB an agreement to be bound by the terms of this Voting Agreement.
I am signing this Voting Agreement solely in my capacity as a shareholder of Yadkin and as an option or restricted stock holder, if I am such, and not in any other capacity, such as a director or officer of Yadkin or as a fiduciary of any trusts in which I am not a beneficiary. Notwithstanding anything herein to the contrary: (a) I make no agreement or understanding herein in any capacity other than in my capacity as a beneficial owner of Yadkin Common Stock and (b) nothing herein shall be construed to limit or affect any action or inaction by me or any of my representatives, as applicable, in serving on Yadkin’s Board of Directors or as an officer of Yadkin, in acting in my capacity as a director, officer or fiduciary of Yadkin.
This Voting Agreement shall terminate and be of no further force and effect concurrently with, and automatically upon, the earliest to occur of (a) the favorable vote of the Yadkin shareholders with respect to the approval of the Merger Agreement, (b) the Effective Time, (c) FNB and I enter into a written agreement to terminate this Voting Agreement, or (d) any termination of the Merger Agreement in accordance with its terms, except that any such termination shall be without prejudice to FNB’s rights if termination should arise out of my willful breach of any covenant or representation contained herein.
All notices and other communications in connection with this Voting Agreement shall be in writing and shall be deemed given if delivered personally, sent via facsimile, with confirmation, mailed by registered or certified mail, return receipt requested, or delivered by an express courier, with confirmation, to the other party hereto at its addresses set forth on the signature page hereto.
This Voting Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties. This Voting Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter of this Voting Agreement.
July 20, 2016
Page 3
I agree and acknowledge that FNB may be irreparably harmed by, and that there may be no adequate remedy at law for, any violation of this Voting Agreement by me. Without limiting other remedies, FNB shall have the right to seek to enforce this Voting Agreement by specific performance or injunctive relief. This Voting Agreement and all claims arising hereunder or relating hereto, shall be governed and construed and enforced in accordance with the laws of the State of Delaware, without giving effect to the principles of conflicts of law thereof. I hereby irrevocably and unconditionally submit to the exclusive jurisdiction of any state or federal court sitting in Wilmington, Delaware, in any action or proceeding arising out of or relating to this letter.
If any term, provision, covenant or restriction of this Voting Agreement is held by a court of competent jurisdiction or other Governmental Entity to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Voting Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such a determination, the parties shall negotiate in good faith to modify this Voting Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.
This Voting Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same instrument.
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Very truly yours, |
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[Name of Shareholder] |
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Address: | | |
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| | Facsimile: | | |
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Acknowledged and Agreed: |
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F.N.B. CORPORATION |
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By: | | |
| | Vincent J. Delie, Jr., |
| | President and Chief Executive Officer |
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Address:
| | One North Shore Center |
| | 12 Federal Street |
| | Pittsburgh, PA 15212 |
| | Facsimile: (724) 983-3515 |
Dated: , 2016
July 20, 2016
Page 4
Appendix A to Voting Agreement
Common shares beneficially owned (including shares underlying restricted stock awards and excluding shares issuable upon the exercise of stock options) – [●]
| Shares issuable upon the exercise of vested stock options – [●] |
APPENDIX C
VOTING AGREEMENT
This VOTING AGREEMENT, dated as of July 20, 2016 (this “Agreement”), is entered into by and between F.N.B. Corporation, a Florida corporation (“FNB”), and the undersigned shareholder of the Company (together with its affiliated private investment funds holding shares of Company Common Stock, the “Shareholder”). Capitalized terms used herein and not defined shall have the meanings specified in the Merger Agreement (defined below).
WHEREAS, concurrently herewith, Yadkin Financial Corporation, a North Carolina corporation (the “Company” or “YDKN”), and FNB are entering into that certain Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which, among other transactions, the Company will, on the terms and subject to the conditions set forth therein, merge with and into FNB, with FNB being the surviving company and, in connection therewith, the shares of voting common stock, par value $1.00 per share, of the Company issued and outstanding immediately prior to the Effective Time, other than Treasury Shares, will, without any further action on the part of the holder thereof, be automatically converted into the right to receive the Merger Consideration as set forth in the Merger Agreement, subject to the terms and conditions therein;
WHEREAS, as of the date hereof, the Shareholder is the record and beneficial owner of, and has the sole right to vote and dispose of, the number of shares of voting common stock of the Company (“Company Common Stock”) set forth on the signature page hereto (such shares of Company Common Stock are hereinafter referred to as the “Shares”, and the Shares, together with any other capital stock of the Company acquired by the Shareholder after the date hereof, whether acquired directly or indirectly, upon the exercise of options, conversion of convertible securities or otherwise, and any other securities issued by the Company that are entitled to vote on the approval of the Merger Agreement held or acquired by the Shareholder, whether acquired heretofore or hereafter, are collectively referred to herein as the “Subject Shares”);
WHEREAS, receiving the Requisite YDKN Vote is a condition to the consummation of the transactions contemplated by the Merger Agreement; and
WHEREAS, as an inducement to FNB to enter into the Merger Agreement and incur the obligations therein, FNB has required that the Shareholder enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1.Agreement to Vote; Restrictions on Voting and Dispositions.
(a)Agreement to Vote Subject Shares. The Shareholder hereby irrevocably agrees that from the date hereof until the Expiration Time, at any meeting (whether annual or special and each adjourned or postponed meeting) of the Company’s shareholders, however called, the Shareholder will, to the fullest extent that the Subject Shares are entitled to vote thereon, (x) appear at such meeting or otherwise cause all of the Subject Shares to be counted as present thereat for purposes of calculating a quorum and (y) vote or cause to be voted all of the Subject Shares to approve the Merger Agreement, provided that the Merger Agreement shall not have been amended or otherwise modified in a manner that would reasonably be expected to be materially adverse to the Shareholder (including, for the avoidance of doubt, the making of any waiver, amendment or other modification of the Merger Agreement that reduces the amount or value of, or changes the type of, consideration payable to holders of Company Common Stock in the Merger).
