Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BETWEEN
F.N.B. CORPORATION
AND
NSD BANCORP, INC.
October 14, 2004
TABLE OF CONTENTS
Page
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ARTICLE I CERTAIN DEFINITIONS........................................... 1
1.01 Certain Definitions................................................ 1
ARTICLE II THE MERGER.................................................... 9
2.01 The Merger......................................................... 9
2.02 Effective Date and Effective Time; Closing......................... 10
ARTICLE III MERGER CONSIDERATION; EXCHANGE PROCEDURES..................... 11
3.01 Conversion of Shares............................................... 11
3.02 Fractional Shares.................................................. 11
3.03 Exchange Procedures................................................ 12
3.04 Adjustments for Dilution and Other Matters......................... 14
3.05 Withholding Rights................................................. 14
3.06 NSD Options........................................................ 14
3.07 Bank Merger........................................................ 15
ARTICLE IV ACTIONS PENDING CLOSING....................................... 15
4.01 Forbearances of NSD................................................ 15
4.02 Forbearances of Parent............................................. 20
ARTICLE V REPRESENTATIONS AND WARRANTIES................................ 20
5.01 Disclosure Schedules............................................... 20
5.02 Standard 21
5.03 Representations and Warranties of NSD.............................. 21
5.04 Representations and Warranties of Parent........................... 36
ARTICLE VI COVENANTS..................................................... 42
6.01 Reasonable Best Efforts............................................ 42
6.02 Stockholder Meeting................................................ 42
6.03 Registration Statement............................................. 42
6.04 Regulatory Filings................................................. 44
6.05 Press Releases..................................................... 44
6.06 Access; Information................................................ 44
6.07 Affiliates......................................................... 45
6.08 Certain Actions.................................................... 46
6.09 Certain Policies................................................... 48
6.10 NYSE Listing....................................................... 49
6.11 Indemnification.................................................... 49
6.12 Benefit Plans...................................................... 50
6.13 Parent Board and Parent Bank Board................................. 52
6.14 Notification of Certain Matters.................................... 53
6.15 Regulatory Conditions.............................................. 53
6.16 Exemption From Liability Under Section 16(b)....................... 53
(i)
6.17 Certain Post-Closing Matters....................................... 53
6.18 Employment Matters................................................. 54
6.19 Director Agreements................................................ 54
6.20 Rights Plan........................................................ 54
ARTICLE VII CONDITIONS TO CONSUMMATION OF THE MERGER...................... 54
7.01 Conditions to Each Party's Obligation to Effect the Merger......... 54
7.02 Conditions to Obligation of NSD.................................... 55
7.03 Conditions to Obligation of Parent................................. 56
ARTICLE VIII TERMINATION................................................... 56
8.01 Termination........................................................ 56
8.02 Effect of Termination.............................................. 59
ARTICLE IX MISCELLANEOUS................................................. 59
9.01 Survival 59
9.02 Waiver; Amendment.................................................. 59
9.03 Counterparts....................................................... 59
9.04 Governing Law...................................................... 59
9.05 Expenses 59
9.06 Notices 60
9.07 Entire Understanding; No Third Party Beneficiaries................. 61
9.08 Severability....................................................... 61
9.09 Enforcement........................................................ 61
9.10 Interpretation..................................................... 62
9.11 Assignment......................................................... 62
9.12 Alternative Structure.............................................. 62
ANNEX A -- Form of Bank Merger Agreement................................. A-1
ANNEX B -- Form of Affiliate Letter...................................... B-1
ANNEX C -- Form of Voting Agreement...................................... C-1
ANNEX D -- Form of Non-Solicitation Agreement............................ D-1
(ii)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 14, 2004 (this
"Agreement"), between F.N.B. Corporation ("Parent") and NSD Bancorp, Inc.
("NSD").
RECITALS
A. NSD. NSD is a Pennsylvania corporation, having its principal place of
business in Pittsburgh, Pennsylvania.
B. Parent. Parent is a Florida corporation, having its principal place of
business in Hermitage, Pennsylvania.
C. Intention of the Parties. It is the intention of the parties to this
Agreement that the Merger provided for herein be treated as a "reorganization"
under Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), and this Agreement constitutes a "plan of reorganization" within the
meaning of Section 1.368-1(c) of the Treasury Regulations.
D. Board Action. The respective Boards of Directors of Parent and NSD have
determined that it is in the best interests of their respective companies and
their stockholders to consummate the Merger provided for herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 Certain Definitions. The following terms are used in this Agreement
with the meanings set forth below:
"Acquisition Proposal" has the meaning set forth in Section 6.08(e)(i).
"Affiliate" has the meaning set forth in Section 3.03(h).
"Affiliate Letter" has the meaning set forth in Section 6.07.
"Agreement" means this Agreement, as amended or modified from time to time
in accordance with Section 9.02.
"Approval Recommendation" has the meaning set forth in Section 6.02.
"Articles of Merger" has the meaning set forth in Section 2.02(a).
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"Average Closing Price" as of any specified date shall mean the average
composite closing price of Parent Common Stock on the NYSE as reported in "New
York Stock Exchange Composite Transactions" in The Wall Street Journal (Eastern
Edition) for each of the twenty consecutive trading days ending on and including
the second such trading day prior to the specified date rounded to the nearest
whole cent.
"Bank Insurance Fund" means the Bank Insurance Fund maintained by the FDIC.
"Bank Merger Agreement" means the Agreement of Merger by and between Parent
Bank and NorthSide Bank, the form of which is attached hereto as Annex A.
"Bank Merger" has the meaning set forth in Section 3.08.
"Bank Regulatory Authority" means the Federal Reserve Board, the OCC, the
FDIC, the Department and any other state or federal bank regulatory agency
charged with the supervision or regulation of NSD, NorthSide Bank, Parent or
Parent Bank or the insurance of the deposits of NorthSide Bank or Parent Bank.
"Bank Secrecy Act" means the Bank Secrecy Act of 1970, as amended.
"Benefit Plans" has the meaning set forth in Section 5.03(m)(i).
"Break-up Fee" has the meaning set forth in Section 6.08(f).
"Business Day" means Monday through Friday of each week, except a legal
holiday recognized as such by the U.S. Government or any day on which banking
institutions in the Commonwealth of Pennsylvania are authorized or obligated to
close.
"Certificate" means any certificate that immediately prior to the Effective
Time represented shares of NSD Common Stock.
"Change in NSD Recommendation" has the meaning set forth in Section
6.08(b).
"Closing" and "Closing Date" have the meanings set forth in Section
2.02(b).
"Code" has the meaning set forth in the recitals to this Agreement.
"Community Reinvestment Act" means the Community Reinvestment Act of 1977,
as amended.
"Confidentiality Agreements" has the meaning set forth in Section 6.06(c).
"Department" means the Pennsylvania Department of Banking.
"Derivatives Contract" has the meaning set forth in Section 5.03(q).
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"Determination Date" means the date on which the last required Bank
Regulatory Authority is obtained with respect to the Transaction, without regard
to a requisite waiting period.
"Disclosure Schedule" has the meaning set forth in Section 5.01.
"DOL" means the Department of Labor.
"DSRP Plan" has the meaning set forth in Section 3.02.
"Effective Date" has the meaning set forth in Section 2.02(a).
"Effective Time" has the meaning set forth in Section 2.02(a).
"Employment Agreement" means the Employment Agreement between Parent Bank
and Xxxxxx X. Xxxxxx in the form of Annex E.
"Environmental Laws" has the meaning set forth in Section 5.03(o)(i).
"Equal Credit Opportunity Act" means the Equal Credit Opportunity Act, as
amended.
