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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
F.N.B. Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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March 15, 2001
Dear Shareholder:
It is a pleasure to invite you to attend the Annual Meeting of Shareholders of
F.N.B. Corporation. The meeting will be held at the Naples Beach Hotel, located
at 851 Gulf Shore Boulevard North, Naples, Florida 34102, on Monday, April 23,
2001, at 4:00 p.m.
At the meeting, you will be asked to consider and vote upon the election of five
directors and the proposed F.N.B. Corporation 2001 Incentive Plan and the
proposed reincorporation of F.N.B. in Florida.
Your vote is important regardless of how many shares of stock you own. If you
hold stock in more than one account or name, you will receive a proxy card for
each. Please sign and return each card since they represent a separate number of
votes. Postage paid envelopes are provided for your convenience.
You are cordially invited to attend the Annual Meeting. Please indicate on the
proxy card whether you plan to attend the Annual Meeting.
Regardless of whether you plan to attend, please date and return the enclosed
proxy card(s) as soon as possible. This will not prevent you from voting at the
meeting, but will assure that your vote is counted if you are unable to attend.
As always, the directors, management and staff thank you for your continued
support and interest in F.N.B. Corporation.
Sincerely,
/s/ Peter Mortensen
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Peter Mortensen
Chairman
/s/ Gary L. Tice
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Gary L. Tice
President and Chief Executive Officer
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[F.N.B. Corporation Logo]
F.N.B. CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the Annual Meeting of Shareholders of F.N.B.
Corporation (the "Corporation") will be held at the Naples Beach Hotel, located
at 851 Gulf Shore Boulevard North, Naples, Florida 34102, on Monday, April 23,
2001, at 4:00 p.m. Eastern Daylight Time, for the following purposes:
1. To elect five (5) directors of the Corporation; and
2. To consider and vote upon the following proposals which have
been unanimously recommended by the Board of Directors:
(a) To approve the F.N.B. Corporation 2001 Incentive Plan
in the form attached as Exhibit A to the Proxy
Statement.
(b) To approve the reincorporation of the Corporation
from Pennsylvania to Florida. The reincorporation
would be effected pursuant to an Agreement and Plan
of Merger in the form attached as Exhibit B to the
Proxy Statement.
3. To transact such other business as may properly come before
the Annual Meeting and any adjournments thereof.
Only the holders of Common Stock and Series A Preferred Stock of the Corporation
of record on the books of the Corporation at the close of business on February
9, 2001, are entitled to notice of and to vote at the Annual Meeting and any
adjournments thereof.
Enclosed with this Notice are a Proxy Statement and form of proxy. All
shareholders, whether or not they expect to be present at the meeting, are
requested to date and sign the proxy and to return it in the enclosed
self-addressed envelope. Prompt compliance with this request will be
appreciated. Shareholders who attend the meeting may, if they wish, vote in
person even if they have mailed their proxies.
BY ORDER OF THE BOARD OF DIRECTORS
David B. Mogle, Secretary
March 15, 2001
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March 15, 2001
[F.N.B. Corporation Logo]
F.N.B. CORPORATION
ONE F.N.B. BOULEVARD
HERMITAGE, PENNSYLVANIA 16148-3363
PROXY STATEMENT
The accompanying proxy is being solicited by F.N.B. Corporation (the
"Corporation") in connection with the Annual Meeting of Shareholders to be held
on April 23, 2001, pursuant to the preceding Notice of Annual Meeting. The
approximate date on which this proxy statement and the accompanying form of
proxy are first being sent to shareholders of the Corporation is March 15, 2001.
If the proxy is executed and returned, it may nevertheless be revoked by written
notice to the Secretary of the Corporation at any time prior to the voting
thereof or in open meeting, or by voting in person at the Annual Meeting. Unless
the proxy is revoked or contains other instructions, the shares represented
thereby will be voted at the meeting in favor of the election of the persons
named below as directors and in favor of the Proposal as recommended by the
Board of Directors.
The Board of Directors has fixed February 9, 2001, as the record date for
determination of shareholders entitled to notice of and to vote at the Annual
Meeting. As of that date, the Corporation had outstanding 22,518,766 shares of
Common Stock, 19,194 shares of Series A Cumulative Convertible Preferred Stock
("Series A Preferred Stock") and 147,490 shares of Series B Cumulative
Convertible Preferred Stock ("Series B Preferred Stock"). The holders of a
majority of the shares outstanding and entitled to vote, present in person or
represented by proxy, constitute a quorum for the meeting. Holders of Common
Stock are entitled to one vote for each share held and holders of Series A
Preferred Stock are entitled to 6.2 votes for each share held. Holders of Series
B Preferred Stock have no voting rights with respect to their shares of Series B
Preferred Stock.
ELECTION OF DIRECTORS
The Bylaws of the Corporation provide that the Board of Directors shall consist
of not fewer than five nor more than 25 persons, the exact number to be
determined from time to time by the Board. The number of directors has been
fixed at 19 by the Board of Directors. Proxies will not be voted for a greater
number of persons than the number of nominees set forth below. Directors are
elected by a plurality of the votes actually cast at the meeting. Abstentions
and shares held in "street" name that are not cast at the meeting are not
counted. Neither the holders of Common Stock nor the holders of Series A
Preferred Stock have cumulative voting rights in the election of directors.
The Bylaws of the Corporation also provide for classification of the directors
with respect to the time for which they shall severally hold office. The Board
is divided into four classes with the term of office of the directors of each
class to expire at the fourth annual meeting after their election. At each
succeeding annual meeting of shareholders, successors to the directors of the
class whose term expires are elected. Each director shall hold office for the
term for which he/she is elected and thereafter until his/her successor is duly
elected and qualified or until his/her earlier death, resignation or removal.
Alan C. Bomstein, Charles T. Cricks, Henry M. Ekker, James S. Lindsay and Paul
P. Lynch, all of whom have expressed their willingness to serve, have been
nominated for election as directors of the Corporation to hold office for the
term described and until their successors are elected and have qualified. All of
the nominees are presently directors of the Corporation. In the event one or
more of such persons is unable or unwilling to serve as a director for any
reason (and the Corporation knows of no such reason), the persons named in the
enclosed proxy will vote for the other nominees named and such substituted
nominees as may be nominated by the Board of Directors.
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INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
Information concerning directors and executive officers is set forth below. The
principal occupation of each director and executive officer as of the date
hereof and for the past five years is included in the table. The information
concerning beneficial ownership of Common Stock and Series B Preferred Stock is
based upon information received as of February 9, 2001. No director or executive
officer of the Corporation is the beneficial owner of any shares of Series A
Preferred Stock.
Amount and
Amount and Nature of
Nature of Beneficial
Expiration Beneficial Ownership
of Term of Ownership of Percent of Series B Percent
Name and Director Office as Common Stock of Preferred of
Principal Occupation Age Since Director(a) (b)(c) Class(d) Stock(e) Class(d)
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PETER MORTENSEN 65 1974 2002 242,080(f) 1.1 0
Chairman of the Corporation since
1988; Chief Executive Officer of the
Corporation 1988-2000; and
Chairman of First National Bank of
Pennsylvania ("FNBPA"), a
subsidiary
STEPHEN J. GURGOVITS 57 1981 2004 123,804(f)(g) 0
Vice Chairman of the Corporation
since 1998; Executive Vice President
of the Corporation 1995-1998; and
President & Chief Executive Officer
of FNBPA
GARY L. TICE 53 1997 2002 145,144(f)(h) 0
Chief Executive Officer of the
Corporation since 2001; President
and Chief Operating Officer of the
Corporation since 1998; Executive
Vice President and Chief Operating
Officer of the Corporation 1997-
1998; and Chairman of First National
Bank of Florida
W. RICHARD BLACKWOOD 59 1985 2004 130,814 8,100 5.5
President, Harry Blackwood Inc.
(insurance and real estate)
ALAN C. BOMSTEIN 55 1999 2001 38,820 0
President and Chief Executive
Officer, Creative Contractors, Inc.
WILLIAM B. CAMPBELL 62 1975 2004 68,943(i)(j) 0
Retired Business Executive
CHARLES T. CRICKS 51 1994 2001 52,994(k) 0
Principal, Starboard Ventures;
Executive Vice President and Chief
Operating Officer, Health Care
Solutions, Inc. 1996-1998
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Amount and
Amount and Nature of
Nature of Beneficial
Expiration Beneficial Ownership
of Term of Ownership of Percent of Series B Percent
Name and Director Office as Common Stock of Preferred of
Principal Occupation Age Since Director(a) (b)(c) Class(d) Stock(e) Class(d)
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HENRY M. EKKER, ESQ 62 1994 2001 20,857 0
Attorney at Law, Partner of Ekker,
Kuster, McConnell & Epstein, LLP
JAMES S. LINDSAY 52 1997 2001 130,708(l) 0
Managing Partner, Dor-J's
Partnership; Licensed Real Estate
Broker, The Lindsay Company
PAUL P. LYNCH 49 1991 2001 119,262(m) 200
Attorney at Law, Partner of Lynch &
Gallitto; President & Chief Executive
Officer, Paul Lynch Investments, Inc.
EDWARD J. MACE 44 1997 2002 113,904(n) 0
Edward J. Mace, Certified Public
Accountant; Chief Operating Officer,
Ribek Corporation
ROBERT S. MOSS 63 1994 2002 21,753(o) 0
Chairman, Associated Contractors of
Conneaut Lake, Inc.
WILLIAM A. QUINN 72 1974 2002 7,297 0
Retired Vice President of the
Corporation; and Retired Executive
Vice President & Cashier of FNBPA
WILLIAM J. STRIMBU 40 1995 2003 49,786 0
President, Nick Strimbu, Inc.
(common carrier)
ARCHIE O. WALLACE, ESQ 66 1992 2003 32,363 0
Attorney at Law, Partner of Rowley,
Wallace, Keck, Karson & St. John
JAMES T. WELLER 70 1975 2003 45,505(p) 0
Chairman, Liberty Steel Products,
Inc. (steel processor)
ERIC J. WERNER, ESQ 38 1995 2003 15,456(q) 0
Vice President, Secretary & General
Counsel, Werner Co. (Manufacturer
of custom aluminum extrusions and
climbing products)
R. BENJAMIN WILEY 56 1997 2003 8,596 0
Chief Executive Officer, Greater Erie
Community Action Committee
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Amount and
Amount and Nature of
Nature of Beneficial
Expiration Beneficial Ownership
of Term of Ownership of Percent of Series B Percent
Name and Director Office as Common Stock of Preferred of
Principal Occupation Age Since Director(a) (b)(c) Class(d) Stock(e) Class(d)
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DONNA C. WINNER 54 1994 2004 272,245 1.2 0
Co-Owner, The Radisson;
Tara - A Country Inn;
The Winner (clothing store); and
Tiffany's (banquet center)
WILLIAM J. RUNDORFF 52 N/A N/A 66,642(f) 0
Executive Vice President of the
Corporation since 1995
JOHN D. WATERS 54 N/A N/A 50,251(f) 0
Vice President & Chief Financial
Officer of the Corporation since
1994 and Chief Financial Officer of
FNBPA
All directors, director nominees and executive officers as a group (21 persons),
as the beneficial owners of 1,240,914 shares of the outstanding Common Stock,
owned 5.5% of the Common Stock of the Corporation as of February 9, 2001, and
controlled 5.5% of the outstanding voting power of the Corporation's issued and
outstanding stock.
(a) The term of office for directors expires at the annual meeting to be
held during the year shown.
(b) Includes (1) the following shares which the officer or director has the
right to acquire within sixty days upon exercise of stock options
and/or warrants: Mr. Mortensen, 147,001 shares; Mr. Gurgovits, 93,940
shares; Mr. Tice, 84,983 shares; Mr. Rundorff, 62,120 shares; Mr.
Waters, 42,386 shares; Mr. Blackwood, 2,793 shares; Mr. Bomstein, 8,807
shares; Mr. Campbell, 3,498 shares; Mr. Cricks, 3,717 shares; Mr.
Ekker, 3,237 shares; Mr. Lindsay, 3,469 shares; Mr. Lynch, 2,794
shares; Mr. Mace, 4,581 shares; Mr. Moss, 2,794 shares; Mr. Quinn,
2,925 shares; Mr. Strimbu, 2,877 shares; Mr. Wallace, 3,172 shares; Mr.
Weller, 3,302 shares; Mr. Werner, 2,750 shares; Mr. Wiley, 2,706
shares; Mrs. Winner, 2,692 shares; and (2) shares which the officer or
director has the right to acquire by conversion of shares of Series B
Preferred Stock. Shares of Series B Preferred Stock are convertible
into shares of Common Stock at the ratio of 2.4861 shares of Common
Stock per share of Series B Preferred Stock.
(c) Except as otherwise indicated, each director possesses sole voting
power and sole investment power as to all shares listed opposite his or
her name or shares these powers with his or her spouse or a wholly
owned company. This does not include the following shares held of
record by the director's spouse or children, or held in trust, and as
to which each director disclaims beneficial ownership: Mr. Mortensen,
336 shares; Mr. Lindsay, 8,994 shares; Mr. Tice, 574 shares; and Mr.
Weller, 39,039 shares.
(d) Unless otherwise indicated, represents less than 1% of the class.
(e) Except as otherwise indicated, each director possesses sole investment
power as to all shares listed opposite his or her name or shares these
powers with his or her spouse or a wholly owned company.
(f) Does not include shares awarded as an employer matching contribution as
a part of the Corporation's 401(k) Plan.
(g) Includes 6,206 shares owned by Mr. Gurgovits' wife as a participant in
her employer's profit sharing program; and 59 shares held by Mr.
Gurgovits as trustee for his daughter.
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(h) Includes 1,867 shares jointly owned by Mr. Tice and his two children;
4,433 shares jointly owned by Mr. Tice and his mother; and 6,345 shares
held by the F.N.B. Corporation Salary Savings Plan for Mr. Tice who has
voting power over these shares.
(i) Includes 2,549 shares held in an irrevocable trust by the First
National Trust Company. A committee which includes Mr. Campbell holds
sole voting power over the shares, while the First National Trust
Company possesses sole investment power over such shares.
(j) Includes 1,790 shares owned by Mr. Campbell's wife.
(k) Includes 2,151 shares owned by Mr. Cricks' wife and 8,491 shares held
by Mr. Cricks as co-trustee for his mother.
(l) Includes 8,195 shares held by Mr. Lindsay as custodian for his two
children; 77,689 shares owned by Dor'J's Partnership, of which Mr.
Lindsay is the managing partner; and 1,274 shares held by Mr. Lindsay
as trustee for his mother.
(m) Includes 27,669 shares owned by Mr. Lynch's wife and 36,811 shares held
by the Paul and Marcia Lynch Family Trust.
(n) Includes 430 shares held by Mr. Mace as custodian for his three
children; 5,714 shares held by Mr. Mace as trustee for certain
unrelated beneficiaries; 23,300 shares held by the Ribek Corporation
Defined Contribution Pension Trust of which Mr. Mace is a Trustee; and
65,533 shares owned by Ribek Corporation of which Mr. Mace is Chief
Operating Officer.
(o) Includes 155 shares owned by Mr. Moss's wife; 276 shares held by Mr.
Moss as custodian for his two grandchildren.
(p) Includes 624 shares owned by Mr. Weller's wife.
(q) Includes 1,703 shares owned by Mr. Werner's wife; 3,662 shares held by
Mr. Werner's wife as custodian for their two children.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Upon review of Forms 3, 4 and 5 furnished to the Corporation during or with
respect to its most recent fiscal year, the Corporation has determined that no
officer, director or 10 percent shareholder of the Corporation failed to timely
file or failed to file a report during 2000 as required by Section 16(a) of the
Securities Exchange Act of 1934.
DIRECTORS' FEES
During 2000, each non-employee director was paid an annual retainer of $14,000
and $2,500 for each quarterly Board meeting attended. Each Corporation director
was issued stock options during 2000 under the Corporation's 1998 Directors'
Stock Option Plan, which were based on the Board fees earned during the year.
Individual grants to Corporation Directors ranged from 973 to 1,642 stock
options with exercise prices equal to the fair market value of the Corporation's
Common Stock on the date of grant. Non-employee directors who serve on
committees were compensated for their attendance at various committee meetings
of the Corporation and its subsidiaries at rates ranging from $100 to $900 per
meeting attended. In addition, Messrs. Mortensen and Tice are compensated for
attendance at certain board and committee meetings of the Florida affiliates.
Each director of the Corporation may elect to receive shares of Common Stock in
lieu of cash as their compensation for attendance at regular and committee
meetings of the Board of Directors of the Corporation pursuant to the F.N.B.
Corporation Directors' Compensation Plan (the "Plan"). The number of shares of
Common Stock to be issued shall equal the number of shares of Common Stock that
may be purchased with (or having a market value equal to) the amount of cash
otherwise payable to such Director by the Corporation for attendance at such
meetings.
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A director may elect to defer receipt of all of his annual fees payable under
the Plan in cash for the period beginning on January 1 of the following year and
continuing until the Corporation receives written notice from the Director
terminating such deferral. Additionally, Mr. Mortensen has elected to
participate in this plan by having an amount equal to the director fees paid to
non-employee directors deferred from his base salary.
BUSINESS RELATIONSHIPS AND RELATED TRANSACTIONS
Certain directors and executive officers of the Corporation and its subsidiaries
and their associates were customers of, and had loans outstanding from, the
Corporation's subsidiaries in the ordinary course of business during 2000. Such
loans were made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other customers of the Corporation's subsidiaries and did not involve more than
the normal risk of collectability.
During 2000, the Corporation entered into an Agreement to repurchase
approximately 69,107 shares of Corporation Common Stock from the Donna C. Winner
Marital Trust. The pricing terms of this stock repurchase conforms with the SEC
Rule 10b-18 guidelines providing a per share purchase price as the higher of (i)
the highest independent published bid; or (ii) the last independent sale
reported for Corporation Common Stock, determined at the close of regular
trading on the date the transaction.
The Corporation's subsidiary, First National Bank of Pennsylvania, leases a
branch facility owned by Director Winner and her husband. The branch facility is
located in Sharon, Pennsylvania, and the lease rate and terms are comparable to
those prevailing in the Sharon market at the time the lease was entered into.
BOARD AND COMMITTEE MEETINGS
During 2000, the Board of Directors of the Corporation held four meetings. All
directors attended at least 75% of the aggregate number of meetings of the Board
of Directors and the respective committees on which they serve, except Mr.
Werner.
The Board of Directors has an Audit Committee consisting of Messrs. Lynch, Mace,
Moss, Quinn and Werner. Committee members satisfy the Nasdaq and the
Corporation's Audit Committee Charter independence requirements. Duties of the
Audit Committee include reviewing with the Corporation's independent auditors,
Ernst & Young LLP, the planning and results of the auditing engagement,
reviewing the activities and recommendations of the Corporation's internal
auditors, and reviewing the adequacy of internal accounting controls. Additional
information regarding the Audit Committee is set forth in the "Report of Audit
Committee" as set forth in Exhibit F to this Proxy Statement.
The Board of Directors has a Compensation Committee which includes Messrs.
Blackwood, Cricks, Lindsay and Weller. During 2000, Mr. Mortensen, as Chairman
and Chief Executive Officer of the Corporation, attended meetings of the
Corporation's Compensation Committee, but did not participate or vote in any
deliberations or decision making involving his own compensation. During 2000,
the Compensation Committee met five times. Duties of the Compensation Committee
include reviewing the performance of and establishing compensation for the
officers of F.N.B. Corporation and affiliate chief executive officers; reviewing
and approving the compensation of affiliate senior officers as proposed by
affiliate boards of directors; and reviewing compensation and benefit matters
that have corporate-wide significance. The Compensation Committee also
administers the various Stock Option Plans, the Restricted Stock and Incentive
Bonus Plan and the Directors' Compensation Plan and awards made under these
Plans.
The Board of Directors has a Nominating Committee consisting of Messrs.
Campbell, Mace, Quinn and Wallace. During 2000, the Nominating Committee met
three times. The Nominating Committee is responsible for selecting and
recommending to the Board of Directors nominees for election as director. The
Nominating Committee will consider nominees recommended by shareholders of the
Corporation. Such recommendations must be made in writing, include a statement
of the nominee's qualifications, and be addressed to the Nominating Committee at
the address of the Corporation. Shareholders may also nominate persons for
election as directors in accordance with the procedures set forth in the
Corporation's Bylaws. Written notification of such nomination, containing the
required information, must be mailed or delivered to the Secretary of the
Corporation not less than 14 days nor more than 50 days prior to the Annual
Meeting.
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PROPOSAL 1
ADOPTION OF F.N.B. CORPORATION 2001 INCENTIVE PLAN
The Board of Directors of the Corporation is submitting to the shareholders for
approval at the Annual Meeting the F.N.B. Corporation 2001 Incentive Plan which
will further the purposes (described below) served by the Corporation's existing
stock option plan approved by the shareholders in 1996, under which relatively
few options remain available for granting to employees.
On January 22, 2001, the Board of Directors of the Corporation adopted the 2001
Incentive Plan (the "Plan") for eligible non-employee directors, employees,
independent contractors and consultants of the Corporation. The Plan provides
for the grant of (i) incentive stock options; (ii) non-qualified stock options;
(iii) stock appreciation rights; (iv) limited stock appreciation rights; (v)
restricted stock; (vi) performance units; (vii) phantom stock; or (viii) any
combination of the foregoing. The purpose of the Plan is to encourage
non-employee directors, employees, independent contractors and consultants to
increase their efforts to make the Corporation and each of its subsidiaries more
successful, to provide an additional inducement for such individuals to remain
with the Corporation or a subsidiary, to reward such individuals by providing an
opportunity to acquire incentive awards on favorable terms and to provide a
means through which the Corporation and its subsidiaries may attract able
persons to enter employment with the Corporation or any of its subsidiaries or
to perform services for the Corporation or any of its subsidiaries.
The Corporation has previously adopted the 1996 Stock Option Plan (the "Option
Plan"), which provides for the grant of incentive stock options, non-qualified
stock options, stock appreciation rights, and limited stock appreciation rights
to eligible employees of the Corporation and its subsidiaries. The Option Plan
has reserved 10% of the total issued and outstanding shares of the Corporation's
Common Stock for issuance pursuant to the exercise of options granted pursuant
to the Option Plan. As of February 9, 2001, options with respect to 1,686,852
shares were outstanding under the Option Plan. No options available under the
Plan will be issued until the remaining balance of unissued options available in
the Option Plan are all issued. The Plan provides significantly greater
flexibility in the number and types of incentive awards available for grant. The
Corporation intends to terminate the Option Plan before any grants are made
under the 2001 Plan.
The Board of Directors of the Corporation recommends that the shareholders vote
FOR approval of the Plan.
The following discussion of the principal features of the Plan is qualified in
its entirety by reference to the full text of the Plan, which is set forth in
Exhibit A attached hereto.
DESCRIPTION OF THE PLAN
SHARES SUBJECT TO THE PLAN
The shares of the Corporation's Common Stock ("Stock") available for issuance
under the Plan may, at the election of the Board of Directors, be authorized and
unissued shares, treasury shares or partly each. The maximum number of shares of
Stock that can be granted under the Plan is initially 500,000 shares, but
beginning in the calendar year following the year in which the Plan is first
adopted, such number is automatically increased each year by 3% of the total
number of issued and outstanding shares of Stock as of the first day of that
calendar year. In addition, up to 1.5% of the number of shares of Stock
outstanding as of the first day of that calendar year could be "borrowed" from
the following year's increase (with the next year's increase being decreased by
the same number of shares). In any event, not more than 3,000,000 shares in the
aggregate will be available for issuance in the form of incentive stock options.
PERSONS ELIGIBLE TO PARTICIPATE IN THE PLAN
Under the Plan, Awards may be granted to non-employee directors, employees,
independent contractors and consultants of the Corporation or any of its
subsidiaries who share the responsibility for the management, growth, or
protection of the business of the Corporation or any of its subsidiaries or who,
in the opinion of the Committee, provide services
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yielding significant benefits to the Corporation or any subsidiary. Only
employees of the Corporation or its subsidiaries, however, are eligible to
receive incentive stock options under the Plan.
ADMINISTRATION OF THE PLAN
The Plan may be administered by the compensation committee of the Board of
Directors of the Corporation (the "Committee") or such other committee as the
Board of Directors may designate. Subject to the provisions of the Plan, the
Committee has the authority to determine the individuals to whom Awards shall be
granted and to determine exercise prices, vesting requirements, the term of and
the number of shares covered by each award, and the form of the Award to be
granted.
INCENTIVE AWARDS
All Awards. The Plan authorizes the Committee to award eligible non-employee
directors, employees, independent contractors and consultants, non-qualified
stock options, stock appreciation rights, limited stock appreciation rights,
restricted stock, performance units, phantom stock or any combination thereof
and to award eligible employees incentive stock options (collectively referred
to as "Awards"). Each Award granted under the Plan will be represented by an
agreement ("Award Agreement") in a form approved by the Committee. The Award
Agreement shall be subject to and shall incorporate the terms and conditions
required under the Plan or as required by the Committee for the form of the
Award granted and such other terms and conditions as the Board of Directors or
Committee may specify.
Stock Options. The Plan authorizes the Committee to grant the eligible
non-employee directors, employees, independent contractors and consultants
non-qualified stock options to purchase shares of Stock and to grant eligible
employees incentive stock options to purchase shares of Stock ("Options").
The exercise price of Options granted under the Plan will be determined by the
Committee, but in the case of incentive stock options, the exercise price in no
event shall be less than 100% of the fair market value per share of one share of
the Stock on the date of the grant of the option (or in the case of certain
incentive stock options as described below, 110% of fair market value). The term
"Fair Market Value" is defined in the Plan to mean, as applicable, (i) the
average of the bid and ask prices of the Corporation's Stock on the date in
question, as quoted by the Nasdaq National Market System (or other
over-the-counter nationally recognized quotation service); (ii) if the
Corporation's Stock is not traded on the Nasdaq National Market but is
registered on a national securities exchange, the closing sales price of the
Corporation's Stock on such national securities exchange; (iii) if the
Corporation's shares of Common Stock are not traded on a national securities
exchange or through any other nationally recognized quotation service, the fair
market value of the Corporation's Stock as determined by the Board or the
Committee, acting in good faith, under any method consistent with the Code, or
Treasury Regulations thereunder, as the Board or the Committee shall in its
discretion select and apply at the time of the grant of the Award concerned; or
(iv) with respect to Limited Stock Appreciation Rights, the applicable value
determined in accordance with the following definition.
The Fair Market Value of a Limited Stock Appreciation Right is defined as the
higher of (i) the average of the bid and ask prices of the Corporation's Stock
as quoted by the Nasdaq National Market System (or other over-the-counter
nationally recognized quotation service) or as reported on such national
securities exchange on which the Corporation's Stock is then registered, in each
case, during the 90-day period ending on the date of exercise of the applicable
Limited Stock Appreciation Right; or (ii) (a) in the event of a tender offer or
exchange offer for Stock the highest price paid for Stock pursuant to any tender
offer or exchange offer in effect at any time during the 90 days ending on the
date of exercise of the applicable Limited Stock Appreciation Rights; (b) in the
event of the acquisition by any person or group of beneficial ownership of
securities of the Corporation entitling the person or group to 10% or more of
all votes to which all shareholders of the Corporation would be entitled in the
election of Directors or in the event of the filing of a Statement on Schedule
13D, or any amendment thereto, disclosing an intention or possible intention by
any person or group to acquire control of the Corporation, the highest price per
share paid for Stock shown on the Statement on Schedule 13D, or any amendment
thereto, filed by the person or group becoming a 10% beneficial owner or
disclosing an intention or possible intention to acquire control of the
Corporation; or (c) in the event of approval by shareholders of the Corporation
of a reorganization agreement, the fixed or formula price specified in the
reorganization agreement
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if such price is determinable as of the date of exercise of the Limited Stock
Appreciation Rights. Any securities or property that are part or all of the
consideration paid for Stock in a tender offer or exchange offer or under an
approved reorganization agreement shall be valued at the higher of (x) the
valuation placed on such securities or property by the person making the tender
offer or exchange offer or by the corporation other than the Corporation issuing
securities or property in the merger or consolidation or to whom the Corporation
is selling or otherwise disposing of all or substantially all the assets of the
Corporation or (y) the valuation placed on such securities or property by the
Committee.
Subject to the foregoing, the Board or the Committee, in fixing the Fair Market
Value, shall have full authority and discretion and be fully protected in doing
so.
Options may be exercised in whole or in part by the participant in the Plan
("Participant"), but in no event later than ten years from the date of the
grant. Any incentive stock option granted under the Plan to a Participant who
owns directly or indirectly (under applicable ownership attribution rules) more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Corporation may not be purchased at a price less than 110% of the
market price on the day the option is granted, and no such option may be
exercised more than five years from the date of grant. Upon payment, the
Corporation will deliver stock certificates for such shares to the Participant,
or will enroll the Participant in the Corporation's dividend reinvestment plan.
The purchase price for the shares may be paid in cash, shares of Stock, by
withholding shares of Stock issuable upon exercise of the Option, by waiving
compensation due or accrued for services rendered, by a same-day sale
commitment, by a margin commitment, by a promissory note or by a combination of
the above, in each case as determined by the Committee and set forth in the
applicable Award Agreement. Further, the Committee may provide for the exercise
of an Option prior to its vesting, in which case such Option is subject to
applicable restricted stock provisions.
Options granted under the Plan are exercisable during the lifetime of the
Participant only by the Participant. All Options granted under the Plan are
non-transferable except by will or under the laws of descent and distribution.
Stock Appreciation Rights, Limited Stock Appreciation Rights. Stock appreciation
rights and limited stock appreciation rights may be granted under the Plan in
conjunction with Options or in tandem with Options granted under the Plan. Stock
appreciation rights and limited stock appreciation rights granted in conjunction
or in tandem with Options generally are exercisable only at such time and to the
extent that the Options to which they relate are exercisable. Upon exercise of a
stock appreciation right or limited stock appreciation right, a Participant
shall be entitled to receive an amount in cash or shares of Stock equal in value
to the excess of the fair market value of one share of Stock over the exercise
price per share at or on the date of exercise specified in the related Option or
stock appreciation right, or limited stock appreciation right or multiplied by
the number of shares in respect of which the stock appreciation right or limited
stock appreciation right is exercised.
Performance Units. The Plan provides for the award of "performance units." In
granting performance units, the Committee shall determine a "performance period"
of one or more years and shall determine the performance objectives for grants
of performance units. Performance objectives may vary from Participant to
Participant and between groups of Participants and may be based upon such
criteria or combination of factors as the Committee may deem appropriate. All
performance units shall be paid in cash.
At the beginning of a performance period, the Committee shall determine for each
Participant eligible for performance units the range of dollar values, if any,
which shall be paid as an Award if the relevant measure of performance for the
performance period is met. No performance units have been granted.
Restricted Stock. Restricted stock may be received by a Participant either as an
Award or as the result of an exercise of an Option or stock appreciation right
or limited stock appreciation right, provided that the Option is exercised prior
to vesting. Restricted stock granted under the Plan shall be subject to a
"restriction period" (after which restrictions shall lapse) commencing on the
date of grant of the Award and ending on such date or upon the achievement of
such performance or other criteria as the Committee shall determine.
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Except as otherwise provided in the Plan, no shares of restricted stock may be
sold, exchanged, transferred, pledged or otherwise disposed of during the
restriction period. The Committee may require certificates for restricted stock
delivered under the Plan to be held in custody by a bank or other institution or
by the Corporation itself until the restriction period expires or the
restrictions thereon otherwise lapse. In addition, the Committee may require the
recipient to deliver a stock power of attorney endorsed in blank relating to the
restricted stock as a condition of receipt of restricted stock. If the
Participant ceases to be employed by or to provide services to the Corporation
or any of its subsidiaries, the restricted stock may be forfeited.
Phantom Stock. Phantom stock may be granted under the Plan. For each share of
phantom stock, a Participant shall be entitled to receive an amount in cash
and/or shares of Stock equal in value to the fair market value of one share of
Stock at the applicable date.
AMENDMENT AND TERMINATION OF THE PLAN
With respect to any shares of Stock at the time not subject to an Award, the
Board of Directors may at any time and from time to time, terminate, modify or
amend the Plan in any respect, provided always that no such revocation or
termination shall terminate any outstanding Award theretofore granted under the
Plan and that no such modification or amendment shall be made absent the
approval of the shareholders of the Corporation to: (i) increase the total
number of shares which may be issued or delivered under the Plan; (ii) make any
change in the class of individuals eligible to receive Awards; (iii) extend the
period set forth in the Plan during which Awards may be granted or exercised; or
(iv) make any changes that require shareholder approval under the rules and
regulations of any securities exchange market on which the Stock is traded. The
Corporation's Board of Directors may also suspend the granting of Awards
pursuant to the Plan at any time and may terminate the Plan at any time;
provided, however, no such suspension or termination shall modify or amend any
Award granted before such suspension or termination unless the affected
Participant consents in writing, to such modification or amendment or there is a
dissolution or liquidation of the Corporation.