(b)Restrictions on Transfers. The Shareholder hereby agrees that, from the date hereof until the earlier of the receipt of the Requisite YDKN Vote or the Expiration Time, the Shareholder shall not, directly or indirectly, sell, offer to sell, give, pledge, grant a security interest in, encumber, assign, grant any option for the
sale of or otherwise transfer or dispose of, or enter into any agreement, arrangement or understanding to sell, any Subject Shares (collectively, “Transfer”) other than to its affiliates (a “Permitted Transferee”);provided that as a condition to such Transfer, such affiliate shall execute an agreement that is identical in form to this Agreement;provided,further, that the assigning Shareholder shall remain jointly and severally liable for the breaches of any of such affiliates of the terms hereof. Any Transfer in violation of this provision shall be void. The Shareholder further authorizes FNB to notify the Company’s transfer agent that there is a stop transfer order with respect to all of the Subject Shares and that this Agreement places limits on the voting of the Subject Shares.
(c)Transfer of Voting Rights. The Shareholder hereby agrees that the Shareholder shall not deposit any Subject Shares in a voting trust, grant any proxy or power of attorney or enter into any voting agreement or similar agreement or arrangement, in each case, in contravention of the obligations of the Shareholder under this Agreement with respect to any of the Subject Shares.
(d)Acquired Shares. Any shares of Company Common Stock or other voting securities of the Company with respect to which beneficial ownership is acquired by the Shareholder or its affiliates, including, without limitation, by purchase, as a result of a stock dividend, stock split, recapitalization, combination, reclassification, exchange or change of such shares of Company Common Stock or upon exercise or conversion of any securities of the Company, if any, after the date hereof shall automatically become subject to the terms of this Agreement as Subject Shares.
(e)Inconsistent Agreements. The Shareholder hereby agrees that it shall not enter into any agreement, contract or understanding with any person prior to the termination of this Agreement, directly or indirectly, to vote, grant a proxy or power of attorney or give instructions with respect to the voting of the Subject Shares in any manner which is inconsistent with this Agreement.
2.Non-Solicit. In its capacity as a shareholder of the Company, the Shareholder shall not, and shall use its reasonable best efforts to cause its affiliates (excluding portfolio company investments) and each of their respective officers, directors, employees and representatives acting on its behalf not to, directly or indirectly, solicit proxies or become a “participant” in a “solicitation” (as such terms are defined in the Securities Exchange Act) or otherwise knowingly encourage or assist any party in taking or planning any action that would reasonably be expected to compete with, restrain or otherwise serve to interfere with or inhibit the timely consummation of the Merger in accordance with the terms of the Merger Agreement.
3.Representations, Warranties and Covenants of the Shareholder.
(a)Representations and Warranties. The Shareholder represents and warrants to FNB as follows:
(i)Capacity. The Shareholder is duly organized and validly existing and in good standing under the laws of the jurisdiction of its formation and has all requisite capacity, power and authority to enter into and perform his, her or its obligations under this Agreement. No filing with, and no permit, authorization, consent or approval of, a Governmental Entity is necessary on the part of the Shareholder for the execution, delivery and performance of this Agreement by the Shareholder or the consummation by the Shareholder of the transactions contemplated hereby.
(ii)Due Authorization. This Agreement has been duly executed and delivered by the Shareholder and the execution, delivery and performance of this Agreement by the Shareholder and the consummation of the transactions contemplated hereby have been duly authorized by all necessary action on the part of the Shareholder.
(iii)Binding Agreement. Assuming the due authorization, execution and delivery of this Agreement by FNB, this Agreement constitutes the valid and binding agreement of the Shareholder, enforceable against the Shareholder in accordance with its terms (except in all cases as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship, 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).
(iv)Non-Contravention. The execution and delivery of this Agreement by the Shareholder does not, and the performance by the Shareholder of his, her or its obligations hereunder and the consummation by the Shareholder of the transactions contemplated hereby will not violate or conflict with, or constitute a default under, any agreement, instrument, contract or other obligation or any order, arbitration award, judgment or decree to which the Shareholder is a party or by which the Shareholder is bound, or any statute, rule or regulation to which the Shareholder is subject or, in the event that the Shareholder is a corporation, partnership, trust or other entity, any charter, bylaw or other organizational document of the Shareholder, except for any of the foregoing as would not reasonably be expected, either individually or in the aggregate, to impair the ability of the Shareholder to perform its obligations hereunder. Except as contemplated by this Agreement, the Shareholder (a) has not entered into any voting agreement or voting trust with respect to any Shares or entered into any other contract relating to the voting of the Shares or (b) has not appointed or granted a proxy or power of attorney with respect to any Shares.
(v)Ownership of Shares. Except for restrictions in favor of FNB pursuant to this Agreement, and except for such transfer restrictions of general applicability as may be provided under the Securities Act of 1933, as amended, and the “blue sky” laws of the various States of the United States, the Shareholder owns, beneficially and of record, all of the Shares, as applicable, free and clear of any proxy, voting restriction, security interest, or other lien and has sole voting power and sole power of disposition with respect to the Shares with no restrictions on the Shareholder’s rights of voting or disposition pertaining thereto and no person other than the Shareholder has any right to direct or approve the voting or disposition of any of the Shares. As of the date hereof, the number of Shares equals that number of shares of Company Common Stock set forth on the signature page hereto. The Shareholder has possession of an outstanding certificate or outstanding certificates representing all of the Shares (other than Shares held at the Depository Trust Company and/or in book-entry form) and such certificate or certificates does or do not contain any legend or restriction inconsistent with the terms of this Agreement, the Merger Agreement or the transactions contemplated hereby and thereby.