"Equity Investment" means (i) an Equity Security, (ii) any ownership
interest in any company or other entity, any membership interest that includes a
voting right in any company or other entity or any interest in real estate or
(iii) any investment or transaction which in substance falls into any of these
categories even though it may be structured as some other form of investment or
transaction.
"Equity Security" means any stock (other than adjustable-rate preferred
stock, money market (auction rate) preferred stock or other instrument
determined by the OCC to have the character of debt securities), certificate of
interest or participation in any profit-sharing agreement, collateral-trust
certificate, preorganization certificate or subscription, transferable share,
investment contract, or voting-trust certificate; any security convertible into
such a security; any security carrying any warrant or right to subscribe to or
purchase any such security and any certificate of interest or participation in,
temporary or interim certificate for or receipt for any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" has the meaning set forth in Section 5.03(m)(iii).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
"Exchange Agent" means such entity selected by Parent to effect the
exchange of NSD Common Stock for Parent Common Stock.
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"Exchange Fund" has the meaning set forth in Section 3.03(a).
"Exchange Ratio" has the meaning set forth in Section 3.01(a).
"Fair Housing Act" means the Fair Housing Act, as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
"Federal Reserve Act" means the Federal Reserve Act, as amended.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
System.
"FLBC" means the Florida Business Corporation Act, as amended.
"GAAP" means generally accepted accounting principles and practices as in
effect from time to time in the United States.
"Governmental Authority" means any federal, state or local court,
administrative agency or commission or other governmental authority or
instrumentality.
"Hazardous Substance" has the meaning set forth in Section 5.03(o)(i).
"Home Mortgage Disclosure Act" means the Home Mortgage Disclosure Act, as
amended.
"Indemnified Parties" and "Indemnifying Party" have the meanings set forth
in Section 6.11(a).
"Index Closing Price" means the average closing price of the Nasdaq Bank
Index for each of the twenty consecutive trading days ending on and including
the second such trading day prior to the Determination Date rounded to the
nearest whole cent.
"Index Ratio" has the meaning set forth in Section 8.01(h)(2).
"Insurance Amount" has the meaning set forth in Section 6.11(c).
"Insurance Policies" has the meaning set forth in Section 5.03(w).
"IRS" means the Internal Revenue Service.
"Liens" means any charge, mortgage, pledge, security interest, restriction,
claim, lien or encumbrance.
"Loans" has the meaning set forth in Section 4.01(q).
"Majority Vote" has the meaning set forth in Section 5.03(e).
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"Material Adverse Effect" means, with respect to Parent or NSD any effect
that (i) is material and adverse to the financial position, results of
operations or business of Parent and its Subsidiaries taken as a whole or NSD
and its Subsidiaries taken as a whole, as the case may be, or (ii) would
materially impair the ability of any of Parent and its Subsidiaries or NSD and
its Subsidiaries to perform their respective obligations under this Agreement or
the Bank Merger Agreement or otherwise materially impede the consummation of the
Transaction; provided, however, that Material Adverse Effect shall not be deemed
to include the impact of (a) changes after the date hereof in banking and
similar laws of general applicability or interpretations thereof by Governmental
Authorities, (b) changes after the date hereof in GAAP or regulatory accounting
requirements applicable to banks, federal savings institutions and their holding
companies generally, (c) changes after the date hereof in general economic or
market conditions affecting banks and their holding companies generally,
including changes in interest rates, (d) public disclosure of the transactions
contemplated hereby, (e) costs incurred in connection with the Transaction
including, without limitation, change in control and severance payments,
investment banking fees, legal fees, accounting fees and printing costs, in each
case in accordance with GAAP and (f) any action or omission of NSD or Parent
taken with the prior consent of the other or as otherwise contemplated by this
Agreement in connection with the consummation of the Transaction.
"Material Contract" has the meaning set forth in Section 5.03(k)(i).
"Merger" has the meaning set forth in Section 2.01(a).
"Merger Consideration" means the number of whole shares of Parent Common
Stock plus cash in lieu of any fractional share interest into which shares of
NSD Common Stock shall be converted pursuant to the provisions of Article III.
"NASD" means the National Association of Securities Dealers, Inc.
"National Labor Relations Act" means the National Labor Relations Act, as
amended.
"Non-Solicitation Agreement" has the meaning set forth in Section 7.03(d).
"NorthSide Bank" means NorthSide Bank, a Pennsylvania banking institution
and wholly owned subsidiary of NSD.
"NSD" has the meaning set forth in the preamble to this Agreement.
"NSD Articles" means the Articles of Incorporation of NSD, as amended.
"NSD Board" means the Board of Directors of NSD.
"NSD Bylaws" means the Bylaws of NSD, as amended.
"NSD Common Stock" means the common stock, par value $1.00 per share, of
NSD.
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"NSD Group" means any "affiliated group", as defined in Section 1504(a) of
the Code without regard to the limitations contained in Section 1504(b) of the
Code, that includes NSD and its Subsidiaries or any predecessor of or any
successor to NSD, or to another such predecessor or successor.
"NSD Insiders" means those officers, directors and 10% or greater
stockholders of NSD who are subject to the reporting requirements of Section
16(a) of the Exchange Act and who are listed in the Section 16 Information.
"NSD Loan Property" has the meaning set forth in Section 5.03(o)(i).
"NSD Meeting" has the meaning set forth in Section 6.02.
"NSD Options" means the options to acquire NSD Common Stock issued under
the NSD Common Stock Option Plans.
"NSD Parent Designee" has the meaning set forth in Section 2.01(d).
"NSD Parent Bank Designees" has the meaning set forth in Section 6.13(b).
"NSD Regulatory Authorities" has the meaning set forth in Section
5.03(i)(i).
"NSD Stock Option Plans" means the NSD 2004 Omnibus Stock Incentive Plan,
the NSD 1994 Stock Option Plan and the NSD 1994 Non-Employee Director Stock
Option Plan.
"NYSE" means The New York Stock Exchange, Inc.
"OCC" means the Office of the Comptroller of the Currency.
"Option Consideration" shall have the meaning set forth in Section 3.07(a).
"OREO" means other real estate owned.
"Parent" has the meaning set forth in the preamble to this Agreement.
"Parent 2006 Annual Meeting" has the meaning set forth in Section 6.13(a).
"Parent Articles" means the Articles of Incorporation of Parent, as
amended.
"Parent Bank" means First National Bank of Pennsylvania, a national
association and wholly owned subsidiary of Parent.
"Parent Bank Board" means the Board of Directors of Parent Bank.
"Parent Bank 2006 Annual Meeting" has the meaning set forth in Section
6.13(b).
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"Parent Benefit Plans" has the meaning set forth in Section 6.12(a).
"Parent Board" means the Board of Directors of Parent.
"Parent Common Stock" means the common stock, $.01 par value per share, of
Parent.
"Parent Option" means an option to purchase Parent Common Stock.
"Parent Preferred Stock" means the preferred stock, $.01 par value per
share, of Parent.
"Parent Ratio" has the meaning set forth in Section 8.01(h)(2).
"Payment Event" has the meaning set forth in Section 6.08(g).
"PBCL" means the Pennsylvania Business Corporation Law of 1988, as amended.
"Pension Plan" has the meaning set forth in Section 5.03(m)(ii).
"Person" means a natural Person or any legal, commercial, or governmental
entity, such as, but not limited to, a corporation, general partnership, joint
venture, limited partnership, limited liability company, trust, business
association, group acting in concert, a common enterprise, or any person acting
in a representative capacity.
"Previously Disclosed" by a party shall mean information set forth in a
section of its Disclosure Schedule corresponding to the section of this
Agreement where such term is used.