With the consent of the affected Participant, the Board of Directors may amend
outstanding Award Agreements in a manner consistent with the Plan. Without
employee consent, the Board of Directors may at any time and from time to time
modify or amend Award Agreements with respect to such Options, intended as of
the date of grant to be incentive stock options, in such respects as it deems
necessary in order that incentive stock options granted under the Plan shall
comply with the appropriate provisions of the Code and regulations thereunder
which are in effect from time to time respecting qualified incentive stock
options.
FEDERAL INCOME TAX CONSEQUENCES
Incentive Stock Options. All incentive stock options granted or to be granted
under the Plan are intended to be incentive stock options as defined in Section
422 of the Internal Revenue Code of 1986, as amended (the "Code").
Under the provisions of Section 422 of the Code, neither the holder of an
incentive stock option nor the issuer of such option will recognize income,
gain, deduction or loss upon the grant or exercise of an incentive stock option.
An optionee will be taxed only when the Stock acquired upon exercise of his or
her incentive stock option is sold or otherwise disposed of in a taxable
transaction. If at the time of such sale or disposition the optionee has held
the shares for the required holding period (two years from the date the option
was granted and one year from the date of the transfer of the shares to the
optionee), the optionee will recognize long-term capital gain or loss, as the
case may be, based upon the difference between his or her exercise price and the
net proceeds of the sale. However, if the optionee disposes of the shares before
the end of such holding period, the optionee will recognize ordinary income on
such disposition in an amount equal to the lesser of: (i) gain on the sale or
other disposition; or (ii) the amount by which the fair market value of the
shares on the date of exercise exceeded the option exercise price, with any
excess gain being capital gain, long-term or short-term, depending on whether or
not the shares had previously been held for more than one year on the date of
sale or other taxable disposition.
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The foregoing discussion and the reference to capital gain or loss treatment
therein assume that the option shares are a capital asset in the hands of the
optionee. A sale or other disposition which results in the recognition of
ordinary income to the optionee will also result in a corresponding income tax
deduction for the Corporation.
The Plan permits an optionee to pay all or part of the purchase price for shares
acquired pursuant to exercise of an incentive stock option by transferring to
the Corporation other shares of the Corporation's Stock owned by the optionee.
Section 422 of the Code provides that an option will continue to be treated as
an incentive stock option even if an optionee exercises such incentive stock
option with previously acquired stock of the corporation granting the option.
Accordingly, except as noted below with respect to certain "statutory option
stock," an optionee who exercises an incentive stock option in whole or in part
by transferring to the Corporation shares of the Corporation's Stock will
recognize no gain or loss upon such exercise. The optionee's basis in the number
of new shares so acquired that is equal to the number of shares surrendered will
be equal to the optionee's cost basis in the shares surrendered. The optionee's
basis in the additional number of new shares received will be zero plus, in the
case of payment of the purchase price in a combination of cash and surrendered
shares, the amount of any cash paid.
Section 424(c)(3) of the Code provides that if "statutory option stock" is
transferred in connection with the exercise of an incentive stock option, and if
the holding period requirements under Section 422(a)(1) of the Code are not met
with respect to such statutory option stock before such transfer, then ordinary
income will be recognized as a result of the transfer of statutory option stock.
The optionee's basis in the number of new shares so acquired that is equal to
the number of shares surrendered will be equal to the optionee's cost basis in
the shares surrendered plus the amount of ordinary income recognized. The
optionee's basis in the additional number of new shares received will be zero
plus, in the case of payment of the purchase price in a combination of cash and
surrendered shares, the amount of any cash paid. However, the incentive stock
option stock acquired through the exchange of statutory option stock will still
qualify for favorable tax treatment under Section 422 of the Code.
Incentive stock options offer two principal tax benefits: (1) the possibility of
converting ordinary income into capital gain to the extent of the excess of fair
market value over option price at the time of exercise, and (2) the deferral of
recognition of gain until disposition of the stock acquired upon the exercise of
the option.
For capital assets, such as Stock, held for more than one year, the maximum tax
rate is currently 20%.
In general, an option granted under the Plan which is designated as an incentive
stock option will be taxed as described above. However, in some circumstances an
option which is designated as an incentive stock option will be treated as a
non-qualified stock option and the holder taxed accordingly. For example, a
change in the terms of an option which gives the employee additional benefits
may be treated as the grant of a new option. Unless all the criteria for
treatment as an incentive stock option are met on the date the "new option" is
considered granted (such as the requirement that the exercise price of the
option be not less than the fair market value of the stock as of the date of the
grant), the option will be treated and taxed as a non-qualified stock option.
Non-Qualified Stock Options. All options granted or to be granted under the Plan
that do not qualify as incentive stock options are non-qualified stock options
not entitled to special tax treatment under Section 422 of the Code.
A Participant in the Plan will recognize taxable income upon the grant of a
non-qualified stock option only if such option has a readily ascertainable fair
market value as of the date of the grant. In such a case, the recipient will
recognize taxable ordinary income in an amount equal to the excess of the fair
market value of the option as of such date over the price, if any, paid for such
option. No income would then be recognized on the exercise of the option, and
when the shares obtained through the exercise of the option are disposed of in a
taxable transaction, the resulting gain or loss would be capital gain or loss
(assuming the shares are a capital asset in the hands of the optionee). However,
under the applicable Treasury Regulations, the non-qualified stock options
issued under the Plan will not have a readily ascertainable fair market value
unless, at the time such options are granted, similar options of the
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Corporation are actively traded on an established market. The Corporation
presently has no such actively traded options.
Upon the exercise of a non-qualified option not having a readily ascertainable
fair market value, the optionee recognizes ordinary income in an amount equal to
the excess of the fair value of the shares on the date of exercise over the
option exercise price for those shares. If the optionee exercises the option
prior to it vesting, the amount of ordinary income recognized and the timing of
the recognition of that income may be different if the optionee receives stock
with respect to which there is a substantial risk of forfeiture (such as
restricted stock), unless the optionee makes an election under 83(b) of the
Code. The Corporation is not entitled to an income tax deduction with respect to
the grant of a non-qualified stock option or the sale of stock acquired pursuant
thereto. The Corporation generally is permitted a deduction equal to the amount
of ordinary income the optionee is required to recognize as a result of the
exercise of a non-qualified stock option.
The Plan permits the Committee to allow an optionee to pay all or part of the
purchase price for shares acquired pursuant to an exercise of a non-statutory
option by transferring to the Corporation other shares of the Corporation's
Stock owned by the optionee. If an optionee exchanges previously acquired Stock
pursuant to the exercise of a non- qualified stock option, the Internal Revenue
Service has ruled that the optionee will not be taxed on the unrealized
appreciation of the shares surrendered in the exchange. In other words, the
optionee is not taxed on the difference between his or her cost basis for the
old shares and their fair market value on the date of the exchange, even though
the previously acquired shares are valued at the current market price for
purposes of paying all or part of the option price. Thus, the optionee's basis
in the number of new shares so acquired that is equal to the number of shares
surrendered will be equal to the optionee's cost basis in the shares
surrendered. The optionee's basis in the additional number of new shares
received will be equal to the amount of ordinary compensation income recognized
as the result of the exercise of the option plus, in the case of payment of the
purchase price in a combination of cash and surrendered shares, the amount of
any cash paid.
Stock Appreciation Rights, Limited Stock Appreciation Rights, Performance Units
and Phantom Stock. On the exercise of a stock appreciation right, a limited
stock appreciation right or upon the receipt by a Plan Participant of a payment
with respect to a performance unit or a share of phantom stock, the Participant
generally will recognize taxable ordinary income in an amount equal to the sum
of the cash and the fair market value of the stock (determined as of the date of
exercise of the stock appreciation right or limited stock appreciation right, or
the date of receipt of a payment with respect to the performance unit or phantom
stock, whichever is applicable), if any, received. However, the amount of
ordinary income recognized and the timing of the recognition of that income may
be different if the Plan Participant receives stock with respect to which there
is a substantial risk of forfeiture (such as restricted stock) in connection
with the exercise of a stock appreciation right or limited stock appreciation
right. The computation of the ordinary income to be recognized and the timing of
the income recognition with respect to the receipt of stock with a substantial
risk of forfeiture is discussed below in connection with restricted stock. A
Plan Participant will not recognize a loss on the termination of an unexercised
stock appreciation right, limited stock appreciation right, performance unit or
share of phantom stock received under the Plan.
Restricted Stock. Generally, and except as noted below, the grant of restricted
stock is not taxable at the time of the grant. Instead, at the time restricted
stock vests or becomes transferable free of a substantial risk of forfeiture, a
Participant will recognize ordinary income equal to (i) the excess of the fair
market value of such restricted stock on the date the shares vest or becomes so
transferrable over (ii) the price, if any, paid for such restricted stock. An
employee may, however, elect to recognize income as of the date of grant of the
restricted stock, in an amount equal to (i) the excess of the fair market value
of the restricted stock on the date of grant over (ii) the price, if any, paid
for the restricted stock. If such an election is made, no additional income will
be recognized at the time the stock vests or becomes transferable. In the event
of a subsequent forfeiture of the shares, an employee making such an election
may be able to recognize a capital loss with respect to the amount, if any, paid
for such restricted stock, but only to the extent such amount exceeds the amount
realized by such employee on such forfeiture. The employee will not be able to
recognize a loss for tax purposes with respect to the excess of fair market
value over the purchase price which
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was previously included in income. Dividends paid on the shares of restricted
stock before they vest will be taxed to the Participant either as additional
compensation or, if the Participant has made the election described above, as
dividend income.
In most cases, the basis in shares acquired upon exercise of a non-qualified
option, stock appreciation right or limited stock appreciation right, upon an
award of restricted stock or upon payment with respect to shares of phantom
stock will be equal to the fair market value of the shares on the employee's
income recognition date, and the holding period for determining gains and losses
on a subsequent disposition of such shares will begin on such date.
As a general rule, the Corporation will be entitled to a deduction for federal
income tax purposes at the same time and in the same amount that an employee
recognizes ordinary income from Awards granted under the Plan (including the
recognition of ordinary income as the result of a holder of stock obtained
through exercise of an incentive stock option disposing of such stock prior to
the expiration of the required holding period), to the extent such income is
considered reasonable compensation under the Code and generally provided that
the Corporation complies with the reporting requirements applicable to the
ordinary income recognized by the employee. The Corporation will not, however,
be entitled to a deduction with respect to payments to employees that are
contingent upon a change of control if such payments are deemed to constitute
"excess parachute payments" pursuant to Section 280G of the Code and do not
qualify as reasonable compensation pursuant to that Section. In addition, such
payment will subject the recipient to a 20% excise tax. The Corporation also may
not be entitled to a deduction with respect to payments to certain employees of
the Corporation to the extent that the total remuneration of such employee is
found to be excessive under Section 162(m) of the Code.
General. The Plan is not qualified under Section 401(a) of the Code and is not
subject to the provisions of the Employee Retirement Income Security Act of
1974.
The preceding discussion is based upon federal tax laws and regulations in
effect on the date of this proxy statement, which are subject to change, and
upon an interpretation of the statutory provisions of the Code, its legislative
history and related income tax regulations. Furthermore, the foregoing is only a
general discussion of the federal income tax consequences of the Plan and does
not purport to be a complete description of all federal income tax aspects of
the Plan. Plan Participants may also be subject to state and local taxes in
connection with the grant or exercise of options, stock appreciation rights,
limited stock appreciation rights, performance units, restricted stock, phantom
stock, or any combination thereof granted under the Plan and the sale or other
disposition of shares acquired upon exercise of the options or otherwise
received pursuant to the Plan. INDIVIDUALS RECEIVING A GRANT OF OPTIONS, STOCK
APPRECIATION RIGHTS, LIMITED STOCK APPRECIATION RIGHTS, PERFORMANCE UNITS,
RESTRICTED STOCK, PHANTOM STOCK, OR ANY COMBINATION THEREOF SHOULD CONSULT WITH
THEIR PERSONAL TAX ADVISOR REGARDING FEDERAL, STATE AND LOCAL CONSEQUENCES OF
PARTICIPATING IN THE PLAN.
VOTE REQUIRED AND RECOMMENDATION
The affirmative vote (either in person or by proxy) of shareholders entitled to
cast a majority of the votes entitled to be cast by the holders of Common Stock
and Series A Preferred Stock, voting together as a class, is required to approve
the Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THIS PROPOSAL.
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PROPOSAL 2
REINCORPORATION IN FLORIDA
The Board of Directors of the Corporation has unanimously approved and
recommends that shareholders approve the reincorporation of the Corporation from
the Commonwealth of Pennsylvania to the State of Florida. The reincorporation
would be accomplished through a merger whereby:
- The present Corporation (also referred to herein as
"FNB-Pennsylvania") would merge with and into a to-be-formed
wholly owned subsidiary of FNB-Pennsylvania which will be
incorporated in Florida (referred to as "FNB-Florida" or as
the "Surviving Corporation"); and
- FNB-Florida would continue as "F.N.B. Corporation" and
FNB-Pennsylvania would cease to exist.
By operation of law, upon completion of the merger, all of the assets, property,
rights, liabilities and obligations of FNB- Pennsylvania would be transferred to
and assumed by FNB-Florida, and each outstanding share of FNB-Pennsylvania
common and preferred stock will be converted into one share of FNB-Florida
common or preferred stock. The merger will be accomplished pursuant to the terms
and conditions of an Agreement and Plan of Merger between FNB- Pennsylvania and
FNB-Florida, a copy of which is attached hereto as Exhibit B.
As described below, the reincorporation would not result in any change of the
Corporation's business, management, assets, liabilities or net worth. The
description set forth below is a summary of the merger agreement, does not
purport to be complete, and is subject to and qualified in its entirety by
reference to the text of the merger agreement itself.
REASONS FOR THE REINCORPORATION
The primary reason for the reincorporation is to conform the Corporation's state
of incorporation to its principal place of business. The Corporation was
incorporated in 1974 in Pennsylvania, and at that time substantially all of the
Corporation's operations were located in Pennsylvania. As a result of its growth
and expansion, however, the majority of the Corporation's assets and operations
are now located in Florida. The Corporation's President and Chief Executive
Officer, along with a majority of the other executive officers of the
Corporation, currently reside and work primarily in Florida. A majority of the
Board of the Directors of the Corporation, including the Chairman, also reside
in Florida. In addition, the Board of Directors has recently approved the change
of the principal executive office of the Corporation from Hermitage,
Pennsylvania to Naples, Florida.
Once the Corporation is reincorporated in Florida, the Corporation will be
subject to the Florida Business Corporation Act (the "Florida Act") rather than
the Pennsylvania Business Corporation Law (the "Pennsylvania Act"). The Board of
Directors believes that the Florida Act will meet the Corporation's business
needs. The Florida Act is a comprehensive, modern and flexible statute based on
the Revised Model Business Corporation Act. For the most part, it provides the
flexibility in management of a corporation and in the conduct of its various
business transactions that is characteristic of the Pennsylvania Act. See
"Comparison of Pennsylvania Law and Florida Law," below.
Based upon the foregoing, the Board of Directors has determined that it would be
in the best interests of the Corporation and its shareholders for the
Corporation to reincorporate in Florida.
EFFECT OF THE REINCORPORATION
The principal effect of the reincorporation would be for the Corporation to
become a Florida corporation. As a result of the reincorporation, the corporate
affairs of the Corporation would be governed by the Florida Act, rather than the
Pennsylvania Act, which the Board believes will not have any material adverse
effect on the Corporation or its shareholders.
Business. The reincorporation would not result in any material change in the
business, management, assets, liabilities or net worth of the Corporation. The
Surviving Corporation will continue to have the name "F.N.B. Corporation"
following the reincorporation.
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Capital Stock and Derivative Securities. The number of outstanding shares of
common and preferred stock will not be affected by the reincorporation. Each
share of common and preferred stock outstanding immediately prior to the
reincorporation would be converted automatically at the effective time of the
reincorporation into one share of common or preferred stock of FNB-Florida. The
rights, designations, preferences and limitations of the shares of common and
preferred stock of FNB-Florida that would be issued to our shareholders in the
reincorporation would be identical to those of our common and preferred stock
immediately prior to the reincorporation. Furthermore, each stock option, stock
warrant, convertible debt instrument and other right to subscribe for or
purchase shares of FNB-Pennsylvania common stock will be converted into a stock
option, stock warrant, convertible debt, instrument or other right to subscribe
for or purchase shares of common stock of FNB-Florida
Listing on the Nasdaq National Market and Trading. The common stock of the
Surviving Corporation will continue to be listed on the Nasdaq National Market
and trade under the symbol "FBAN."
THE MERGER AGREEMENT
The merger agreement which would effect the reincorporation provides, among
other things, that at the effective time of the merger:
- FNB-Pennsylvania will merge with and into FNB-Florida with
FNB-Florida continuing as the surviving corporation with the
name "F.N.B. Corporation";
- All of the assets and liabilities of FNB-Pennsylvania will be
transferred to and assumed by FNB-Florida by operation of law;
- the officers of FNB-Pennsylvania will become th officers of
FNB-Florida for identical terms of office;
- the directors of FNB-Florida will continue as the directors of
FNB-Florida (see "Reclassification of Board of Directors,"
below);
- each issued and outstanding share of common stock will
automatically be converted into one fully paid and
nonassessable share of common stock of FNB-Florida;
- each issued and outstanding share of Series A o Series B
preferred stock will automatically be converted into one fully
paid and nonassessable share of Series A or Series B preferred
stock of FNB-Florida; and
- each of the outstanding stock options will automatically be
converted into an option to purchase the same number of shares
of common stock at the same exercise price per share and upon
the same terms and subject to the same conditions as set forth
in the option agreement.
STOCK CERTIFICATES
It will not be necessary for shareholders to exchange their stock certificates
in connection with the reincorporation. Please do not return any stock
certificates with the enclosed proxy.
RECLASSIFICATION OF BOARD OF DIRECTORS
As described above under the section entitled "Election of Directors", the
Corporation's Board of Directors is currently divided into four classes.
Under the Florida Law, the Board of Directors of a Florida corporation may not
be divided into more than three classes. Consequently, although the Board of
Directors of FNB-Florida is composed of the same members as the Board of
Directors of FNB-Pennsylvania, the FNB-Florida Board is classified into three
classes. The members of each of the classes of the FNB-Florida Board, and the
year in which the term of the directors of each class will first expire, is set
forth in the following table:
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Class I Class II Class III
Term Expiring 2002 Term Expiring 2003 Term Expiring 2004
- ------------------ ------------------ ------------------
Alan C. Bomstein Paul P. Lynch W. Richard Blackwood
James S. Lindsay William J. Strimbu William B. Campbell
Edward J. Mace Archie O. Wallace Charles T. Cricks
Peter Mortensen James T. Weller Henry M. Ekker
Robert S. Moss Eric J. Werner Stephen J. Gurgovits
William A. Quinn Robert J. Wiley Donna C. Winner
Gary L. Tice
At the effective time of the merger, the Board of Directors of FNB-Florida will
continue as the Board of Directors of the Surviving Corporation. As a result, if
the merger is effected, the Board of Directors of the Surviving Corporation will
be as set forth in the table above, regardless of the outcome of the vote on the
reelection of directors at the 2001 Annual meeting of Shareholders described
under the section entitled "Election of Directors".
RIGHTS OF DISSENTING SHAREHOLDERS
Holders of Series A and Series B preferred stock will have the right to dissent
from the merger agreement and obtain the fair value of their Series A or Series
B preferred shares in cash in accordance with the procedures established by
Pennsylvania law. Any Series A or Series B preferred shareholder who
contemplates exercising the right to dissent is urged to carefully read the
provisions of Subchapter D of Chapter 15 of the Pennsylvania Act attached to
this proxy statement as Exhibit E. Also, there may be tax consequences
associated with exercise dissenters' rights. See "Tax Consequences of the
Merger," below.
The following is a summary of the steps to be taken if the right to dissent is
to be exercised, and should be read in connection with the full text of the law
found at Exhibit E. A dissenting shareholder must take each step in the
indicated order and in strict compliance with the provisions of the law in order
to perfect dissenters' rights. The failure of a preferred shareholder to comply
with these procedural steps will result in the shareholder receiving Surviving
Corporation preferred shares in exchange for FNB-Pennsylvania preferred shares
in the event that the merger is completed.
Any written notice of demand which is required in connection with the exercise
of dissenters' rights, whether before or after the effective date of the merger,
must be sent to FNB Corporation, One F.N.B. Boulevard, Hermitage, Pennsylvania
16148, Attention: General Counsel.
A Series A or B preferred shareholder must file with the Corporation, prior to
the vote on the merger agreement at the 2001 annual meeting, a written notice of
intention to demand payment in cash of the fair value of such holder's preferred
stock if the merger is consummated. Such shareholder cannot change in any manner
the ownership of preferred stock from the date of this notice through the
effective date of the merger and must refrain from voting, in the case of the
Series A preferred stock, his or her Series A preferred stock in favor of
approval of the merger agreement. Neither a proxy nor a vote against approval of
the merger will constitute the necessary written notice of intention to dissent.
If the merger agreement is approved by the shareholders, the Corporation will
mail a notice to all dissenters who gave notice as described above and, in the
case of Series A preferred shareholders, who refrained from voting in favor of
approval of the merger agreement. This notice will state where and when: (1) a
dissenter must send written demand for payment; and (2) the dissenter's
preferred stock certificates are to be deposited. This notice will include a
form for this demand and another copy of the Pennsylvania law that is found at
Exhibit E.
A dissenter who fails to send back to the Corporation the notice to demand
payment and deposit his or her preferred stock certificates by the deadline
stated on the form of notice to demand payment will forfeit his or her right to
receive a cash payment rather than the Surviving Corporation Series A or B
preferred shares.
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After the effective time of the merger, the Surviving Corporation will give to
dissenters notice of the estimated fair value of their preferred shares and pay
such amount or indicate that no remittance accompanies the notice. In addition,
this notice will include:
(i) a closing balance sheet and statement of income of the
Corporation for the most recent fiscal year and calendar
quarterly period;
(ii) a statement expressing the estimate of the fair value of the
preferred shares; and
(iii) a notice of the right of a dissenter to demand a supplemental
payment under Pennsylvania law and another copy of the
dissenters' rights provisions of Pennsylvania law.
If a dissenter believes that the estimated value or the amount sent is less than
the fair value, a dissenter may send to the Surviving Corporation his or her own
estimate of the fair value of the preferred shares, which is deemed to be a
demand for payment of the amount of the deficiency. If the Surviving Corporation
remits payment of its estimated value and the dissenter does not file his or her
own estimate within 30 days after the mailing of such payment to the dissenter,
then the dissenter will be entitled to no more than the amount mailed to him or
her.
If any demands for payment remain unsettled within 60 days after the latest to
occur of:
(i) the effective date of the merger;
(ii) receipt of FNB-Pennsylvania or the Surviving Corporation of
any demands for payment; or
(iii) receipt by FNB-Pennsylvania or the Surviving Corporation of
any estimates by dissenters of the fair value;
then the Surviving Corporation may file an application in the Court of Common
Pleas of Mercer County, Pennsylvania, requesting that the fair value of the
preferred stock be determined by the court. In such case, all dissenters,
wherever residing, whose demands have not been settled, shall be made parties to
the proceeding. A copy of this court application will be served on each
dissenter who has not settled.
If the Surviving Corporation fails to file the application, then any dissenter,
on behalf of all dissenters who have made a demand and who have not settled
their claims, may file the application in the name of the Surviving Corporation
within a 30-day period after the expiration of the above 60-day period and
request the fair value be determined by the court. The fair value determined by
the court need not equal the dissenters' estimate of fair value. If no dissenter
files such an application, then each dissenter entitled to do so shall be paid
the Surviving Corporation's estimate of the fair value and may only start a
legal action to recover any amount not previously remitted plus interest at a
rate that the court finds fair.
The Surviving Corporation, after the effective date of the merger, intends to
negotiate in good faith with any dissenting preferred shareholders. If, after
negotiation, a claim cannot be settled, then the Surviving Corporation intends
to file an application requesting that the fair value be determined by the
court.
The costs and expenses of any valuation proceeding in the court, including the
reasonable compensation and expenses of any appraiser appointed by the court,
will be determined by the court and assessed against the Surviving Corporation
after the merger, except that any part of the costs and expenses may be
apportioned and assessed against all or any of the dissenters who are parties to
the proceeding and whose actions the court funds to be dilatory, obdurate,
arbitrary, vexatious or in bad faith.
Series A or B preferred shareholders considering seeking appraisal by exercising
their dissenters' rights should be aware that the fair value of their preferred
stock determined under Pennsylvania Law could be more than, the same as, or less
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than the value of the surviving corporation Series A or B preferred stock that
they are entitled to receive under the merger agreement if they do not seek
appraisal of their preferred stock.
The foregoing discussion is not a complete statement of the procedures to be
followed by preferred shareholders desiring to exercise appraisal rights and,
because exercise of such rights requires strict adherence to the relevant
provisions of the Pennsylvania Act, each shareholder desiring to exercise
appraisal rights is advised individually to consult their own counsel to ensure
that they fully and properly comply with the requirements of Pennsylvania law.
TAX CONSEQUENCES OF THE MERGER
The merger and resulting reincorporation of the Corporation from Pennsylvania to
Florida will constitute a tax-free reorganization within the meaning of Section
368(a)(1)(F) of the Internal Revenue Code of 1986, as amended. Accordingly, for
federal income tax purposes, no gain or loss will be recognized by shareholders
upon the conversion of FNB-Pennsylvania common stock into shares of FNB-Florida
common stock, the conversion of FNB-Pennsylvania Series A preferred stock into
shares of FNB-Florida Series A preferred stock, or the conversion of
FNB-Pennsylvania Series B preferred stock into shares of FNB-Florida Series B
preferred stock. Each shareholder whose shares are converted from
FNB-Pennsylvania common stock into FNB-Florida common stock, from
FNB-Pennsylvania Series A preferred stock into FNB-Florida Series A preferred
stock, or from FNB-Pennsylvania Series B preferred stock into FNB-Florida Series
B preferred stock will have the same basis in his or her FNB-Florida common
stock, Series A preferred stock or Series B preferred stock as he or she had in
his or her FNB-Pennsylvania common stock, Series A preferred stock or Series B
preferred stock, respectively, prior to the effective date of the merger, and
his or her holding period of FNB-Florida common stock, Series A preferred stock
or Series B preferred stock will include the period during which he or she held
the corresponding shares of FNB-Pennsylvania common stock, Series A preferred
stock or Series B preferred stock, provided such corresponding shares of
FNB-Pennsylvania common stock, Series A preferred stock or Series B preferred
stock were held as a capital asset on the effective date of the merger.
Holders of FNB-Pennsylvania Series A preferred stock or FNB-Pennsylvania Series
B preferred stock who exercise dissenter's rights and receive cash rather than
FNB-Florida Series A preferred stock or FNB-Florida Series B preferred stock
will recognize taxable gain or loss, as the case may be, equal to the difference
between the holder's tax basis in such shares of FNB-Pennsylvania preferred
stock and the amount of cash received in exchange therefor. Such gain or loss
will be capital gain or loss if the shares of FNB-Pennsylvania preferred stock
were held as a capital asset and the holder does not actually or constructively
own any shares of FNB-Florida stock at the conclusion of the merger. Such gain
or loss will be long-term gain or loss if the holder had held the shares for
more than one year.
No gain or loss will be recognized by FNB-Pennsylvania or by FNB-Florida as a
result of the merger and reincorporation, and FNB-Florida generally will
succeed, without adjustment, to the tax attributes of FNB-Pennsylvania.
THE FOREGOING IS A SUMMARY OF THE ANTICIPATED FEDERAL INCOME TAX CONSEQUENCES OF
THE MERGER AND RESULTING REINCORPORATION AND IS INTENDED FOR GENERAL REFERENCE
PURPOSES ONLY. THE SUMMARY DOES NOT ADDRESS THE POTENTIAL CONSEQUENCES TO
SHAREHOLDERS HAVING SPECIAL CIRCUMSTANCES AND DOES NOT INCLUDE INFORMATION
REGARDING THE TAX CONSEQUENCES, IF ANY, UNDER APPLICABLE STATE, LOCAL OR FOREIGN
LAWS. EACH SHAREHOLDER IS ADVISED TO CONSULT HIS OR HER PERSONAL ATTORNEY OR TAX
ADVISOR AS TO THE FEDERAL, STATE, LOCAL AND/OR FOREIGN TAX CONSEQUENCES OF THE
PROPOSED REINCORPORATION IN VIEW OF THE SHAREHOLDER'S INDIVIDUAL CIRCUMSTANCES.
ACCOUNTING TREATMENT OF THE MERGER
In accordance with generally accepted accounting principles, we expect that the
merger and resulting reincorporation will be accounted for as a reorganization
of entities under common control at historical cost in a manner similar to a
pooling of interests. Under this accounting method, the assets and liabilities
of the combining entities will be carried forward at their recorded historical
book values. The merger and resulting reincorporation will be disclosed in a
footnote to financial statements in interim and year-end filings.
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EFFECTIVE DATE
The merger and resulting reincorporation will become effective as soon as
practicable after shareholder approval is obtained and all other conditions to
the merger are satisfied. It is expected that Articles of Merger will be filed
and that the reincorporation will be effected immediately following the Annual
Meeting. The merger may be abandoned at any time prior to its effectiveness if
the Board of Directors determines, in its discretion, that consummation of the
merger and the reincorporation is no longer advisable.
COMPARISON OF PENNSYLVANIA LAW AND FLORIDA LAW
The rights of the shareholders of FNB-Pennsylvania are currently governed by the
Articles of Incorporation and Bylaws of FNB-Pennsylvania and the Pennsylvania
Act. Upon consummation of the merger, the Surviving Corporation's shareholders'
rights will be governed by the Florida Act and the Articles and Bylaws of
FNB-Florida. The Articles of Incorporation and Bylaws of FNB-Florida are
substantially identical to FNB-Pennsylvania's current Articles of Incorporation
and Bylaws, except for statutory references necessary to conform to the Florida
Act and other differences attributable to the differences between the Florida
Act and the Pennsylvania Act. A copy of FNB-Florida's Articles of Incorporation
and Bylaws is attached to this proxy statement as Exhibit C and Exhibit D,
respectively.
Although it is not practical to compare all the differences between, on the one
hand, the Pennsylvania Act and the Articles of Incorporation and Bylaws of
FNB-Pennsylvania, and, on the other hand, the Florida Act and the Articles of
Incorporation and Bylaws of FNB-Florida, the following is a summary of certain
of those differences which may significantly affect your rights. This summary is
not intended to be relied upon as an exhaustive list of all such differences or
a complete description of the provisions discussed, and is qualified in its
entirety by reference to Pennsylvania Act, the Florida Act and the form of the
Articles of Incorporation and Bylaws of FNB-Florida and FNB- Pennsylvania.
ACTION BY WRITTEN CONSENT
Florida. Under the Florida Act, unless otherwise provided in a corporation's
Articles of Incorporation, any action that may be taken at any annual or special
meeting of shareholders may be taken without a meeting and without prior notice,
if a consent in writing, setting forth the action so taken, is signed by the
holders of outstanding shares having not less than the minimum number of votes
that would be necessary to authorize such action at a meeting at which all
shares entitled to vote thereon were present and voted.
Pennsylvania. The Pennsylvania Act requires every shareholder entitled to vote
on the matter at an annual or special meeting of shareholders to consent to the
action in writing. However, the corporation's Bylaws may either (i) restrict the
use of unanimous written consents or (ii) provide for partial written consent
pursuant to which any action that may be taken at any annual or special meeting
of shareholders may be taken without a meeting and without prior notice, if a
consent in writing, setting forth the action so taken, is signed by the holders
of outstanding shares having not less than the minimum number of votes that
would be necessary to authorize such action at a meeting at which all shares
entitled to vote thereon were present and voted.
AFFILIATED TRANSACTIONS AND CONTROL SHARE ACT
Florida. Florida has enacted legislation that may deter or frustrate takeovers
of Florida corporations. The affiliated transaction provisions of the Florida
Act generally require supermajority approval by disinterested shareholders of
certain specified transactions between a public corporation and holders of more
than 10% of outstanding voting shares of a corporation (or their affiliates).
However, if the transaction is approved by a majority of the disinterested
directors of the corporation, the transaction must only be approved by a
majority of all of the shares entitled to vote on the transaction. The control
share provisions of the Florida Act generally provide that shares acquired in
excess of certain specified thresholds (at least 20%) will not possess any
voting rights unless such voting rights are approved by a majority of a
corporation's disinterested shareholders.
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Pennsylvania. The Pennsylvania Act includes several "anti-takeover" provisions.