(vi)Legal Actions. As of the date of this Agreement, there is no action, suit, investigation, complaint or other proceeding pending against the Shareholder or, to the knowledge of the Shareholder, threatened against the Shareholder that restricts or prohibits (or, if successful, would restrict or prohibit) the exercise by the Shareholder of its obligations under this Agreement.
(vii)Reliance. The Shareholder understands and acknowledges that FNB is entering into the Merger Agreement in reliance upon the Shareholder’s execution and delivery of this Agreement and the representations and warranties of the Shareholder contained herein.
(b)Representations and Warranties. FNB represents and warrants to the Shareholder as follows:
(i)Capacity. FNB is duly organized and validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to enter into and perform its obligations under this Agreement. No filing with, and no permit, authorization, consent or approval of, a Governmental Entity is necessary on the part of FNB for the execution, delivery and performance of this Agreement by FNB or the consummation by FNB of the transactions contemplated hereby.
(ii)Due Authorization. This Agreement has been duly executed and delivered by FNB and the execution, delivery and performance of this Agreement by FNB and the consummation of the transactions contemplated hereby have been duly authorized by all necessary action on the part of FNB.
(iii)Binding Agreement. Assuming the due authorization, execution and delivery of this Agreement by the Shareholder, this Agreement constitutes the valid and binding agreement of FNB, enforceable against FNB in accordance with its terms (except in all cases as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, receivership, conservatorship, 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).
(iv)Non-Contravention. The execution and delivery of this Agreement by FNB does not, and the performance by FNB of its obligations hereunder and the consummation by FNB of the transactions contemplated hereby will not, violate or conflict with, or constitute a default under, any agreement, instrument, contract or other obligation or any order, arbitration award, judgment or decree to which FNB is a party or by which FNB is bound, or any statute, rule or regulation to which FNB is subject or, in the event that FNB is a corporation, partnership, trust or other entity, any charter, bylaw or other organizational document of FNB, except for any of the foregoing as would not reasonably be expected, either individually or in the aggregate, to impair the ability of FNB to perform its obligations hereunder.
(c)Covenants. From the date hereof until the Expiration Time:
(i) the Shareholder agrees not to take any action that would make any representation or warranty of the Shareholder contained herein untrue or incorrect or have the effect of preventing, impeding or in any material respect, interfering with or adversely affecting the performance by the Shareholder of its obligations under this Agreement;
(ii) the Shareholder hereby agrees, while this Agreement is in effect, to promptly notify FNB of the number of any new shares of Company Common Stock acquired by the Shareholder, if any, after the date hereof; and
(iii) the Shareholder hereby authorizes FNB and the Company to publish and disclose in any announcement or disclosure required by applicable Law and any proxy statement filed in connection with the transactions contemplated by the Merger Agreement solely the Shareholder’s identity and ownership of the Subject Shares and the nature of the Shareholder’s obligation under this Agreement, subject to the prior written approval of such disclosure, which approval shall not be unreasonably withheld, conditioned or delayed.
4.Termination. Other than this Section 4 and Section 5, which shall survive any termination of this Agreement, this Agreement will terminate (the “Expiration Time”) upon the earliest of (a) the favorable vote of the YDKN shareholders with respect to the approval of the Merger Agreement, (b) the Effective Time, (c) the date of termination of the Merger Agreement in accordance with its terms, (d) the making of any waiver, amendment or other modification of the Merger Agreement that reduces the amount or value of consideration payable to holders of Company Common Stock in the Merger, or changes the type of consideration payable to holders of Company Common Stock in the Merger in a manner reasonably expected to be adverse to holders of Company Common Stock (for the avoidance of doubt, any such change that reduces the amount or value of the consideration payable to holders of Company Common Stock in the Merger shall be considered “adverse to holders of Company Common Stock”), and (e) the date on which the Merger Agreement shall have been amended or otherwise modified in a manner that would otherwise be reasonably expected to be materially adverse to the Shareholder;provided that no such termination shall relieve any party hereto from any liability for any willful and material breach of this Agreement occurring prior to such termination.
5.Miscellaneous.
(a)Expenses. All expenses incurred in connection with this Agreement and the transactions contemplated by this Agreement shall be paid by the party incurring such expenses.
(b)Notices. Any notice required to be given hereunder shall be sufficient if in writing, and sent by email or facsimile transmission (provided that any notice received by facsimile transmission or otherwise at the addressee’s location on any business day after 5:00 p.m. (addressee’s local time) shall be deemed to have been received at 9:00 a.m. (addressee’s local time) on the next business day), by reliable overnight delivery service (with proof of service), hand delivery or certified or registered mail (return receipt requested and first-class postage prepaid), addressed as follows:
If to FNB, to:
F.N.B. Corporation
One North Shore Center
12 Federal Street
Pittsburgh, PA 15212
Attention: Vincent J. Delie, Jr., President and Chief Executive Officer
Facsimile: (724) 983-3515
Email: Delie@fnb-corp.com
With a copy (which shall not constitute notice) to:
Reed Smith LLP
Reed Smith Centre
225 Fifth Avenue
Pittsburgh, PA 15222
Attention: Gary R. Walker, Esq.
Facsimile: (412) 288-3063
Email: gwalker@reedsmith.com
If to9.5 Interpretation. The parties have participated jointly in negotiating and drafting this Agreement. In the Shareholder, to the address for the Shareholder set forth on the signature pages hereto.
(c)Amendments, Waivers, Etc. This Agreement may not be amended, changed, supplemented, waivedevent that an ambiguity or otherwise modifieda question of intent or terminated except by an instrument in writing signed by FNB and the Shareholder.