"Proxy Statement" has the meaning set forth in Section 6.03(a).
"Registration Statement" has the meaning set forth in Section 6.03(a).
"Representatives" has the meaning set forth in Section 6.08(a).
"Rights" means, with respect to any Person, warrants, options, rights,
convertible securities and other arrangements or commitments that obligate the
Person to issue or dispose of any of its capital stock or other ownership
interests.
"SEC" means the Securities and Exchange Commission.
"Section 16 Information" means information accurate in all respects
regarding the NSD Insiders, the number of shares of NSD Common Stock held by
each such NSD Insider and the number and description of the NSD Options held by
each such NSD Insider.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
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"Securities Documents" has the meaning set forth in Sections 5.03(g)(i) and
5.04(g)(i) in the case of NSD and Parent, respectively.
"Starting Date" means the trading day on the NYSE immediately preceding the
day on which the parties publicly announced the signing of this Agreement.
"Starting Index Price" means the closing price of the Nasdaq Bank Index on
the Starting Date.
"Starting Price" means the closing price of Parent Common Stock on the
Starting Date, subject to adjustment pursuant to Section 3.04 and rounded to the
nearest whole cent.
"Subsidiary" has the meaning ascribed thereto in Rule 1-02 of Regulation
S-X of the SEC.
"Superior Proposal" has the meaning set forth in Section 6.08(e)(ii).
"Surviving Corporation" has the meaning set forth in Section 2.01(a).
"Tax" and "Taxes" mean all federal, state, local or foreign income, gross
income, gains, gross receipts, sales, use, ad valorem, goods and services,
capital, production, transfer, franchise, windfall profits, license,
withholding, payroll, employment, disability, employer health, excise,
estimated, severance, stamp, occupation, property, environmental, custom duties,
unemployment or other taxes of any kind whatsoever, together with any interest,
additions or penalties thereto and any interest in respect of such interest and
penalties.
"Tax Returns" means any return, declaration or other report (including
elections, declarations, schedules, estimates and information returns) with
respect to any Taxes.
"Third Party" has the meaning set forth in Section 6.08(g)(v).
"Transaction" means the Merger and any other transactions contemplated by
this Agreement.
"Treasury Shares" means shares of NSD Common Stock held by NSD or any of
its Subsidiaries or by Parent or any of its Subsidiaries, other than in a
fiduciary, including custodial or agency, capacity or as a result of debts
previously contracted in good faith.
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ARTICLE II
THE MERGER
2.01 The Merger.
(a) The Merger. Subject to the terms and conditions of this Agreement, at
the Effective Time, NSD shall merge with and into Parent in accordance with the
applicable provisions of the PBCL and the FLBC (the "Merger"), the separate
corporate existence of NSD shall cease and Parent shall survive and continue to
exist as a corporation incorporated under the FLBC (Parent, as the surviving
corporation in the Merger, sometimes being referred to herein as the "Surviving
Corporation").
(b) Name. The name of the Surviving Corporation shall be "F.N.B.
Corporation."
(c) Articles of Incorporation and Bylaws. The articles of incorporation and
bylaws of the Surviving Corporation immediately after the Merger shall be the
articles of incorporation and the bylaws of Parent as in effect immediately
prior to the Merger, in each case until thereafter amended in accordance with
applicable law.
(d) Directors and Executive Officers of the Surviving Corporation. The
directors of the Surviving Corporation immediately after the Merger shall be (i)
the directors of Parent immediately prior to the Merger and (ii) one current
member of NSD's Board of Directors (the "NSD Parent Designee") as is mutually
agreed by Parent and NSD, each of whom shall serve until such time as their
successors shall be duly elected and qualified and as further provided in
Section 6.13(a). The executive officers of the Surviving Corporation immediately
after the Merger shall be the executive officers of Parent immediately prior to
the Merger, each of whom shall serve until such time as their successors shall
be duly elected and qualified.
(e) Authorized Capital Stock. The authorized capital stock of the Surviving
Corporation upon consummation of the Merger shall be as set forth in the Parent
Articles immediately prior to the Merger.
(f) Effect of the Merger. At the Effective Time, the effect of the Merger
shall be as provided in Sections 1921 through 1932 of the PBCL and Sections
607.1101 through 607.11101 of the FLBC. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the property, rights,
privileges, powers and franchises of NSD shall vest in the Surviving
Corporation, and all debts, liabilities, obligations, restrictions, disabilities
and duties of NSD shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
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(g) Additional Actions. If, at any time after the Effective Time, the
Surviving Corporation shall consider that any further assignments or assurances
in law or any other acts are necessary or desirable to (i) vest, perfect or
confirm, of record or otherwise, in the Surviving Corporation its right, title
or interest in, to or under any of the rights, properties or assets of NSD
acquired or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger, or (ii) otherwise carry out the purposes of this
Agreement, NSD, and its proper officers and directors, shall be deemed to have
granted to the Surviving Corporation an irrevocable power of attorney to execute
and deliver all such proper deeds, assignments and assurances in law and to do
all acts necessary or proper to vest, perfect or confirm title to and possession
of such rights, properties or assets in the Surviving Corporation and otherwise
to carry out the purposes of this Agreement, and the proper officers and
directors of the Surviving Corporation are fully authorized in the name of the
Surviving Corporation or otherwise to take any and all such action.
2.02 Effective Date and Effective Time; Closing.
(a) Subject to the satisfaction or waiver of the conditions set forth in
Article VII, other than those conditions that by their nature are to be
satisfied at the consummation of the Merger, but subject to the fulfillment or
waiver of those conditions, the parties shall cause articles of merger relating
to the Merger (the "Articles of Merger") to be filed with the Secretary of State
of the Commonwealth of Pennsylvania pursuant to the PBCL and the Secretary of
State of the State of Florida pursuant to the FLBC as soon as possible after the
receipt of all required approvals from Bank Regulatory Authorities on (i) a date
selected by Parent after such satisfaction or waiver that is no later than five
Business Days after such satisfaction or waiver, or (ii) such other date to
which the parties may mutually agree in writing, provided that in either case,
such date shall be no less than ten days following the NSD Meeting. The Merger
provided for herein shall become effective upon such filings or on such date as
may be specified therein. The date of such filings or such later effective date
is herein called the "Effective Date." The "Effective Time" of the Merger shall
be the time of such filings or as set forth in such filings.
(b) A closing (the "Closing") shall take place immediately prior to the
Effective Time at 8:00 a.m., prevailing time, at the principal offices of Parent
in Hermitage, Pennsylvania, or at such other place, at such other time, or on
such other date as the parties may mutually agree upon (such date, the "Closing
Date"). At the Closing, there shall be delivered to Parent and NSD the opinions,
certificates and other documents required to be delivered under Article VII.
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ARTICLE III
MERGER CONSIDERATION; EXCHANGE PROCEDURES
3.01 Conversion of Shares.
(a) Subject to the provisions of this Agreement, each share of NSD Common
Stock issued and outstanding immediately prior to the Effective Time, other than
Treasury Shares, shall at the Effective Time, by virtue of the Merger, no longer
be outstanding and shall as of the Effective Time automatically be converted
into and shall thereafter only represent the right to receive 1.8 shares of
Parent Common Stock (the "Exchange Ratio").
(b) At and after the Effective Time, each Treasury Share shall be cancelled
and retired and no shares of Parent Common Stock or other consideration shall be
issued in exchange therefor.