The Pennsylvania Act generally requires the supermajority approval by
disinterested shareholders for certain business combinations between a
corporation and the holders of 20% or more of the outstanding votes entitled to
vote in the election of directors of the corporation (or their affiliates). In
addition, under the Pennsylvania control-share acquisitions' statutes, a person
who acquires 20% or more of the outstanding votes entitled to vote in the
election of directors of a corporation loses his or her voting rights, unless
and until the voting rights are restored by a majority of the corporation's
disinterested shareholders.
Generally, a corporation must elect in its Bylaws to "opt out" of such
provisions if the corporation chooses not to be covered by the "anti-takeover"
provisions of Pennsylvania Act. However, because FNB-Pennsylvania has a class of
shares entitled to vote in the election of directors that is registered under
the Exchange Act of 1934, as amended, these "anti-takeover" provisions of
Pennsylvania Act do not apply to FNB-Pennsylvania.
OTHER CONSTITUENCIES
Florida. The Florida Act provides that directors of a Florida corporation, in
discharging their fiduciary duties to the corporation, may consider the social,
economic, legal or other effects of corporate action on the employees, suppliers
and customers of the corporation or its subsidiaries and the communities in
which the corporation and its subsidiaries operate, in addition to the effect on
shareholders.
Pennsylvania. The Pennsylvania Act has a similar provision, pursuant to which
the director of a corporation may, in considering the best interests of the
corporation, consider (i) the effects of any action on shareholders, employees,
suppliers, customers and creditors of the corporation, (ii) the short-term and
long-term interests of the corporation, including the possibility that the best
interests of the corporation may be served by the continued independence of the
corporation, (iii) the resources, intent and conduct of any person seeking to
acquire control of the corporation, and (iv) all other pertinent factors.
CLASSIFIED BOARD OF DIRECTORS
Florida. The Florida Act provides that a corporation may, pursuant to its
Articles of Incorporation or its initial Bylaws, divide its Board of Directors
into one, two or three classes with the number of directors in each class being
as nearly equal as possible. If the corporation elects to stagger the terms of
its directors, then any increase or decrease in the number of directors shall be
apportioned among the classes as to make all classes as nearly equal in number
as possible.
Pennsylvania. The Pennsylvania Law has a similar provision for classifying a
corporation's Board of Directors. However, the Pennsylvania Law does not limit
the number of classes of directors into which a corporation may divide its Board
of Directors.
REMOVAL OF DIRECTORS
Florida. The Florida Act provides that the shareholders may remove one or more
directors with or without cause unless the Articles of Incorporation provide
otherwise. Such removal may be effected at a meeting of shareholders if the
number of votes cast to remove the director exceeds the number of votes cast not
to remove him or her.
Pennsylvania. The Pennsylvania Act provides that, generally, the shareholders of
a corporation may remove one or more directors with or without cause unless the
Articles of Incorporation provide otherwise. However, if a corporation has a
classified Board of Directors, then a director may only be removed for cause.
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SPECIAL SHAREHOLDERS' MEETINGS
Florida. Under the Florida Act, a special meeting of shareholders may be called
by:
- the Board of Directors
- the persons authorized in the corporation's Articles of
Incorporation or Bylaws; and
- the holders of not less than 10% of all votes entitled to be
cast on any issue to be considered at the meeting, provided,
however, that a corporation, in its Articles of Incorporation,
may require a higher percentage of votes required to call a
special meeting of shareholders, up to a maximum of 50%.
Pennsylvania. Under the Pennsylvania Act, a special meeting of shareholders may
be called by:
- the Board of Directors;
- officers and other persons, as designated in th corporation's
Bylaws; and
- unless otherwise provided in the corporation's Articles of
Incorporation, the holders of at least 20% of the votes
entitled to be cast at the special meeting.
DISSENTERS' RIGHTS
Florida. Under the Florida Act, dissenting shareholders who follow prescribed
statutory procedures are, in certain circumstances, entitled to appraisal rights
in the case of:
- a merger or consolidation;
- a sale or exchange of all of substantially all the assets of
the corporation;
- amendments to the Articles of Incorporation that adversely
affect the rights or preferences of shareholders;
- consummation of a plan of share exchange if the shareholder is
entitled to vote on the plan.
Such rights are not provided when:
- such shareholders are shareholders of a corporation surviving
a merger or consolidation and no vote of the shareholders is
required for the merger or consolidation; or
- shares of the corporation are listed on a national securities
exchange, designated as a Nasdaq National Market security, or
held of record by more than 2,000 shareholders.
Pennsylvania. The Pennsylvania Act is substantially similar to the Florida Act.
AMENDMENT TO ARTICLES
Florida. Under the Florida Act, unless a Florida corporation's Articles of
Incorporation or the Board of Directors requires a greater vote, an amendment to
a Florida corporation's Articles of Incorporation generally requires that the
votes cast in favor of the amendment exceed the votes cast against the
amendment. In addition, unless the Articles of Incorporation
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provide otherwise, the Board of Directors of a Florida corporation may, without
shareholder approval, amend the corporation's Articles of Incorporation to:
- extend the duration of the corporation;
- delete the names and address of the initial directors;
- delete information that is solely of historical interest;
- delete the authorization for a class or series of stock if no
shares of such class or series are issued;
- change the par value for a class or series of shares; and
- provide for treasury shares.
Pennsylvania.
The Pennsylvania Act requires, unless the corporation's Articles of
Incorporation provide otherwise, the affirmative vote of a majority of all
shares entitled to vote for the adoption of an amendment to the corporation's
Articles of Incorporation. However, except as provided in the Articles of
Incorporation, the Board of Directors of a Pennsylvania corporation may, without
shareholder approval, amend the Articles of Incorporation to:
- change the corporate name;
- provide for perpetual existence;
- add or delete a provision relating to uncertificated shares;
and
- delete all reference to a class or series of shares that is no
longer outstanding.
AMENDMENT TO BYLAWS
Florida. The Florida Act provides that the shareholders, as well as the
directors, of a corporation may amend the Bylaws, unless such power is reserved
to the shareholders by the Articles of Incorporation, by specific action of the
shareholders or by a specific provision of the Florida Act.
Pennsylvania. The Pennsylvania Act provides that, generally, the Board of
Directors and the shareholders of a corporation have the power to adopt, amend
or repeal a corporation's Bylaws. In addition, under the Pennsylvania Act, the
Bylaws of a corporation may vest the power to amend and adopt Bylaws solely in
the corporation's Board of Directors, so long as the shareholders of the
corporation have the power to amend the Bylaw vesting such power in the Board of
Directors.
LIABILITY OF DIRECTORS
Florida. Under the Florida Act, a director is not personally liable for monetary
damages to the corporation or any other person for any statement, vote, decision
or failure to act, regarding corporate management or policy, by a director
unless the director breached or failed to perform his duties as a director and
such breach or failure constitutes:
- a violation of criminal law unless the director had reasonable
cause to believe his conduct was lawful or had no reasonable
cause to believe his conduct was unlawful;
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- a transaction from which the director derived a improper
personal benefit;
- a circumstance resulting in an unlawful distribution;
- in a proceeding by or in the right of the corporation to
procure a judgment in its favor or by or in the right of a
shareholder, conscious disregard for the best interests of the
corporation or willful misconduct; or
- in a proceeding by or in the right of one other than the
corporation or a shareholder, recklessness or an act or
omission which was committed in bad faith or with malicious
purpose or in a manner exhibiting wanton and willful disregard
of human rights, safety, or property.
Pennsylvania. The Pennsylvania Act provides that a corporation's Bylaws may
include a provision limiting the personal liability of directors for monetary
damages for actions taken as a director, except to the extent that the director
has breached or failed to perform his or her duties to the corporation and the
breach or failure to perform constitutes, self- dealing, willful misconduct or
recklessness.
INDEMNIFICATION
Florida. The Florida Act provides that a corporation may indemnify directors and
officers, as well as other employees and agents, along with a director, officer,
employee or agent against of another corporation, partnership, joint venture,
trust, or other enterprise, against expenses incurred in legal proceedings
connected with their service to the corporation, if he or she acted in good
faith and in a manner he or she reasonably believed to be in, or not opposed to,
the best interests of the corporation and, had no reasonable cause to believe
his or her conduct was unlawful.
Pennsylvania. The Pennsylvania Act is substantially similar to the Florida Act.
DERIVATIVE ACTIONS
Florida. Under the Florida Act, a derivative action may be brought only by a
person who was a shareholder of the corporation at the time of the alleged
wrongdoing, unless the person became a shareholder through a transfer by
operation of law from a person who was a shareholder at the time of the alleged
wrongdoing.
Pennsylvania. The Pennsylvania Act provides that when the corporation refuses to
enforce rights that it may properly assert against a director or officer, a
derivative action may be brought by a shareholder, even if the shareholder was
not a shareholder at the time of the alleged wrongdoing, if there is a strong
prima facie case in favor of the claim asserted and if the court, in its
discretion, determines that a serious injustice will result without such action.
DISTRIBUTIONS TO SHAREHOLDERS
Florida. A Florida corporation may make distributions to shareholders as long
as, after giving effect to such distribution, (1) the corporation would be able
to pay its debts as they become due in the usual course of business, and (2) the
corporation's total assets would not be less than the sum of its total
liabilities plus (unless the Articles of Incorporation permit otherwise) the
amount that would be needed if the corporation were to be dissolved at the time
of the distribution to satisfy the preferential rights upon dissolution of
shareholders whose preferential rights are superior to those receiving the
distribution.
Pennsylvania. The Pennsylvania Act provides for a substantially similar
treatment of distributions to shareholders.
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SHAREHOLDER INSPECTION RIGHTS
Florida. Under the Florida Act, a shareholder is entitled to inspect and copy
the Articles of Incorporation, Bylaws, certain board and shareholder
resolutions, certain written communications to shareholders, a list of the names
and business addresses of the corporation's directors and officers, and the
corporation's most recent annual report during regular business hours if the
shareholder gives at least five business days' prior written notice to the
corporation. In addition, a shareholder of a Florida corporation is entitled to
inspect and copy other books and records of the corporation during regular
business hours if the shareholder gives at least five business days' prior
written notice to the corporation, and the shareholder's demand is made in good
faith and for a proper purpose,
- the demand describes with particularity its purpose and the
records to be inspected or copied, and
- the requested records are directly connected with such
purpose.
The Florida Act also provides that a corporation may deny any demand for
inspection if the demand was made for an improper purpose or if the demanding
shareholder has, within two years preceding such demand, sold or offered for
sale any list of shareholders of the corporation or any other corporation, has
aided or abetted any person in procuring a list of shareholders for such purpose
or has improperly used any information secured through any prior examination of
the records of the corporation or any other corporation.
Pennsylvania. The Pennsylvania Act provides that a shareholder has the right to
examine and copy, in person or by agent or attorney, during normal business
hours, the corporation's share register, books and records of account, and
records of the proceedings of the shareholders and directors, provided that the
shareholder present the corporation with written notice stating the reasons for
the shareholder's request and the reasons for the requested inspection are
reasonably related to his or her interest as a shareholder.
TREASURY STOCK
Florida. A Florida corporation may reacquire its own issued and outstanding
capital stock. Under the Florida Act, however, all capital stock reacquired by a
Florida corporation is automatically returned to the status of authorized but
unissued stock, and is not deemed treasury stock unless the corporation's
Articles of Incorporation provide otherwise.
Pennsylvania. The Pennsylvania Act provides that shares of a corporation's stock
that have been reacquired by the corporation, shall be deemed issued but not
outstanding and, unless otherwise provided in the corporation's Bylaws, may be
returned to the status of authorized but unissued by a resolution of the Board
of Directors. The Pennsylvania Act further provides that the Articles of
Incorporation may include a provision stating that all shares reacquired by a
corporation shall not be reissued and the number of authorized shares shall be
reduced by the number of shares reacquired.
VOTE REQUIRED AND RECOMMENDATION
The affirmative vote (either in person or by proxy) of shareholders entitled to
cast a majority of the votes entitled to be cast by the holders of Common Stock
and Series A Preferred Stock, voting together as a class, is required to approve
the merger agreement and resulting reincorporation in Florida.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THIS PROPOSAL.
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REPORT OF AUDIT COMMITTEE
To Our Shareholders:
The Audit Committee ("Committee") oversees the Corporation's financial reporting
process on behalf of the Board of Directors. Management has the primary
responsibility for the financial statements and the reporting process including
the systems of internal controls. In fulfilling its oversight responsibilities,
the Committee reviewed the audited financial statements in the Annual Report
with management including a discussion of the quality, not just the
acceptability, of the accounting principles, the reasonableness of significant
judgments, and the clarity of disclosures in the financial statements.
The Committee reviewed with Ernst & Young LLP, its independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, their
judgments as to the quality, not just the acceptability, of the Corporation's
accounting principles and such other matters as are required to be discussed
with the Committee in accordance with Statement on Auditing Standards No. 61
(Communication with Audit Committees).
The Committee has discussed with Ernst & Young LLP, their independence from
management and the Corporation including the matters in the written disclosures
required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees). Fees for the last annual audit were $275,000
and all other fees were $248,000, including audit related services of $105,000
and non-audit services of $143,000. Audit related services include fees for
employee benefit plan audits, consents and accounting consultations. The
Committee has considered whether the provision of non-audit services by Ernst &
Young LLP is compatible with maintaining their independence.
The Committee discussed with the Corporation's internal auditors and Ernst &
Young LLP, the overall scope and plans for their respective audits. The
Committee meets with the internal auditors and Ernst & Young LLP, with and
without management present, to discuss the results of their examinations, their
evaluations of the Corporation's internal controls, and the overall quality of
the Corporation's financial reporting. The Committee met five times during 2000.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors that the audited financial statements be
included in the Annual Report on Form 10-K for the year ended December 31, 2000,
for filing with the Securities and Exchange Commission.
Respectfully submitted,
Edward J. Mace, Chairman
Paul P. Lynch
Robert S. Moss
William A. Quinn
Eric J. Werner
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EXECUTIVE COMPENSATION, BENEFITS AND RELATED MATTERS
REPORT OF COMPENSATION COMMITTEE
To Our Shareholders:
RESPONSIBILITIES AND COMPOSITION OF THE COMPENSATION COMMITTEE
The Compensation Committee ("Committee") meets periodically during the course of
the year and establishes compensation programs for executive officers and senior
managers of the Corporation and its affiliates that attract, retain, motivate
and appropriately reward individuals who are responsible for the Corporation's
short- and long-term profitability, growth and return to shareholders; reviews,
oversees and administers the Corporation's executive compensation programs;
determines the compensation of the Corporation's executive officers; and
approves changes to the Corporation's compensation program and practices. The
Committee is comprised entirely of directors who are not officers of the
Corporation or its affiliates. Although Mr. Mortensen, Chairman and Chief
Executive Officer of the Corporation, attended meetings of the Committee, he did
not participate in any deliberations or decision-making involving his own
compensation.
COMPENSATION PHILOSOPHY AND OBJECTIVES
The central objective of the compensation philosophy of the Corporation is to
provide fair and reasonable compensation to all employees, including its
executive officers and senior managers. The Committee maintains that the
compensation of the Corporation's executive officers and senior managers should
be determined in accordance with a performance-based framework that enhances
shareholder value by integrating the overall financial condition and results,
individual contribution, and business unit performance. Within this philosophy,
the Committee's specific objectives are to: (i) provide annual compensation that
takes into account the Corporation's performance relative to its financial goals
and objectives and the performance of functions and business units under the
executive's and senior manager's management and performance against assigned
individual goals; (ii) align the financial interests of the executive officers
with those of shareholders by providing significant equity-based long-term
incentives; and (iii) offer a total compensation program for executive officers
based on the level of responsibility of the executive's position and necessary
skills and experience relative to other senior management positions and
comparative compensation of similarly positioned executives and senior managers
of peer financial institutions.
Specifically, a critical aspect of the committee's compensation philosophy is
that some portion of the executive officer's and senior manager's total
compensation be "at risk." The "at risk" portion is a function of the executive
officer's and senior manager's performance against Corporation, business unit
and individual goals and objectives.
The following two components of executive officer and senior manager
compensation are "at risk": an annual cash bonus based on short-term performance
and stock options as an award for long-term performance. The total cash
compensation opportunities for executive officers and senior managers is
targeted at the median of industry practices among the Corporation's peer group.
In addition, the Corporation's incentive cash and bonus award program provide an
opportunity for stronger rewards when the Corporation's performance exceeds its
financial goals and objectives.
COMPENSATION COMPONENTS AND PROCESS
The major components of the Corporation's executive officer and senior manager
compensation are: (i) base salary, (ii) annual incentive awards and (iii)
long-term incentive awards (typically in the form of stock options or restricted
stock). The process utilized by the Committee in determining executive officer
and senior manager compensation levels for all of these components is based upon
the Committee's subjective judgment and takes into account objective qualitative
and quantitative factors. However, the Committee emphasizes that in determining
executive officer compensation levels, particular attention is placed on tying a
significant portion of executive compensation to the success of the executive
officer and senior manager and the Corporation in meeting predetermined
financial and other performance goals, including performance of the
Corporation's stock.
In making compensation decisions, the Committee relies upon the work performed
by its independent compensation consultant, Strategic Compensation Planning,
Inc. The independent compensation consultant reviewed market data to
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determine relevant compensation practices of the Corporation's peer group. The
Corporation's peer group developed by the independent compensation consultant
consisted of national and regional financial institutions and bank holding
companies having between $3 to $5 billion of banking assets. The Committee
determined that the Corporation's peer group identified by the independent
consultant is reasonable to measure the Corporation's compensation practices
given the Corporation's continued and expected growth. The peer information
provides guidance to the Committee, but the Committee does not target total
compensation or any component thereof to any particular point within, or
outside, the range of the peer group results.
In general, the Committee continues to adjust the mix of base salary, annual
incentive awards and long-term incentives. Specifically, the Committee's focus
is to emphasize the amount of executive compensation that is at risk. Executive
officers received annual cash incentive awards under the Corporation's
Restricted Stock and Incentive Bonus Plan in accordance with the target payout
percentages established by the Committee for 2001.
LONG-TERM INCENTIVE AWARDS
The stock-based awards (stock option awards and restricted stock grants) are
generally granted to executive officers and senior managers on an annual basis.
It has been the practice of the Committee to grant stock options and restricted
stock to executive officers and senior management. The stock option awards
cannot be issued with an exercise price below the market price of the
Corporation's Common Stock at the time of the award and the exercise price
cannot be changed after the award is issued, except to accommodate any
dividends, stock splits or conversions which would affect all shareholders.
The Committee has historically granted stock options as a means of providing
long-term incentives to employees. All stock options granted by the Corporation
under its Stock Option Plan "vest" incrementally over a five-year period based
on the optionee's continued employment by the Corporation or one of its
principal subsidiaries. The Committee therefore based its 2000 decisions with
regard to the stock options granted to its executive officers primarily upon the
total number of options available for grant, the officer's position and a
multiple of the officer's base salary.
The Committee granted restricted stock in 2000 to certain non-executive officers
and other employees under the Corporation's Restricted Stock and Incentive Bonus
Plan. There were no restricted stock grants awarded to the Corporation's
Executive Officers during 2000. The restricted stock grants are to reward
individuals who made a particularly important contribution to the Corporation in
2000. These grants are also a key component of the Committee's long-term
incentive compensation policy because restricted stock granted under this plan
only "vests" incrementally over a five-year period based on the recipient's
continued employment by the Corporation or one of its principal subsidiaries.
CHIEF EXECUTIVE OFFICER COMPENSATION
In evaluating the compensation of Mr. Peter Mortensen for services rendered in
2000 as Chairman of the Board as well as Chief Executive Officer of the
Corporation, the Committee examined both quantitative and qualitative factors.
In examining the relevant quantitative factors, the Committee reviewed the
Corporation's 2000 financial results as compared with those of its peer group
and with the Corporation's financial results for 1999. In determining Mr.
Mortensen's 2000 compensation, the Committee reviewed the following important
criteria concerning the Corporation's 2000 core operating results: (i) net
earnings of $42.8 million for 2000, an increase of 9% from 1999; (ii) 5% growth
in total assets in 2000 to $3.9 billion; (iii) the continuation of the
Corporation's exceptional asset quality in 2000; and (iv) other quantitative
factors. The Committee did not apply any specific quantitative formula which
would assign weights to these performance measures or establish numerical
targets for any given factor.
In addition to the above quantitative considerations, the Committee reviewed the
following 2000 accomplishments of the Corporation that are qualitative in
nature. The Committee recognized the important benefits resulting from Mr.
Mortensen's innovative leadership in positioning the Corporation to diversify
its product offerings and increase fee income opportunities, the results of
which are amply demonstrated by the fact that the Corporation's subsidiary,
Roger Bouchard Insurance, Inc., is now one the largest bank-affiliated insurance
agencies in the United States. Also, under Mr. Mortensen's guidance in 2000, the
Corporation significantly expanded the size and geographic scope of its consumer
finance subsidiary, Regency Finance Company, through its acquisition of eight
offices and $44 million in gross loans in
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Tennessee. Additionally, the Committee favorably considered the Corporation's
pending affiliation with Citizens Community Bancorp, Inc., as continuation of
the Corporation's successful southwest Florida bank expansion strategy. Finally,
Mr. Mortensen has made important contributions to the Corporation's strategic
planning process, including initiatives designed to result in significant cost
reductions for the Corporation by promoting enhanced efficiencies and improved
streamlining of the Corporation's operations.
On December 31, 2000, Mr. Mortensen retired as Chief Executive Officer of the
Corporation after forty-two (42) years of service.
The Committee's decisions relating to Mr. Mortensen's compensation were ratified
by the Board. Also, consistent with the principles and procedures outlined in
this report, the Committee approved the compensation of the Corporation's other
executive officers for 2000 and said decisions were ratified by the Board.
Respectfully submitted,
Charles T. Cricks, Chairman
James T. Weller
W. Richard Blackwood
James S. Lindsay
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2000, Mr. Mortensen, as Chairman and Chief Executive Officer of the
Corporation, attended meetings of the Corporation's Compensation Committee, but
did not participate or vote in any deliberations or decision making involving
his own compensation.
Mr. Mortensen serves on the board of directors of Liberty Steel Products, Inc.,
a closely held corporation which is wholly owned by Mr. Weller and his family.
Mr. Weller, a member of the Corporation's Compensation Committee, is Chairman of
Liberty Steel Products, Inc.
EXECUTIVE REMUNERATION
The following table sets forth information regarding remuneration paid by the
Corporation and its subsidiaries for the years shown to the Chairman and Chief
Executive Officer of the Corporation and the four other most highly compensated
executive officers of the Corporation whose aggregate annual remuneration
exceeded $100,000 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
Long Term Compensation
-------------------------------------
Annual Compensation Awards Payouts
- ------------------------------------------------------------------------------------------------------------
Name and Other Restricted Securities LTIP All Other
Principal Year Salary Bonus(1) Annual Stock Underlying Payouts Compensation
Position ($) ($) Compensation(2) Award(3),(4) Options ($) ($)
($) ($) (#)
- ---------------------------------------------------------------------------------------------------------------------------------
Peter Mortensen 2000 560,000 320,000 None 89,134 None 76,030 (5),(6)
Chairman and Chief 1999 530,000 416,000 None 81,824 None 57,698
Executive Officer 1998 450,000 250,000 None 26,186 None 49,053
Stephen J. Gurgovits 2000 338,000 121,903 None 39,117 None 28,823 (5),(6)
Vice Chairman 1999 315,000 236,000 None 35,784 None 15,851
1998 290,004 126,842 None 14,465 None 14,435
Gary L. Tice 2000 362,000 180,000 None 41,808 None 150,105 (5),(6)
President and Chief 1999 340,000 223,000 None 38,479 None 163,855
Operating Officer 1998 305,297 137,000 45,567 191,260 37,617 None 139,792
William J. Rundorff 2000 227,000 82,581 None 20,365 None 16,870 (5),(6)
Executive Vice President 1999 214,992 126,000 None 18,546 None 11,338
1998 200,004 90,000 None 9,975 None 10,927
John D. Waters 2000 216,500 67,115 None 19,423 None 15,757 (5),(6)
Vice President and Chief 1999 205,008 106,000 None 17,682 None 13,387
Financial Officer 1998 190,008 81,000 None 9,476 None 13,610
=================================================================================================================================
(1) Amount earned by the officer as a cash incentive bonus under the Restricted
Stock and Incentive Bonus Plan.
(2) The aggregate amount of payments made to each officer for perquisites or
other personal benefits did not exceed 10% of salary and bonus except that
in 1998, Mr. Tice received a car allowance of $15,420, country club
memberships of $12,647 and directors' fees of $17,500.
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(3) Aggregate restricted stock holdings in terms of number of shares and dollar
value as of December 31, 2000 for each named executive officer were as
follows: Mr. Mortensen: 6,077, $128,191; Mr. Gurgovits: 2,910, $61,393; Mr.
Tice: 4,164, $87,840; Mr. Rundorff: 1,838, $38,765; and Mr. Waters: 365,
$7,707.
(4) During 1998, Mr. Tice was granted 5,494 shares of Restricted Stock. There
were no other grants awarded to the Named Executive Officers during the
three years ending December 31, 2000. All such restricted stock grants vest
20% each year on the first through fifth anniversaries of the grant date.
Dividends in the form of stock are paid on all restricted stock granted to
the named executive officers.
(5) Includes the following amounts paid or accrued by the Corporation for 2000
under the following programs to Messrs. Mortensen, Gurgovits, Tice, Rundorff
and Waters, respectively: 401(k) Plan (employer matching contributions),
$5,100, $5,100, $14,700, $5,100 and $5,100; Basic Retirement Plan (employer
matching contributions relating to 401(k) Plan), $30,952, $14,367, $13,750,
$6,450 and $5,014; Supplemental Disability, $8,357, $5,102, $8,969, $0 and
$0.
(6) Includes the following amounts which represent the present value of imputed
interest on the Corporation's portion of split dollar life insurance
premiums paid during 2000: Mr. Mortensen, $31,620; Mr. Gurgovits, $4,254;
Mr. Tice, $112,686; Mr. Rundorff, $5,320; and Mr. Waters, $5,642. These
premiums will be returned to the Corporation upon the earlier of either the
death of the covered employee or termination of the policy.
DEFERRED COMPENSATION
In addition to the Basic Retirement Plan (more fully described below), the Board
of Directors of the Corporation and FNBPA has established a Deferred
Compensation Plan (the "Compensation Plan") for Messrs. Mortensen and Gurgovits
which commenced January 1, 1986. The Compensation Plan provides for payments of
annual benefits of $102,000 for Mr. Mortensen and $25,000 for Mr. Gurgovits for
a period of ten years commencing upon the occurrence of: (a) retirement from the
Corporation or FNBPA; (b) complete and total disability; or (c) the death of the
participant in the event such death occurs prior to retirement. Of these
amounts, $62,000 and $25,000, respectively, will be paid pursuant to Deferred
Compensation Agreements. The remaining amount for Mr. Mortensen is to be
provided by an annuity generated by the excess cash surrender value of a split
dollar life insurance policy. During 1997, it was determined that the cash
surrender value of the split dollar life insurance policy would fall short of
the expected level at Mr. Mortensen's retirement. Accordingly, the Corporation
accrued an additional $48,815, $47,955 and $51,091 during 1998, 1999 and 2000,
respectively, to cover the estimated shortfall.
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STOCK OPTIONS
The following tables show certain information relating to stock options granted
during the last fiscal year and aggregated stock options for the named executive
officers and all unexercised options held by such officers as of December 31,
2000.
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation
Individual Grants(1) for Option Term(4)
- -----------------------------------------------------------------------------------------------------------------------
Securities % of Total Exercise
Underlying Options Granted to or Base
Options Granted Employees in Price Expiration
Name (#) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
- -----------------------------------------------------------------------------------------------------------------------
Mr. Mortensen 87,923(2) 19.5 22.29 01/23/10 1,232,501 3,123,418
1,211(3) 4.8 22.29 01/23/10 16,971 43,008
Mr. Gurgovits 37,906(2) 8.4 22.29 01/23/10 531,365 1,346,590
1,211(3) 4.8 22.29 01/23/10 16,971 43,008
Mr. Tice 40,597(2) 9.0 22.29 01/23/10 569,087 1,442,187
1,211(3) 4.8 22.29 01/23/10 16,971 43,008
Mr. Rundorff 20,365(2) 4.5 22.29 01/23/10 285,476 723,456
Mr. Waters 19,423(2) 4.3 22.29 01/23/10 272,271 689,992
=======================================================================================================================
(1) Adjusted for a 5% stock dividend declared on April 17, 2000.
(2) Options were granted on January 23, 2000 and are 20% vested on each of the
first through fifth anniversaries of the grant date.
(3) Options were granted on January 23, 2000 and are immediately 100% vested.
(4) In order for the gains to be realized over the ten-year term of the option,
the stock price at expiration date January 23, 2010 would be $36.31 and
$57.81, reflecting increases in the overall market price of each share of
Common Stock of the Corporation by approximately 63% and 159%, respectively.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
- -----------------------------------------------------------------------------------------------------------------------------
Number of Securities Underlying Value of Unexercised
Unexercised In-The-Money Options at
Options at 12/31/00 12/31/00($)(1)
--------------------------------- ----------------------------
Value
Shares Acquired Realized
Name on Exercise ($) Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------------------------
Mr. Mortensen 0 0 97,143 184,993 551,974 51,198
Mr. Gurgovits 0 0 68,469 85,963 461,668 41,774
Mr. Tice 5,925 76,243 60,509 103,151 795,703 191,297
Mr. Rundorff 0 0 47,634 47,544 328,664 18,425
Mr. Waters 0 0 27,859 47,128 80,368 19,356
=============================================================================================================================
(1) Represents the difference between the aggregate market value at December 31,
2000, of the shares subject to the options and the aggregate option price of
those shares.
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RETIREMENT BENEFITS
The following table illustrates the maximum annual benefits payable in 2001
under the life annuity option of the Corporation's pension plan, in which
Messrs. Mortensen, Gurgovits, Rundorff and Waters participate, and the Basic
Retirement Plan (more fully described below) upon normal retirement at age 62.
Mr. Tice does not participate in the same Corporation pension plans as Messrs.
Mortensen, Gurgovits, Rundorff and Waters, but does participate in the Basic
Retirement Plan. Mr. Tice also participates in the F.N.B. Corporation Salary
Savings Plan and Executive Management Supplemental Retirement Plan. The
estimated annual pension payments shown in the chart below are reasonable
representations of the total benefits under the Basic Retirement Plan, the
F.N.B. Corporation Salary Savings Plan, the portion of the Executive Management
Supplemental Retirement Plan related to pension benefits and social security.
ESTIMATED ANNUAL PENSION PAYMENTS
- --------------------------------------------------------------------------------------------------
Average Annual Earnings
for Five Years Preceding
Retirement Years of Service
- --------------------------------------------------------------------------------------------------
10 15 20 25 or More
- --------------------------------------------------------------------------------------------------
$ 125,000 $ 41,483 $ 51,106 $ 60,730 $ 70,353
$ 150,000 $ 52,525 $ 64,301 $ 76,077 $ 87,853
$ 175,000 $ 66,408 $ 79,390 $ 92,371 $ 105,353
$ 200,000 $ 83,908 $ 96,890 $ 109,871 $ 122,853
$ 225,000 $ 101,408 $ 114,390 $ 127,371 $ 140,353
$ 250,000 $ 118,908 $ 131,890 $ 144,871 $ 157,853
$ 275,000 $ 136,408 $ 149,390 $ 162,371 $ 175,353
$ 300,000 $ 153,908 $ 166,890 $ 179,871 $ 192,853
$ 325,000 $ 171,408 $ 184,390 $ 197,371 $ 210,353
$ 350,000 $ 188,908 $ 201,890 $ 214,871 $ 227,853
$ 375,000 $ 206,408 $ 219,390 $ 232,371 $ 245,353
$ 400,000 $ 223,908 $ 236,890 $ 249,871 $ 262,853
$ 500,000 $ 293,908 $ 306,890 $ 319,871 $ 332,853
$ 600,000 $ 363,908 $ 376,890 $ 389,871 $ 402,853
==================================================================================================
The retirement benefit for each employee covered by the pension plan is a
monthly benefit in the form of a Five Year Certain and Life annuity, equal to
1.2% of Final Average Earnings plus .5% of Final Average Earnings in excess of
the employee's Covered Compensation (as defined by Section 401(l)(5)(E) of the
Internal Revenue Code) times Years of Service, not to exceed twenty-five (25)
years. The Final Average Earnings figure is calculated using the highest 60
consecutive months of earnings of the last 120 months of service as an employee.
The benefits listed above are not subject to deduction for Social Security.
Compensation included for computation of benefits is base salary as indicated in
the Summary Compensation Table. As of December 31, 2000, credited years of
service under the plan were as follows: Mr. Mortensen, 42 years; Mr. Gurgovits,
39 years; Mr. Rundorff, 10 years and Mr. Waters, six years.
BASIC RETIREMENT PLAN
The Basic Retirement Plan (the "BRP") is an unfunded plan providing supplemental
retirement benefits to those officers of the Corporation and its subsidiaries
who are designated by the Board of Directors of the Corporation (the "Board").