(d)Successors and Assigns. No party may assign any of its or his rights or delegate any of its or his obligations under this Agreement without the prior written consent of the other party. Subject to the preceding sentence,interpretation arises, this Agreement shall be binding upon and shall inure to the benefit of and be enforceableconstrued as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement. When a reference is made in this Agreement to Articles, Sections, Exhibits or Schedules, such reference shall be to an Article or Section of or Exhibit or Schedule to this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The UBNC Disclosure Schedule and the FNB Disclosure Schedule, as well as all other schedules and all exhibits to this Agreement, shall be deemed part of this Agreement and included in any reference to this Agreement. Any matter disclosed pursuant to any section of either Disclosure Schedule shall be deemed disclosed for purposes of any other section of Article 3 or Article 4, respectively, to the extent that applicability of the disclosure to such other section is reasonably apparent on the face, notwithstanding the absence of a specific cross-reference, of such disclosure. No item is required to be set forth in either Disclosure Schedule as an exception to a representation or warranty if its absence would not result in the related representation or warranty being deemed untrue or incorrect. The mere inclusion of an item in
either Disclosure Schedule as an exception to a representation or warranty shall not be deemed an admission by either party that such item represents a material exception or fact, event or circumstance or that such item is reasonably likely to result in a Material Adverse Effect, or that any breach or violation of applicable Laws or any contract exists or has actually occurred. This Agreement shall not be interpreted or construed to require any person to take any action, or fail to take any action, if to do so would violate any applicable Law. As used in this Agreement, “knowledge” means the actual knowledge as of the date referenced of executive officers of the applicable party following reasonable inquiry of persons within their respective successorsorganization and assigns, including without limitationits Subsidiaries who would be reasonably expected to be knowledgeable about the relevant subject matter. As used herein, (i) ”business day” means any corporate successorday other than a Saturday, a Sunday or a day on which banks in Raleigh, North Carolina or Pittsburgh, Pennsylvania are authorized by mergerlaw or otherwise.executive order to be closed, (ii) the term “made available” means any document or other information that was (a) provided by one party or its representatives to the other party or its representatives prior to the date hereof, (b) included in the virtual data room of a party prior to the date hereof or (c) filed by a party with the SEC and publicly available on EDGAR prior to the date hereof, (iii) references to “the date hereof” shall mean the date of this Agreement, (iv) the word “or” is not exclusive and (v) terms defined in the singular have a comparable meaning when used in the plural, and vice versa.
(e)9.6 Third Party BeneficiariesCounterparts. Nothing expressedThis Agreement, any signed agreement or instrument entered into in connection with this Agreement, and any amendments or waivers hereto or thereto, may be executed in two or more counterparts, including by facsimile or other electronic means, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties and delivered to the other party, it being understood that each party need not sign the same counterpart. No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine or e-mail delivery of a “.pdf” format data file to deliver a signature to this Agreement or any amendment hereto or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine or e-mail delivery of a “.pdf” format data file as a defense to the formation of a contract and each party hereto forever waives any such defense.
9.7 Entire Agreement. This Agreement, including the documents and the instruments referred to in this Agreement, will be construed to give any person, other thantogether with the parties to thisConfidentiality Agreement, and their respective successors and permitted assigns, any legal or equitable right, remedy or claim under or with respect to this Agreement or any provision of this Agreement.
(f)No Partnership, Agency, or Joint Venture. This Agreement is intended to create, and creates, a contractual relationship and is not intended to create, and does not create, any agency, partnership, joint venture or any like relationshipconstitutes the entire agreement between the parties hereto.
(g)Entire Agreement. This Agreement embodies the entire agreement and understanding among the parties relating to the subject matter hereof and supersedes all prior agreements and understandings, relatingboth written and oral, between the parties with respect to suchthe subject matter.
(h)Severability. If any term or other provisionmatter of this Agreement is invalid, illegal or incapable of being enforced by any rule or law, or public policy, all other conditions and provisions of thisAgreement.
9.8 Governing Law; Jurisdiction; Specific Performance.
(a) This Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.
(i)Specific Performance; Remedies Cumulative. The parties hereto acknowledge that money damages are not an adequate remedy for violations of this Agreement and that any party, in addition to any other rights and remedies which the parties may have hereunder or at law or in equity, may, in his or its sole discretion, apply to a court of competent jurisdiction for specific performance or injunction or such other relief as such court may deem just and proper in order to enforce this Agreement or prevent any violation hereof and, to the extent permitted by applicable law, each party waives any objection to the imposition of such relief. All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise or beginning of the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such rights, powers or remedies by such party.
(j)No Waiver. The failure of any party hereto to exercise any right, power or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with his or its obligations hereunder, and any custom or practice of the parties at variance with the terms hereof, shall not constitute a waiver by such party of his or its right to exercise any such or other right, power or remedy or to demand such compliance.
(k)Governing Law. This Agreement and all disputes or controversies arising out of or relating to this Agreement or the transactions contemplated hereby shall be governed by, and construed in accordance with the internal laws of the State of Delaware, without regardgiving effect to any applicable conflicts of law principles.law.
(l)Submission(b) Each of the parties to Jurisdiction. The parties hereto agreethis Agreement agrees that it shall bring any suit, action or proceeding brought by either party to enforcein respect of any provision of, or based on any matterclaim arising out of or in connection with,related to this Agreement or the transactions that are contemplated hereby shall be broughtby this Agreement exclusively in any federal or state court locatedsitting in Wilmington, Delaware. Each of the parties hereto submits to the jurisdiction of any such court in any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of, orDelaware (the “Chosen Courts”), and solely in connection with claims arising under this Agreement or the transactions contemplated hereby, and herebythat are the subject of this Agreement, (i) irrevocably waives the benefit of jurisdiction derived from present or future domicile or otherwise in such action or proceeding. Each party hereto irrevocably waives,submits to the fullest extent permitted by law,exclusive jurisdiction of the Chosen Courts, (ii) waives any objection that it may now or hereafter have to the laying of the venue ofin any such suit, action or proceeding in the Chosen Courts, (iii) waives any objection that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any party hereto and (iv) agrees that service of process upon such party in any such court or that any such suit, action or proceeding broughtshall be effective if notice is given in any such court has been brought in an inconvenient forum.accordance with Section 9.4.