(c) At the Effective Time, the stock transfer books of NSD shall be closed
as to holders of NSD Common Stock immediately prior to the Effective Time and no
transfer of NSD Common Stock by any such holder shall thereafter be made or
recognized. If, after the Effective Time, certificates are properly presented in
accordance with Section 3.03 of this Agreement to the Exchange Agent, such
certificates shall be canceled and exchanged for certificates representing the
number of whole shares of Parent Common Stock and payment for any fractional
share of Parent Common Stock without any interest thereon.
(d) At and after the Effective Time, each share of Parent Common Stock
issued and outstanding immediately prior to the Effective Time shall remain
issued and outstanding and shall not be affected by the Merger.
3.02 Fractional Shares. Each holder of NSD Common Stock shall have the
option of enrolling the shares of Parent Common Stock issuable to such
stockholder upon the consummation of the Merger in Parent's Dividend
Reinvestment and Stock Purchase Plan (the "DRSP Plan"). Notwithstanding any
other provision of this Agreement, each holder of NSD Common Stock who elects
not to enroll in the DRSP Plan and who would otherwise be entitled to receive a
fractional share of Parent Common Stock, after taking into account all
Certificates delivered by such holder, shall receive an amount in cash, without
interest, rounded to the nearest cent, equal to the product obtained by
multiplying (a) the Average Closing Price determined as of the Effective Date by
(b) the fraction calculated to the nearest ten-thousandth of the share of Parent
Common Stock to which such holder would otherwise be entitled. No such holder
shall be entitled to dividends or other rights in respect of any such fractional
shares. Each NSD stockholder electing to enroll in the DRSP Plan shall be issued
the shares of Parent Common Stock issuable to such stockholder in book-entry
form, with any fractional share rounded to the third decimal place and such
stockholders shall be entitled to dividend and voting rights with respect to
such fractional shares.
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3.03 Exchange Procedures.
(a) Not later than three days prior to the Effective Time of the Merger,
Parent shall deposit with the Exchange Agent for the benefit of the holders of
shares of NSD Common Stock, for exchange in accordance with this Section 3.03,
certificates representing the aggregate number of shares of Parent Common Stock
issuable pursuant to Section 3.01 in exchange for shares of NSD Common Stock
outstanding immediately prior to the Effective Time of the Merger and funds in
an amount not less than (i) the amount of cash payable in lieu of fractional
shares of Parent Common Stock that would otherwise be issuable in connection
with Section 3.01, but for the operation of Section 3.02 of this Agreement and
(ii) the aggregate Option Consideration payable pursuant to Section 3.06(a)
(collectively, the "Exchange Fund").
(b) After the Effective Time of the Merger, each holder of a certificate
("Certificate") formerly representing NSD Common Stock, other than Treasury
Shares, who surrenders or has surrendered such Certificate or customary
affidavits and indemnification regarding the loss or destruction of such
Certificate, together with duly executed transmittal materials to the Exchange
Agent, shall, upon acceptance thereof, be entitled to a certificate representing
the Parent Common Stock into which the shares of NSD Common Stock shall have
been converted pursuant to Section 3.01, as well as cash in lieu of any
fractional share of Parent Common Stock to which such holder would otherwise be
entitled, if applicable. The Exchange Agent shall accept such Certificate upon
compliance with such reasonable and customary terms and conditions as the
Exchange Agent may impose to effect an orderly exchange thereof in accordance
with normal practices. Until surrendered as contemplated by this Section 3.03,
each Certificate representing NSD Common Stock shall be deemed from and after
the Effective Time of the Merger to evidence only the right to receive the
consideration to which it is entitled hereunder upon such surrender. Parent
shall not be obligated to deliver the Merger Consideration to which any former
holder of NSD Common Stock is entitled as a result of the Merger until such
holder surrenders his Certificate or Certificates for exchange as provided in
this Section 3.03. If any certificate for shares of Parent Common Stock, or any
check representing cash and/or declared but unpaid dividends, is to be issued in
a name other than that in which a Certificate surrendered for exchange is
issued, the Certificate so surrendered shall be properly endorsed and otherwise
in proper form for transfer and the person requesting such exchange shall affix
any requisite stock transfer tax stamps to the Certificate surrendered or
provide funds for their purchase or establish to the satisfaction of the
Exchange Agent that such taxes are not payable.
(c) No dividends or other distributions declared or made after the
Effective Time of the Merger with respect to Parent Common Stock with a record
date after the Effective Time of the Merger shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of Parent Common Stock
represented thereby, and no cash payment in lieu of a fractional share shall be
paid to any such holder pursuant to Section 3.02, until the holder of record of
such Certificate shall surrender such Certificate. Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid to the record holder of the certificates representing whole shares of
Parent Common Stock issued in exchange thereof, without interest, (i) at the
time of such surrender, the amount of any cash payable in lieu of a fractional
share of Parent Common Stock to which such holder is entitled pursuant to
Section 3.02 and the amount of dividends or other distributions with a record
date after the Effective Time of the Merger theretofore paid with respect to
such whole shares of Parent Common Stock, and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record date after
the Effective Time of the Merger but prior to surrender and a payment date
subsequent to surrender payable with respect to such whole shares of Parent
Common Stock.
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(d) All shares of Parent Common Stock issued upon the surrender for
exchange of shares of NSD Common Stock or the provision of customary affidavits
and indemnification for lost or mutilated certificates in accordance with the
terms hereof, including any cash paid pursuant to Section 3.02, shall be deemed
to have been issued in full satisfaction of all rights pertaining to such shares
of NSD Common Stock, and there shall be no further registration of transfers on
the stock transfer books of Parent, after the Merger, of the shares of NSD
Common Stock that were outstanding immediately prior to the Effective Time of
the Merger. If, after the Effective Time of the Merger, Certificates are
presented to Parent for any reason, they shall be canceled and exchanged as
provided in this Agreement.
(e) Any portion of the Exchange Fund, including any interest thereon, that
remains undistributed to the stockholders of NSD following the passage of nine
months after the Effective Time of the Merger shall be delivered to Parent, upon
demand, and any stockholders of NSD who have not theretofore complied with this
Section 3.03 shall thereafter look only to Parent for payment of their claim for
Parent Common Stock, any cash in lieu of fractional shares of Parent Common
Stock and any dividends or distributions with respect to Parent Common Stock.
(f) Neither NSD nor Parent shall be liable to any holder of shares of NSD
Common Stock or Parent Common Stock, as the case may be, for such shares, or
dividends or distributions with respect thereto, or cash from the Exchange Fund
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
(g) The Exchange Agent shall not be entitled to vote or exercise any rights
of ownership with respect to the shares of Parent Common Stock held by it from
time to time hereunder, except that it shall receive and hold all dividends or
other distributions paid or distributed with respect to such shares of Parent
Common Stock for the account of the Persons entitled thereto.
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(h) Certificates surrendered for exchange by any Person constituting an
Affiliate of NSD for purposes of Rule 144(a) under the Securities Act shall not
be exchanged for certificates representing whole shares of Parent Common Stock
until Parent has received a written agreement from such person as provided in
Section 6.07.
3.04 Adjustments for Dilution and Other Matters. If prior to the Effective
Time of the Merger, (a) Parent shall declare a stock dividend or distribution on
Parent Common Stock with a record date prior to the Effective Time of the
Merger, or subdivide, split up, reclassify or combine Parent Common Stock, or
make a distribution other than a regular quarterly cash dividend not in excess
of $.30 per share, on the Parent Common Stock in any security convertible into
Parent Common Stock, in each case with a record date prior to the Effective Time
of the Merger, or (b) the outstanding shares of Parent Common Stock shall have
been increased, decreased, changed into or exchanged for a different number or
kind of shares or securities, in each case as a result of a reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar change in Parent's capitalization other than a
transaction in which Parent shall have received fair, as determined by its Board
of Directors, consideration for the shares issued, then a proportionate
adjustment or adjustments will be made to the Exchange Ratio, the Starting Price
and the Average Closing Price, which adjustment or adjustments may include, as
appropriate, the issuance of securities, property or cash on the same basis as
that on which any of the foregoing shall have been issued, distributed or paid
to holders of Parent Common Stock generally.