The basic benefits under the BRP, payable when a participant retires at or after
the normal retirement date under his
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employer's defined benefit or defined contribution plan ("Primary Qualified
Plan"), is a monthly benefit equal to either 50%, 60% or 70% (as determined by
the Board) of the participant's highest average monthly cash compensation during
any five consecutive calendar years within the last ten calendar years of
employment. This amount is reduced by the monthly benefit to which the
participant would be entitled under Social Security at normal retirement under
the Primary Qualified Plan in which he participates and (to the extent the
benefit relates to employer contributions other than matching contributions)
under other benefit plans designated by the Board. The benefit also includes
credits equal to matching stock contributions which certain participants were
prevented from receiving pursuant to the Corporation's 401(k) Plan due to limits
imposed by the Internal Revenue Code.
The BRP contains provisions for reducing the basic benefit described above if
the participant retires before his normal retirement age but on or after the
early retirement date permitted by the Primary Qualified Plan. The participant's
rights to benefits under the BRP vest pursuant to a schedule set forth in the
BRP which takes into account years of participation in the BRP and years of
credited service under the participant's Primary Qualified Plan. A participant
automatically becomes 100% vested if he is employed with the Corporation or a
subsidiary on his normal retirement date, if a "change in control" (as defined
in the BRP) occurs, or in the event of his death or total and permanent
disability. Benefits are forfeited in the event a participant's employment is
terminated for cause or if the participant retires before the early retirement
date provided in his Primary Qualified Plan.
EMPLOYMENT AGREEMENTS
The Corporation has entered into Employment Agreements with Messrs. Tice,
Gurgovits, Rundorff and Waters. Also, Mr. Kevin Hale entered into an Employment
Agreement with the Corporation when he was hired in March 2000. Mr. Mortensen's
Employment Agreement expired on December 31, 2000, with his retirement as Chief
Executive Officer and during the term of his Continuation Employment Agreement,
Mr. Mortensen will continue to serve the Corporation as Chairman of the Board
and otherwise make himself available for consulting purposes. The Employment
Agreements of Messrs. Tice, Rundorff, Waters and Hale provide that on December
31 of each year, the term of employment of each executive officer will be
automatically extended to December 31 of the third calendar year thereafter, and
Mr. Gurgovits' Employment Agreement provides that on January 1 of each year, the
term of his employment will extend to December 31 of the fifth calendar year
thereafter, (unless the Corporation or the respective executive officer fixes
the expiration date of the term of employment in accordance with provisions
contained in the Employment Agreements) and that the officer will continue to be
employed throughout that term at not less than his current base salary. The term
shall not be extended to a date beyond December 31 of the year during which the
executive officer reaches age 62, except for Mr. Tice, which is age 65.
The Employment Agreements may be terminated voluntarily by the executive
officers and upon such event, all obligations of the Corporation shall cease as
of the date of termination. The Corporation will be obligated, should it
terminate any of the Employment Agreements other than for cause, to pay the
executive officer affected for the balance of the term of his Employment
Agreement then in effect. Provision is made in the Employment Agreements for
termination of their respective obligations to serve the Corporation and for the
payment to them of a bonus equal to approximately three times the annual
compensation for Mr. Gurgovits, the cash or Common Stock equivalent of the value
of Mr. Tice's Stock Options and approximately three times his annual
compensation, and two times the annual compensation for Messrs. Rundorff and
Waters in the event of a sale or other change of control transaction affecting
the Corporation, and three times the annual compensation for Mr. Hale in the
event of a sale or other change of control transaction affecting the
Corporation.
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STOCK PERFORMANCE GRAPH
The following five-year performance graph compares the cumulative total
shareholder return (assuming reinvestment of dividends) on the Corporation's
Common Stock (*) to the Nasdaq Composite Index (**) and the Nasdaq Bank Index
(***). This stock performance graph assumes $100 was invested on December 31,
1995, and the cumulative return is measured as of each subsequent fiscal year
end.
F.N.B. CORPORATION FIVE-YEAR STOCK PERFORMANCE
TOTAL RETURN, INCLUDING STOCK AND CASH DIVIDENDS
12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
-------- -------- -------- -------- -------- --------
F.N.B. Corporation 100.00 114.84 201.71 162.66 138.34 142.05
NASDAQ - Total US 100.00 123.04 150.69 212.51 394.92 237.62
NASDAQ Bank Index 100.00 132.04 221.06 219.64 211.14 241.08
SECURITY OWNERSHIP OF CERTAIN SHAREHOLDERS
The Schedule 13G filed with the Securities and Exchange Commission on February
15, 2001, by Perkins, Wolf, McDonnell & Company reports that the company owns
approximately 6.4% of the Corporation's Common Stock. The business address of
Perkins, Wolf, McDonnell & Company is 53 West Jackson Boulevard, Suite 722,
Chicago, Illinois 60604. The following table sets forth certain information
concerning persons known to the Corporation to be the beneficial owner of 5% or
more of the outstanding Series A Preferred Stock as of February 9, 2001. The
Corporation makes no representation to the accuracy or completeness of the
information reported by the parties identified herein.
=====================================================================================================
Percent of Outstanding Series A
Shares Preferred Stock Beneficially Owned
Name and Address Beneficially Owned
-----------------------------------------------------------------------------------------------------
Cede & Co.
Box 20, Bowling Green Station
New York, NY 10274 7,648 39.8
Hilton G. Klein & Joan H. Klein
122 Hilton Drive
New Brighton, PA 15066-3510 2,160 11.3
=====================================================================================================
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VOTING SHARES HELD IN FIDUCIARY CAPACITY
The Corporation's affiliate, First National Trust Company, and said affiliate's
nominee were, as of February 9, 2001, the beneficial owner of 240,333 shares of
the Corporation's Common Stock, or 1.1% of the outstanding shares of Common
Stock. These shares are held by First National Trust Company with full voting
and/or dispositive power in various fiduciary capacities. The Corporation's
other affiliates offering trust services will not exercise voting power with
respect to Corporation Common Stock that is beneficially held with these
affiliates. First National Trust Company has or shares voting power as to
121,376 of these shares, or .5% of the total shares of Common Stock outstanding,
and .5% of the total voting power of the Corporation's outstanding Stock. First
National Trust Company will vote the shares over which it has authority as of
the record date for the election of the five candidates for director.
INDEPENDENT AUDITORS
Ernst & Young LLP served as the Corporation's independent auditors for the year
ended December 31, 2000. Ernst & Young, LLP has served as the Corporation's
independent auditors since 1993.
ANNUAL REPORT ON FORM 10-K
UPON WRITTEN REQUEST TO THE UNDERSIGNED SECRETARY OF THE CORPORATION (AT THE
ADDRESS SPECIFIED ON PAGE 1) BY ANY SHAREHOLDER WHOSE PROXY IS SOLICITED HEREBY,
THE CORPORATION WILL FURNISH TO SUCH SHAREHOLDER WITHOUT CHARGE A COPY OF ITS
2000 ANNUAL REPORT ON FORM 10-K TO THE SECURITIES AND EXCHANGE COMMISSION,
TOGETHER WITH FINANCIAL STATEMENTS AND SCHEDULES THERETO.
ADDITIONAL INFORMATION
The Corporation knows of no other matters which will be presented to
shareholders for action at the Annual Meeting. However, if other matters are
presented which are proper subjects for action by shareholders, it is the
intention of those named in the accompanying proxy to vote such proxy in
accordance with their judgment upon such matters.
Solicitation of proxies will be made by employees of the Corporation, and the
cost will be borne by the Corporation. Proxies will be solicited by mail and, in
limited instances, by telephone, telegraph and personal interview. The
Corporation will also request brokerage houses and other custodians, nominees
and fiduciaries to forward soliciting material to the beneficial owners of the
stock held of record by such persons and will reimburse such persons for their
costs incurred in forwarding such materials.
SHAREHOLDER PROPOSALS
The Corporation's Bylaws provide that no proposals submitted by a shareholder of
the Corporation for consideration at the annual meeting of shareholders will be
considered at any such meeting unless the Secretary of the Corporation has
received written notice of the matter proposed to be presented from the
shareholder on or prior to the date which is 120 days prior to the date on which
the Corporation first mailed its proxy materials for the prior year's annual
meeting of the shareholders. Accordingly, any shareholder proposal must be
submitted to the Corporation by November 20, 2001, to be considered for the 2002
Annual Meeting of Shareholders. In accordance with SEC Rule 14a-4(c) under the
Securities Exchange Act of 1934, proxy holders will have discretionary authority
to vote in accordance with their judgment upon any proposal which is not timely
received by the Corporation or which does not otherwise comply with applicable
SEC rules, including Rule 14(a)-4(c).
BY ORDER OF THE BOARD OF DIRECTORS
David B. Mogle, Secretary
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EXHIBIT A
F.N.B. CORPORATION
2001 INCENTIVE PLAN
The purposes of the 2001 Incentive Plan are to encourage Eligible Individuals to
increase their efforts to make F.N.B. Corporation and each of its Subsidiaries
more successful, to provide an additional inducement for such Eligible
Individuals to continue to provide services to the Corporation or a Subsidiary
as an employee, consultant, non-employee director, or independent contractor, to
reward such Eligible Individuals by providing an opportunity to acquire
incentive awards on favorable terms and to provide a means through which the
Corporation may attract able persons to enter the employment of or engagement
with the Corporation or one of its Subsidiaries. Such incentive awards may, in
the discretion of the Board or Committee, consist of Stock (subject to such
restrictions as the Board or Committee may determine or as provided herein),
Performance Units, Stock Appreciation Rights, Limited Stock Appreciation Rights,
Incentive Stock Options, Non-Qualified Stock Options, Phantom Stock, or any
combination of the foregoing, all as the Board or Committee, in each case, may
determine.
DEFINITIONS
"Award" means an Incentive Stock Option, a Non-Qualified Stock Option,
Restricted Stock Award, Stock Appreciation Rights, Limited Stock Appreciation
Rights, Performance Units, or Phantom Stock granted hereunder.
"Award Agreement" means an agreement entered into between the Corporation and
the applicable Participant, setting forth the terms and provisions applicable to
the Award then being granted under this Plan, as further described in Section
2.5 of the Plan.
"Board" means the Board of Directors of the Corporation.
"Code" means the Internal Revenue Code of 1986, as amended. A reference to any
provision of the Code shall include reference to any successor provision of the
Code.
"Committee" means the Compensation Committee, if any, appointed by the Board. If
no Committee is appointed by the Board, the Board shall function in place of the
Committee.
"Corporation" means F.N.B. Corporation.
"Disabled Participant" means a Participant becoming disabled within the meaning
of Section 422(c)(6) of the Code.
"Eligible Employee" means any employee of the Corporation or one of its
Subsidiaries.
"Eligible Individual" means any Eligible Employee and any consultant,
non-employee director, or independent contractor of the Corporation or one of
its Subsidiaries.
"Fair Market Value" shall mean, as applicable, (i) the average of the bid and
ask prices of the Corporation's Stock on the date in question, as quoted by the
Nasdaq National Market System (or other over-the-counter nationally recognized
quotation service); (ii) if the Corporation's Stock is not traded on the Nasdaq
National Market but is registered on a national securities exchange, the closing
sales price of the Corporation's Stock on such national securities exchange;
(iii) if the Corporation's shares of Common Stock are not traded on a national
securities exchange or through any other nationally recognized quotation
service, the fair market value of the Corporation's Stock as determined by the
Board or the Committee, acting in good faith, under any method consistent with
the Code, or Treasury Regulations thereunder, as
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40
the Board or the Committee shall in its discretion select and apply at the time
of the grant of the Award concerned; or (iv) for purposes of Section 3.4 hereof
with respect to Limited Stock Appreciation Rights, the applicable value
determined in accordance with Paragraph (C) of such Section 3.4. Subject to the
foregoing, the Board or the Committee, in fixing the Fair Market Value, shall
have full authority and discretion and be fully protected in doing so.
"Incentive Stock Option" means an option that is intended to qualify as an
"Incentive Stock Option" within the meaning of section 422 of the Code. Any
Option which does not qualify under section 422 of the Code shall be treated as
a Non-Qualified Stock Option.
"Limited Stock Appreciation Right" means a Stock Appreciation Right granted
under Section 3.4.
"Non-Qualified Stock Option" means an option that is not an Incentive Stock
Option.
"Option" means an option to purchase Stock, including Restricted Stock, if the
Committee so determines, subject to the applicable provisions of Article 3,
awarded in accordance with the terms of the Plan and which may be an Incentive
Stock Option or a Non-Qualified Stock Option.
"Participant" means an Eligible Individual who has been selected by the
Committee to participate in the Plan in accordance with Section 2.2 of the Plan.
"Performance Unit" means a performance unit subject to the requirements of
Article 4 and awarded in accordance with the terms of the Plan.
"Phantom Stock" means a deferred compensation award subject to the requirements
of Article 6.
"Plan" means the F.N.B. Corporation 2001 Incentive Plan, as the same may be
amended, administered or interpreted from time to time.
"Restricted Stock" means Stock delivered under the Plan subject to the
requirements of Article 5 and such other restrictions as the Committee deems
appropriate or desirable.
"Stock" means the Common Stock of the Corporation.
"Stock Appreciation Right" means a right granted under Article 3 in conjunction
with the grant of an Option that entitles the holder to receive a cash payment
or an award of Stock, at the discretion of the Committee, in an amount equal to
the excess of the Fair Market Value of one share of Stock on such date of
exercise over the Option Price per share multiplied by the number of shares
covered by the right.
"Subsidiary" means any corporation in an unbroken chain of corporations
beginning with the Corporation, if each of the corporations (other than the last
corporation in the unbroken chain) owns stock possessing more than fifty percent
(50%) of the total combined voting power of all classes of stock in one of the
other corporations in the chain.
"Termination" means the termination of employment with the Corporation or any of
its Subsidiaries or the cessation of the provision of services to the
Corporation or any of its Subsidiaries by a non-employee director, consultant or
independent contractor.
ARTICLE 2
PLAN ADMINISTRATION
SECTION 2.1 ADMINISTRATION. The Plan shall be administered by the Committee.
The Committee shall interpret the Plan and prescribe such rules, regulations and
procedures in connection with the operation of the Plan as it shall deem
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to be necessary and advisable for the administration of the Plan consistent with
the purposes of the Plan. Without limiting the foregoing, the Committee shall
have the authority and complete discretion to:
(i) Prescribe, amend and rescind rules and regulations relating to
the Plan;
(ii) Select Eligible Individuals to receive Awards under the Plan
as provided in Section 2.2 of the Plan;
(iii) Determine the form and terms of Awards;
(iv) Determine the number of shares or other consideration subject
to Awards under the Plan as provided in Articles 3, 4, 5 and 6
of the Plan;
(v) Determine whether Awards will be granted singly, in
combination or in tandem with, in replacement of, or as
alternatives to, other Awards under the Plan or grants or
awards under any other incentive or compensation plan of the
Corporation;
(vi) Construe and interpret the Plan, any Award Agreement in
connection with an Award and any other agreement or document
executed pursuant to the Plan;
(vii) Correct any defect or omission, or reconcile any inconsistency
in the Plan, any Award or any Award Agreement;
(viii) Determine whether a Participant is a Disabled Participant;
(ix) Accelerate or, with the consent of the Participant, defer the
vesting of any Award and/or the exercise date of any Award;
(x) Determine whether a Participant's Termination from the
Corporation or its Subsidiaries is voluntary and with the
written consent of the Corporation or its Subsidiaries;
(xi) Authorize any person to execute on behalf of the Corporation
any instrument required to effectuate the grant of an Award;
(xii) With the consent of the Participant reprice, cancel and
reissue, or otherwise adjust the terms of an Award previously
granted to the Participant;
(xiii) Determine when a Participant's period of employment is deemed
to be continued during an approved leave of absence, or
whether a Participant has engaged in the operation or
management of a business that is in competition with the
Corporation or any of its Subsidiaries;
(xiv) Determine, upon review of relevant information, the Fair
Market Value of the Stock; and
(xv) Make all other determinations deemed necessary or advisable
for the administration of the Plan.
The Committee may delegate to officers of the Corporation or any Subsidiary the
authority to perform administrative functions under the Plan subject to any
legal requirements that the Committee as a whole take action with respect to
such function.
The Committee shall keep records of action taken at its meetings. A majority of
the Committee shall constitute a quorum at any meeting, and the acts of a
majority of the members present at any meeting at which a quorum is present, or
acts approved in writing by a majority of the Committee, shall be the acts of
the Committee.
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SECTION 2.2 ELIGIBILITY. Those Eligible Individuals who share the responsibility
for the management, growth or protection of the business of the Corporation or
any Subsidiary or who, in the opinion of the Committee, provide services
yielding significant benefits to the Corporation or any Subsidiary shall be
eligible to receive Awards as described herein.
Subject to the provisions of the Plan, the Committee shall have full and final
authority, in its discretion, to grant Awards as described herein and to
determine the Eligible Individuals to whom Awards shall be granted. In
determining the eligibility of any Eligible Individual, as well as in
determining the Award, the Committee shall consider the position and the
responsibilities of the Eligible Individual being considered, the nature and
value to the Corporation or a Subsidiary of his or her services, his or her
present and/or potential contribution to the success of the Corporation or a
Subsidiary and such other factors as the Committee may deem relevant.
SECTION 2.3 SHARES AVAILABLE UNDER THE PLAN. Subject to adjustment as set forth
in Section 2.6, the maximum number of shares of Stock that may be issued or
delivered and as to which Awards, other than Limited Stock Appreciation Rights
or Performance Units, may be granted under the Plan shall be 500,000 shares
plus, beginning in the calendar year following the year in which the Plan is
first adopted, annual amounts equal to 3% of the total issued and outstanding
shares of Stock as of the first day of such calendar year. The maximum number of
shares available under the Plan may be increased for any particular calendar
year at the discretion of the Committee by not more than one and one-half
percent (1-1/2%) of the number of shares of Stock outstanding as of the first
day of such calendar year, provided that the number of shares by which the
aggregate share limitation would otherwise be increased in the next calendar
year shall be decreased by the same number of shares as the applicable limit for
the current calendar year is increased pursuant to this sentence.
Notwithstanding anything to the contrary in this Section 2.3, in no event shall
more than 3,000,000 shares of Stock be cumulatively available for Awards of
Incentive Stock Options under the Plan. Subject to adjustment as set forth in
Section 2.6, the maximum number of shares of Stock with respect to which Awards
may be granted in any calendar year to any Participant under the Plan shall be
100,000 shares.
If any Award, other than Limited Stock Appreciation Rights or Performance Units,
granted under the Plan is canceled by mutual consent or terminates or expires
for any reason without having been exercised in full, or, if and to the extent
that an award of Phantom Stock is paid in cash rather than the issuance of
shares of Stock, the number of shares subject to such Award (or in the case of
Phantom Stock the number of shares of Stock for which payment was made in cash)
shall again be available for purposes of the Plan, except that, to the extent
that Stock Appreciation Rights granted in conjunction with an Option under the
Plan are exercised and the related Option surrendered, the number of shares
available for purposes of the Plan shall be reduced by the number of shares, if
any, of Stock issued or delivered upon exercise of such Stock Appreciation
Rights.
The shares that may be issued or delivered under the Plan may be either
authorized but unissued shares or repurchased shares or partly each.
SECTION 2.4 CORPORATION'S OBLIGATION TO DELIVER STOCK. The obligation of the
Corporation to issue or deliver shares of Stock under the Plan shall be subject
to (i) the effectiveness of a registration statement under the Securities Act of
1933, as amended, with respect to such shares, if deemed necessary or
appropriate by counsel for the Corporation; (ii) the condition that the shares
shall have been listed (or authorized for listing upon official notice of
issuance) upon each stock exchange on which such shares may then be listed; and
(iii) all other applicable laws, regulations, rules and orders which may then be
in effect.
SECTION 2.5 AWARD AGREEMENT. Each Award granted under the Plan shall be
evidenced by a written Award Agreement, in a form approved by the Committee.
Such Award Agreement shall be subject to and incorporate the express terms and
conditions, if any, required under the Plan or as required by the Committee for
the form of Award granted and such other terms and conditions as the Committee
may specify and shall be executed by the Chief Executive Officer, the President
(if other than the Chief Executive Officer) or any Vice President on behalf of
the Corporation and by the Participant to whom such Award is granted. With the
consent of the Participant to whom such Award is granted, the Board may at any
time and from time to time amend an outstanding Award Agreement in a manner
consistent with
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the Plan. Without consent of the Participant, the Board of Directors may at any
time and from time to time modify or amend Award Agreements with respect to
Options intended as of the date of grant to be Incentive Stock Options in such
respects as it deems necessary in order that Incentive Stock Options granted
under the Plan shall comply with the appropriate provisions of the Code and
regulations thereunder which are in effect from time to time with respect to
Incentive Stock Options.
SECTION 2.6 ADJUSTMENT AND SUBSTITUTION OF SHARES. If a dividend or other
distribution shall be declared upon the Stock payable in shares of Stock, the
number of shares of Stock then subject to any outstanding Option or by reference
to which the amount of any other Award is determined and the number of shares
which may be issued or delivered under the Plan shall be adjusted by adding
thereto the number of shares which would have been distributable thereon if such
shares had been outstanding on the date fixed for determining the stockholders
entitled to receive such stock dividend or distribution.
If the outstanding shares of Stock shall be changed into or exchangeable for a
different number or kind of shares of Stock or other securities of the
Corporation or another corporation, whether through reorganization,
reclassification, recapitalization, stock split-up, combination of shares,
merger or consolidation, then there shall be substituted for each share of Stock
subject to any then outstanding Award and for each share of Stock, which may be
issued or delivered under the Plan but is not then subject to an outstanding
Award, the number and kind of shares of Stock or other securities into which
each outstanding share of Stock shall be so changed or for which each such share
shall be exchangeable.
In the case of any adjustment or substitution as provided for in this Section
2.6, the aggregate Option Price for all shares subject to each then outstanding
Option prior to such adjustment or substitution shall be the aggregate option
price for all shares of Stock or other securities (including any fraction) to
which such shares shall have been adjusted or which shall have been substituted
for such shares. Any new option price per share shall be carried to at least
three decimal places with the last decimal place rounded upwards to the nearest
whole number.
No adjustment or substitution provided for in this Section 2.6 shall require the
Corporation to issue or sell a fraction of a share or other security.
Accordingly, all fractional shares or other securities that result from any such
adjustment or substitution shall be eliminated and not carried forward to any
subsequent adjustment or substitution.
If any such adjustment or substitution provided for in this Section 2.6 requires
the approval of stockholders in order to enable the Corporation to grant
Incentive Stock Options, then no such adjustment or substitution shall be made
without prior stockholder approval. Notwithstanding the foregoing, in the case
of Incentive Stock Options, if the effect of any such adjustment or substitution
would be to cause the Option to fail to continue to qualify as an Incentive
Stock Option or to cause a modification, extension or renewal of such Option
within the meaning of Section 424 of the Code, the Committee may elect that such
adjustment or substitution not be made but rather shall use reasonable efforts
to effect such other adjustment of each then outstanding Option as the Committee
in its sole discretion shall deem equitable and which will not result in any
disqualification, modification, extension or renewal (within the meaning of
Section 424 of the Code) of such Incentive Stock Option.
ARTICLE 3
OPTIONS AND STOCK APPRECIATION RIGHTS
SECTION 3.1 GRANT OF STOCK OPTIONS, STOCK APPRECIATION RIGHTS, AND LIMITED STOCK
APPRECIATION RIGHTS. The Committee shall have authority, in its discretion, to
grant Incentive Stock Options, Non-Qualified Stock Options or to grant both
types of Options (but not in tandem). Notwithstanding the above, Incentive Stock
Options may only be granted to employees. The Committee also shall have the
authority, in its discretion, to grant Stock Appreciation Rights in conjunction
with Incentive Stock Options or Non-Qualified Stock Options with the effect
provided in Section 3.2(D). Stock Appreciation Rights granted in conjunction
with an Incentive Stock Option may only be granted at the time such Incentive
Stock Option is granted. Stock Appreciation Rights granted in conjunction with a
Non-Qualified Stock Option may be granted either at the time such Non-Qualified
Stock Option is granted or at any time thereafter during the term
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of such Non-Qualified Stock Option. The Committee shall also have the authority,
in its discretion, to grant Limited Stock Appreciation Rights in accordance with
the provisions of, and subject to the terms and conditions set forth in, Section
3.4.
No Participant shall be granted an Option or Options under the Plan
(disregarding canceled, terminated or expired stock options) for an aggregate
number of shares in excess of ten percent (10%) of the total number of shares
that may be issued or delivered under the Plan.
SECTION 3.2 TERMS AND CONDITIONS OF STOCK OPTIONS AND STOCK APPRECIATION RIGHTS.
Options and Stock Appreciation Rights granted under the Plan shall be subject to
the following terms and conditions:
(A) The purchase price at which each Option may be exercised (the
"Option Price") shall be such price as the Committee, in its
discretion, shall determine except that, in the case of an
Incentive Stock Option, the Option Price shall not be less than
one hundred percent (100%) of the Fair Market Value per share of
Stock covered by the Option on the date of grant (or in the case
of an Incentive Stock Option granted to an Eligible Employee who,
immediately prior to such grant, owns stock possessing more than
ten percent (10%) of the total combined voting power of all
classes of stock of the Corporation or any Subsidiary (a "Ten
Percent Employee"), shall not be less than 110% of such Fair
Market Value on the date of grant). For purposes of this Section
3.2(A), a Participant (i) shall be considered as owning not only
shares of the Stock owned individually, but also all shares that
are at the time owned, directly or indirectly, by or for the
spouse, ancestors, lineal descendants and brothers and sisters
(whether by the whole or half blood) of such individual and (ii)
shall be considered as owning proportionately any shares of Stock
owned, directly or indirectly, by or for any corporation,
partnership, estate or trust in which such individual shall be a
stockholder, partner or beneficiary.
(B) The Option Price shall be payable in full in any one or more of
the following ways, as shall be determined by the Committee to be
applicable to any such Award:
(i) in cash; or
(ii) in shares of Stock (which are owned by the participant
free and clear of all liens and other encumbrances and
which are not subject to the restrictions set forth in
Article 5) having an aggregate Fair Market Value on the
date of exercise of the Option equal to the Option Price
for the shares being purchased; or
(iii) by requesting that the Corporation withhold such number
of shares of Stock then issuable upon exercise of the
Option as shall have an aggregate Fair Market Value equal
to the Option Price for the shares being acquired upon
exercise of the Option; or
(iv) by waiver of compensation due or accrued to the
Participant for services rendered; or
(v) provided that a public market for the Corporation's stock
exists:
(a) Through a "same day sale" commitment from the
Participant and a broker-dealer that is a member of
the National Association of Securities Dealers (an
"NASD Dealer") whereby the Participant irrevocably
elects to exercise the Option and to sell a portion
of the shares so purchased to pay the purchase price
(or a larger number of the shares so purchased), and
whereby the NASD Dealer irrevocably commits upon
receipt of such shares to forward the purchase price
directly to the Corporation (and any excess to the
Participant); or
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(b) Through a "margin" commitment from the Participant
and an NASD Dealer whereby the Participant
irrevocably elects to exercise the Option and to
pledge the shares so purchased to the NASD Dealer in
a margin account as security for a loan from the NASD
Dealer in the amount of the purchase price, and
whereby the NASD Dealer irrevocably commits upon
receipt of such shares to forward the purchase price
directly to the Corporation; or
(vi) by promissory note executed by the Participant,
evidencing his or her obligation to make future cash
payment thereof, secured by an applicable number of
shares of Stock or such other security as may be
determined by the Committee; provided, however, that in
no event may the Committee accept a promissory note for
an amount in excess of the difference between the
aggregate Option Price and the par value of the shares;
or
(vii) by any combination of the foregoing.
If the Option Price is paid in whole or in part in shares of
Stock, any portion of the Option Price representing a fraction of
a share shall be paid in cash. The date of exercise of an Option
shall be determined under procedures established by the
Committee, and the Option Price shall be payable at such time or
times as the Committee, in its discretion, shall determine. No
shares shall be issued or delivered upon exercise of an Option
until full payment of the Option Price has been made, provided
that, for this purpose, tender of a promissory note shall
constitute full payment of the principal amount of such
promissory note. When full payment of the Option Price has been
made and subject to the restrictions set forth in Article 5, the
Participant shall be considered for all purposes to be the owner
of the shares with respect to which payment has been made.
Payment of the Option Price with shares shall not increase the
number of shares of Stock which may be issued or delivered under
the Plan as provided in Section 2.3.
(C) An Option may be exercised (i) at such time as the Option vests;
or (ii) if and to the extent set forth in the applicable Award
Agreement, prior to the date on which the Option vests provided
that such Stock obtained shall be subject to the same
requirements that are applicable to grants of Restricted Stock
set forth in Article 5. No Incentive Stock Option shall be
exercisable after the expiration of ten years (five years in the
case of a Ten Percent Employee) from the date of grant. No
Non-Qualified Stock Option shall be exercisable after the
expiration of ten years and six months from the date of grant.
Subject to this Section 3.2(C), 3.3(F), and 2.5, Options may be
exercised at such times, in such amounts and subject to such
restrictions as shall be determined by the Committee, in its
discretion.
(D) Stock Appreciation Rights shall be exercisable to the extent that
the related Option is exercisable and only by the same person or
persons who are entitled to exercise the related Option. Stock
Appreciation Rights shall entitle the Participant to surrender
the related Option, or any portion thereof, and to receive from
the Corporation in exchange therefor that number of shares of
Stock having an aggregate Fair Market Value equal to the excess
of the Fair Market Value of one share of Stock on such date of
exercise over the Option Price per share, multiplied by the
number of shares covered by the Option, or portion thereof, which
is surrendered. Cash shall be paid in lieu of any fractional
shares. The Committee shall have the authority, in its
discretion, to determine that the obligation of the Corporation
shall be paid in cash or part in cash and part in shares. The
date of exercise of Stock Appreciation Rights shall be determined
under procedures established by the Committee, and payment under
this Section 3.2(D) shall be made by the Corporation as soon as
practicable after the date of exercise. To the extent that an
Option as to which Stock Appreciation Rights have been granted in
conjunction therewith is exercised, the Stock Appreciation Rights
shall be canceled.
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(E) No Option or Stock Appreciation Rights shall be transferable by a
Participant other than by will, or if a Participant dies
intestate, by the laws of descent and distribution of the state
of domicile of the Participant at the time of death, and all
Options and Stock Appreciation Rights shall be exercisable during
the lifetime of a Participant only by the Participant.
(F) Unless otherwise determined by the Committee and set forth in the
Award Agreement referred to in Section 2.5 or an amendment
thereto, following the Termination of a Participant for any
reason, such Participant must exercise any outstanding Option
within one year from the date of Termination.
SECTION 3.3 RELOAD OPTIONS. Concurrently with the award of any Option under this
Plan or pursuant to an amendment of any outstanding stock option (such option is
hereinafter referred to as the "Underlying Option"), to any Participant in the
Plan, the Committee may grant a reload option (the "Reload Option") to such
Participant pursuant to which the Participant shall be entitled to purchase a
number of shares of Stock as specified below. A Reload Option shall be
exercisable for a number of shares of Stock equal to (i) the number of shares
delivered by the Participant to the Corporation to exercise the Underlying
Option pursuant to Section 3.2(B)(ii), (iii) or (v); and (ii) to the extent
authorized by the Committee, the number of shares used to satisfy any tax
withholding requirement incident to the exercise of the Underlying Option,
subject to the availability of shares of Stock under the Plan at the time of
such exercise. The grant of a Reload Option shall become effective upon the
exercise of an Underlying Option by delivering to the Corporation shares held by
the Participant pursuant to Section 3.2(B)(ii), (iii) or (v). Reload Options are
not intended to qualify as "Incentive Stock Options" under Section 422 of the
Code.
Each Award Agreement in connection with an Option granted under the Plan shall
state whether the Committee has authorized Reload Options with respect to the
Underlying Option covered by such agreement. Upon the exercise of an Underlying
Option, the Reload Option will be evidenced by an amendment to the stock option
agreement governing the Underlying Option.
The option price per share for a Reload Option shall be the Fair Market Value
per share of the Stock on the date the grant of the Reload Option becomes
effective.
Each Reload Option shall be fully exercisable subject to such limitations on
exercisability, if any, as may be imposed by the Committee in its discretion at
the time of the grant of the Underlying Option. The term of each Reload Option
shall be equal to the remaining option term of the Underlying Option.
No Reload Option shall be granted to a Participant when Options are exercised by
such Participant (or by such Participant's estate or personal representative)
pursuant to the terms of the Plan following the Participant's Termination.
Except as otherwise provided in this Section 3.3, the provisions of Article 3 of
the Plan applicable to Options shall apply equally to Reload Options.