(m)Waiver of Jury Trial.(c) EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THATWHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, to the fullest extent permitted by applicable law, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A)THAT: (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B)(II) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C)(III) EACH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D)(IV) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.SECTION 9.8.
(n)Drafting and Representation. The parties have participated jointly in the negotiation and drafting of this Agreement. No(d) Each party agrees that irreparable damage would occur if any provision of this Agreement willwere not performed in accordance with its specific terms or were otherwise breached. Accordingly, the parties shall be interpreted forentitled to specific performance of the terms hereof, including an injunction or against any party because that party or his or its legal representative drafted the provision.
(o)Name, Captions, Gender. Section headingsinjunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof (including the parties’ obligation to consummate the Merger), in addition to any other remedy to which they are entitled at law or in equity. Each of the parties further waives (i) any defense in any action for reference purposes onlyspecific performance that a remedy at law would be adequate and are(ii) any requirement under any law to post security or a bond as a prerequisite to obtaining equitable relief.
9.9 Severability. Any term or provision of this Agreement that is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be given no effect inunenforceable, the construction or interpretationprovision shall be interpreted to be only so broad as is enforceable. In all such cases, the parties shall use their reasonable best efforts to substitute a valid, legal and enforceable provision that, insofar as practicable, implements the original purposes and intents of this Agreement. Whenever
9.10 Assignment; Third Party Beneficiaries. Neither this Agreement nor any of the contextrights, interests or obligations under this Agreement shall be assigned by either of the parties, whether by operation of law or otherwise, without the prior written consent of the other party. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of and be enforceable by each of the parties and their respective successors and assigns. Except as otherwise specifically provided in Section 6.7(d), this Agreement, including the documents and instruments referred to in this Agreement, is not intended to and does not confer upon any person other than the parties to this Agreement any rights or remedies under this Agreement, including the right to rely upon the representations and warranties set forth herein. The representations and warranties in this Agreement are the product of negotiations among the parties hereto and are for the sole benefit of the parties. Any inaccuracies in such representations and warranties are subject to waiver by the parties hereto in accordance herewith without notice or liability to any other person. In some instances, the representations and warranties in this Agreement may require,represent an allocation among the parties hereto of risks associated with particular matters regardless of the knowledge of any pronounof the parties hereto. Consequently, persons other than the parties may not rely upon the representations and warranties in this Agreement as characterizations of actual facts or circumstances as of the date of this Agreement or as of any other date.
[Remainder of page intentionally blank; signature page follows]
IN WITNESS WHEREOF, the duly authorized officers of F.N.B. Corporation and UB Bancorp have executed this Agreement as of the date first above written.
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| F.N.B. CORPORATION |
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| By: | | /s/ Vincent J. Delie, Jr. |
| Name: | | Vincent J. Delie, Jr. |
| Title: | | President and Chief Executive Officer |
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| UB BANCORP |
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| By: | | /s/ V. Robert Jones |
Name: | | V. Robert Jones |
Title: | | President and Chief Executive Officer |
[Signature Page to Agreement and Plan of Merger]
EXHIBIT B to
Merger Agreement
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (“Bank Merger Agreement”), dated as of May 31, 2022, is by and between First National Bank of Pennsylvania (“FNB Bank”) and Union Bank (“Union Bank”). All capitalized terms used herein but not defined herein shall includehave the corresponding masculine, femininerespective meanings assigned to them in the Agreement and Plan of Merger (the “Parent Merger Agreement “) dated as of May 31, 2022, between F.N.B. Corporation (“FNB”) and Union Bancorp (“UBNC”).
WlTNESSETH:
WHEREAS, Union Bank is a North Carolina state-chartered bank and a wholly owned subsidiary of UBNC; and
WHEREAS, FNB Bank is a national banking association and a wholly owned subsidiary of FNB; and
WHEREAS, FNB and UBNC have entered into the Parent Merger Agreement, pursuant to which UBNC will merge with and into FNB (the “Parent Merger”); and
WHEREAS, FNB Bank and Union Bank desire to merge on the terms and conditions herein provided immediately following the effective time of the Parent Merger.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained, the parties hereto, intending to be legally bound, agree as follows:
1. The Bank Merger. Subject to the terms and conditions of the Parent Merger Agreement and this Bank Merger Agreement, at the Effective Time (as defined in Section 2 below), Union Bank shall merge with and into FNB Bank (the “Bank Merger” ) under the laws of the United States and of the State of North Carolina. FNB Bank shall be the surviving bank of the Bank Merger (the “Surviving Bank”).
2. Effective Time. The Bank Merger shall become effective on the date and at the time (the “Effective Time”) specified in the Bank Merger certification to be issued by the Office of the Comptroller of the Currency (the “OCC”), which date and time shall not be earlier than the consummation of the Parent Merger.
3. Articles of Association: Bylaws. From and after the Effective Time, the Articles of Association and Bylaws of FNB Bank each as in effect immediately prior to the Effective Time shall be the Articles of Association and Bylaws of the Surviving Bank, until thereafter altered, amended or neuter forms.repealed in accordance with their terms and applicable law.
(p)4. Business of Surviving Bank; Name; Offices. The business of the Surviving Bank after the Bank Merger shall be that of a national banking association with trust powers and shall be conducted at its main office and at all legally established branches. The name of the Surviving Bank shall be “First National Bank of Pennsylvania.” The main office of the Surviving Bank immediately prior to the Effective Time shall be the main office of FNB Bank upon the consummation of the Bank Merger. All branch offices of Union Bank that are in lawful operation immediately prior to the Effective Time shall become branch offices of the Surviving Bank upon consummation of the Bank Merger.