3.05 Withholding Rights. Parent, directly or through the Exchange Agent,
shall be entitled to deduct and withhold from any amounts otherwise payable
pursuant to this Agreement to any holder of shares of NSD Common Stock such
amounts as Parent is required under the Code or any state, local or foreign tax
law or regulation thereunder to deduct and withhold with respect to the making
of such payment. Any amounts so withheld shall be treated for all purposes of
this Agreement as having been paid to the holder of NSD Common Stock in respect
of which such deduction and withholding was made by Parent.
3.06 NSD Options.
(a) At the Effective Time, each vested NSD Option, which shall include NSD
Options that become vested after the date hereof through and including the
Effective Date, that is then outstanding shall cease to represent a right to
acquire shares of NSD Common Stock and shall, at the option of the holder
thereof, be converted automatically into (i) a right to receive a cash payment
for each share of NSD Common Stock subject to such NSD Option in an amount equal
to the Average Closing Price at the Effective Time times the Exchange Ratio less
the per share exercise price of such option with payment of such amount to be
made to the optionee after deducting all applicable federal and state
withholding obligations of the optionee (the "Option Consideration"), or (ii) a
Parent Option.
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(b) Parent shall assume each unvested NSD Option, and each vested NSD
Option whose holder does not elect to receive cash as provided in subsection
(a), in accordance with the terms of the NSD Stock Option Plans and stock option
or other agreement by which it is evidenced, except that from and after the
Effective Time, (i) Parent and the Compensation Committee of its Board of
Directors shall be substituted for NSD and the committee of the Board of
Directors of NSD, including, if applicable, the entire Board of Directors of
NSD, administering such NSD Stock Option Plans, (ii) each NSD Option assumed by
Parent may be exercised solely for shares of Parent Common Stock, (iii) the
number of shares of Parent Common Stock subject to such NSD Option shall be
equal to the number of shares of NSD Common Stock subject to such NSD Option
immediately prior to the Effective Time multiplied by the Exchange Ratio,
provided that any fractional shares of Parent Common Stock resulting from such
multiplication shall be rounded down to the nearest share and (iv) the per share
exercise price under each such NSD Option shall be adjusted by dividing the per
share exercise price under each such NSD Option by the Exchange Ratio, provided
that such exercise price shall be rounded up to the nearest cent.
Notwithstanding clauses (iii) and (iv) of the preceding sentence, each NSD
Option that is an "incentive stock option" shall be adjusted as required by
Section 424 of the Code, and the regulations promulgated thereunder, so as not
to constitute a modification, extension or renewal of the option within the
meaning of Section 424(h) of the Code. Parent and NSD agree to take all
necessary steps to effect the foregoing provisions of this Section 3.06.
(c) As of the Effective Time, Parent shall issue to each holder of an
outstanding NSD Option that has been assumed by Parent a document evidencing the
conversion and assumption of the NSD Option by Parent pursuant to this Section
3.06.
3.07 Bank Merger. As soon as practicable after the execution of this
Agreement, NSD and Parent shall cause NorthSide Bank and Parent Bank to enter
into the Bank Merger Agreement, the form of which is attached hereto as Annex A,
that provides for the merger of NorthSide Bank with and into Parent Bank (the
"Bank Merger"), in accordance with applicable laws and regulations and the terms
of the Bank Merger Agreement and as soon as practicable after consummation of
the Merger. The Bank Merger Agreement provides that the directors of Parent Bank
upon consummation of the Bank Merger shall be the directors of Parent Bank
immediately prior to the Bank Merger, plus the three NSD Parent Bank Designees.
ARTICLE IV
ACTIONS PENDING CLOSING
4.01 Forbearances of NSD. From the date hereof until the Effective Time,
except as expressly contemplated or permitted by this Agreement or as Previously
Disclosed, without the prior written consent of Parent, not to be unreasonably
withheld, NSD will not, and will cause each of its Subsidiaries not to:
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(a) Ordinary Course.
(i) Conduct its business other than in the ordinary and usual course
consistent with past practice or fail to use reasonable best efforts to preserve
intact its business organization and advantageous business relationships;
(ii) Fail to use commercially reasonable best efforts to keep available the
present services of its employees and preserve for itself and Parent the
goodwill of the customers of NSD and its Subsidiaries and others with whom
business relations exist; and
(iii) Take any action that would adversely affect or materially delay the
ability of either NSD or Parent to obtain any necessary approvals of any
regulatory agency required for the transactions contemplated hereby or to
perform its covenants and agreements under this Agreement or to consummate the
transactions contemplated hereby.
(b) Capital Stock. Other than pursuant to Rights set forth on Schedule
4.01(b) of the NSD Disclosure Schedule and outstanding on the date hereof, (i)
issue, sell or otherwise permit to become outstanding, or authorize the creation
of, any additional shares of stock or any Rights or (ii) permit any additional
shares of stock to become subject to grants of employee or director stock
options or other Rights.
(c) Dividends; Etc.
(i) Make, declare, pay or set aside for payment any dividend on or in
respect of, or declare or make any other distribution on any shares of NSD
capital stock, other than dividends from wholly owned Subsidiaries to NSD
or another wholly owned Subsidiary of NSD or as set forth on Schedule
4.01(c) of the NSD Disclosure Schedule, regular quarterly dividends not in
excess of $.22 per share; or
(ii) Directly or indirectly adjust, split, combine, redeem,
reclassify, purchase or otherwise acquire, any shares of its capital stock.
(iii) Parent and NSD agree to coordinate their declaration of
dividends so that holders of NSD Common Stock will not receive two
dividends, or fail to receive one dividend, for any quarter with respect to
the NSD Common Stock and any Parent Common Stock any holder receives in the
Merger.
(d) Compensation; Employment Agreements; Etc. Enter into or amend or renew
any employment, consulting, severance or similar agreements or arrangements with
any director, officer or employee of NSD or its Subsidiaries or grant any salary
or wage increase or increase any employee benefit, including discretionary or
other incentive or bonus payments, except:
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(i) for normal increases in compensation and bonuses to employees in
the ordinary course of business consistent with past practice, provided
that no such increases shall result in an annual aggregate adjustment in
compensation or bonus of more than 3%, provided, however, that no increase
for any individual shall result in an annual adjustment in compensation or
bonus of more than 4% unless mutually agreed to by NSD and Parent;
(ii) for other changes that are required by applicable law;
(iii) to pay the amounts or to provide payments under plans and/or
commitments set forth in Schedule 4.01(d) of the NSD Disclosure Schedule;
(iv) for retention bonuses to such persons and in such amounts as are
mutually agreed by Parent and NSD, provided, however, that the aggregate
amount of such retention bonuses shall not exceed $200,000 unless mutually
agreed to by NSD and Parent;
(v) severance payments pursuant to the severance agreements or
employment agreements that are set forth in Schedule 4.01(d) of the NSD
Disclosure Schedule; or
(vi) for grants of awards to newly hired employees consistent with
past practice.