SECTION 3.4 LIMITED STOCK APPRECIATION RIGHTS. Limited Stock Appreciation Rights
may be granted in connection with all or part of (i) an Incentive Stock Option
granted under this Plan at the time of the grant of such Option; or (ii) a
Non-Qualified Stock Option, at the time such Option is granted or at any time
thereafter during the term of such Option.
Limited Stock Appreciation Rights shall entitle the holder of an Option in
connection with which such Limited Stock Appreciation Rights are granted, upon
exercise of the Limited Stock Appreciation Rights, to surrender the Option, or
any applicable portion thereof, and any related Stock Appreciation Rights, to
the extent unexercised, and to receive an amount of cash determined pursuant to
this Section 3.4. Such Option, and any related Stock Appreciation Rights, shall,
to the extent so surrendered, thereupon cease to be exercisable.
Limited Stock Appreciation Rights shall be subject to the following terms and
conditions and to such other terms and conditions not inconsistent with the Plan
as shall from time to time be approved by the Committee.
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(A) Limited Stock Appreciation Rights shall be exercisable, subject
to Section 3.4(B), during any one or more of the following
periods:
(i) for a period of 60 days beginning on the date on which
shares of Stock are first purchased pursuant to a
tender offer or exchange offer (other than such an
offer by the Corporation), whether or not such offer
is approved or opposed by the Corporation and
regardless of the number of shares of Stock purchased
pursuant to such offer;
(ii) for a period of 60 days beginning on the date the
Corporation acquires knowledge that any person or
group deemed a person under Section 13(d)(3) of the
Exchange Act (other than any director of the
Corporation on November 1, 1989, any Affiliate or
Associate of any such director (with such terms having
the respective meanings set forth in Rule 12b-2 under
the Exchange Act as in effect on November 1, 1989),
any member of the family of any such director, any
trust (including the trustees thereof) established by
or for the benefit of any such persons, or any
charitable foundation, whether a trust or a
corporation (including the trustees and directors
thereof) established by or for the benefit of any such
persons), in a transaction or series of transactions
shall become the beneficial owner, directly or
indirectly (with beneficial ownership determined as
provided in Rule 13d-3, or any successor rule, under
the Exchange Act), of securities of the Corporation
entitling the person or group to 10% or more of all
votes (without consideration of the rights of any
class of stock to elect directors by a separate class
vote) to which all shareholders of the Corporation
would be entitled if the election of Directors were an
election held on such date;
(iii) for a period of 60 days beginning on the date of
filing under the Exchange Act of a Statement on
Schedule 13D, or any amendment thereto, by any person
or group deemed a person under Section 13(d)(3) of the
Exchange Act, disclosing an intention or possible
intention to acquire or change control of the
Corporation;
(iv) for a period of 60 days beginning on the date, during
any period of two consecutive years, when individuals
who at the beginning of such period constitute the
Board of the Corporation cease for any reason to
constitute at least a majority thereof, unless the
election, or the nomination for election by the
shareholders of the Corporation, of each new Director
was approved by a vote of at least two-thirds of the
Directors then still in office who were Directors at
the beginning of such period; and
(v) for a period of 60 days beginning on the date of
approval by the shareholders of the Corporation of an
agreement (a "reorganization agreement") providing for
(a) the merger or consolidation of the Corporation
with another corporation where the shareholders of the
Corporation, immediately prior to the merger or
consolidation, do not or will not beneficially own,
immediately after the merger or consolidation, shares
of the corporation issuing cash or securities in the
merger or consolidation entitling such shareholders to
50% or more of all votes (without consideration of the
rights of any class of stock to elect directors by a
separate class vote) to which all shareholders of such
corporation would be entitled in the election of
Directors or where the members of the Board of the
Corporation, immediately prior to the merger or
consolidation, do not or will not, immediately after
the merger or consolidation, constitute a majority of
the Board of the corporation issuing cash or
securities in the merger or consolidation or (b) the
sale or other disposition of all or substantially all
the assets of the Corporation.
(B) Limited Stock Appreciation Rights shall in no event be
exercisable unless and until the holder of the Limited Stock
Appreciation Rights shall have completed at least six months of
continuous service with
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the Corporation or a Subsidiary, or both, immediately following
the date upon which the Limited Stock Appreciation Rights shall
have been granted.
(C) Upon exercise of Limited Stock Appreciation Rights, the holder
thereof shall be entitled to receive an amount of cash in respect
of each share of Stock subject to the related Option equal to the
excess of the Fair Market Value of such share over the Option
Price of such related Option. For purposes of Section 3.4 with
respect to Limited Stock Appreciation Rights, Fair Market Value
shall mean the higher of (i) the highest daily average of the bid
and ask prices of the Corporation's Stock as quoted by the Nasdaq
National Market System (or other over-the-counter nationally
recognized quotation service) or as reported on such national
securities exchange on which the Corporation's Stock is then
registered, in each case during the 90-day period ending on the
date of exercise of the applicable Limited Stock Appreciation
Right; or (ii)(a) in the event of a tender offer or exchange
offer for Stock the highest price paid for Stock pursuant to any
tender offer or exchange offer in effect at any time during the
90 days ending on the date of exercise of the applicable Limited
Stock Appreciation Rights; (b) in the event of the acquisition by
any person or group of beneficial ownership of securities of the
Corporation entitling the person or group to 10% or more of all
votes to which all shareholders of the Corporation would be
entitled in the election of Directors or in the event of the
filing of a Statement on Schedule 13D, or any amendment thereto,
disclosing an intention or possible intention by any person or
group to acquire control of the Corporation, the highest price
per share paid for Stock shown on the Statement on Schedule 13D,
or any amendment thereto, filed by the person or group becoming a
10% beneficial owner or disclosing an intention or possible
intention to acquire control of the Corporation; or (c) in the
event of approval by shareholders of the Corporation of a
reorganization agreement, the fixed or formula price specified in
the reorganization agreement if such price is determinable as of
the date of exercise of the Limited Stock Appreciation Rights.
Any securities or property which are part or all of the
consideration paid for Stock in a tender offer or exchange offer
or under an approved reorganization agreement shall be valued at
the higher of (x) the valuation placed on such securities or
property by the person making the tender offer or exchange offer
or by the corporation other than the Corporation issuing
securities or property in the merger or consolidation or to whom
the Corporation is selling or otherwise disposing of all or
substantially all the assets of the Corporation or (y) the
valuation placed on such securities or property by the Committee.
(D) To the extent that Limited Stock Appreciation Rights shall be
exercised, the Option in connection with which such Limited Stock
Appreciation Rights shall have been granted shall be deemed to
have been exercised and any related Stock Appreciation Rights
shall be canceled. To the extent that the Option in connection
with which Limited Stock Appreciation Rights shall have been
granted or any related Stock Appreciation Rights shall be
exercised, the Limited Stock Appreciation Rights granted in
connection with such Option shall be canceled.
ARTICLE 4
PERFORMANCE UNITS
SECTION 4.1 PERFORMANCE PERIOD AND OBJECTIVES. The Committee shall determine a
performance period (the "Performance Period") of one or more years and shall
determine the performance objectives for grants of Performance Units.
Performance objectives may vary from Participant to Participant and shall be
based upon such performance criteria or combination of factors as the Committee
may deem appropriate, including, but not limited to, minimum earnings per share,
return on equity or performance by a subsidiary or division of the Corporation
or any of its Subsidiaries. Performance Periods may overlap and Participants may
participate simultaneously with respect to Performance Units for which different
Performance Periods are prescribed.
SECTION 4.2 ELIGIBILITY. At the beginning of a Performance Period, the Committee
shall determine for each Participant or group of Participants eligible for
Performance Units with respect to that Performance Period the range of
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dollar values, if any, which may be fixed or may vary in accordance with such
performance or other criteria specified by the Committee, which shall be paid to
a Participant as an Award if the relevant measure of Corporation performance for
the Performance Period is met.
SECTION 4.3 SIGNIFICANT EVENT. If during the course of a Performance Period
there shall occur a significant event or events (a "Significant Event") as
determined by the Committee, including, but not limited to, a reorganization of
the Corporation, which the Committee expects to have a substantial effect on a
performance objective during such period, the Committee may revise such
objective.
SECTION 4.4 TERMINATION. If an Eligible Individual terminates service with the
Corporation or any of its Subsidiaries during a Performance Period because of
death, Participant Disability, retirement on or after age 62, or at an earlier
age with the consent of the Corporation, or a Significant Event, as determined
by the Committee, that Eligible Individual shall be entitled to payment in
settlement of each Performance Unit for which the Performance Period was
prescribed (i) based upon the performance objectives satisfied at the end of
such period; and (ii) prorated for the portion of the Performance Period during
which the Eligible Individual was employed or retained by the Corporation or any
of its Subsidiaries; provided, however, the Committee may provide for an earlier
payment in settlement of such Performance Unit in such amount or amounts and
under such terms and conditions as the Committee deems appropriate or desirable
with the consent of the Eligible Individual. If an Eligible Individual
terminates service with the Corporation or any of its Subsidiaries during a
Performance Period for any other reason, such Eligible Individual shall not be
entitled to any payment with respect to that Performance Period unless the
Committee shall otherwise determine.
SECTION 4.5 AWARD. Each Performance Unit shall be paid in cash either as a lump
sum payment or in annual installments, as the Committee shall determine, at the
time of grant of the Performance Unit or otherwise, commencing as soon as
practicable after the end of the relevant Performance Period.
ARTICLE 5
RESTRICTED STOCK
SECTION 5.1 AWARD. Restricted Stock may be received by an Eligible Individual
either as an Award or as the result of an exercise of an Option or Stock
Appreciation Right, when such award has not vested. Restricted Stock shall be
subject to a restriction period (after which restrictions shall lapse) which
shall mean a period commencing on the date the Award is granted and ending on
such date or upon the achievement of such performance or other criteria as the
Committee shall determine (the "Restriction Period"). The Committee may provide
for the lapse of restrictions in installments where deemed appropriate.
SECTION 5.2 RESTRICTION PERIOD. Except as otherwise provided in this Article 5,
no shares of Restricted Stock received by an Eligible Individual shall be sold,
exchanged, transferred, pledged, hypothecated or otherwise disposed of during
the Restriction Period; provided, however, that the Restriction Period for any
recipient of Restricted Stock shall expire and all restrictions on shares of
Restricted Stock shall lapse upon death, Disability, retirement on or after age
62 or an earlier age with the consent of the Corporation, or upon a Significant
Event, as determined by the Committee.
SECTION 5.3 TERMINATION. Except as otherwise provided in Section 5.2 above, if
an Eligible Individual terminates employment or service with the Corporation or
any of its Subsidiaries for any reason before the expiration of the Restriction
Period, all shares of Restricted Stock still subject to restriction shall,
unless the Committee otherwise determines, be forfeited by the recipient and
shall be reacquired by the Corporation, and in the case of Restricted Stock
purchased through the exercise of an Option, the Corporation shall refund the
purchase price paid on the exercise of the Option. Upon such forfeiture, such
forfeited shares of Restricted Stock shall again become available for award
under the Plan.
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SECTION 5.4 RESTRICTED STOCK CERTIFICATES. The Committee may require, under such
terms and conditions as it deems appropriate or desirable, that the certificates
for Restricted Stock delivered under the Plan be held in custody by a bank or
other institution, or that the Corporation may itself hold such shares in
custody until the Restriction Period expires or until restrictions thereon
otherwise lapse, and may require, as a condition of any receipt of Restricted
Stock, that the recipient shall have delivered a stock power endorsed in blank
relating to the Restricted Stock.
SECTION 5.5 EXCHANGE OF SHARES. Nothing in this Article 5 shall preclude a
recipient of Restricted Stock from exchanging any shares of Restricted Stock
subject to the restrictions contained herein for any other shares of Stock that
are similarly restricted.
ARTICLE 6
PHANTOM STOCK
SECTION 6.1 AWARD. The Committee shall have authority, in its discretion, to
grant deferred compensation to an Eligible Individual by the award of Phantom
Stock, the value of which is related to the value of the Stock of the Company.
SECTION 6.2 VALUE. An Award of Phantom Stock shall entitle the Participant to
receive from the Corporation cash and/or shares of Stock having an aggregate
fair market value equal to the Fair Market Value of a share of Stock on such
date, or upon the occurrence of one or more events, as may be specified in the
Award Agreement for any Phantom Stock.
SECTION 6.3 TERMINATION. If the Participant is Terminated for any reason prior
to the vesting of the Phantom Stock Award, the Participant's rights with respect
to the Phantom Stock will terminate and be forfeited, and neither the
Participant nor his or her heirs, personal representatives, successors or
assigns shall have any future rights with respect to any such Phantom Stock.
ARTICLE 7
CERTIFICATES FOR AWARDS OF STOCK
SECTION 7.1 STOCK CERTIFICATES. Subject to Section 5.4 and except as otherwise
provided in this Section 7.1, each Participant entitled to receive shares of
Stock under the Plan shall be issued a certificate for such shares. Such
certificate shall be registered in the name of the Eligible Individual and shall
bear an appropriate legend reciting the terms, conditions and restrictions, if
any, applicable to such shares and shall be subject to appropriate stop-transfer
orders. To the extent that the Plan provides for issuance of stock certificates
to reflect the issuance of shares of Stock, the issuance may be effected on a
non-certificated basis, to the extent not prohibited by applicable law or the
applicable rules of any stock exchange. If the issuance of shares under the Plan
is effected on a non-certificated basis, the issuance of shares to a Participant
shall be reflected by crediting (by means of a book entry) the applicable number
of shares of Stock to an account maintained by the Corporation in the name of
such Participant, which account may be an account maintained by the Corporation
for such Participant under any dividend reinvestment program offered by the
Corporation.
SECTION 7.2 COMPLIANCE WITH LAWS AND REGULATIONS. The Corporation shall not be
required to issue or deliver any certificates for shares of Stock, or to effect
the issuance of any non-certificated shares as provided in Section 7.1, prior to
(i) the listing of such shares on any stock exchange or quotation system on
which the Stock may then be listed; and (ii) the completion of any registration
or qualification of such shares under any Federal or state law, or any ruling or
regulation of any government body which the Corporation shall, in its sole
discretion, determine to be necessary or advisable.
SECTION 7.3 RESTRICTIONS. All certificates for shares of Stock delivered under
the Plan (and all non-certificated shares credited to a Participant's account as
provided in Section 7.1) shall also be subject to such stop-transfer orders and
other restrictions as the Committee may deem advisable under the rules,
regulations and other requirements of the Securities and Exchange Commission,
any stock exchange or quotation system upon which the Stock is then listed and
any
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applicable Federal or state securities laws; and the Committee may cause a
legend or legends to be placed on any such certificates to make appropriate
reference to such restrictions. The foregoing provisions of this Section 7.3
shall not be effective if and to the extent that the shares of Stock delivered
under the Plan are covered by an effective and current registration statement
under the Securities Act of 1933, or if and so long as the Committee determines
that application of such provisions is no longer required or desirable. In
making such determination, the Committee may rely upon an opinion of counsel for
the Company.
SECTION 7.4 RIGHTS OF STOCKHOLDERS. Except for the restrictions on Restricted
Stock under Article 5, each Participant who receives an award of Stock shall
have all of the rights of a stockholder with respect to such shares, including
the right to vote the shares and receive dividends and other distributions. No
Eligible Individual awarded an Option, a Stock Appreciation Right, a Limited
Stock Appreciation Right or Phantom Stock shall have any right as a stockholder
with respect to any shares subject to such Award prior to the date of issuance
to him or her of a certificate or certificates for such shares, or if
applicable, the crediting of non-certificated shares to an account maintained by
the Corporation in the name of such Eligible Individual.
ARTICLE 8
MISCELLANEOUS
SECTION 8.1 EFFECT OF THE PLAN ON THE RIGHTS OF EMPLOYEES AND EMPLOYER. Neither
the adoption of the Plan nor any action of the Board or the Committee pursuant
to the Plan shall be deemed to give any Eligible Individual any right to be
granted an Award under the Plan and nothing in the Plan, in any Award granted
under the Plan or in any Award Agreement shall confer any right to any
Participant to continue in the employment of the Corporation or any Subsidiary
or to continue to be retained to provide services to the Corporation or any
Subsidiary as a non-employee director, consultant or independent contractor or
interfere in any way with the rights of the Corporation or any Subsidiary to
terminate a Participant at any time.
SECTION 8.2 AMENDMENT. The right to alter and amend the Plan at any time and
from time to time and the right to revoke or terminate the Plan or to suspend
the granting of Awards pursuant to the Plan are hereby specifically reserved to
the Board; provided always that no such revocation, termination, alteration or
suspension of any Award shall terminate any outstanding Award theretofore
granted under the Plan, unless there is a liquidation or a dissolution of the
Corporation; and provided further that no such alteration or amendment of the
Plan shall, without prior stockholder approval (i) increase the total number of
shares which may be issued or delivered under the Plan; (ii) make any changes in
the class of Eligible Individuals; (iii) extend the period set forth in the Plan
during which Awards may be granted; or (iv) or make any changes that require
shareholder approval under the rules and regulations of any securities exchange
or market on which the Common Stock is traded. No alteration, amendment,
revocation or termination of the Plan or suspension of any Award shall, without
the written consent of the holder of an Award theretofore granted under the
Plan, adversely affect the rights of such holder with respect to such Award.
SECTION 8.3 EFFECTIVE DATE AND DURATION OF PLAN. The effective date and date of
adoption of the Plan shall be January 21, 2001 (the "Effective Date"), the date
of adoption of the Plan by the Board, provided that such adoption of the Plan by
the Board is approved by the affirmative vote of the holders of at least a
majority of the outstanding shares of Stock at a meeting of such holders duly
called, convened and held within one year of the Effective Date. No Award
granted under the Plan prior to such shareholder approval may be exercised until
after such approval. No Award may be granted under the Plan subsequent to
January 21, 2011.
SECTION 8.4 UNFUNDED STATUS OF PLAN. The Plan shall be unfunded. The Corporation
shall not be required to establish any special or separate fund nor to make any
other segregation of assets to assume the payment of any benefits under the
Plan. With respect to any payments not yet made to a Participant pursuant to an
Award, nothing contained in the Plan or any Award shall give any such
Participant any rights that are greater than those of a general unsecured
creditor of the Corporation; provided, however, that the Committee may authorize
the creation of trusts or make other arrangements to meet the Corporation's
obligations under the Plan to deliver cash, shares or other property pursuant to
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any Award, which trusts or other arrangements shall be consistent with the
"unfunded" status of the Plan unless the Committee otherwise determines.
SECTION 8.5 EMPLOYEE STATUS. For purposes of determining questions of
termination and exercise of an Option or Stock Appreciation Right after a
Participant's Termination, a leave of absence for military or government
service, illness, temporary disability or other reasons approved by a duly
authorized officer of the Company shall not be treated as Termination or
interruption of employment or engagement; provided, however, that, with respect
to an Incentive Stock Option, if such leave of absence exceeds 90 days, such
Option shall be deemed a Non-Qualified Stock Option unless the Eligible
Individual's right to reemployment with the Company or a Subsidiary following
such leave of absence is guaranteed by statute or by contract; provided,
however, that no Award may be granted to an employee while he or she is absent
on leave.
SECTION 8.6 TAX WITHHOLDING. Whenever the Corporation proposes or is required to
distribute Stock under the Plan, the Corporation may require the recipient to
remit to the Corporation an amount sufficient to satisfy any Federal, state and
local tax withholding requirements prior to the delivery of any certificate for
such shares or, in the discretion of the Committee, the Corporation may withhold
from the shares to be delivered shares sufficient to satisfy all or a portion of
such tax withholding requirements. Whenever under the Plan payments are to be
made in cash, such payments may be net of an amount sufficient to satisfy any
Federal, state and local tax withholding requirements.
SECTION 8.7 BENEFITS. Amounts received under the Plan are not to be taken into
account for purposes of computing benefits under other plans unless the
Corporation determines to do so.
SECTION 8.8 SUCCESSORS AND ASSIGNS. The terms of the Plan shall be binding upon
the Corporation and its successors and assigns.
SECTION 8.9 HEADINGS. Captions preceding the sections hereof are inserted solely
as a matter of convenience and in no way define or limit the scope or intent of
any provision hereof.
SECTION 8.10 FEDERAL AND STATE LAWS, RULES AND REGULATIONS. The Plan and the
grant of Awards shall be subject to all applicable federal and state laws, rules
and regulations and to such approval by any government or regulatory agency as
may be required.
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EXHIBIT B
AGREEMENT AND PLAN OF MERGER
OF F.N.B. CORPORATION,
A PENNSYLVANIA CORPORATION
AND
F.N.B. SURVIVING CORPORATION,
A FLORIDA CORPORATION
THIS AGREEMENT AND PLAN OF MERGER dated this ____ day of ________, 2001
(this "Agreement") is entered by and between F.N.B. Surviving Corporation, a
Florida corporation ("FNB-Florida"), and F.N.B. Corporation, a Pennsylvania
corporation ("FNB-Pennsylvania"). FNB-Florida and FNB-Pennsylvania are sometimes
hereinafter collectively referred to as the "Constituent Corporations."
RECITALS:
A. FNB-Florida is a corporation organized and existing under the
laws of the State of Florida and, as of the date hereof, 500 shares of common
stock of FNB-Florida are issued and outstanding, all of which are held by
FNB-Pennsylvania, and no shares of Series A Preferred Stock or Series B
Preferred Stock are issued and outstanding.
B. FNB-Pennsylvania is a corporation organized and existing under
the laws of the State of Pennsylvania and, as of the date hereof, __________
shares of common stock of FNB-Pennsylvania are issued and outstanding, ______
shares of Series A Preferred Stock are issued and outstanding, and ______ shares
of Series B Preferred Stock are issued and outstanding.
C. The Board of Directors of FNB-Pennsylvania has determined
that, for the purpose of effecting the reincorporation of FNB-Pennsylvania in
the State of Florida, it is advisable and in the best interests of
FNB-Pennsylvania that it merge with and into FNB-Florida upon the terms and
conditions herein provided.
D. The respective Boards of Directors of FNB-Florida and
FNB-Pennsylvania have approved this Agreement and have directed that this
Agreement be submitted to a vote of their respective shareholders and executed
by the undersigned officers.
NOW, THEREFORE, in consideration of the mutual agreements and covenants
set forth herein, FNB-Florida and FNB-Pennsylvania hereby agree, subject to the
terms and conditions hereinafter set forth, as follows:
ARTICLE I
THE MERGER
1.01 Merger. In accordance with the provisions of this Agreement,
the Pennsylvania Business Corporation Law (the "Pennsylvania Act") and the
Florida Business Corporations Act (the "Florida Act"), FNB-Pennsylvania shall be
merged with and into FNB-Florida (the "Merger"), whereupon the separate
existence of FNB-Pennsylvania shall cease and FNB-Florida shall be, and is
hereinafter sometimes referred to as, the "Surviving Corporation." On the
Effective Date of the Merger (as hereinafter defined) the name of the Surviving
Corporation shall be F.N.B. Corporation.
1.02 Filing and Effectiveness. The Merger shall become effective
when the following actions shall have been completed:
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(a) this Agreement and the Merger shall have been adopted
and approved by the shareholders of each Constituent Corporation in accordance
with the requirements of the Pennsylvania Act and the Florida Act, as the case
may be;
(b) all of the conditions precedent to the consummation
of the Merger specified in this Agreement shall have been satisfied or duly
waived by the party entitled to satisfaction thereof;
(c) executed Articles of Merger meeting the requirements
of the Pennsylvania Act shall have been filed with the Pennsylvania Secretary of
State; and
(d) executed Articles of Merger meeting the requirements
of the Florida Act shall have been filed with the Florida Department of State.
The date and time at which the Merger shall become effective, as aforesaid, is
herein referred to as the "Effective Date of the Merger."
1.03 Effect of the Merger. On the Effective Date of the Merger, the
separate existence of FNB-Pennsylvania shall cease, and FNB-Florida, as the
Surviving Corporation, shall (i) continue to possess all of its assets, rights,
powers and property as constituted immediately prior to the Effective Date of
the Merger; (ii) be subject to all actions previously taken by its and
FNB-Pennsylvania's Board of Directors; (iii) succeed, without other transfer, to
all of the assets, rights, powers and property of FNB-Pennsylvania in the manner
more fully set forth in Section 607.1106 of the Florida Act; (iv) continue to be
subject to all of its debts, liabilities and obligations as constituted
immediately prior to the Effective Date of the Merger; and (v) succeed, without
other transfer, to all of the debts, liabilities and obligations of
FNB-Pennsylvania in the same manner as if FNB-Florida had itself incurred them,
all as more fully provided under the applicable provisions of the Florida Act.
ARTICLE II
CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
2.01 Articles of Incorporation. The Articles of Incorporation of
FNB-Florida as in effect immediately prior to the Effective Date of the Merger
shall continue in full force and effect as the Articles of Incorporation of the
Surviving Corporation until duly amended in accordance with the provisions
thereof and applicable law; provided, however, that on the Effective Date of the
Merger, Article I of the Articles of Incorporation of the Surviving Corporation
shall be amended to reflect that the name of the Surviving Corporation shall be
"F.N.B. Corporation."
2.02 Bylaws. The Bylaws of FNB-Florida as in effect immediately
prior to the Effective Date of the Merger shall continue in full force and
effect as the Bylaws of the Surviving Corporation until duly amended in
accordance with the provisions thereof and applicable law.
2.03 Directors and Officers. The officers of FNB-Pennsylvania
immediately prior to the Effective Date of the Merger shall be the officers of
the Surviving Corporation. The directors of FNB-Florida immediately prior to the
Effective Date of the Merger shall be the directors of the Surviving
Corporation, and such directors shall continue to be constituted in the same
terms of office which they had as directors, in accordance with the Bylaws of
FNB-Florida.
ARTICLE III
MANNER OF CONVERSION OF SHARES
3.01 Conversion of F.N.B.-Pennsylvania Common and Preferred Shares
(a) Common Shares. Upon the Effective Date of the Merger,
each share of common stock of FNB-Pennsylvania, $2.00 par value, issued and
outstanding immediately prior thereto shall, by virtue of the Merger and
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without any action by the Constituent Corporations, the holder of such shares or
any other person, be converted into and exchanged for one fully paid and
nonassessable share of common stock, $0.01 par value per share, of the Surviving
Corporation.
(b) Series A Preferred Shares. Upon the Effective Date of
the Merger, each share of Series A Preferred Stock of FNB-Pennsylvania, $10.00
par value, issued and outstanding immediately prior thereto shall, by virtue of
the Merger and without any action by the Constituent Corporations, the holder of
such shares or any other person, be converted into and exchanged for one fully
paid and nonassessable share of Series A Preferred Stock, $0.01 par value per
share, of the Surviving Corporation.
(c) Series B Preferred Shares. Upon the Effective Date of
the Merger, each share of Series B Preferred Stock of FNB-Pennsylvania, $10.00
par value, issued and outstanding immediately prior thereto shall, by virtue of
the Merger and without any action by the Constituent Corporations, the holder of
such shares or any other person, be converted into and exchanged for one fully
paid and nonassessable share of Series B Preferred Stock, $0.01 par value per
share, of the Surviving Corporation.
3.02 FNB-Pennsylvania Options and Stock Purchase Rights.
(a) Upon the Effective Date of the Merger, the Surviving
Corporation shall assume and continue any and all stock option, stock incentive
or stock award plans heretofore adopted by FNB-Pennsylvania. Each outstanding
and unexercised option or other right to purchase FNB-Pennsylvania common stock
existing under and by virtue of any such plan shall become an option or right to
purchase the Surviving Corporation's common stock on the basis of one share of
the Surviving Corporation's common stock for each common share of
FNB-Pennsylvania issuable pursuant to any such option or stock purchase right,
on the same terms and conditions and at an exercise or conversion price per
share equal to the exercise or conversion price per share applicable to any such
FNB-Pennsylvania option or stock purchase right at the Effective Date of the
Merger.
(b) A number of shares of the Surviving Corporation's
common stock shall be reserved for issuance upon the exercise of options and
stock purchase rights equal to the number of shares of common stock of FNB-
Pennsylvania so reserved immediately prior to the Effective Date of the Merger.
3.03 FNB-Florida Common Stock. Upon the Effective Date of the
Merger, each share of FNB-Florida common stock, $0.01 par value per share,
issued and outstanding immediately prior thereto shall, by virtue of the Merger
and without any action by FNB-Florida, the holder of such shares or any other
person, be canceled and returned to the status of authorized but unissued
shares.
3.04 Exchange of Certificates.
(a) After the Effective Date of the Merger, each holder
of an outstanding certificate representing shares of capital stock of
FNB-Pennsylvania may, at such holder's option, surrender the same for
cancellation to FNB Shareholder Services, 2150 Goodlette Road North, Suite 102,
Naples, Florida 34102, or such other entity as the Surviving Corporation so
designates as exchange agent (the "Exchange Agent"), and each such holder shall
be entitled to receive in exchange therefor a certificate or certificates
representing the number of shares of the Surviving Corporation's capital stock
into which the surrendered shares were converted, or to which such holder was
otherwise entitled, as herein provided. Until so surrendered, each outstanding
certificate theretofore representing shares of capital stock of FNB-
Pennsylvania shall be deemed for all purposes to represent the number and kind
of shares of the Surviving Corporation's capital stock into which such shares of
FNB-Pennsylvania were converted in the Merger and which the holder of such
certificate was otherwise entitled to receive pursuant to this Agreement.
(b) The registered owner on the books and records of the
Surviving Corporation or the Exchange Agent of any such outstanding certificate
shall, until such certificate shall have been surrendered for transfer or
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conversion or otherwise accounted for to the Surviving Corporation or the
Exchange Agent, have and be entitled to exercise any voting and other rights
with respect to and to receive dividends and other distributions upon the shares
of capital stock of the Surviving Corporation represented by such outstanding
certificate as provided above.
(c) Each certificate representing capital stock of the
Surviving Corporation so issued in the Merger shall bear the same legends, if
any, with respect to the restrictions on transferability that appeared on the
certificates of FNB-Pennsylvania so converted and given in exchange therefor,
unless otherwise determined by the Board of Directors of the Surviving
Corporation in compliance with applicable laws.
(d) If any certificate for shares of capital stock of the
Surviving Corporation is to be issued in a name other than that in which the
certificate surrendered in exchange therefor is registered, it shall be a
condition of issuance thereof that the certificate so surrendered shall be
properly endorsed and otherwise in proper form for transfer, that such transfer
otherwise be proper and that the person requesting such transfer pay to the
Exchange Agent any transfer or other taxes payable by reason of issuance of such
new certificate in a name other than that of the registered holder of the
certificate surrendered or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not payable.
ARTICLE IV
GENERAL PROVISIONS
4.01 Covenants of FNB-Florida. FNB-Florida covenants and agrees
that it will on or before the Effective Date of the Merger:
(a) take such action as may be required to qualify to do
business as a foreign corporation in the states in which FNB-Pennsylvania is
qualified to do business and in connection therewith irrevocably appoint an
agent for service of process as required under the applicable provisions of the
relevant state law;
(b) take such action as may be required under applicable
federal banking law to continue the business of FNB-PA following the Effective
Date of the Merger; and
(b) take all such other actions as may be required by the
Pennsylvania Act and the Florida Act to effect the Merger.
4.02 Abandonment. At any time before the Effective Date of the
Merger, this Agreement may be terminated and the Merger may be abandoned for any
reason whatsoever by the Board of Directors of FNB-Pennsylvania and FNB-
Florida, notwithstanding the approval of this Agreement by the shareholders of
FNB-Pennsylvania or by the sole shareholder of FNB-Florida, or by both.
4.03 Amendment. The Constituent Corporations may amend this
Agreement at any time prior to the filing of these Articles of Merger with
either the Pennsylvania Secretary of State or the Florida Department of State,
provided that an amendment made subsequent to the adoption of this Agreement by
the shareholders of either Constituent Corporation shall not (i) alter or change
the amount or kind of shares, securities, cash, property or rights to be
received in exchange for or on conversion of all or any of the shares of any
class or series thereof of such Constituent Corporation; or (ii) alter or change
any of the terms and conditions of this Agreement if such alteration or change
would adversely affect the holders of any class or series of capital stock of
either Constituent Corporation.
4.05. Registered Office. The registered office of the Surviving
Corporation in the State of Florida is located at 2150 Goodlette Road North, 8th
Floor, Naples, Florida, and Robert T. Reichert is the registered agent of the
Surviving Corporation at such address.
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4.06 Agreement. Executed copies of this Agreement will be on file
at the principal place of business of the Surviving Corporation in Naples,
Florida, and copies thereof will be furnished to any shareholder of either
Constituent Corporation, upon request and without cost.
4.07 Governing Law. This Agreement shall in all respects be
construed, interpreted and enforced in accordance with and governed by the laws
of the State of Florida and, so far as applicable, the merger provisions of the
Pennsylvania Act.
4.08. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement, having first been approved by the
Board of Directors of FNB-Florida and FNB-Pennsylvania, is hereby executed on
behalf of each of such corporations by their respective officers thereunto duly
authorized.