5. Directors and Executive Officers. As of the Effective Time, (a) the directors of FNB Bank immediately prior to the Effective Time shall serve as the directors of the Surviving Bank, and (b) the executive officers of
FNB Bank immediately prior to the Effective Time shall serve as the executive officers of the Surviving Bank. Each of the directors and officers of the Surviving Bank immediately after the Effective Time shall hold office until his or her successor is elected and qualified in accordance with the Articles of Association and Bylaws of the Surviving Bank or until his or her earlier death, resignation or removal.
6. Effects of the Merger. As of the Effective Time, and in addition to the effects set forth at 12 U.S.C. § 215a, the applicable provisions of the regulations of the OCC and other applicable law, (a) all assets of FNB Bank and Union Bank as they exist immediately prior to the Effective Time, shall pass to and vest in the Surviving Bank without any conveyance or other transfer; (b) the Surviving Bank shall be considered the same business and corporate entity as each constituent bank with all the rights, powers and duties of each constituent bank and (c) the Surviving Bank shall be responsible for all the liabilities of every kind and description, of each of FNB Bank and Union Bank existing immediately prior to the Effective Time.
7. Effect on Shares of Stock.
(a) Each share of FNB Bank common stock issued and outstanding immediately prior to the Effective Time shall be unchanged and shall remain issued and outstanding.
(b) At the Effective Time, each share of Union Bank capital stock issued and outstanding prior to the Bank Merger shall, by virtue of the Bank Merger and without any action on the part of the holder thereof, be canceled. Any shares of Union Bank capital stock held in the treasury of Union Bank immediately prior to the Effective Time shall be retired and canceled.
8. Procurement of Approvals. This Bank Merger Agreement shall be subject to the approval of FNB as the sole shareholder of FNB Bank and UBNC as the sole shareholder of Union Bank at meetings to be called and held or by consent in lieu thereof in accordance with the applicable provisions of law and their respective organizational documents. During the period from the date of this Bank Merger Agreement and continuing until the Effective Time, each of the parties hereto agrees to use all reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to procure all consents and approvals under applicable laws and regulations or otherwise necessary to consummate and make effective the transactions contemplated by this Bank Merger Agreement, subject to and in accordance with the applicable provisions of the Parent Merger Agreement.
9. Conditions Precedent. The obligations of the parties under this Bank Merger Agreement shall be subject to: (a) the approval of this Bank Merger Agreement by FNB as the sole shareholder of FNB Bank and UBNC as the sole shareholder of Union Bank at meetings of shareholders duly called and held or by consent or consents in lieu thereof, in each case without any exercise of such dissenters’ rights as may be applicable; (b) receipt of approval of the Bank Merger from all governmental and banking authorities whose approval is required and all applicable waiting periods in respect thereof shall have expired; (c) receipt of any necessary regulatory approval to operate the main office and the branch offices of Union Bank as offices of the Surviving Bank; (d) there shall not be in effect any temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Bank Merger and no action shall be taken, nor any statute, rule, regulation or order enacted, entered, enforced or deemed applicable to the Bank Merger, which makes the consummation of the Bank Merger illegal, and (e) the consummation of the Parent Merger pursuant to the Parent Merger Agreement at or before the Effective Time.
10. Additional Actions. If, at any time after the Effective Time, the Surviving Bank shall determine that any further assignments or assurances in law or any other acts are necessary or desirable to (a) vest, perfect or confirm, of record or otherwise, in the Surviving Bank its rights, title or interest in, to or under any of the rights, properties or assets of Union Bank acquired by the Surviving Bank as a result of, or in connection with, the Bank Merger, or (b) otherwise carry out the purposes of this Bank Merger Agreement, Union Bank and its proper officers and directors shall be deemed to have granted to the Surviving Bank an irrevocable power of attorney to
(i) execute and deliver all such proper deeds, assignments and assurances in law and to do all acts necessary or proper to vest, perfect or confirm title to and possession of such rights, properties or assets in the Surviving Bank and (ii) otherwise to carry out the purposes of this Bank Merger Agreement. The proper officers and directors of the Surviving Bank are fully authorized in the name of Union Bank or otherwise to take any and all such action.
11. Amendment. Subject to applicable law, this Bank Merger Agreement may be amended, modified or supplemented only by written agreement of FNB Bank and Union Bank at any time prior to the Effective Time.
12. Assignment. This Bank Merger Agreement may not be assigned by either FNB Bank or Union Bank without the prior written consent of the other.
13. Termination. This Bank Merger Agreement may be terminated by written agreement of FNB Bank and Union Bank at any time prior to the Effective Time, and in any event shall terminate upon the termination of the Parent Merger Agreement in accordance with its terms.
14. Governing Law. Except to the extent governed by federal law, this Bank Merger Agreement shall be governed in all respects, including, but not limited to, validity, interpretation, effect and performance, by the laws of the State of Delaware without regard to the conflicts of law provisions thereof.
15. Counterparts. This Bank Merger Agreement may be executed in one or more counterparts (including by facsimile or other electronic means and in any number of counterparts,means), each of which shall be deemed to be an original but all of which together shall constitute one instrument. Each counterpart may consistagreement.
[Signature Page Follows.]
IN WITNESS WHEREOF, each of FNB Bank and Union Bank have caused this Bank Merger Agreement to be executed on its behalf by their duly authorized officers.