(e) Hiring. Hire any person as an employee of NSD or any of its
Subsidiaries or promote any employee, except (i) to satisfy contractual
obligations existing as of the date hereof and set forth on Schedule 4.01(e) of
the NSD Disclosure Schedule, or (ii) to fill any vacancies arising after the
date hereof at a comparable level of compensation with persons whose employment
is terminable at the will of NSD or a Subsidiary of NSD, as applicable,
provided, however, that such total compensation may not exceed $40,000.
(f) Benefit Plans. Enter into, establish, adopt, amend or make any
contributions to (except (i) as may be required by applicable law or (ii) to
satisfy contractual obligations existing as of the date hereof and set forth on
Schedule 4.01(f) of the NSD Disclosure Schedule), any pension, retirement, stock
option, stock purchase, savings, profit sharing, deferred compensation,
consulting, bonus, group insurance or other employee benefit, incentive or
welfare contract, plan or arrangement, or any trust agreement or similar
arrangement related thereto, in respect of any director, officer or employee of
NSD or its Subsidiaries or take any action to accelerate the vesting or
exercisability of stock options, restricted stock or other compensation or
benefits payable thereunder.
(g) Dispositions. Sell, transfer, mortgage, encumber or otherwise dispose
of or discontinue any of its assets, deposits, business or properties except in
the ordinary course of business consistent with past practice and in a
transaction that, together with all other such transactions, is not material to
NSD and its Subsidiaries taken as a whole.
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(h) Acquisitions. Acquire, other than by way of foreclosures or
acquisitions of control in a bona fide fiduciary capacity or in satisfaction of
debts previously contracted in good faith, in each case in the ordinary and
usual course of business consistent with past practice, all or any portion of
the assets, business, deposits or properties of any other entity.
(i) Capital Expenditures. Make any capital expenditures other than capital
expenditures in the ordinary course of business consistent with past practice in
amounts not exceeding $15,000 individually or $50,000 in the aggregate,
provided, however, that if Parent does not object to a written request for
approval within two business days after receipt, the request shall be deemed
approved.
(j) Governing Documents. Amend the NSD Articles or the NSD Bylaws or the
articles of incorporation or bylaws (or equivalent documents) of any Subsidiary
of NSD, except as may be required by law.
(k) Accounting Methods. Implement or adopt any change in its tax accounting
or financial accounting principles, practices or methods, other than as may be
required by changes in laws or regulations or GAAP.
(l) Contracts. Except in the ordinary course of business consistent with
past practice or as otherwise permitted under this Section 4.01, enter into or
terminate any Material Contract or amend or modify in any material respect any
of its existing Material Contracts.
(m) Claims. Enter into any settlement or similar agreement with respect to
any action, suit, proceeding, order or investigation to which NSD or any of its
Subsidiaries is or becomes a party, which settlement, agreement or action
involves payment by NSD or any of its Subsidiaries of an amount that exceeds
$50,000 and/or would impose any material restriction on the business of NSD or
any of its Subsidiaries or create precedent for claims that are reasonably
likely to be material to NSD and its Subsidiaries taken as a whole.
(n) Banking Operations. Enter into any new material line of business;
change its material lending, investment, underwriting, risk and asset liability
management and other material banking and operating policies, except as required
by applicable law, regulation or policies imposed by any Governmental Authority;
or file any application or make any contract with respect to opening or closing
a branching or site location or branching or site relocation.
(o) Indebtedness. (i) Incur any indebtedness for borrowed money, other than
deposits, federal funds purchased, cash management accounts, Federal Home Loan
Bank borrowings that mature within one year and securities sold under agreements
to repurchase that mature within 90 days, in each case in the ordinary course of
business consistent with past practice, or assume, guarantee, endorse or
otherwise as an accommodation become responsible for the obligations of any
other Person, other than in the ordinary course of business consistent with past
practice or (ii) prepay any indebtedness.
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(p) Investment Securities. (i) Acquire, other than by way of foreclosures
or acquisitions in a bona fide fiduciary capacity or in satisfaction of debts
previously contracted in good faith, in each case in the ordinary course of
business consistent with past practice, any debt security or Equity Investment
other than federal funds or United States Government securities or United States
Government agency securities, in each case with a term of one (1) year or less,
(ii) restructure or materially change its investment securities portfolio or its
gap position or (iii) enter in any Derivatives Contract, provided, however, that
if Parent does not object to a written request for approval within two business
days after receipt, the request shall be deemed approved.
(q) Loans. Make, renew or otherwise modify any loan, loan commitment,
letter of credit or other extension of credit (individually, a "Loan" and
collectively, "Loans") to any Person if, immediately after making an unsecured
Loan or Loans, such Person would be indebted to NorthSide Bank in an aggregate
amount in excess of $500,000, or make any fully secured Loan or Loans to any
Person (except for any Loan secured by a first mortgage on single family
owner-occupied real estate) if, immediately after making a secured Loan, such
Person would be indebted to NorthSide Bank in an aggregate amount in excess of
$1,000,000 (in either case Parent shall object thereto within two business days,
and the failure to provide a written objection within two business days after
receipt shall be deemed as the approval of Parent to make such Loan or Loans)
or, without approval of Parent, shall not make, renew or otherwise modify any
Loan or Loans secured by an owner-occupied 1-4 single-family residence with a
principal balance in excess of $500,000 or in any event if such Loan does not
conform with NorthSide Bank's Credit Policy Manual.
(r) Investments in Real Estate. Make any investment or commitment to invest
in real estate or in any real estate development project, other than by way of
foreclosure or acquisitions in a bona fide fiduciary capacity or in satisfaction
of a debt previously contracted in good faith, in each case in the ordinary
course of business consistent with past practice.
(s) Adverse Actions. Take any action that (i) would, or is reasonably
likely to, prevent or impede the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code, (ii) is intended or is
reasonably likely to result in (x) any of its representations and warranties set
forth in this Agreement being or becoming untrue in any material respect at any
time at or prior to the Effective Time, (y) any of the conditions to the Merger
set forth in Article VII not being satisfied or (z) a material violation of any
provision of this Agreement or the Bank Merger Agreement, in either case, except
as may be required by applicable law or regulation and (iii) would adversely
affect or materially delay the ability of either Parent or NSD to obtain any
necessary approvals required of any regulatory agency for the transactions
contemplated hereby or to perform its covenants and agreements under this
Agreement or to consummate the transactions contemplated hereby.
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(t) Commitments. Enter into any contract with respect to, or otherwise
agree or commit to do, any of the foregoing.
4.02 Forbearances of Parent. From the date hereof until the Effective Time,
except as expressly contemplated or permitted by this Agreement or as Previously
Disclosed, without the prior written consent of NSD, not to be unreasonably
withheld, Parent will not, and will cause each of its Subsidiaries not to:
(a) Adverse Actions. Take any action that (i) would, or is reasonably
likely to, prevent or impede the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code, (ii) is intended or is
reasonably likely to result in (x) any of its representations and warranties set
forth in this Agreement being or becoming untrue in any material respect at any
time at or prior to the Effective Time, (y) any of the conditions to the Merger
set forth in Article VII not being satisfied or (z) a material violation of any
provision of this Agreement or the Bank Merger Agreement, except as may be
required by applicable law or regulation or (iii) would adversely affect or
materially delay the ability of either Parent or NSD to obtain any necessary
approvals required of any regulatory agency for the transactions contemplated
hereby or to perform its covenants and agreements under this Agreement or to
consummate the transactions contemplated hereby.