F.N.B. SURVIVING CORPORATION,
a Florida corporation
By:
------------------------------------------
Kevin C. Hale
Executive Vice President
F.N.B. CORPORATION,
a Pennsylvania corporation
By:
------------------------------------------
Gary L. Tice
President and Chief Executive Officer
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EXHIBIT C
F.N.B. SURVIVING CORPORATION
ARTICLES OF INCORPORATION
ARTICLE 1
The name of the Corporation is F.N.B. Surviving Corporation.
ARTICLE 2
The street address and mailing address of the initial principal office
of the Corporation and the initial registered office of the Corporation is 2150
Goodlette Road North, 8th Floor, Naples Florida 34102 and its registered agent
at such address shall be Robert T. Reichert.
ARTICLE 3
The name and address of the Incorporator of the Corporation is James G.
Orie, Esq., One F.N.B. Boulevard, Hermitage, Pennsylvania 16148.
ARTICLE 4
The term of existence of the Corporation shall be perpetual.
ARTICLE 5
The aggregate number of shares which the Corporation shall have
authority to issue is One Hundred and Twenty Million Shares (120,000,000) of
which Twenty Million (20,000,000) shall be preferred stock, par value $0.01 per
share, issuable in one or more series, and One Hundred Million (100,000,000)
shall be common stock, par value $0.01 per share.
A description of each such class of shares and a statement of the
authority hereby vested in the Board of Directors of the Corporation to fix and
determine the designations, preferences, qualifications, limitations,
restrictions and special or relative rights and preferences granted to or
imposed upon the shares of each class and series are as follows:
Section I. Preferred Stock
The Preferred Stock may be divided into and issued in series. The Board
of Directors is hereby expressly authorized, at any time or from time to time,
to divide any or all of the shares of the Preferred Stock into series, and in
the resolution or resolutions establishing a particular series, before issuance
of any of the shares thereof, to fix and determine the designation and the
relative rights and preferences of the series so established, to the fullest
extent now or hereafter permitted by the laws of the Commonwealth of
Pennsylvania, including, but not limited to, the variations between different
series in the following respects:
(i) The distinctive serial designation of such series;
(ii) The annual dividend rate for such series, and the date or
dates from which dividends shall commence to accrue;
(iii) The redemption price or prices, if any, for shares of such
series and the terms and conditions on which such shares may be redeemed;
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(iv) The sinking fund provisions, if any, for the redemption or
purchase of shares of such series;
(v) The preferential amount or amounts payable upon shares of such
series in the event of the voluntary or involuntary liquidation of the
Corporation;
(vi) The voting rights of shares of such series;
(vii) The terms and conditions, if any, upon which shares of such
series may be converted and the class or classes or series of shares of the
Corporation into which such shares may be converted; and
(viii) Such other terms, limitations and relative rights and
preferences, if any, of shares of such series as the Board of Directors may, at
the time of such resolutions, lawfully fix and determine under the laws of the
Commonwealth of Pennsylvania.
All shares of the Preferred Stock shall be of equal rank with each
other, regardless of series.
A. SERIES A - CUMULATIVE CONVERTIBLE PREFERRED STOCK
1. Designation and number of shares of series.
A series of Preferred Stock comprised of 60,000 shares is created,
established and designated "Series A-Cumulative Convertible Preferred Stock"
(hereinafter called "Series A Preferred Stock").
2. Dividend rights.
2.1 The holders of the Series A Preferred Stock shall be entitled
to receive, when and as declared by the Board of Directors, preferential
cumulative dividends in cash at the annual rate of $1.68 per share and no more,
payable in equal quarterly installments on the 15th days of March, June,
September and December of each year. In the case of the issuance of shares of
Series A Preferred Stock on or prior to June 30, 1985, such dividends shall be
cumulative from and after June 30, 1985. In the case of the issuance of shares
of other Series A Preferred Stock issued after such date, such dividends with
respect to each of such other shares shall be cumulative from the quarterly
dividend payment date next preceding the date of issuance of such shares to
which dividends have been paid on Series A Preferred Stock (or from June 30,
1985 if such other shares are issued on or prior to the record date for the
first dividend declared on Series A Preferred Stock), unless the date of
issuance of such shares is a dividend payment date to which dividends have been
paid on Series A Preferred Stock or a date between the record date for the
determination of holders of Series A Preferred Stock entitled to receive a
dividend which has been declared and the date for payment thereof, in either of
which events such dividends shall be cumulative from such dividend payment date,
so that all holders of record of Series A Preferred Stock outstanding on any
record date for the determination of holders of Series A Preferred Stock
entitled to receive any dividend thereon shall have the same dividend rights per
share.
2.2 So long as any shares of the Series A Preferred Stock are
outstanding, no dividends, other than (i) dividends on common stock payable in
common stock, (ii) dividends payable in stock which is junior to the Series A
Preferred Stock (both as to dividends and upon liquidation) and (iii) cash in
lieu of fractional shares in connection with any such dividend, shall be paid or
declared in cash or otherwise, nor shall any other distribution be made, on the
common stock or on any other stock junior to the Series A Preferred Stock as to
dividends, unless there shall be no arrearages in dividends on the Series A
Preferred Stock for any past quarterly dividend period, and all cumulative
dividends shall have been paid or declared in full on the Series A Preferred
Stock for the current quarterly dividend period.
2.3 Subject to the foregoing provisions, such dividends and other
distributions (payable in cash, property or stock junior to the Series A
Preferred Stock) as may be determined by the Board of Directors may be declared
and paid
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from time to time on the common stock or on any other stock junior to the Series
A Preferred Stock, without any right of participation therein by the holders of
Series A Preferred Stock.
2.4 So long as any shares of the Series A Preferred Stock are
outstanding, no shares of any stock junior to the Series A Preferred Stock shall
be purchased, redeemed or otherwise acquired by the Corporation or by any
subsidiary, except in connection with (i) a reclassification or exchange of any
stock junior to the Series A Preferred Stock through the issuance of other stock
junior to the Series A Preferred Stock (both as to dividends and upon
liquidation), or (ii) the purchase, redemption or other acquisition of any stock
junior to the Series A Preferred Stock with proceeds of a reasonably
contemporaneous sale of other stock junior to the Series A Preferred Stock (both
as to dividends and upon liquidation), nor shall any funds be set aside or made
available for any purchase, redemption or sinking fund for the purchase or
redemption of any stock junior to the Series A Preferred Stock, unless there
shall be no arrearages in dividends on the Series A Preferred Stock for any past
quarterly dividend period.
2.5 If there are any arrearages in dividends for any past
quarterly dividend period on any series of Preferred Stock ranking on a parity
with the Series A Preferred Stock as to dividends, or if dividends shall not
have been paid or declared in full for the current quarterly period on all
series of Preferred Stock ranking on a parity with the Series A Preferred Stock
as to dividends to the extent that dividends on such other series of Preferred
Stock are cumulative, any dividends paid or declared on the Series A Preferred
Stock or on any other series of Preferred Stock ranking on a parity with the
Series A Preferred Stock as to dividends shall be shared ratably by the holders
of the Series A Preferred Stock and the holders of all such other series of
Preferred Stock ranking on a parity with the Series A Preferred Stock as to
dividends in proportion to such respective arrearages and unpaid and undeclared
current quarterly cumulative dividends.
3. Liquidation preference.
3.1 In the event of any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary (hereinafter sometimes called
"liquidation"), the holders of the Series A Preferred Stock shall be entitled to
receive a preferential liquidation payment in an amount equal to $25.00 per
share plus all arrearages in dividends thereon to the date fixed for the
liquidation payment (computed without interest), before any distribution shall
be made to the holders of the common stock or any other stock junior to the
Series A Preferred Stock as to distribution upon liquidation.
3.2 If the assets of the Corporation are insufficient to permit
payment of the full preferential amount payable to the holders of the Series A
Preferred Stock and of any other series of Preferred Stock ranking on a parity
with the Series A Preferred Stock as to distribution upon liquidation, then the
assets available for distribution to holders of the Series A Preferred Stock and
the holders of such other series of Preferred Stock ranking on a parity with the
Series A Preferred Stock as to distribution upon liquidation shall be
distributed ratably to the holders of the Series A Preferred Stock and the
holders of all such other series of Preferred Stock in proportion to the full
preferential amounts payable on their respective shares upon liquidation.
3.3 If the preferential liquidation payment shall have been made
in full as provided herein, the remaining assets of the Corporation shall be
distributed among the holders of common stock and other junior stock, according
to their respective rights and preferences and in accordance with their
respective holdings.
3.4 For the purposes of this section 3, a consolidation or merger
of the Corporation with any other corporation shall not be deemed, as such, to
constitute a liquidation, dissolution or winding up of the Corporation, but any
reorganization of the Corporation required by any court or administrative body
in order to comply with any provision of law shall be deemed to be a
liquidation, dissolution or winding up of the Corporation unless the
preferences, qualifications, limitations, restrictions and special or relative
rights granted to or imposed upon the Series A Preferred Stock are not adversely
affected by such reorganization.
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4. Redemption.
The Series A Preferred Stock shall not be subject to call for
redemption by the Corporation, nor shall any holder thereof have the right to
require redemption of the Series A Preferred Stock.
5. Status of Series A Preferred Stock repurchased or
declassified.
Shares of Series A Preferred Stock repurchased or declassified as such
by future resolution of the Board of Directors shall be deemed to be authorized
but unissued shares of Preferred Stock undesignated as to series. Shares of
Series A Preferred Stock exchanged for shares of any other class or series shall
thereby be deemed to be cancelled and the number of shares of Preferred Stock
which the Corporation is authorized to issue shall be correspondingly reduced.
6. Restrictions on certain action affecting Series A Preferred
Stock.
6.1 The Corporation will not (i) establish any other series of
Preferred Stock ranking prior to, or authorize any other class of stock ranking
prior to (or issuable in series which may, by resolutions of the Board of
Directors providing for the issue of such series, rank prior to), the Series A
Preferred Stock, either as to dividends or upon liquidation, or increase the
authorized number of shares of any such other class or series of stock, or (ii)
amend, alter or repeal any of the provisions of the Articles of Incorporation or
of this resolution so as to affect adversely the preferences, special rights or
powers of the holders of the Series A Preferred Stock, or (iii) effect a merger
or consolidation which would affect adversely the preferences, special rights or
powers of the holders of the Series A Preferred Stock, without the consent given
in writing without a meeting or affirmative vote given in person or by proxy at
a meeting called for the purpose, by the holders of at least 66-2/3 per cent of
the shares of the Series A Preferred Stock then outstanding.
6.2 The Corporation may, without the consent or affirmative vote
of any holders of the Series A Preferred Stock then outstanding, establish any
other series of Preferred Stock ranking on a parity with, or authorize any other
class of stock ranking on a parity with (or issuable in series which may, by
resolutions of the Board of Directors providing for the issue of such series,
rank on a parity with), the Series A Preferred Stock, either as to dividends or
upon liquidation or both, or increase the authorized number of shares of any
such other class or series.
7. Voting rights.
Holders of the Series A Preferred Stock shall be entitled to one vote
for each share upon all matters upon which holders of common stock have the
right to vote, and such votes shall be counted together with those of the common
stock and not separately as a class or group; provided, however, that if from
time to time the outstanding shares of common stock shall be increased by any
subdivision of shares, or decreased by combination of shares, and the Series A
Preferred Stock shall not simultaneously be so increased or decreased in the
same proportion, the number of votes of each share of Series A Preferred Stock
shall be adjusted so that the proportionate voting power of the Series A
Preferred Stock and of the common stock shall be the same immediately after such
increase or decrease as immediately before it to the nearest 1/10th of a vote
per share.
8. Conversion rights.
8.1 The holders of Series A Preferred Stock shall be entitled, at
any time or from time to time after June 30,1989, to surrender shares of the
Series A Preferred Stock for conversion into shares of common stock of the
Corporation. Subject to the provisions set forth in this section 8, each share
of Series A Preferred Stock surrendered hereunder shall be converted, as of the
close of business on the date of such surrender, into that number of shares of
common stock having at that time an aggregate value equal to $25.00 (the
"Conversion Price").
8.2 In order to convert shares of Series A Preferred Stock into
common stock, the holder shall surrender the certificate or certificates
therefor, duly endorsed, at the office of the Transfer Agent for the common
stock, and shall give
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written notice to the Corporation at said office that he elects to convert the
same or part thereof. The Corporation as soon as practicable thereafter will
issue and deliver at said office to such holder a certificate for the number of
full shares of common stock to which he shall be entitled hereunder; however,
such holder shall be treated for all purposes as the record holder of such
common stock at the time as of which such conversion takes place as aforesaid.
8.3 No fractional shares of common stock shall be issued upon
conversion of the Series A Preferred Stock. Instead of any fraction of a share
which would otherwise be issuable, the Corporation shall pay a cash adjustment,
concurrently with issuance of the certificate for the full number of shares to
which the holder is entitled, in an amount equal to the same fraction of the
Stabilized Market Value (hereinafter defined) used to determine the holder's
entitlement to common stock.
8.4 In determining the number of shares of common stock to which
the Series A Preferred Stock may be converted, the following provisions shall be
applied, to wit:
(a) The Conversion Price shall be divided by the then Stabilized
Market Value (hereinafter defined) per share, and the quotient shall determine
the number of shares (calculated to ten-thousandths) of common stock issuable
upon conversion, except in cases to which paragraph (b) applies.
(b) If (and for so long as) the Stabilized Market Value should be
less than 80% of the Corporation's last reported book value per share of common
stock, the number of shares (calculated to ten-thousandths) of common stock
issuable upon conversion of the Series A Preferred Stock shall be determined by
the quotient obtained in dividing (x) the Conversion Price by (y) 80% of the
Corporation's last reported book value per share of common stock. This paragraph
(b) shall not apply to conversions effected under Section 9 hereof.
(c) Adjustment shall be made for any dividends accrued on the
Series A Preferred Stock during the current quarterly period in which shares
thereof are surrendered for conversion, by increasing the Conversion Price by an
amount equal to the quarterly dividend yield, prorated to the date on which
conversion is effective, on the shares so surrendered. No adjustment shall be
made on account of any prior dividends on the common stock issuable upon
conversion; nor shall the Corporation be obligated to make any cash payment in
respect of any such dividends in connection with the surrender and conversion of
Series A Preferred Stock.
8.5 (a) In case of any capital reorganization or any
reclassification of the common stock of the Corporation or in case of the
consolidation or merger of the Corporation with or into another corporation or
the conveyance of all or substantially all of the assets of the Corporation to
another corporation, each share of the Series A Preferred Stock shall thereafter
be convertible into the kind(s) of stock or other securities or property to
which a holder of the number of shares of common stock of the Corporation that
might have been issued (disregarding the time limitation set forth in section
8.1) upon conversion of such share of the Series A Preferred Stock shall be
entitled upon such reorganization, reclassification, consolidation, merger or
conveyance; and, in any such case, appropriate adjustment (as determined by the
Board of Directors) shall be made by the Corporation or the corporation formed
by such consolidation or the corporation into which the Corporation shall have
merged or the transferee of the Corporation's assets, as the case may be, in the
application of the provisions herein set forth with respect to the rights and
interests thereafter of the holders of the Series A Preferred Stock, to the end
that the provisions set forth herein (including provisions with respect to
changes in and other adjustments of the Conversion Price) shall thereafter be
applicable, as nearly as reasonably may be, in relation to any shares of stock
or other securities or property thereafter deliverable upon the conversion of
the shares of the Series A Preferred Stock.
(b) If, after giving effect to any such consolidation, merger or
conveyance of all or substantially all of the assets of the Corporation, the
holders of the Corporation's common stock (as a group) would own less than 50%
of all the issued and outstanding voting stock of the corporation formed by such
consolidation or the corporation surviving such merger or the transferee of the
Corporation's assets, as the case may be, then, notwithstanding the date set
forth in section
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8.1, the conversion rights of the holders of the Series A Preferred Stock shall
be advanced to the close of business on the date on which the shareholders of
the Corporation shall have approved the subject transaction.
8.6 In case:
(i) the Corporation shall authorize the granting to the holders of
its common stock of rights to subscribe for or purchase any shares of stock of
any class or to receive any other rights; or
(ii) of any capital reorganization of the Corporation,
reclassification of the capital stock of the Corporation, consolidation or
merger of the Corporation with or into another corporation, or conveyance of all
or substantially all of the assets of the Corporation to another corporation; or
(iii) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;
then, and in any such case, the Corporation shall cause to be mailed to the
holders of record of the outstanding shares of the Series A Preferred Stock, at
least ten (10) days prior to the date hereinafter specified, a notice stating
(x) the date on which a record is to be taken for the purpose of such dividend,
distribution or rights, or, if a record is not to be taken, the date as of which
the holders of common stock of record to be entitled to such dividend,
distribution or rights are to be determined, or (y) the date on which such
reclassification, reorganization, consolidation, merger, conveyance,
dissolution, liquidation or winding up is to take place, and the date, if any,
to be fixed as of which holders of common stock of record shall be entitled to
exchange their shares of common stock for securities or other property
deliverable upon such reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up.
8.7 The Corporation shall at all times reserve and keep available,
out of its authorized but unissued common stock or out of shares of common stock
held in its Treasury, solely for the purpose of effecting the conversion of the
shares of the Series A Preferred Stock, the full number of shares of common
stock deliverable upon the conversion of all shares of the Series A Preferred
Stock from time to time outstanding. The Corporation shall from time to time, in
accordance with the laws of the Commonwealth of Pennsylvania, increase the
authorized amount of its common stock if at any time the authorized number of
shares of common stock remaining unissued or available from Treasury shall not
be sufficient to permit the conversion of all of the shares of the Series A
Preferred Stock at the time outstanding.
8.8 The Corporation will pay any and all issue taxes that may be
payable in respect of any issue or delivery of shares of common stock on
conversion of shares of the Series A Preferred Stock pursuant to this section 8
or section 9 hereof. The Corporation shall not, however, be required to pay any
tax which may be payable in respect of any transfer involved in the issue and
delivery of shares of common stock in a name other than that in which the shares
of the Series A Preferred Stock so converted were registered, and no such issue
or delivery shall be made unless and until the person requesting such change in
registration has paid to the Corporation the amount of any such tax, or has
established to the satisfaction of the Corporation, that such tax has been paid.
8.9 If any shares of common stock issuable upon conversion of the
Series A Preferred Stock require registration with or approval of any
governmental authority under any federal or state law before such shares may be
lawfully issued upon conversion, then the Corporation shall, in good faith and
as expeditiously as possible, endeavor to obtain such registration or approval,
as the case may be, but shall not be required to issue such shares until the
requisite registration or approval has been obtained.
9. Required Conversion to Common Stock.
9.1 At the option of the Corporation, the Series A Preferred Stock
shall be converted into common stock of the Corporation after one-half or more
of the shares comprising the Series A Preferred Stock (disregarding shares
declassified before issue) shall no longer be outstanding (whether by reason of
conversion pursuant to section 8 hereof
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or repurchase or otherwise). Subject to the provisions of this section 9, such
option may be exercised at any time by resolution of the Board of Directors, but
only with respect to all the then outstanding Series A Preferred Stock.
9.2 Conversion of the Series A Preferred Stock pursuant to the
option reserved in section 9.1 hereof may be required as of any quarterly
dividend payment date (specified in section 2.1 hereof) to which all dividends
have been declared and paid in full, as may be determined by the Board of
Directors and fixed in the resolution directing such conversion. Notice of the
required conversion of the Series A Preferred Stock shall be published once in
two newspapers printed in the English language and customarily published on each
business day and of general circulation, one in the City of Pittsburgh,
Pennsylvania and one in Beaver Falls, Pennsylvania (or if no such newspaper is
published in Beaver Falls, then publication in lieu thereof may be made in any
other newspaper selected as appropriate for this purpose by the Treasurer of the
Corporation), such publications to be at least 30 days prior to the date fixed
by the Board of Directors for such conversion. Notice of such election shall
also be mailed not less than 60 days nor more than 120 days prior to the date
fixed for conversion to each holder of record of shares of the Series A
Preferred Stock to be converted hereunder, at his address as the same may appear
on the books of the Corporation.
9.3 Effective upon the date fixed for conversion, as specified in
the resolution directing conversion hereunder, all shares of the Series A
Preferred Stock with respect to the conversion of which such notices shall have
been given (and which remain outstanding on the date so fixed) shall
automatically be deemed to be no longer outstanding for any purpose, whether or
not the certificates for such shares shall have been surrendered for conversion.
All rights with respect to such shares shall thereupon cease and terminate
except for the right of the respective holders of the certificates for such
shares to receive, upon surrender thereof, duly endorsed, to the transfer agent
for the common stock, certificates for the common stock issuable in respect to
the conversion of their Series A Preferred Stock as of the date fixed for
conversion.
9.4 The number of shares of common stock issuable upon required
conversion shall be determined in accordance with the applicable provisions in
section 8 hereof.
10. Miscellaneous.
10.1 The term "Stabilized Market Value" in this Resolution means
the price per share of the Corporation's common stock paid in secondary trading
transactions during the 45-day period next preceding the date as of which
Stabilized Market Value is to be determined hereunder, computed on a weighted
average basis with respect to the numbers of shares involved in such
transactions. Prices paid shall be ascertained in good faith by the Treasurer of
the Corporation by reference to all reasonably available data deemed reliable by
him for such purpose. If fewer than five secondary trading transactions are
found to have occurred during such 45-day period, "Stabilized Market Value"
shall be determined by reference to the median between the average bid and ask
prices quoted during said period by any two market-makers selected for this
purpose in good faith by the Treasurer of the Corporation.
10.2 The last reported book value of the Corporation's common
stock, for purposes of this Resolution, shall be determined by reference to the
shareholder's equity, calculated on a fully-diluted basis, of the Corporation as
set forth in the most recent balance sheet of the Corporation filed with the
Securities and Exchange Commission.
10.3 The shares of Series A Preferred Stock shall not have any
relative or special rights and powers other than as set forth in this Resolution
and in the Articles of Incorporation, as amended, of the Corporation.
B. 7-1/2 CUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES B
1. Designation and number of shares of series.
A series of Preferred Stock comprised of 460,000 shares is created,
established and designated "7-1/2% Cumulative Convertible Preferred Stock,
Series B" (hereinafter called "Series B Preferred Stock").
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2. Dividend rights.
2.1 The holders of the Series B Preferred Stock shall be entitled
to receive, when and as declared by the Board of Directors, preferential
cumulative dividends in cash at the annual rate of $1.875 per share and no more,
payable quarterly on March 15, June 15, September 15 and December 15 of each
year commencing June 15, 1992. In the case of the issuance of shares of Series B
Preferred Stock on or prior to May 15, 1992, such dividends shall be cumulative
from and after May 15, 1992, and the initial dividend for the period commencing
on May 15, 1992 to but not including June 15, 1992 shall be payable on June 15,
1992. Such initial dividend and all other dividends payable for a period less
than a full quarterly period shall be computed on the basis of a 360-day year
consisting of twelve 30-day months. In the case of the issuance of other shares
of Series B Preferred Stock issued after May 15, 1992 such dividends with
respect to each of such other shares shall be cumulative from the quarterly
dividend payment date next preceding the date of issuance of such shares to
which dividends have been paid on Series B Preferred Stock (or from May 15, 1992
if such shares are issued on or prior to the record date for the first dividend
declared on Series B Preferred Stock), unless the date of issuance of such
shares is a dividend payment date to which dividends have been paid on Series B
Preferred Stock or a date between the record date for the determination of
holders of Series B Preferred Stock entitled to receive a dividend which has
been declared and the date of payment thereof, in either of which events such
dividend shall be cumulative from such dividend payment date, so that all
holders of record of Series B Preferred Stock outstanding on any record date for
the determination of holders of Series B Preferred Stock entitled to receive any
dividend thereon shall have the same dividend rights per share.
2.2 So long as any shares of the Series B Preferred Stock are
outstanding, no dividends, other than (i) dividends on common stock payable in
common stock, (ii) dividends payable in stock which is junior to the Series B
Preferred Stock (both as to dividends and upon liquidation), (iii) options,
warrants or other rights to subscribe for or purchase common stock or other
stock which is junior to the Series B Preferred Stock and (iv) cash in lieu of
fractional shares in connection with any such dividend, shall be paid or
declared in cash or otherwise, nor shall any other distribution be made, on the
common stock or on any other stock junior to the Series B Preferred Stock as to
dividends, unless there shall be no arrearages in dividends on the Series B
Preferred Stock for any past quarterly dividend period, and all cumulative
dividends shall have been paid or declared in full on the Series B Preferred
Stock for the current quarterly dividend period.
2.3 Subject to the foregoing provisions, such dividends and other
distributions (payable in cash, property or stock junior to the Series B
Preferred Stock) as may be determined by the Board of Directors may be declared
and paid from time to time on the common stock or on any other stock junior to
the Series B Preferred Stock, without any right of participation therein by the
holders of Series B Preferred Stock.
2.4 So long as any shares of the Series B Preferred Stock are
outstanding, no shares of any stock junior to the Series B Preferred Stock shall
be purchased, redeemed or otherwise acquired by the Corporation or by any
subsidiary, except in connection with (i) a reclassification or exchange of any
stock junior to the Series B Preferred Stock through the issuance of other stock
junior to the Series B Preferred Stock (both as to dividends and upon
liquidation), or (ii) the purchase, redemption or other acquisition of any stock
junior to the Series B Preferred Stock with proceeds of a reasonably
contemporaneous sale of other stock junior to the Series B Preferred Stock (both
as to dividends and upon liquidation), nor shall any funds be set aside or made
available for any purchase, redemption or sinking fund for the purchase or
redemption of any stock junior to the Series B Preferred Stock, unless there
shall be no arrearages in dividends on the Series B Preferred Stock for any past
quarterly dividend period.
2.5 If there are any arrearages in dividends for any past
quarterly dividend period on any series of Preferred Stock ranking on a parity
with the Series B Preferred Stock as to dividends, or if dividends shall not
have been paid or declared in full for the current quarterly period on all
series of Preferred Stock ranking on a parity with the Series B Preferred Stock
as to dividends to the extent that dividends on such other series of Preferred
Stock are cumulative, any dividends paid or declared on the Series B Preferred
Stock or on any other series of Preferred Stock ranking on a parity with the
Series B Preferred Stock as to dividends shall be shared ratably by the holders
of the Series B Preferred Stock
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and the holders of all such other series of Preferred Stock ranking on a parity
with the Series B Preferred Stock as to dividends in proportion to such
respective arrearages and unpaid and undeclared current quarterly cumulative
dividends.
3. Liquidation preference.
3.1 In the event of any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary (hereinafter sometimes called
"liquidation"), the holders of the Series B Preferred Stock shall be entitled to
receive a preferential liquidation payment in an amount equal to $25.00 per
share plus all arrearages in dividends thereon to, but not including, the date
fixed for the liquidation payment (computed without interest) and no more,
before any distribution shall be made to the holders of the common stock or any
other stock junior to the Series B Preferred Stock as to distribution upon
liquidation. The holders of the shares of the Series B Preferred Stock will not
be entitled to receive the liquidation payment in respect of such shares until
the liquidation preference of any other shares of the Corporation's stock
ranking senior to the Series B Preferred Stock with respect to the rights upon
liquidation shall have been paid (or a sum set aside therefor sufficient to
provide for payment) in full.
3.2 If upon any liquidation the assets of the Corporation are
insufficient to permit payment of the full preferential amount payable to the
holders of the Series B Preferred Stock and of any other series of Preferred
Stock ranking on a parity with the Series B Preferred Stock as to distribution
upon liquidation, then the assets available for distribution to holders of the
Series B Preferred Stock and the holders of such other series of Preferred Stock
ranking on a parity with the Series B Preferred Stock as to distribution upon
liquidation shall be distributed ratably to the holders of the Series B
Preferred Stock and the holders of all such other series of Preferred Stock in
proportion to the full preferential amounts payable on their respective shares
upon liquidation.
3.3 If the preferential liquidation payment shall have been made
in full as provided herein, the remaining assets of the Corporation shall be
distributed among the holders of common stock and other junior stock, according
to their respective rights and preferences and in accordance with their
respective holdings, and the holders of the Series B Preferred Stock shall not
be entitled to any further participation in any distribution of assets by the
Corporation.
3.4 For the purposes of this section 3, a consolidation or merger
of the Corporation with any other corporation or a sale, lease or conveyance of
all or any part of the Corporation's property or business shall not be deemed,
as such, to constitute a liquidation, dissolution or winding up of the
Corporation, but any reorganization of the Corporation required by any court or
administrative body in order to comply with any provision of law shall be deemed
to be a liquidation, dissolution or winding up of the Corporation unless the
preferences, qualifications, limitations, restrictions and special or relative
rights granted to or imposed upon the Series B Preferred Stock are not adversely
affected by such reorganization.
4. Redemption.
4.1 The Series B Preferred Stock shall not be subject to call for
mandatory redemption by the Corporation, nor shall any holder thereof have the
right to require redemption of the Series B Preferred Stock.
4.2 The Series B Preferred Stock shall be subject to redemption at
the option of the Corporation for cash on at least 30 but not more than 60 days'
notice at any time or from time to time as a whole or in part, except that the
Series B Preferred Stock may not be redeemed prior to May 15, 1996. With respect
to any such redemption, the Series B Preferred Stock shall be redeemable at the
following redemption prices per share, together in each case with accrued but
unpaid dividends to but excluding the date fixed for redemption, if redeemed
during the 12-month period beginning on:
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Year Redemption Price Per Share
of Convertible Preferred Stock
- ---------------------- ----------------------------------------
May 15, 1996 $26.125
May 15, 1997 25.938
May 15, 1998 25.750
May 15, 1999 25.563
May 15, 2000 25.375
May 15, 2001 25.188
May 15, 2002 and thereafter 25.00
4.3 Notice of any redemption shall be given by first class mail,
postage prepaid, mailed not less than 30 nor more than 60 days prior to the date
fixed for redemption to the holders of record of the shares of Series B
Preferred Stock to be redeemed, at their respective addresses appearing on the
books of the Corporation. Notice so mailed shall be conclusively presumed to
have been duly given whether or not actually received. Such notice shall state:
(i) the date fixed for redemption; (ii) the redemption price; (iii) that the
holder has the right to convert such shares into Common Stock until the close of
business on the redemption date; (iv) the then-effective conversion rate and the
place where certificates for such shares may be surrendered for conversion; (v)
if less than all the shares held by such holder are to be redeemed, the number
of shares to be redeemed from such holder; (vi) the place where certificates for
such shares are to be surrendered for payment of the redemption price; and (vii)
that after such date fixed for redemption the shares to be redeemed shall not
accrue dividends.
At the option of the Corporation, if notice of redemption is mailed as
aforesaid, and if prior to the date fixed for redemption funds sufficient to pay
in full the redemption price are deposited in trust, for the account of the
holders of the shares to be redeemed, with a bank or trust company named in such
notice doing business in the Borough of Manhattan, the City of New York, State
of New York or the Commonwealth of Pennsylvania and having capital surplus and
undivided profits of at least $50 million (which bank or trust company also may
be the transfer agent and/or paying agent for the Series B Preferred Stock)
notwithstanding the fact that any certificate(s) for shares called for
redemption shall not have been surrendered for cancellation, on and after such
date of deposit the shares represented thereby so called for redemption shall be
deemed to be no longer outstanding, and all rights of the holders of such shares
as shareholders of the Corporation shall cease, except the right of the holders
thereof to convert such shares in accordance with the provisions of Paragraph 8
at any time prior to the close of business on the redemption date and the right
of the holders thereof to receive out of the funds so deposited in trust the
redemption price, without interest, upon such surrender of the certificate(s)
representing such shares. Any funds so deposited with such bank or trust company
in respect of shares of Series B Preferred Stock converted before the close of
business on the redemption date shall be returned to the Corporation upon such
conversion. Any funds so deposited with such bank or trust company which shall
remain unclaimed by the holders of shares called for redemption at the end of
two years after the redemption date shall be repaid to the Corporation, on
demand, and thereafter the holder of any such shares shall look only to the
Corporation for the payment, without interest, of the redemption price.
4.4 Any provision of this Section 4 to the contrary
notwithstanding, in the event that any quarterly dividend payable on the Series
B Preferred Stock shall be in arrears and until all such dividends in arrears
shall have been paid or declared and set apart for payment, the Corporation
shall not redeem any shares of Series B Preferred Stock unless all outstanding
shares of Series B Preferred Stock are simultaneously redeemed and shall not
purchase or otherwise acquire any shares of Series B Preferred Stock except in
accordance with a purchase offer made by the Corporation on the same terms to
all holders of record of Series B Preferred Stock.
4.5 If fewer than all the outstanding shares of the Series B
Preferred Stock are to be redeemed, the Corporation shall select those to be
redeemed by lot or on a pro rata basis or by any other method deemed by the
Corporation to be equitable (with adjustments to avoid fractional shares).
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4.6 Any shares of the Series B Preferred Stock for which a notice
of redemption has been given may be converted into shares of Common Stock at any
time before the close of business on the date fixed for the redemption as set
forth in Section 8 below.