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| FIRST NATIONAL BANK OF PENNSYLVANIA |
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| By: | | |
| President and Chief Executive Officer |
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| UNION BANK |
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| By: | | |
| Chief Executive Officer and President |
[Signature Page to Bank Merger Agreement]
APPENDIX B
VOTING AGREEMENT
May 31, 2022
F.N.B. Corporation
One North Shore Center
12 Federal Street
Pittsburgh, PA 15212
Ladies and Gentlemen:
Concurrently with the execution of this letter agreement (“Voting Agreement”), F.N.B. Corporation, a Pennsylvania corporation (“FNB”), and UB Bancorp, a North Carolina corporation (“UBNC”), are entering into an Agreement and Plan of Merger, of even date herewith (the “Merger Agreement”), whereby UBNC will merge with and into FNB (the “Merger”) and shareholders of UBNC will receive the Merger Consideration as set forth in the Merger Agreement, subject to the closing of the Merger. All defined terms used but not defined herein shall have the meanings ascribed thereto in the Merger Agreement.
A condition to FNB’s interest in entering into the Merger Agreement is that I execute and deliver this Voting Agreement to FNB.
Intending to be legally bound hereby, I irrevocably agree and represent as follows:
(a) As of the date of this Voting Agreement, except as noted on Appendix A, I have, and at all times during the term of this Voting Agreement will have (subject to paragraphs (d) and (g) hereof), beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of, and good and valid title to, the number of copies each signed by less thanshares of common stock, no par value, of UBNC (the “UBNC Common Stock”), that is set forth on Appendix A hereto. Except as noted on Appendix A, all but together signed by all,of the parties hereto.
(q)securities listed on No RecourseAppendix A. This Agreement may only be enforced against, are owned free and clear of any proxy or voting restriction, claims, liens, encumbrances and security interests and any claimsother limitation or causesrestriction whatsoever (including, any restriction on the right to dispose of such securities). Except as noted on Appendix A, none of the securities listed on Appendix A is subject to any voting trust or other agreement or arrangement with respect to the voting rights of such securities.
(b) As of the date of this Voting Agreement, except as set forth on Appendix A, I do not beneficially own any (i) shares of capital stock or voting securities of UBNC, (ii) securities of UBNC convertible into or exchangeable for shares of capital stock or voting securities of UBNC or (iii) options or other rights to acquire from UBNC any shares of capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of UBNC. The UBNC Common Stock listed on Appendix A, together with all UBNC Common Stock that I subsequently acquire during the term of this Voting Agreement, including through the issuance of shares of UBNC Common Stock as part of UBNC’s director compensation program or the exercise of any stock options, warrants or similar instruments, are referred to herein as the “Shares”.
(c) During the term of this Voting Agreement, at the UBNC Shareholders Meeting and at any other meeting of UBNC shareholders, however called, and on every action or approval by written consent of shareholders of UBNC, I will vote or cause to be voted all Shares over which I have sole voting power, and I will use my commercially reasonable efforts to cause any Shares over which I share voting power to be voted in favor of (i) approval and adoption of the Merger Agreement and the transactions contemplated thereby, and (ii) any proposal to adjourn or postpone such meeting to a later date if there are not sufficient votes to approve the Merger Agreement. Determinations as to “sole” or “shared” voting power shall be made in accordance with Rule 13d-3 of the Exchange Act.
May 31, 2022
Page 2
(d) During the term of this Voting Agreement, on or prior to the record date for the UBNC Shareholders Meeting (as defined in the Merger Agreement), I will not, directly or indirectly, offer, sell, transfer, pledge, encumber or otherwise dispose of (collectively, “Transfer”) any Shares over which I have sole dispositive power (or any interest therein), and I will use my commercially reasonable efforts to not permit the Transfer of any Shares over which I have shared dispositive power (or any interest therein), except to the extent permitted by paragraph (g) hereof.
(e) I agree that UBNC shall not be bound by any attempted sale of any UBNC Common Stock over which I have sole voting and dispositive power, and UBNC’s transfer agent shall be given appropriate stop transfer orders and shall not be required to register any such attempted sale, unless the sale has been effected in compliance with the terms of this Voting Agreement.
(f) I represent that I have the legal capacity to enter into this Voting Agreement, that I have duly and validly executed and delivered this Voting Agreement and that this Voting Agreement is a valid and binding obligation enforceable against me in accordance with its terms, subject to bankruptcy, insolvency and other laws affecting creditors’ rights and general equitable principles; and further, that no consent of my spouse is necessary under any “community property” or other laws in order for me to enter into and perform my obligations under this Voting Agreement.
(g) Notwithstanding anything herein to the contrary, I may Transfer any or all of the Shares over which I have beneficial ownership to my spouse, ancestors or descendants or other transfers solely for estate planning purposes; provided, however, that in any such case, prior to and as a condition to the effectiveness of such Transfer, each person to which any of such Shares or any interest in any of such Shares is or may be basedTransferred shall have executed and delivered to FNB an agreement to be bound by the terms of this Voting Agreement.
I am signing this Voting Agreement solely in my capacity as a shareholder of UBNC and not in any other capacity, such as a director or officer of UBNC or as a fiduciary of any trusts in which I am not a beneficiary. Notwithstanding anything herein to the contrary: (a) I make no agreement or understanding herein in any capacity other than in my capacity as a beneficial owner of UBNC Common Stock and (b) nothing herein shall be construed to limit or affect any action or inaction by me or any of my representatives, as applicable, in serving on UBNC’s Board of Directors or as an officer of UBNC, in acting in my capacity as a director, officer or fiduciary of UBNC.
This Voting Agreement shall terminate and be of no further force and effect concurrently with, and automatically upon, the earliest to occur of (a) the favorable vote of the UBNC shareholders with respect to the approval of the Merger Agreement, (b) a Change in UBNC Recommendation (as defined in the Merger Agreement), (c) the Effective Time, (d) FNB and I enter into a written agreement to terminate this Voting Agreement, or (e) any termination of the Merger Agreement in accordance with its terms, except that any such termination shall be without prejudice to FNB’s rights if termination should arise out of my willful breach of any covenant or relaterepresentation contained herein.