(b) Commitments. Enter into any contract with respect to, or otherwise
agree or commit to do, any of the foregoing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Disclosure Schedules. On or prior to the date hereof, Parent has
delivered to NSD a schedule and NSD has delivered to Parent a schedule
(respectively, its "Disclosure Schedule") setting forth, among other things,
items the disclosure of which is necessary or appropriate either in response to
an express disclosure requirement contained in a provision hereof or as an
exception to one or more representations or warranties contained in Section 5.03
or 5.04 or to one or more of its covenants contained in Article IV; provided,
however, that (a) no such item is required to be set forth in a Disclosure
Schedule as an exception to a representation or warranty or as an exception to a
covenant in Article IV if its absence would not be reasonably likely to result
in the related representation or warranty being deemed untrue or incorrect under
the standard established by Section 5.02 and (b) the mere inclusion of an item
in a Disclosure Schedule as an exception to a representation or warranty shall
not be deemed an admission by a party that such item represents a material
exception or fact, event or circumstance or that, absent such inclusion in the
Disclosure Schedule, such item is or would be reasonably likely to result in a
Material Adverse Effect.
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5.02 Standard. No representation or warranty of NSD or Parent contained in
Sections 5.03 or 5.04, respectively, shall be deemed untrue or incorrect for any
purpose under this Agreement, and no party hereto shall be deemed to have
breached a representation or warranty, in any case, as a consequence of the
existence of any fact, event or circumstance unless such fact, circumstance or
event, individually or taken together with all other facts, events or
circumstances inconsistent with any representation or warranty contained in
Sections 5.03, 5.04 or 5.05, has had or would be reasonably likely to have a
Material Adverse Effect on the party making such representation or warranty
disregarding for the purposes of this Section 5.02 any materiality or Material
Adverse Effect qualification contained in any representations or warranties.
5.03 Representations and Warranties of NSD. Subject to Sections 5.01 and
5.02, NSD hereby represents and warrants to Parent:
(a) Organization, Standing and Authority. NSD is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania. NSD is duly qualified to do business and is in
good standing in each jurisdiction where its ownership or leasing of property or
assets or the conduct of its business requires it to be so qualified. NSD has in
effect all federal, state, local and foreign governmental authorizations
necessary for it to own or lease its properties and assets and to carry on its
business as now conducted.
(b) NSD Capital Stock. The authorized capital stock of NSD consists solely
of 10,000,000 shares of NSD Common Stock, of which 3,413,348 shares are issued
and outstanding as of the date hereof and options to purchase 155,031 shares are
outstanding as of the date hereof. As of the date hereof, 344,964 shares of NSD
Common Stock were held in treasury by NSD or otherwise directly or indirectly
owned by NSD. The outstanding shares of NSD Common Stock have been duly
authorized and validly issued and are fully paid and non-assessable, and none of
the outstanding shares of NSD Common Stock have been issued in violation of the
preemptive rights of any Person. Schedule 5.03(b) of the NSD Disclosure Schedule
sets forth for each NSD Option the name of the grantee, the date of the grant,
the type of grant, the status of the option grant as qualified or non-qualified
under Section 422 of the Code (with respect to the NSD Options), the number of
shares of NSD Common Stock subject to each NSD Option, the number of shares of
NSD Common Stock subject to NSD Options that are currently exercisable and the
exercise price per share. Except as set forth in the preceding sentence and the
NSD Rights as set forth in Schedule 5.03(b) of the NSD Disclosure Schedule there
are no shares of NSD Common Stock reserved for issuance, NSD does not have any
Rights issued or outstanding with respect to NSD Common Stock and NSD does not
have any commitment to authorize, issue or sell any NSD Common Stock or Rights.
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(c) Subsidiaries.
(i) (A) Schedule 5.03(c) of the NSD Disclosure Schedule sets forth a
list of all of its Subsidiaries together with the jurisdiction of
organization of each such Subsidiary; (B) except as set forth on Schedule
5.03(c) of the NSD Disclosure Schedule, NSD owns, directly or indirectly,
all the issued and outstanding equity securities of each of its
Subsidiaries; (C) no equity securities of any of its Subsidiaries are or
may become required to be issued (other than to NSD) by reason of any Right
or otherwise; (D) there are no contracts, commitments, understandings or
arrangements by which any of its Subsidiaries is or may be bound to sell or
otherwise transfer any of its equity securities other than to NSD or any of
its wholly owned Subsidiaries; (E) there are no contracts, commitments,
understandings or arrangements relating to NSD's rights to vote or to
dispose of such equity securities of NSD's subsidiaries and (F) all the
equity securities of NSD's Subsidiaries held by NSD or its Subsidiaries are
fully paid and nonassessable and are owned by NSD or its Subsidiaries free
and clear of any Liens.
(ii) Except as set forth in Schedule 5.03 of the NSD Disclosure
Schedules and except for securities and other interests held in a fiduciary
capacity and beneficially owned by third parties or taken in consideration
of debts previously contracted, ownership interests in NSD's Subsidiaries
and stock in the Federal Home Loan Bank of Pittsburgh, NSD does not own
beneficially, directly or indirectly, any equity securities or similar
interests of any Person or any interest in a partnership or joint venture
of any kind.
(iii) Each of NSD's Subsidiaries has been duly organized and is
validly existing in good standing under the laws of the jurisdiction of its
organization and is duly qualified to do business and in good standing in
the jurisdictions where its ownership or leasing of property or the conduct
of its business requires it to be so qualified.
(iv) The deposit accounts of NorthSide Bank are insured by the Bank
Insurance Fund, in the manner and to the maximum extent provided by
applicable law, and NorthSide Bank has paid all deposit insurance premiums
and assessments required by applicable laws and regulations.
(d) Corporate Power. Each of NSD and its Subsidiaries has the corporate
power and authority to carry on its business as it is now being conducted and to
own all its properties and assets; and NSD has the corporate power and authority
to execute, deliver and perform its obligations under this Agreement and to
consummate the Transaction, subject to receipt of all necessary approvals of
Governmental Authorities and the approval of NSD's stockholders of this
Agreement, and no other corporate proceedings are necessary on the part of NSD
to approve this Agreement or to consummate the Transaction.
(e) Corporate Authority. Subject to the approval of this Agreement by the
holders of not less than 51% of the outstanding shares of NSD Common Stock (a
"Majority Vote"), this Agreement and the Transaction have been authorized by all
necessary corporate action of NSD and the NSD Board on or prior to the date
hereof. NSD has duly executed and delivered this Agreement and, assuming due
authorization, execution and delivery by Parent of this Agreement, this
Agreement is a valid and legally binding obligation of NSD, enforceable in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, receivership, conservatorship, reorganization,
moratorium, fraudulent transfer and similar laws of general applicability
relating to or affecting creditors' rights or by general equity principles.
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(f) Regulatory Approvals; No Defaults.
(i) No consents or approvals of, or waivers by, or filings or
registrations with, any Governmental Authority or with any third party are
required to be made or obtained by NSD or any of its Subsidiaries in
connection with the execution, delivery or performance by NSD and NorthSide
Bank of this Agreement and the Bank Merger Agreement, respectively, or to
consummate the Transaction except for (A) filings of applications or
notices with, and approvals or waivers by, the OCC, the FDIC, the
Department and the Federal Reserve Board, (B) filings with the SEC and
state securities authorities, as applicable, in connection with the
submission of this Agreement for the approval of the holders of NSD Common
Stock and the registration of Parent Common Stock issuable in the Merger,
(C) the filing of Articles of Merger with the Secretary of State of the
Commonwealth of Pennsylvania pursuant to the PBCL and the Secretary of
State of the State of Florida pursuant to the FLBC with respect to the
Merger and (D) the approval and adoption of this Agreement by a Majority
Vote. As of the date hereof, NSD is not aware of any reason why the
approvals set forth above and referred to in Section 7.01(b) will not be
received in a timely manner and without the imposition of a condition,
restriction or requirement of the type described in Section 7.01(b).