5. Status of Series B Preferred Stock repurchased or
declassified.
Shares of Series B Preferred Stock repurchased or declassified as such
by future resolution of the Board of Directors shall be deemed to be authorized
but unissued shares of Preferred Stock undesignated as to series. Shares of
Series B Preferred Stock exchanged for shares of any other class or series shall
thereby be deemed to be cancelled and the number of shares of Preferred Stock
which the Corporation is authorized to issue shall be correspondingly reduced.
6. Restrictions on certain action affecting Series B Preferred
Stock.
6.1 So long as any shares of Series B Preferred Stock remain
outstanding, the Corporation will not, without the consent given in writing
without a meeting or affirmative vote given in person or by proxy at a meeting
called for the purpose, by the holders of at least 66-2/3 per cent of the shares
of the Series B Preferred Stock then outstanding, (i) authorize, create or
issue, or increase the authorized or issued amount of, any other series of
Preferred Stock or any other class of stock ranking prior to (or issuable in
series which may, by resolutions of the Board of Directors providing for the
issue of such series, rank prior to), the Series B Preferred Stock, either as to
dividends or upon liquidation, dissolution or winding up, or (ii) amend, alter
or repeal any of the provisions of the Articles of Incorporation or of this
resolution so as to materially and adversely affect the preferences, special
rights, privileges or voting powers of the holders of the Series B Preferred
Stock, or (iii) effect a merger or consolidation which would affect materially
and adversely the preferences, special rights, privileges or voting powers of
the holders of the Series B Preferred Stock; provided, however, that any
increase in the amount of the authorized preferred stock or any outstanding
series of preferred stock or any other capital of the Corporation, or the
creation and issuance of other series of preferred stock including the Series B
Preferred Stock, or of any other capital stock of the Corporation, in each case
ranking on a parity with or junior to the Series B Preferred Stock with respect
to the payment of dividends and the distribution of assets upon liquidation,
dissolution or winding up shall not be deemed to materially and adversely affect
such rights, preferences, special rights, privileges or voting powers.
6.2 The Corporation may not, without the consent or affirmative
vote of holders of the Series B Preferred Stock then outstanding as described in
Section 6.1, establish any other series of Preferred Stock ranking on a parity
with, or authorize any other class of stock ranking on a parity with (or
issuable in series which may, by resolutions of the Board of Directors providing
for the issue of such series, rank on a parity with) the Series B Preferred
Stock, either as to dividends or upon liquidation, dissolution or winding up, or
both ("Parity Stock"), or increase the authorized number of shares of any such
other class or series, unless the Articles of Incorporation or Designation
Statement creating or authorizing such class or series provide that if in any
case the stated dividends or amounts payable upon liquidation, dissolution or
winding up are not paid in full on the Series B Preferred Stock and all
outstanding shares of Parity Stock, the shares of all Parity Stock shall share
ratably in the payment of dividends, including accumulations (if any) in
accordance with the sums which would be payable on all Parity Stock if all
dividends in respect of all shares of Parity Stock were paid in full, and on any
distribution of assets upon liquidation, dissolution or winding up ratably in
accordance with the sums which would be payable in respect of all shares of
Parity Stock if all sums payable were discharged in full.
7. Voting rights.
Except as set forth in section 6 or as otherwise from time to time
expressly required by law, holders of the Series B Preferred Stock shall not be
entitled to vote.
8. Conversion rights.
8.1 The holders of Series B Preferred Stock shall be entitled, at
any time, to surrender shares of the Series B Preferred Stock for conversion
into shares of common stock of the Corporation. Subject to the provisions set
forth in this section 8, each share of Series B Preferred Stock surrendered
hereunder shall be converted, as of the close of business
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on the date of such surrender, into 1.6026 shares of common stock subject to
adjustment as described in Section 8.4 (the "Conversion Rate").
8.2 In order to convert shares of Series B Preferred Stock into
common stock, the holder shall surrender the certificate or certificates
therefor, duly endorsed, at the office of the Transfer Agent for the common
stock, and shall give written notice to the Corporation at said office that he
elects to convert the same or part thereof. The Corporation as soon as
practicable thereafter will issue and deliver at said office to such holder a
certificate for the number of full shares of common stock to which he shall be
entitled hereunder; however, such holder shall be treated for all purposes as
the record holder of such common stock at the time as of which such conversion
takes place as aforesaid.
8.3 No fractional shares of common stock shall be issued upon
conversion of the Series B Preferred Stock. Instead of any fraction of a share
which would otherwise be issuable, the Corporation shall pay a cash adjustment,
concurrently with issuance of the certificate for the full number of shares to
which the holder is entitled, in an amount equal to the product of (i) the
fraction of a share which would otherwise be issuable, and (ii) the current
market price of the Corporation's common stock on the date of conversion.
8.4 The Conversion Rate shall be subject to adjustment from time
to time as follows:
(a) In the event the Corporation should at any time or
from time to time fix a record date for the effectuation of a subdivision of the
outstanding shares of common stock or the determination of holders of common
stock entitled to receive a dividend or other distribution payable in additional
shares of common stock (or payable in certain rights or warrants entitling them
to subscribe for common stock) at less than the current market price, then, as
of such record date (or the date of such dividend distribution or subdivision if
no record date is fixed) the Conversion Rate of the Series B Preferred Stock
shall be appropriately increased so that the number of shares of common stock
issuable on conversion of each share of Series B Preferred Stock shall be
increased in proportion to such increase of outstanding shares of common stock.
(b) If the number of shares of common stock outstanding
at any time is decreased by a combination of the outstanding shares of common
stock, then, following the record date of such combination, the Conversion Rate
for the Series B Preferred Stock shall be appropriately decreased so that the
number of shares of common stock issuable on conversion of each share of Series
B Preferred Stock shall be decreased in proportion to such decrease in
outstanding shares of common stock.
(c) In the event the Corporation shall declare a
distribution payable in the Corporation's capital stock (other than common
stock), evidences of indebtedness issued by the Corporation, assets (excluding
cash dividends or distributions from retained earnings) or warrants or rights
not referred to in section 8.4(a), then, in each such case for the purpose of
this section, the holders of the Series B Preferred Stock shall be entitled to a
proportionate share of any such distribution as though they were the holders of
the number of shares of common stock of the Corporation into which their shares
of Series B Preferred Stock are convertible as of the record date fixed for the
determination of the holders of common stock of the Corporation entitled to
receive such distribution.
8.5 No adjustment in the Conversion Rate will be required unless
such adjustment would require a change of at least .01 in the Conversion Rate
then in effect; provided, however, that any adjustment that would otherwise be
required to be made shall be carried forward and taken into account in any
subsequent adjustment.
8.6 In the case of any consolidation or merger to which the
Corporation is a party and as a result of which holders of common stock shall be
entitled to receive securities, cash or other property with respect to or in
exchange for such common stock, or in case of any sale or conveyance to another
corporation of the property of the Corporation as an entirety or substantially
as an entirety, or in case of any reclassification or change in outstanding
shares of common stock (other than a change in par value, or from par value to
no par value or from no par value to par value, or as a result of a subdivision
or combination of the common stock) there will be no adjustment of the
Conversion Rate but the holder of each share of Series B Preferred Stock then
outstanding will have the right thereafter to convert such share into the
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kind and amount of securities, cash or other property which such holder would
have owned or have been entitled to receive immediately after such consolidation
or merger, sale or conveyance or reclassification or change had such share been
converted immediately prior to the effective date of such consolidation or sale
or conveyance or reclassification or change. If, in the case of any such
consolidation, merger, sale or conveyance, the stock or other securities and
property receivable thereupon by a holder of shares of common stock includes
shares of stock, securities or other property or assets (including cash) of an
entity other than the successor or acquiring entity, as the case may be, in such
consolidation, merger, sale or conveyance, then the Corporation shall enter into
an agreement with such other entity for the benefit of the holders of Series B
Preferred Stock that shall contain such provisions to protect the interests of
such holders as the Board of Directors shall reasonably consider necessary by
reason of the foregoing.
8.7 The Corporation shall at all times reserve and keep available,
out of its authorized but unissued common stock or out of shares of common stock
held in its Treasury, solely for the purpose of effecting the conversion of the
shares of the Series B Preferred Stock, the full number of shares of common
stock deliverable upon the conversion of all shares of the Series B Preferred
Stock from time to time outstanding. The Corporation shall from time to time, in
accordance with the laws of the Commonwealth of Pennsylvania, increase the
authorized amount of its common stock if at any time the authorized number of
shares of common stock remaining unissued or available from Treasury shall not
be sufficient to permit the conversion of all of the shares of the Series B
Preferred Stock at the time outstanding.
8.8 The Corporation will pay any and all issue taxes that may be
payable in respect of any issue or delivery of shares of common stock on
conversion of shares of the Series B Preferred Stock pursuant to this section 8.
The Corporation shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issue and delivery of shares
of common stock in a name other than that in which the shares of the Series B
Preferred Stock so converted were registered, and no such issue or delivery
shall be made unless and until the person requesting such change in registration
has paid to the Corporation the amount of any such tax, or has established to
the satisfaction of the Corporation, that such tax has been paid.
8.9 If any shares of common stock issuable upon conversion of the
Series B Preferred Stock require registration with or approval of any
governmental authority under any federal or state law before such shares may be
lawfully issued upon conversion, then the Corporation shall, in good faith and
as expeditiously as possible, endeavor to obtain such registration or approval,
as the case may be, but shall not be required to issue such shares until the
requisite registration or approval has been obtained.
8.10 The Corporation reserves the right to make any adjustment in
the Conversion Rate in addition to those required in the foregoing provisions as
the Corporation in its discretion shall determine to be advisable in order that
certain stock-related distributions hereafter made by the Corporation to its
stockholders shall not be taxable. Except as stated above, the Conversion Rate
will not be adjusted for the issuance of common stock or any securities
convertible into or exchangeable for common stock or carrying the right to
purchase any of the foregoing.
Upon conversion no adjustments will be made for accrued dividends and,
therefore, shares of the Series B Preferred Stock surrendered for conversion
during the period between the close of business on any dividend payment record
date and the opening of business on the corresponding dividend payment date
(except shares called for redemption on a date during such period) must be
accompanied by payment of an amount equal to the dividend payable on such shares
on such dividend payment date.
8.11 In the case of any share of Series B Preferred Stock that is
converted after any record date with respect to the payment of a dividend on the
Series B Preferred Stock and on or prior to the date on which such dividend is
payable by the Corporation (the "Dividend Due Date") the dividend due on such
Dividend Due Date shall be payable on such Dividend Due Date to the holder of
record of such shares as of such preceding record date notwithstanding such
conversion. Shares of Series B Preferred Stock surrendered for conversion during
the period from the close of business on any record date with respect to the
payment of a dividend on the Series B Preferred Stock next preceding any
Dividend Due Date to the opening of business on such Dividend Due Date shall
(except in the case of shares of Series B Preferred Stock which have been called
for redemption on a redemption date within such period) be accompanied by
payment in
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next-day funds or other funds acceptable to the Corporation of an amount equal
to the dividend payable on such Dividend Due Date on the share of Series B
Preferred Stock being surrendered for conversion. The dividend with respect to a
share of Series B Preferred Stock called for redemption on a redemption date
during the period from the close of business on any record date with respect to
the payment of a dividend on the Series B Preferred Stock next preceding any
Dividend Due Date to the opening of business on such Dividend Due Date shall be
payable on such Dividend Due Date to the holder of record of such share on such
dividend record date notwithstanding the conversion of such share of Series B
Preferred Stock after such record date and prior to such Dividend Due Date, and
the holder converting such share of Series B Preferred Stock need not include a
payment of such dividend amount upon surrender of such share of Series B
Preferred Stock for conversion. Except as provided in this paragraph, no payment
or adjustment shall be made upon any conversion on account of any dividends
accrued on shares of Series B Preferred Stock surrendered for conversion or on
any dividends on the shares of Common Stock issued upon conversion.
9. Miscellaneous.
9.1 The "current market price" of the Corporation's common stock,
for purposes of this Resolution, shall mean the average, for the ten trading
days immediately preceding the date as of which "current market price" is to be
determined, of (A) the median of the highest bid price and lowest ask price per
share of the Corporation's common stock as reported by the National Association
of Securities Dealers Automated Quotation System, or any similar system of
automated dissemination of quotations of securities prices then in common use,
if so quoted, or (B) if the Corporation's common stock is listed or admitted for
trading on any national securities exchange, the last sale price, or the closing
bid price if no sale occurred, of the Corporation's common stock on the
principal securities exchange on which the Corporation's common stock is listed.
If the Corporation's common stock is quoted on a national securities or central
market system, in lieu of a market or quotation system described above, "current
market price" shall be determined in the manner set forth in clause (A) of the
preceding sentence if bid and asked quotations are reported but actual
transactions are not, and in the manner set forth in clause (B) of the preceding
sentence if actual transactions are reported. If none of the conditions set
forth above is met, the "current market price" shall be the average of actual
sale prices of the Corporation's common stock during the ten business days
immediately preceding the date as of which "current market price" is to be
determined.
9.2 The shares of Series B Preferred Stock shall not have any
relative or special rights and powers other than as set forth in this Resolution
and in the Articles of Incorporation, as amended, of the Corporation.
Section II. Common Stock
Except for and subject to those rights expressly granted to holders of
the Preferred Stock by resolution or resolutions adopted by the Board of
Directors pursuant to Section I of this Article 5 and except as may be provided
by the laws of the Commonwealth of Pennsylvania, holders of the Common Stock
shall have exclusively all other rights of shareholders.
Section III. Preemptive Rights; Cumulative Voting
A. The Corporation may issue shares, option rights, securities
having conversion or option rights and any other securities of any class without
first offering them to shareholders of any class or classes.
B. The shareholders shall not have any right of cumulative
voting.
Section IV. Special Voting Requirements
A. Except as provided in paragraph C below, no corporate action
of a character described in paragraph B below, and no agreement, plan or
resolution providing therefor, shall be valid or binding upon the Corporation
unless such corporate action shall have been approved in compliance with all
applicable provisions of the Florida Business Corporation Act and these Articles
and shall have been authorized by the affirmative vote of at least seventy-five
percent
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of the outstanding shares of Common Stock entitled to vote, given in person or
by proxy, at a meeting called for such purpose.
B. Corporate actions subject to the voting requirements of this
Section IV shall be:
(i) any merger or consolidation, or any 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 the Corporation; or
(ii) removal of the entire Board of Directors, a class of
Directors or any member of the Board of Directors during his term
without cause.
C. The voting requirements of this Section shall not apply to any
transaction of a character described in clause (i) of paragraph B above if the
Board of Directors shall have approved and recommended the transaction prior to
the consummation thereof.
D. Except if otherwise specifically provided in the Bylaws of the
Corporation such Bylaws may be altered or repealed and new Bylaws may be adopted
by the Board or by the affirmative vote of the holders of at least seventy-five
percent of the outstanding Common Stock entitled to vote.
E. For purposes of this Section IV, the following definitions
shall apply:
(i) "Person" shall mean an individual, a corporation, a
partnership, an association, a joint-stock company, a trust, any
unincorporated organization, a government or political subdivision
thereof and any other entity.
(ii) "Substantial Part" shall mean more than twenty
percent of the total consolidated assets of the Corporation, as shown
on its consolidated balance sheet as of the end of the most recent
fiscal year.
F. The affirmative vote of the holders of at least seventy-five
percent of the outstanding shares of Common Stock entitled to vote shall be
required to amend or repeal this Section IV or Section V hereof.
ARTICLE 6
A. The Board of Directors of the Corporation. when evaluating any
proposal
(i) involving a tender or exchange offer for any security
of the Corporation,
(ii) to merge or consolidate the Corporation with another
corporation or other person, or
(iii) to purchase or otherwise acquire all or substantially
all or a substantial part of the properties or assets of the
Corporation,
shall, in connection with the exercise of its judgment in determining what is in
the best interests of the Corporation and its shareholders, give due
consideration to all relevant factors, including without limitation, the
long-term prospects and interests of the corporation and its shareholders, and
the social, economic, legal or other effects of any action on the employees,
suppliers, customers of the corporation or its subsidiaries, the communities and
societies in which the corporation or its subsidiaries operate, and the economy
of the state and the nation.
The definitions set forth in Article 5, Section IV, paragraph E of
these Articles shall apply to this Article 6.
B. If the Board of Directors determines that a proposal of a
character described in clause (i) or (ii) or (iii) of paragraph a above should
be rejected, it may take any lawful action to accomplish its purpose, including,
but not
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limited to, any or all of the following: advising shareholders not to accept the
proposal; instituting litigation against the party making the proposal; filing
complaints with governmental and regulatory authorities; acquiring the
Corporation's securities; selling or otherwise issuing authorized but unissued
securities or treasury stock or granting options with respect thereto; acquiring
a company to create an antitrust or other regulatory problem for the party
making the proposal; and obtaining a more favorable offer from another
individual or entity.
ARTICLE 7
The following are provisions for the regulation of the internal affairs
and business of the Corporation:
A. BYLAWS
The Board of Directors of the Corporation shall have the power to make,
alter, amend and repeal such Bylaws as it may deem necessary and convenient for
the regulation and management of the Corporation not inconsistent with law or
the Articles.
B. INDEMNIFICATION
Directors and Officers of the Corporation shall be indemnified as of
right to the fullest extent now or hereafter permitted by law in connection with
any actual or threatened action, suit or proceedings, civil, criminal,
administrative, investigative or other (whether brought by or in the right of
the Corporation or otherwise) arising out of their service to the Corporation or
to another organization at the request of the Corporation, or because of their
positions with the Corporation. Persons who are not Directors or Officers of the
Corporation may be similarly indemnified in respect of such service to the
extent authorized at any time by the Board of Directors of the Corporation. The
Corporation may purchase and maintain insurance to protect itself and any such
Director, Officer or other person against any liability, cost or expense
asserted against or incurred by him in respect of such service, whether or not
the Corporation would have the power to indemnify him against such liability by
law or under the provisions of this paragraph. The provisions of this paragraph
shall be applicable to persons who have ceased to be Directors or Officers, and
shall inure to the benefit of the heirs, executors and administrators of persons
entitled to indemnity hereunder.
C. RESERVED POWER
The Corporation shall be deemed for all purposes to have reserved the
right to alter, change, or repeal any provision contained in its Articles or
Bylaws to the extent now or hereafter permitted or prescribed by law, and all
rights herein conferred upon shareholders and others are granted subject to such
reservation.
ARTICLE 8
Any or all classes and series of shares or any part thereof, may be
uncertificated shares to the extent now or hereafter permitted or prescribed by
law.
ARTICLE 9
To the fullest extent permitted by law, no director of the Corporation
shall be personally liable for monetary damages for any action taken, or any
failure to take any action.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Incorporation this ___ day of _____________, 2001.
-------------------------------
James G. Orie
Incorporator
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EXHIBIT D
BYLAWS OF F.N.B. SURVIVING CORPORATION
A Florida Corporation
Adopted _______________, 2001
ARTICLE I
SHAREHOLDERS
SECTION 1. ANNUAL MEETING. The regular annual meeting of the
shareholders for the election of directors and the transaction of whatever other
business may properly come before the meeting shall be held at the principal
office of the Corporation, at 2 o'clock, p.m. on the fourth Wednesday of April
of each year, or at such other time and place as the Board of Directors may
designate. Notice of such meeting shall be given not less than ten days prior to
the date thereof, addressed to each shareholder at his/her address appearing on
the books of the Corporation.
SECTION 2. SPECIAL MEETINGS. Special meetings of the shareholders may
be called by the Chairman of the Board or the President, or by the Secretary
pursuant to a resolution or at the written direction of 75% of the members of
the Board of Directors, or by the holders of not less than 10% of the
outstanding shares of the Corporation. Special meetings may be held at such
place within or without the State of Florida as shall be specified in the notice
thereof. Except as otherwise required by law or by the Articles, written notice
of the time, place and purpose or purposes of every special meeting of
shareholders shall be given not less than 10 nor more than 60 days before the
date of the meeting to each shareholder entitled to vote at the meeting. At any
special meeting only such business may be transacted which is related to the
purpose or purposes set forth in the notice thereof.
SECTION 3. RECORD DATE FOR MEETINGS AND OTHER PURPOSES. For the purpose
of determining the shareholders entitled to notice of or to vote at any meeting
of shareholders, or to express consent to or dissent from any proposal without a
meeting, or for the purpose of determining shareholders entitled to receive
payment of any dividend or allotment of any right, or for the purpose of any
other action, the Board shall fix, in advance, a date as the record date for any
such determination of shareholders. Such date shall not be more than 70 days
before the date of such meeting or other action.
When a determination of shareholders of record entitled to notice of or
to vote at any meeting of shareholders has been made as provided in this
Section, such determination shall apply to any adjournment thereof; provided,
however, that if a meeting is adjourned to a date more than 120 days from the
original date of the meeting, the Board shall fix a new record date.
When a meeting is adjourned to another time or place, it shall not be
necessary to give notice of the adjourned meeting if the time and place to which
the meeting is adjourned are announced at the meeting at which the adjournment
is taken and at the adjourned meeting only such business is transacted as might
have been transacted at the original meeting.
SECTION 4. QUORUM FOR MEETINGS. Except as otherwise required by law or
in the Articles, the holders of shares entitled to cast a majority of the votes
present at a meeting of shareholders in person or by proxy shall constitute a
quorum at such meeting for the transaction of business, but the shareholders
present may adjourn any meeting to another time or place despite the absence of
a quorum. The shareholders present in person or by proxy at a duly organized
meeting may continue to do business until adjournment, notwithstanding the
withdrawal of enough shareholders to leave less than a quorum.
Whenever the holders of any class or series of shares are entitled to
vote separately on a specified item of business, the provisions of this Section
shall apply in determining the presence of a quorum of such class or series for
the transaction of such specified item of business.
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SECTION 5. PRESIDING OFFICER AND SECRETARY. At any meeting of the
shareholders, if neither the Chairman of the Board, if there be one, nor the
President nor a Vice President nor a person designated by the Board to preside
at the meeting shall be present, the shareholders shall appoint a presiding
officer for the meeting. If neither the Secretary nor an Assistant Secretary
shall be present, the appointee of the person presiding at the meeting shall act
as Secretary of the meeting.
SECTION 6. JUDGE OF ELECTION. The Board may, in advance of any
shareholders' meeting, appoint one or three Judges of Election to act at the
meeting or any adjournment thereof. If a Judge of Election is not so appointed,
the person presiding at the shareholders' meeting may, and on the request of any
shareholder entitled to vote thereat shall, make such appointment. In case any
person appointed as Judge of Election fails to appear or act, the vacancy may be
filled by appointment made by the Board in advance of the meeting or at the
meeting by the person presiding at the meeting. No person shall be elected a
director at a meeting at which he has served as a Judge of Election.
The Judge of Election shall determine the number of shares outstanding
and the voting power of each, the shares represented at the meeting, the
existence of a quorum, the validity and effect of proxies, and shall receive
votes, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, determine the result, and
do such acts as are proper to conduct the election or vote with fairness to all
shareholders. If there are three Judges of Election the act of majority shall
govern. On request of the person presiding at the meeting or any shareholder
entitled to vote thereat, the Judge of Election shall make a report in writing
of any challenge, question or matter determined by him or her. Any such report
shall be prima facie evidence of the facts therein stated, and shall be filed
with the minutes of the meeting.
SECTION 7. VOTING. Whenever directors are to be elected by the
shareholders, they shall be elected by a plurality of the votes cast at the
meeting of shareholders by the holders of shares entitled to vote for such
directors.
Whenever any action other than the election of directors is proposed to
be taken by vote of the shareholders, except as otherwise expressly required by
law, in the Articles or in these Bylaws, it shall be authorized by a majority of
the votes cast at the meeting of shareholders by the holders of shares entitled
to vote thereon.
Except as otherwise provided by the Articles, each shareholder of the
Corporation entitled to vote on any matter at any meeting of shareholders shall
be entitled to one vote for every such share standing in his/her name on the
record date for the meeting.
Elections of directors need not be by ballot unless required by vote of
the shareholders before the voting for election of directors begins. Otherwise,
the method of voting at any election of directors and upon any other matter
before a meeting shall be determined at the discretion of the person presiding
at the meeting.
SECTION 8. VOTING LIST. The Secretary of the Corporation, or other
officers or agents designated by the Board of Directors, shall make a complete
list of the shareholders entitled to vote at each meeting arranged in alphabetic
order with the addresses and the number of shares held by each. The list shall
be available for inspection by any shareholder at least ten days prior to the
meeting and shall be produced and kept open at the meeting and shall be subject
to inspection by any shareholder during the meeting.
SECTION 9. NOTICE OF SHAREHOLDER PROPOSALS. No proposal submitted by a
shareholder of the Corporation for consideration at the annual meeting of the
shareholders will be considered at any such meeting unless the Secretary of the
Corporation has received written notice of the matter proposed to be presented
from the shareholder on or prior to the date which is 120 days prior to the date
on which the Corporation first mailed its proxy materials for the prior year's
annual meeting of shareholders.
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ARTICLE II
BOARD OF DIRECTORS
SECTION 1. POWERS. The business and affairs of the Corporation shall be
managed by its Board of Directors (herein referred to as the "Board").
SECTION 2. NUMBER AND QUALIFICATION OF DIRECTORS. The entire Board
shall consist of that number of directors, not less than five nor more than 25,
as shall from time to time be prescribed by the Board. Directors shall be at
least 21 years of age but need not be United States citizens, residents of
Florida nor shareholders of the Corporation.
SECTION 3. CLASSIFICATION OF DIRECTORS. The board of directors shall be
divided into three classes, designated Class I, Class II and Class III. Each
class shall consist, as nearly as may be possible, of one-third of the total
number of directors constituting the entire Board of Directors. The term of the
Corporation's initial Class I directors shall expire at the Corporation's 2002
annual meeting of shareholders; the term of the Corporation's initial Class II
directors shall expire at the Corporation's 2003 annual meeting of shareholders;
and the term of the Corporation's initial Class III directors shall expire at
the Corporation's 2004 annual meeting of shareholders.
At each annual meeting of the shareholders, successors to the class of
directors whose term expires at the annual meeting shall be elected for a
three-year term. Except as provided in Section 6, a director shall hold office
until the annual meeting for the year in which his term expires and until his
successor shall be elected and shall qualify, subject, however, to prior death,
resignation, retirement, disqualification or removal from office.
SECTION 4. NOMINATION OF DIRECTORS.
(a) By Board Resolution. Prior to each annual meeting, and subject
to the power accorded to it under Section 2 of this Article, the Board shall
nominate candidates to succeed the directors of the class whose terms will
expire at such meeting and shall disclose the identity and credentials of such
nominees to the shareholders by means of a proxy statement filed and
disseminated pursuant to Regulation 14A adopted under the federal Securities
Exchange Act of 1934 (or any successor regulation or statute).
(b) By Shareholders. Nominations for election of directors may
also be made by any shareholder entitled to vote for the election of directors
if written notice (the "Notice") of the shareholder's intent to nominate a
director at the meeting is given by the shareholder and received by the
Secretary of the Corporation in the manner and within the time specified herein.
The Notice shall be delivered to the Secretary not less than 14 days prior to
the meeting of the shareholders called for the election of directors; except
that if less than 21 days' notice of the meeting is given to shareholders, the
Notice shall be delivered to the Secretary not later than the earlier of the
seventh day following the day on which notice of the meeting was first mailed to
shareholders or the fourth day prior to the meeting. In lieu of delivery to the
Secretary, the Notice may be mailed to the Secretary by certified mail, return
receipt requested, but shall be deemed to have been given only upon actual
receipt by the Secretary.
(c) Contents of Notice. The Notice shall be in writing and shall
contain or be accompanied by:
(1) the name and address of the nominating shareholder;
(2) a representation that the shareholder is a holder of
record of the Corporation's voting stock and intends
to appear in person or by proxy at the meeting to
nominate the person or persons specified in the
Notice;
(3) such information regarding each nominee as would have
been required to be included in a proxy statement
filed pursuant to Regulation 14A under the Securities
Exchange Act of 1934 (or pursuant to any successor
act or regulation) had proxies been solicited with
respect to such nominee by the Board;
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(4) a description of all arrangements or understandings
among the shareholder and each nominee and any other
person or persons (naming such person or persons)
pursuant to which the nomination or nominations are
to be made by the shareholder;
(5) the written consent of each nominee to serve as a
director of the Corporation if so elected; and
(6) such other information as may be required by any
applicable law or regulation.
(d) Determination of Compliance. The Judge or Judges of Election,
or if a Judge or Judges of Election shall not have been appointed pursuant to
these bylaws the presiding officer at the meeting, may if the facts warrant,
determine and declare to the meeting that any nomination made at the meeting
pursuant to paragraph (b) hereof was not made in accordance with the procedures
of this Section 4 and, in such event, that nomination shall be invalid. Any
decision by the presiding officer shall be conclusive and binding upon all
shareholders of the Corporation for any purpose.
SECTION 5. TERM OF DIRECTORS. Each director shall hold office for the
term for which he/she is elected and thereafter until his/her successor is duly
elected and qualified or until his/her earlier death, resignation or removal.
SECTION 6. VACANCIES AND NEWLY CREATED DIRECTORSHIPS. Any directorship
not filled at the annual meeting and any vacancy occurring in the Board, however
caused (including any vacancy created as a result of any increase in the number
of directors) may be filled by the affirmative vote of a majority of the
incumbent directors or by a sole remaining director. If one or more directors
shall resign from the Board effective at a future date, a majority of directors
then in office, including those who have so resigned, shall have the power to
fill such vacancy or vacancies, to take effect when such resignation or
resignations shall become effective.
If the number of directors is changed, any increase or decrease shall
be apportioned among the classes so as to maintain the number of directors in
each class as nearly equal as possible, and any additional director of any class
elected to fill a vacancy resulting from an increase in such class shall hold
office until the next annual meeting of shareholders, but in no case will a
decrease in the number of directors shorten the term of any incumbent director.
SECTION 7. RESIGNATIONS. Any director may resign by written notice
delivered to the Secretary. A resignation shall be effective upon receipt or at
such subsequent time as shall be specified in the notice of resignation.
SECTION 8. MEETINGS. Meetings of the Board, regular or special, may be
held at any place within or without the State of Florida as the Board from time
to time may fix or as shall be specified in the respective notice or waivers of
notice thereof. An annual meeting of the Board for the appointment of officers
shall be held on the day on which the annual meeting of the shareholders shall
have been held, or as soon after the holding of such meeting of shareholders as
is practicable. The Board may fix times and places for regular meetings of the
Board and no notice of such meetings need be given. Special meetings of the
Board shall be held whenever called by the Chairman of the Board, if there be
one, the President or a majority of the members of the Board. Notice of each
such meeting shall be given by the Secretary or the person calling the meeting
to each director either personally or by mailing the same not later than the
second day before the meeting, or by facsimile transmission, telegraphing,
cabling, telephoning or personal delivery or communication of same no later than
the day before the meeting. Notice of a meeting need not be given to any
director who signs a waiver of notice whether before or after the meeting, or
who attends the meeting without protesting prior to the conclusion of the
meeting the lack of notice to him. Neither the business to be transacted at, nor
the purpose of, any meeting of the Board need be specified in the notice or
waiver of notice of such meeting. Notice of an adjourned meeting need not be
given if the time and place are fixed at the meeting adjourning and if the
period of adjournment does not exceed ten days in any one adjournment.
SECTION 9. COMMITTEES OF THE BOARD.
(a) The Board, by resolution adopted by a majority of the entire
Board, shall appoint from among its members an Audit Committee, a Nominating
Committee and a Compensation Committee, and may appoint an Executive Committee
and one or more other committees, each of which shall have at least three
members.
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(b) The Executive Committee, if so created, shall have and may
exercise all the powers and authority of the Board except as limited by
applicable law or by the Board.
(c) The Audit Committee shall review periodically the
Corporation's processes for producing financial data, its internal controls and
the independence of its external auditors and such other similar matters as the
Board from time to time may determine. Its members shall not include any person
employed by the Corporation or any subsidiary.
(d) The Nominating Committee shall recommend to the Board
candidates to be nominated for election as directors in accordance with the
provisions of Section 4(a) of this Article II and shall, when circumstances in
its judgment so require, formulate plans and procedures for executive management
succession, and may exercise such other powers, as may, from time to time, be
lawfully granted by the Board of Directors. The majority of the Nominating
Committee shall be persons who are not employees of the Corporation or any
subsidiary.
(e) The Compensation Committee shall recommend to the Board the
amounts of salary, bonus and other benefits of employment to be paid as current
or deferred remuneration to all executive officers of the Corporation and may
exercise such other powers as may, from time to time, be lawfully granted by the
Board of Directors.
(f) The Board, by resolution adopted by a majority of the entire
Board, may:
(i) Fill any vacancy in any such committee;
(ii) Appoint one or more directors to serve as alternate
members of any such committee, to act in the absence
or disability of members of any such committee with
all the powers of such absent or disabled members;
and
(iii) Remove any director from membership on such committee
at any time, with or without cause.