All notices and other communications in connection with this Voting Agreement shall be in writing and shall be deemed given if delivered personally, sent via facsimile, with confirmation, mailed by registered or certified mail, return receipt requested, or delivered by an express courier, with confirmation, to the other party hereto at its addresses set forth on the signature page hereto.
This Voting Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties. This Voting Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter of this Voting Agreement.
May 31, 2022
Page 3
I agree and acknowledge that FNB may be irreparably harmed by, and that there may be no adequate remedy at law for, any violation of this Voting Agreement by me. Without limiting other remedies, FNB shall have the right to seek to enforce this Voting Agreement by specific performance or injunctive relief. This Voting Agreement and all claims arising hereunder or relating hereto, shall be governed and construed and enforced in accordance with the laws of the State of Delaware, without giving effect to the principles of conflicts of law thereof. I hereby irrevocably and unconditionally submit to the exclusive jurisdiction of any state or federal court sitting in Wilmington, Delaware, in any action or proceeding arising out of or relating to this Agreement,letter.
If any term, provision, covenant or the negotiation, execution or performancerestriction of this Voting Agreement may onlyis held by a court of competent jurisdiction or other Governmental Entity to be made againstinvalid, void or unenforceable, the entities that are expressly identified as parties hereto (including, for the avoidance of doubt, any Permitted Transferees) and no former, current or future equity holders, controlling persons, directors, officers, employees, agents or affiliates of any party hereto or any former, current or future stockholder, controlling person, director, officer, employee, general or limited partner, member, manager, agent or affiliate (other than the Shareholder) of anyremainder of the foregoing, includingterms, provisions, covenants and restrictions of this Voting Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the Company (each, unless a Permitted Transferee, a “Non-Recourse Party”) shall have any liability for any obligationseconomic or liabilities of the parties to this Agreement or for any claim (whether in tort, contract or otherwise) based on, in respect of, or by reasonlegal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such a determination, the parties shall negotiate in good faith to modify this Voting Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.
This Voting Agreement may be executed and delivered (including by facsimile transmission) in one or in respect of any representations made or alleged to be made in connection herewith. Without limitingmore counterparts, and by the rights of any party against the otherdifferent parties hereto in no event shall any party or anyseparate counterparts, each of its affiliates seek to enforce this Agreement against, make any claims for breach of this Agreement against, or seek to recover monetary damages from, any Non-Recourse Party. For the avoidance of doubt, nothing in this Section 5(q)which when executed shall be deemed to limit, restrict or otherwise affect in any way any rights or remedies available underbe an original but all of which taken together shall constitute one and the Merger Agreement.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the date and year first written above.same instrument.
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| | Very truly yours, |
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| | [ ] |
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| | Address: 1011 Red Banks Road |
| | Greenville, North Carolina 27858 |
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| Acknowledged and Agreed: |
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| F.N.B. CORPORATION |
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| By: | | |
Name: | | Vincent J. Delie, Jr., |
Title: | | Chairman, President and Chief Executive Officer |
criteria as we considered relevant. We also discussed with certain members of the senior management of YDKNUBNC and its representatives the business, financial condition, results of operations and prospects of YDKNUBNC and held similar discussions with certain members of the senior management of FNB and its representatives regarding the business, financial condition, results of operations and prospects of FNB.
In performing our review, we have relied upon the accuracy and completeness of all of the financial and other information that was available to us from public sources, that was provided to us by YDKN andUBNC, FNB or their respective representatives, or that was otherwise reviewed by us and we have assumed such accuracy and completeness for purposes of preparingrendering this letter.opinion without any independent verification or investigation. We have further relied on the assurances of the managementrespective senior managements of YDKNUBNC and FNB that they are not aware of any facts or circumstances that would make any of such information inaccurate or misleading.misleading in any respect material to our analyses. We have not been asked to undertake, and have not undertaken, an independent verification of any of such information and we do not assume any responsibility or liability for the accuracy or completeness thereof. We did not make an independent evaluation or perform an appraisal of the specific assets, the collateral securing assets or the liabilities (contingent or otherwise) of YDKNUBNC or FNB, or any of their respective subsidiaries, nor havewere we been furnished with any such evaluations or appraisals. We render no opinion on, or evaluation onof, the collectability of any assets or the future performance of any loans of YDKNUBNC or FNB. We did not make an independent evaluation of the adequacy of the allowance for loan losses of YDKN,UBNC or FNB, or the combined entity after the Merger, and we have not reviewed any individual credit files relating to YDKNUBNC or FNB. We have assumed, with your consent, that the respective allowances for loan losses for both YDKNUBNC and FNB are adequate to cover such losses and will be adequate on a pro forma basis for the combined entity.
We have also assumed, with your consent, that (i) each of the parties to the Agreement will comply in all material respects with all material terms and conditions of the Agreement and all related agreements required to effect the Merger, that all of the representations and warranties contained in such agreements are true and correct in all material respects, that each of the parties to such agreements will perform in all material respects all of the covenants and other obligations required to be performed by such party under thesuch agreements and that the conditions precedent in such agreements are not and will not be waived, (ii) in the course of obtaining the necessary regulatory or third party approvals, consents and releases with respect to the Merger, no delay, limitation, restriction or condition will be imposed that would have an adverse effect on YDKN,UBNC, FNB, or the Merger or any related transaction,transactions, and (iii) the Merger and any related transactiontransactions will be consummated in accordance
with the terms of the Agreement without any waiver, modification or amendment of any material term, condition or agreement thereof and in compliance with all applicable laws and other requirements. Finally, with your consent, we have relied upon the advice that YDKNUBNC has received from its legal, accounting and tax advisors as to all legal, accounting and tax matters relating to the Merger and the other transactions contemplated by the Agreement. We express no opinion as to any such matters.
Based upon and subject to the foregoing, it is our opinion that, as of the date hereof, the Exchange Ratio is fair to the holders of YDKNUBNC Common Stock from a financial point of view.