(g) Actions taken at a meeting of each committee shall be kept in
a record of its proceedings which shall be reported to the Board at its next
meeting following each committee meeting.
SECTION 10. NOTICES AND MEETINGS OF COMMITTEES. Meetings of any
committee of the Board, regular or special, may be held at any place within or
without the State of Florida as such committee from time to time may fix or as
shall be specified in the respective notice or waivers of notice thereof, but no
notice of regular meetings need be given. Notice of such special meeting shall
be given to each member of such committee in the manner specified in Section 8
of this Article II. Notice of the meeting need not be given to any member who
signs a waiver of notice whether before or after the meeting, or who attends the
meeting without protesting prior to the conclusion of the meeting the lack of
notice to him. Neither the business to be transacted at, nor the purposes of,
any meeting of a committee need be specified in the notice or waiver of notice
of such meeting.
SECTION 11. QUORUM AND ACTIONS BY COMMITTEE. A majority of each
committee shall constitute a quorum for the transaction of business. The act of
the majority of the members present at a meeting at which a quorum is present
shall be the act of any such committee. Each committee shall have and may
exercise such authority to the extent provided by these Bylaws or in the
resolution creating such committee.
SECTION 12. RESIGNATIONS FROM COMMITTEES. Any member of a committee may
resign by written notice to the Secretary. A resignation shall be effective upon
receipt thereof by the Secretary of the Board or at such subsequent time as
shall be specified in the notice of resignation.
SECTION 13. COMPENSATION OF DIRECTORS. The Board, by the affirmative
vote of a majority of directors in office and irrespective of any personal
interest of any of them, may establish reasonable compensation of directors for
services to the Corporation and its subsidiaries as directors and as members of
any committee of the Board of the Corporation and its subsidiaries.
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SECTION 14. QUORUM. Unless otherwise provided by law, the Articles or
these Bylaws, a majority of the directors in office shall constitute a quorum
for the transaction of business and the acts of the majority of the directors
present and voting at a meeting at which a quorum is present, shall be the acts
of the Board of Directors.
SECTION 15. ACTION OF BOARD OR COMMITTEES WITHOUT A MEETING. Any action
required or permitted to be taken pursuant to authorization voted at a meeting
of the Board or any committee thereof may be taken without a meeting if, prior
or subsequent to such action, all members of the Board or of such committee, as
the case any be, consent thereto in writing and such written consent is filed
with the minutes of the proceedings of the Board or such committee. Any such
actions shall be reported to the Board at the next meeting following such
action.
SECTION 16. ACTION OF BOARD OR COMMITTEES BY TELEPHONE CONFERENCE.
Directors may participate in meetings of the Board or committees of the Board by
means of conference telephone or other similar communications equipment by means
of which all persons participating in the meeting can hear each other.
SECTION 17. DIRECTOR'S LIABILITY. To the fullest extent permitted by
law, no director of the Corporation shall be personally liable for monetary
damages for any action taken, or any failure to take any action.
ARTICLE III
OFFICERS AND EMPLOYEES
SECTION 1. CHAIRMAN OF THE BOARD. The Board of Directors may appoint
one of its members to be Chairman of the Board to serve at the pleasure of the
Board. The duties of the Chairman shall be to preside at all meetings of the
Board of Directors and to provide a proposed agenda for all such meetings. The
Chairman shall also have and may exercise such further powers and duties as from
time to time may be determined by the Board of Directors.
SECTION 2. PRESIDENT. The Board of Directors shall appoint one of its
members to be President of the Corporation. In the absence of the Chairman, the
President shall preside at all meetings of the Board. The President shall also
have and may exercise such further powers and duties as from time to time may be
determined by the Board of Directors.
SECTION 3. CHIEF EXECUTIVE OFFICER. The Board of Directors shall
appoint a Chief Executive Officer. The Chief Executive Officer shall have and
may exercise all the powers and duties pertaining, by law, regulation or
practice, to the position of Chief Executive Officer and shall have and may
exercise such further powers and duties as from time to time may be determined
by the Board of Directors. Unless the Chairman or another executive officer or
group shall have been so designated and empowered by the Board of Directors, the
President shall be the Chief Executive Officer of the Corporation.
SECTION 4. OFFICERS. Each Executive Vice President, Senior Vice
President, Vice President and Assistant Vice President shall have and may
exercise any and all powers and duties which may be determined by the Board of
Directors or the Chief Executive Officer. One Executive Vice President, Senior
Vice President or Vice President may be designated by the Board of Directors, in
the absence of the President, to perform all the duties of the President.
SECTION 5. SECRETARY. The Board of Directors shall appoint a Secretary,
who shall be Secretary of the Board and of the Corporation, and shall keep
accurate records of all proceedings of the Board and of the shareholders. The
Secretary shall attend to the giving of all notices required by these Bylaws to
be given, shall be custodian of the corporate seal, and shall have and may
exercise any and all other powers and duties pertaining, by law, regulation or
practice, to the office of Secretary. The Secretary shall also have and may
exercise such other powers and duties as may be determined by the Board of
Directors, the Chairman of the Board or the Chief Executive Officer.
SECTION 6. TREASURER. The Board of Directors shall appoint a Treasurer
who shall have charge of all funds and securities of the Corporation. The
Treasurer shall have and may exercise any and all other powers and duties
pertaining,
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by law, regulation or practice, to the office of Treasurer. The Treasurer shall
also have and may exercise such other powers and duties as may be determined by
the Board of Directors or the Chief Executive Officer.
SECTION 7. ELECTION AND TERM OF OFFICE. Except for filling officer
vacancies or officer positions established after the Annual Meeting, all
Executive and Senior Vice Presidents and other officers of the Corporation whose
responsibilities include participation in major policy making decisions shall be
elected or appointed by the Board of Directors annually. All Vice Presidents,
Assistant Vice Presidents and other officers who do not participate in major
policy making decisions of the Corporation shall be appointed by the Chief
Executive Officer. If the election of Officers shall not be held as provided
herein, such election shall be held as soon thereafter as conveniently may be.
Each Officer shall hold office until a successor shall have been duly elected
and shall have qualified, or until the expiration of such Officer's term in
office if elected or appointed for a specified period of time, or until his or
her earlier death, retirement, termination, resignation or removal.
ARTICLE IV
SHARES OF THE CORPORATION
SECTION 1. CERTIFICATES FOR SHARES. Each certificate representing any
share of the stock of any class shall be signed in the name of the Corporation
by the Chairman or President or any Vice President, and the Treasurer or an
Assistant Treasurer or Secretary or an Assistant Secretary, or any other officer
appointed by the Board of Directors for that purpose to be known as an
Authorized Officer. Any of said signatures may be engraved, printed, impressed
or placed on certificates by facsimile process. Certificates may be sealed with
the seal of the Corporation or a facsimile thereof and shall contain such
information as is required by law to be stated thereon. Certificates may be
countersigned by a transfer agent or registrar who is not an officer or employee
of the Corporation. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon such certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of its
issue.
SECTION 2. UNCERTIFICATED SHARES. Any or all classes and series of
shares, or any portion thereof, may be declared uncertificated shares, except
that no share that is represented by a certificate shall be deemed
uncertificated until the certificate representing that share is surrendered to
the Corporation. Within a reasonable time after the issuance or transfer of
uncertificated shares the Corporation shall send to the registered owner of the
share a written notice containing such information as is required by law. Except
as otherwise expressly provided by law, the rights and obligations of holders of
uncertificated shares of a class or series shall be identical to the rights and
obligations of holders of certificated shares of that same class or series.
SECTION 3. TRANSFER AGENTS AND REGISTRARS. The Board may appoint one or
more transfer agents and one or more registrars with respect to the certificates
representing shares of stock of the Corporation, and may require all such
certificates to bear the signature of either or both.
SECTION 4. RECORD OF SHAREHOLDERS. The Corporation shall keep at its
registered office in the State of Florida, or at the office of its transfer
agent within or without the State of Florida a record containing the names and
addresses of all shareholders, the number, class and series of shares held by
each and the dates when they respectively became the owners of record thereof.
The Corporation shall be entitled to treat the persons in whose names shares
stand on the record of shareholders as owners thereof for all purposes.
SECTION 5. LOST, DESTROYED OR MUTILATED CERTIFICATES. The holder of any
shares of the Corporation shall immediately notify the Corporation of any loss,
destruction or mutilation of the certificate or certificates issued for such
shares. The Corporation may cause a new certificate or certificates to be issued
to such holder, in case of mutilation upon the surrender of the mutilated
certificate, or in case of loss or destruction upon satisfactory proof of such
loss or destruction and the deposit of a bond in such form and in such sum, and
with such surety or sureties, as may be required pursuant to such policies as
may be adopted by the Board of Directors.
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ARTICLE V
MISCELLANEOUS
SECTION 1. SEAL. The seal of the Corporation shall be in such form as
may be approved from time to time by the Board. The Corporation may use the seal
by causing it or a facsimile to be affixed or impressed or reproduced in any
manner.
SECTION 2. CHECKS, NOTES DRAFTS, ETC. Checks, notes, drafts,
acceptances, bills of exchange and other orders or obligations for the payment
of money shall be signed by such officer or officers or person or persons as the
Board shall from time to time determine.
SECTION 3. FISCAL YEAR. The fiscal year of the Corporation shall be the
calendar year.
SECTION 4. OFFICES. The registered office of the Corporation in Florida
shall be at 2150 Goodlette Road North, 8th Floor, Naples, Florida 34102, until
otherwise established by the Board of Directors and a record of any such change
is duly filed with the State of Florida in the manner provided by law. The
Corporation may also have offices at such other places within or without Florida
as the Board of Directors may from time to time determine or as the business of
the Corporation may require.
SECTION 5. EXCEPTIONS TO REQUIREMENT FOR NOTICE.
(a) Whenever any notice or communication is required to be given
to any person under these Bylaws or otherwise and the proper officers have
determined that the giving of such notice or communication to that person is
then unlawful, the giving of the notice of communication to that person shall
not be required notwithstanding any other provision contained herein to the
contrary.
(b) Notices or other communications shall not be sent, unless
otherwise directed by the Board of Directors, to any shareholder with whom the
Corporation has been unable to communicate for more than 24 consecutive months
because communications to the shareholder are returned unclaimed or the
shareholder has otherwise failed to provide the Corporation with a current
address. Whenever the shareholder provides the Corporation with a current
address, the Corporation shall commence sending notices and other communications
to the shareholder in the same manner as to other shareholders.
ARTICLE VI
AMENDMENTS
These Bylaws may be altered or repealed and new Bylaws may be adopted
by the affirmative vote of at least 75% of the members of the Board of Directors
or by the affirmative vote of the holders of at least 75% of the outstanding
stock entitled to vote thereon.
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EXHIBIT E
SECTIONS 1571 THROUGH 1580
OF THE PENNSYLVANIA BUSINESS CORPORATION LAW,
REGARDING DISSENTERS' RIGHTS
PENNSYLVANIA BUSINESS CORPORATION LAW
Subchapter D. Dissenters Rights
1571 APPLICATION AND EFFECT OF SUBCHAPTER. - (a) General rule. - Except
as otherwise provided in subsection (b), any shareholder of a business
corporation shall have the right to dissent from, and to obtain payment of the
fair value of his shares in the event of, any corporate action, or to otherwise
obtain fair value for his shares, where this part expressly provides that a
shareholder shall have the rights and remedies provided in this subchapter. See:
Section 1906(c) (relating to dissenters rights upon special treatment).
Section 1930 (relating to dissenters rights).
Section 1931(d) (relating to dissenters rights in share exchanges).
Section 1932(c) (relating to dissenters rights in asset transfers).
Section 1952(d) (relating to dissenters rights in division).
Section 1962(c) (relating to dissenters rights in conversion).
Section 2104(b) (relating to procedure).
Section 2324 (relating to corporation option where a restriction on
transfer of a security is held invalid).
Section 2325(b) (relating to minimum vote requirement).
Section 2704(c) (relating to dissenters rights upon election).
Section 2705(d) (relating to dissenters rights upon renewal of
election).
Section 2907(a) (relating to proceedings to terminate breach of
qualifying conditions). Section 7104(b)(3) (relating to procedure).
(b) Exceptions. (1) Except as otherwise provided in paragraph (2), the
holders of the shares of any class or series of shares that, at the record date
fixed to determine the shareholders entitled to notice of and to vote at the
meeting at which a plan specified in any of section 1930, 1931(d), 1932(c) or
1952(d) is to be voted on, are either:
(i) listed on a national securities exchange; or
(ii) held of record by more than 2,000 shareholders;
shall not have the right to obtain payment of the fair value of any such shares
under this subchapter.
(2) Paragraph (1) shall not apply to and dissenters rights shall be
available without regard to the exception provided in that paragraph in the case
of:
(i) Shares converted by a plan if the shares are not converted solely
into shares of the acquiring, surviving, new or other corporation or solely into
such shares and money in lieu of fractional shares.
(ii) Shares of any preferred or special class unless the articles, the
plan or the terms of the transaction entitle all shareholders of the class to
vote thereon and require for the adoption of the plan or the effectuation of the
transaction the affirmative vote of a majority of the votes cast by all
shareholders of the class.
(iii) Shares entitled to dissenters rights under section 1906(c)
(relating to dissenters rights upon special treatment).
(3) The shareholders of a corporation that acquires by purchase, lease,
exchange or other disposition all or substantially all of the shares, property
or assets of another corporation by the issuance of shares, obligations or
otherwise, with or without assuming the liabilities of the other corporation and
with or without the intervention of another corporation or other person, shall
not be entitled to the rights and remedies of dissenting shareholders provided
in this subchapter regardless of the fact, if it be the case, that the
acquisition was accomplished by the issuance of voting shares of the corporation
to be outstanding immediately after the acquisition sufficient to elect a
majority or more of the directors of the corporation.
(c) Grant of optional dissenters rights. - The bylaws or a resolution
of the board of directors may direct that all or a part of the shareholders
shall have dissenters rights in connection with any corporate action or other
transaction that would otherwise not entitle such shareholder to dissenters
rights.
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(d) Notice of dissenters rights. - Unless otherwise provided by
statute, if a proposed corporate action that would give rise to dissenters
rights under this subpart is submitted to a vote at a meeting of shareholders,
there shall be included in or enclosed with the notice of meeting:
(1) A statement of the proposed action and a statement that the
shareholders have a right to dissent and obtain payment of the fair value of
their shares by complying with the terms of this subchapter; and
(2) A copy of this subchapter.
(e) Other statutes. - The procedures of this subchapter shall also be
applicable to any transaction described in any statute other than this part that
makes reference to this subchapter for the purpose of granting dissenters
rights.
(f) Certain provisions of articles ineffective. - This subchapter may
not be relaxed by any provision of the articles.
(g) Cross references. - See 1105 (relating to restriction on equitable
relief), 1904 (relating to de facto transaction doctrine abolished) and 2512
(relating to dissenters rights procedure).
1572 DEFINITIONS. - The following words and phrases when used in this
subchapter shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Corporation." The issuer of the shares held or owned by the dissenter
before the corporate action or the successor by merger, consolidation, division,
conversion or otherwise of that issuer. A plan of division may designate which
of the resulting corporations is the successor corporation for the purposes of
this subchapter. The successor corporation in a division shall have sole
responsibility for payments to dissenters and other liabilities under this
subchapter except as otherwise provided in the plan of division.
"Dissenter." A shareholder or beneficial owner who is entitled to and
does assert dissenters rights under this subchapter and who has performed every
act required up to the time involved for the assertion of those rights.
"Fair value." The fair value of shares immediately before the
effectuation of the corporate action to which the dissenter objects, taking into
account all relevant factors, but excluding any appreciation or depreciation in
anticipation of the corporate action.
"Interest." Interest from the effective date of the corporate action
until the date of payment at such rate as is fair and equitable under all the
circumstances, taking into account all relevant factors, including the average
rate currently paid by the corporation on its principal bank loans.
1573 RECORD AND BENEFICIAL HOLDERS AND OWNERS. - (a) Record holders of
shares. - A record holder of shares of a business corporation may assert
dissenters rights as to fewer than all of the shares registered in his name only
if he dissents with respect to all the shares of the same class or series
beneficially owned by any one person and discloses the name and address of the
person or persons on whose behalf he dissents. In that event, his rights shall
be determined as if the shares as to which he has dissented and his other shares
were registered in the names of different shareholders.
(b) Beneficial owners of shares. - A beneficial owner of shares of a
business corporation who is not the record holder may assert dissenters rights
with respect to shares held on his behalf and shall be treated as a dissenting
shareholder under the terms of this subchapter if he submits to the corporation
not later than the time of the assertion of dissenters rights a written consent
of the record holder. A beneficial owner may not dissent with respect to some
but less than all shares of the same class or series owned by the owner, whether
or not the shares so owned by him are registered in his name.
1574 NOTICE OF INTENTION TO DISSENT. - If the proposed corporate action
is submitted to a vote at a meeting of shareholders of a business corporation,
any person who wishes to dissent and obtain payment of the fair value of his
shares must file with the corporation, prior to the vote, a written notice of
intention to demand that he be paid the fair value for his shares if the
proposed action is effectuated, must effect no change in the beneficial
ownership of his shares from the date of such filing continuously through the
effective date of the proposed action and must refrain from voting his shares in
approval of such action. A dissenter who fails in any respect shall not acquire
any right to payment of the fair value of his shares under this subchapter.
Neither a proxy nor a vote against the proposed corporate action shall
constitute the written notice required by this section.
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1575 NOTICE TO DEMAND PAYMENT. - (a) General rule. - If the proposed
corporate action is approved by the required vote at a meeting of shareholders
of a business corporation, the corporation shall mail a further notice to all
dissenters who gave due notice of intention to demand payment of the fair value
of their shares and who refrained from voting in favor of the proposed action.
If the proposed corporate action is to be taken without a vote of shareholders,
the corporation shall send to all shareholders who are entitled to dissent and
demand payment of the fair value of their shares a notice of the adoption of the
plan or other corporate action. In either case, the notice shall:
(1) State where and when a demand for payment must be sent and
certificates for certificated shares must be deposited in order to obtain
payment.
(2) Inform holders of uncertificated shares to what extent transfer of
shares will be restricted from the time that demand for payment is received.
(3) Supply a form for demanding payment that includes a request for
certification of the date on which the shareholder, or the person on whose
behalf the shareholder dissents, acquired beneficial ownership of the shares.
(4) Be accompanied by a copy of this subchapter.
(b) Time for receipt of demand for payment. - The time set for receipt
of the demand and deposit of certificated shares shall be not less than 30 days
from the mailing of the notice.
1576 FAILURE TO COMPLY WITH NOTICE TO DEMAND PAYMENT, ETC. - (a) Effect
of failure of shareholder to act. - A shareholder who fails to timely demand
payment, or fails (in the case of certificated shares) to timely deposit
certificates, as required by a notice pursuant to section 1575 (relating to
notice to demand payment) shall not have any right under this subchapter to
receive payment of the fair value of his shares.
(b) Restriction on uncertificated shares. - If the shares are not
represented by certificates, the business corporation may restrict their
transfer from the time of receipt of demand for payment until effectuation of
the proposed corporate action or the release of restrictions under the terms of
section 1577(a) (relating to failure to effectuate corporate action).
(c) Rights retained by shareholder. - The dissenter shall retain all
other rights of a shareholder until those rights are modified by effectuation of
the proposed corporate action.
1577 RELEASE OF RESTRICTIONS OR PAYMENT FOR SHARES. - (a) Failure to
effectuate corporate action. - Within 60 days after the date set for demanding
payment and depositing certificates, if the business corporation has not
effectuated the proposed corporate action, it shall return any certificates that
have been deposited and release uncertificated shares from any transfer
restrictions imposed by reason of the demand for payment.
(b) Renewal of notice to demand payment. - When uncertificated shares
have been released from transfer restrictions and deposited certificates have
been returned, the corporation may at any later time send a new notice
conforming to the requirements of section 1575 (relating to notice to demand
payment), with like effect.
(c) Payment of fair value of shares. - Promptly after effectuation of
the proposed corporate action, or upon timely receipt of demand for payment if
the corporate action has already been effectuated, the corporation shall either
remit to dissenters who have made demand and (if their shares are certificated)
have deposited their certificates the amount that the corporation estimates to
be the fair value of the shares, or give written notice that no remittance under
this section will be made. The remittance or notice shall be accompanied by:
(1) The closing balance sheet and statement of income of the issuer of
the shares held or owned by the dissenter for a fiscal year ending not more than
16 months before the date of remittance or notice together with the latest
available interim financial statements.
(2) A statement of the corporation's estimate of the fair value of the
shares.
(3) A notice of the right of the dissenter to demand payment or
supplemental payment, as the case may be, accompanied by a copy of this
subchapter.
(d) Failure to make payment. - If the corporation does not remit the
amount of its estimate of the fair value of the shares as provided by subsection
(c), it shall return any certificates that have been deposited and release
uncertificated shares from any transfer restrictions imposed by reason of the
demand for payment. The corporation may make a notation
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on any such certificate or on the records of the corporation relating to any
such uncertificated shares that such demand has been made. If shares with
respect to which notation has been so made shall be transferred, each new
certificate issued therefor or the records relating to any transferred
uncertificated shares shall bear a similar notation, together with the name of
the original dissenting holder or owner of such shares. A transferee of such
shares shall not acquire by such transfer any rights in the corporation other
than those that the original dissenter had after making demand for payment of
their fair value.
1578 ESTIMATE BY DISSENTER OF FAIR VALUE OF SHARES. - (a) General rule.
- - If the business corporation gives notice of its estimate of the fair value of
the shares, without remitting such amount, or remits payment of its estimate of
the fair value of a dissenter's shares as permitted by section 1577(c) (relating
to payment of fair value of shares) and the dissenter believes that the amount
stated or remitted is less than the fair value of his shares, he may send to the
corporation his own estimate of the fair value of the shares, which shall be
deemed a demand for payment of the amount or the deficiency.
(b) Effect of failure to file estimate. - Where the dissenter does not
file his own estimate under subsection (a) within 30 days after the mailing by
the corporation of its remittance or notice, the dissenter shall be entitled to
no more than the amount stated in the notice or remitted to him by the
corporation.
1579 VALUATION PROCEEDINGS GENERALLY. - (a) General rule. - Within 60
days after the latest of:
(1) Effectuation of the proposed corporate action;
(2) Timely receipt of any demands for payment under section 1575
(relating to notice to demand payment);
or
(3) Timely receipt of any estimates pursuant to section 1578 (relating
to estimate by dissenter of fair value of shares); If any demands for payment
remain unsettled, the business corporation may file in court an application for
relief requesting that the fair value of the shares be determined by the court.
(b) Mandatory joinder of dissenters. - All dissenters, wherever
residing, whose demands have not been settled shall be made parties to the
proceeding as in an action against their shares. A copy of the application shall
be served on each such dissenter. If a dissenter is a nonresident, the copy may
be served on him in the manner provided or prescribed by or pursuant to 42
Pa.C.S. Ch. 53 (relating to bases of jurisdiction and interstate and
international procedure).
(c) Jurisdiction of the court. - The jurisdiction of the court shall be
plenary and exclusive. The court may appoint an appraiser to receive evidence
and recommend a decision on the issue of fair value. The appraiser shall have
such power and authority as may be specified in the order of appointment or in
any amendment thereof.
(d) Measure of recovery. - Each dissenter who is made a party shall be
entitled to recover the amount by which the fair value of his shares is found to
exceed the amount, if any, previously remitted, plus interest.
(e) Effect of corporation's failure to file application. - If the
corporation fails to file an application as provided in subsection (a), any
dissenter who made a demand and who has not already settled his claim against
the corporation may do so in the name of the corporation at any time within 30
days after the expiration of the 60-day period. If a dissenter does not file an
application within the 30-day period, each dissenter entitled to file an
application shall be paid the corporation's estimate of the fair value of the
shares and no more, and may bring an action to recover any amount not previously
remitted.
1580 COSTS AND EXPENSES OF VALUATION PROCEEDINGS. - (a) General rule. -
The costs and expenses of any proceeding under section 1579 (relating to
valuation proceedings generally), including the reasonable compensation and
expenses of the appraiser appointed by the court, shall be determined by the
court and assessed against the business corporation except that any part of the
costs and expenses may be apportioned and assessed as the court deems
appropriate against all or some of the dissenters who are parties and whose
action in demanding supplemental payment under section 1578 (relating to
estimate by dissenter of fair value of shares) the court finds to be dilatory,
obdurate, arbitrary, vexatious or in bad faith.
(b) Assessment of counsel fees and expert fees where lack of good faith
appears. - Fees and expenses of counsel and of experts for the respective
parties may be assessed as the court deems appropriate against the
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corporation and in favor of any or all dissenters if the corporation failed to
comply substantially with the requirements of this subchapter and may be
assessed against either the corporation or a dissenter, in favor of any other
party, if the court finds that the party against whom the fees and expenses are
assessed acted in bad faith or in a dilatory, obdurate, arbitrary or vexatious
manner in respect to the rights provided by this subchapter.
(c) Award of fees for benefits to other dissenters. - If the court
finds that the services of counsel for any dissenter were of substantial benefit
to other dissenters similarly situated and should not be assessed against the
corporation, it may award to those counsel reasonable fees to be paid out of the
amounts awarded to the dissenters who were benefitted.
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EXHIBIT F
F.N.B. CORPORATION
AUDIT COMMITTEE CHARTER
I. ORGANIZATION
This charter governs the operations of the F.N.B. Corporation Audit
Committee. The committee shall review and reassess this charter at least
annually and obtain the approval of the F.N.B. Corporation board of directors.
The committee shall disclose in the proxy statement annually the fact that the
charter has been adopted, and shall also disclose in the proxy statement the
charter itself at least once every three years. The committee shall be appointed
by the board of directors and shall comprise at least three directors, each of
whom are independent of management and the Company. Members of the committee
shall be considered independent if they have no relationship that may interfere
with the exercise of their independence from management and the Company. Under
exceptional and limited circumstances, one director who is not independent may
be appointed to the committee with approval from the board of directors. All
committee members shall be financially literate, or shall become financially
literate within a reasonable period of time after appointment to the committee,
and at least one member shall have accounting or related financial management
expertise.
II. STATEMENT OF POLICY
The audit committee shall provide assistance to the board of directors
in fulfilling their oversight responsibility to the shareholders, potential
shareholders, the investment community, and others relating to the Company's
financial statements and the financial reporting process, the systems of
internal accounting and financial controls, the internal risk management
function (i.e. internal audit, asset review, compliance and legal), the annual
independent audit of the Company's financial statements, and the legal
compliance and ethics programs as established by management and the board. In so
doing, it is the responsibility of the committee to maintain free and open
communication between the committee, independent auditors, risk management, and
financial management of the Company. In discharging its oversight role, the
committee is empowered to investigate any matter brought to its attention with
full access to all books, records, facilities, and personnel of the Company and
the power to retain outside counsel, or other experts for this purpose.
III. RESPONSIBILITIES AND PROCESSES
The primary responsibility of the audit committee is to oversee the
Company's financial reporting process on behalf of the board and report the
results of their activities to the board. Management is responsible for
preparing the Company's financial statements, and the independent auditors are
responsible for auditing those financial statements. The committee in carrying
out its responsibilities believes its policies and procedures should remain
flexible, in order to best react to changing conditions and circumstances. The
committee should take the appropriate actions to set the overall corporate tone
for quality financial reporting, sound business risk practices, and ethical
behavior.
The following shall be the principal recurring processes of the audit
committee in carrying out its oversight responsibilities. The processes are set
forth as a guide with the understanding that the committee may supplement them
as appropriate.
- The committee shall have a clear understanding with management
and the independent auditors that the independent auditors are
ultimately accountable to the board and the audit committee,
as representatives of the Company's shareholders. The
committee shall have the ultimate authority and responsibility
to evaluate and, where appropriate, replace the independent
auditors. The committee shall discuss with the auditors their
independence from management and the Company and the matters
included in the written disclosures required by the
Independence Standards Board, and if necessary, take
appropriate action to ensure the independence of the auditor.
Annually, the committee shall review and recommend
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to the board the selection of the Company's independent
auditors, and shall approve the fees to be paid to the
independent auditors.
- The committee shall discuss with the internal risk management
group (internal audit, asset review, compliance and legal) and
the independent auditors the overall scope and plans for their
respective audits including adequacy of staffing and
qualifications. Also, the committee shall discuss with
financial management, the internal risk management group, and
the independent auditors the adequacy and effectiveness of the
accounting and financial controls, including the Company's
system to monitor and manage business risk, and legal and
ethical compliance programs. Further, the committee shall meet
separately with the internal risk management group and the
independent auditors, with and without management present, to
discuss the results of their examinations and to review any
problems or difficulties encountered during the course of the
audit work, including any restrictions on the scope of
activities or access to required information.
- The committee shall discuss with management and the
independent auditors, prior to the filing of the Company's
Quarterly Report on Form 10-Q and preferably prior to any
public announcement of financial results, the results of the
interim financial statement reviews performed by the Company's
independent auditors. Also, the committee shall discuss any
other matters required to be communicated to the committee by
the independent auditors under generally accepted auditing
standards. The chair of the committee may represent the entire
committee for purposes of this discussion.
- The committee shall review with management and the independent
auditors the financial statements to be included in the
Company's Annual Report on Form 10-K (or the annual report to
shareholders if distributed prior to the filing of Form 10-K),
including their judgment about the quality, not just
acceptability, of accounting principles, the reasonableness of
significant judgments, and the clarity of the disclosures in
the financial statements. Based on these reviews, the
committee shall recommend to the board of directors whether
the audited financial statements should be included in the
Annual Report on Form 10-K. Also, the committee shall discuss
the results of the annual audit and any other matters required
to be communicated to the committee by the independent
auditors under generally accepted auditing standards, and
shall prepare the report required by the rules of the
Securities and Exchange Commission to be included in the
Company's annual proxy statement. The committee shall review,
with the organization's counsel, any legal matter that could
have a significant impact on the organization's financial
statements.
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F.N.B. CORPORATION
2001 ANNUAL MEETING OF SHAREHOLDERS
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert T. Reichert, William J. Rundorff and
John D. Waters, each with full power to act without the others, as Proxies of
the undersigned, each with the full to appoint his substitute, and hereby
authorizes them to represent and to vote, as indicated on the reverse, all the
shares of Common Stock and/or Series A Cumulative Convertible Preferred Stock
of F.N.B. Corporation held of record by the undersigned on February 9, 2001 at
the Annual Meeting of Shareholders to be held on April 23, 2001 or any
adjournment of it.
(Continued, and to be marked, dated and signed, on the other side.)
- FOLD AND DETACH HERE -
90
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS.
ELECTION OF DIRECTORS:
FOR THE TERM OF FOUR YEARS: FOR WITHHOLD
Alan C. Bomstein, Charles T. Cricks, all nominees listed authority to vote
Henry M. Ekker, James S. Lindsay, Paul P. Lynch (except as marked to for all nominees
the contrary below) listed
[ ] [ ]
INSTRUCTION: To withhold authority to vote your shares for
any individual nominee, write that nominee's name here:
- ----------------------------------------------------------------------------------------------------
Your shares will be voted for the election of each nominee
whose name is not written in the space above.
PROPOSALS:
1. To approve the F.N.B. Corporation 2001 Incentive Plan.
For Against Abstain
[ ] [ ] [ ]
2. To approve a change in the Company's state of incorporation
from Pennsylvania to Florida through the merger of the Company
into a wholly owned Florida subsidiary of the Company.
For Against Abstain
[ ] [ ] [ ]
I(We) will attend the meeting.
Yes No
[ ] [ ]
In their discretion, the Proxies are authorized to vote upon such other
matters as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS
DIRECTED HEREBY BY THE UNDERSIGNED SHAREHOLDER(S). IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION
OF ALL NOMINEES FOR DIRECTOR AND FOR PROPOSALS 1 AND 2.
PLEASE DATE, EXECUTE AND RETURN THIS PROXY PROMPTLY
IN THE ENCLOSED ENVELOPE.
Daytime Phone:____________________________
Signatures(s):_____________________ Signatures(s):_________________________ Date: _________________
Please sign exactly as your name appears hereon. When signing as attorney, executor, administrator,
trustee, etc., or as officer of a corporation, please give your full title(s) as such.
For joint accounts, each joint owner must sign.
FOLD AND DETACH HERE
Dear Shareholder:
F.N.B. Corporation offers a Dividend Reinvestment and Direct Stock Purchase Plan
for its shareholders.
This plan provides features such as safekeeping to eliminate the risk of loss,
theft, or destruction of stock certificates; automatic dividend reinvestment and
purchase of additional common shares without a broker fee.
All of these convenient features are at no cost to you.
If you wish to participate in this Plan, a Prospectus and enrollment card may be
obtained by calling F.N.B. Shareholder Services at 888-441-4FNB (4362).
Sincerely,
F.N.B. Corporation