(ii) Subject to receipt, or the making, of the consents, approvals,
waivers and filings referred to in the preceding paragraph and the
expiration of related waiting periods, the execution, delivery and
performance of this Agreement and the Bank Merger Agreement by NSD and
NorthSide Bank, respectively, and the consummation of the Transaction do
not and will not (A) except as Previously Disclosed, constitute a breach or
violation of, or a default under, or give rise to any Lien, any
acceleration of remedies or any right of termination under, any law, rule
or regulation or any judgment, decree, order, governmental permit or
license, or agreement, indenture or instrument of NSD or any of its
Subsidiaries or to which NSD or any of its Subsidiaries or any of their
respective properties is subject or bound, (B) constitute a breach or
violation of, or a default under, the NSD Articles, the NSD Bylaws or
similar governing documents of NSD's Subsidiaries or (C) require any
consent or approval under any such law, rule, regulation, judgment, decree,
order, governmental permit or license, agreement, indenture or instrument.
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(g) Financial Reports; Undisclosed Liabilities.
(i) NSD's Annual Reports on Form 10-K for the fiscal years ended
December 31, 2003, 2002 and 2001 and all other reports, registration
statements, definitive proxy statements or information statements filed or
to be filed by it subsequent to December 31, 2001 with the SEC
(collectively, NSD's "Securities Documents"), as of the date filed or to be
filed and as amended prior to the date hereof, (A) complied or will comply
in all material respects as to form with the applicable regulations of the
SEC as the case may be and (B) did not and will not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, except
that information as of a later date shall be deemed to modify information
as of an earlier date; and each of the consolidated statements of financial
condition contained in any such Securities Documents, including the related
notes and schedules thereto, fairly presents, or will fairly present, the
consolidated financial position of NSD and its Subsidiaries as of its date,
and each of the consolidated statements of income, stockholders' equity and
cash flows or equivalent statements in NSD's Securities Documents,
including any related notes and schedules thereto, fairly presents, or will
fairly present, the consolidated results of operations, changes in
stockholders' equity and changes in cash flows, as the case may be, of NSD
and its Subsidiaries for the periods to which they relate, in each case in
accordance with GAAP consistently applied during the periods involved,
except in each case as may be noted therein.
(ii) Neither NSD nor any of its Subsidiaries has incurred any
liability other than in the ordinary course of business consistent with
past practice, excluding the incurrence of expenses related to this
Agreement and the Transaction.
(iii) Since December 31, 2003, (A) NSD and its Subsidiaries have
conducted their respective businesses in the ordinary and usual course
consistent with past practice (excluding the incurrence of expenses related
to this Agreement and the Transaction); (B) neither NSD nor any of its
Subsidiaries has taken nor permitted or entered into any contract with
respect to, or otherwise agreed or committed to do or take, any of the
actions set forth in Sections 4.01(d), (f), (g), (h), (j), (k) and (n)
hereof between December 31, 2003 and the date hereof; (C) neither NSD nor
any of its Subsidiaries has taken or permitted or entered into any contract
with respect to, or otherwise agreed or committed to do or take, any of the
actions set forth in Sections 4.01(e), (i), (l), (m), (p), (q) and (r)
between January 1, 2004 and the date hereof and (D) except as set forth in
the NSD Securities Documents, since December 31, 2003, no event has
occurred or circumstance arisen that, individually or taken together with
all other facts, circumstances and events described in any paragraph of
this Section 5.03 or otherwise, is reasonably likely to have a Material
Adverse Effect with respect to NSD.
24
(iv) No agreement pursuant to which any loans or other assets have
been or shall be sold by NSD or its Subsidiaries entitled the buyer of such
loans or other assets, unless there is material breach of a representation
or covenant by NSD or its Subsidiaries, to cause NSD or its Subsidiaries to
repurchase such loan or other asset or the buyer to pursue any other form
of recourse against NSD or its Subsidiaries. To the knowledge of NSD, there
has been no material breach of a representation or covenant by NSD or its
Subsidiaries in any such agreement. Except as disclosed in NSD's Securities
Documents filed prior to the date hereof, since December 31, 2001, no cash,
stock or other dividend or any other distribution with respect to the
capital stock of NSD or any of its Subsidiaries has been declared, set
aside or paid. Except as disclosed in NSD's Securities Documents filed
prior to the date hereof, no shares of capital stock of NSD have been
purchased, redeemed or otherwise acquired, directly or indirectly, by NSD
since December 31, 2003, and no agreements have been made to do the
foregoing.
(v) NSD maintains disclosure controls and procedures required by Rule
13a-15 or 15d-15 under the Exchange Act; such controls and procedures are
effective to ensure that all material information concerning NSD and its
Subsidiaries is made known on a timely basis to the individuals responsible
for the preparation of NSD's Securities Documents and other public
disclosure documents. The President and the Chief Financial Officer of NSD
have signed, and NSD has furnished to the SEC, all certifications required
by Rule 13a-14 or 15d-14 under the Exchange Act or 18 U.S.C. ss. 1350; such
certifications contain no qualifications or exceptions to the matters
certified therein and have not been modified or withdrawn; and neither NSD
nor any of its officers has received notice from any Governmental
Authorities questioning or challenging the accuracy, completeness, form or
manner of filing or submission of such certifications.
(h) Litigation. No litigation, claim or other proceeding before any court
or governmental agency is pending against NSD or any of its Subsidiaries and, to
NSD's knowledge, no such litigation, claim or other proceeding has been
threatened and there are no facts that could reasonably give rise to such
litigation, claim or other proceeding. Neither NSD nor any of its Subsidiaries
is a party to any order, judgment or decree that has or could reasonably be
expected to have a Material Adverse Effect with respect to NSD.
(i) Regulatory Matters.
(i) Neither NSD nor any of its Subsidiaries nor any of their
respective properties is a party to or is subject to any order, decree,
agreement, memorandum of understanding or similar arrangement with, or a
commitment letter or similar submission to, or extraordinary supervisory
letter from, any Bank Regulatory Authority or any federal or state
governmental agency or authority charged with the supervision or regulation
of issuers of securities or the supervision or regulation of it
(collectively, the "NSD Regulatory Authorities"). NSD and its Subsidiaries
have paid all assessments made or imposed by any NSD Regulatory Authority.
25
(ii) Neither NSD nor any of its Subsidiaries has been advised by, nor
does it have any knowledge of facts that could give rise to an advisory
notice by, any NSD Regulatory Authority that such NSD Regulatory Authority
is contemplating issuing or requesting, or is considering the
appropriateness of issuing or requesting, any such order, decree,
agreement, memorandum of understanding, commitment letter, supervisory
letter or similar submission.
(iii) NSD and each of its Subsidiaries have timely filed all reports,
registrations and statements, together with any amendments required to be
made with respect thereto, that they were required to file since January 1,
2001 with (A) the Federal Reserve Board, (B) the FDIC, (C) the Department
or (D) any other state regulatory authority and (E) the SEC, and all other
reports and statements required to be filed by them since January 1, 2001,
and have paid all fees and assessments due and payable in connection
therewith. Except as set forth in Schedule 5.03(i) of the NSD Disclosure
Schedule and except for normal examinations conducted by Bank Regulatory
Authorities, (A) no Bank Regulatory Authority has initiated or has pending
any proceeding or, to the knowledge of NSD, investigation into the business
or operations of NSD or any of its Subsidiaries since January 1, 2001,
except where such proceedings or investigation are not reasonably likely to
have, either individually or in the aggregate, a NSD Material Adverse
Effect, and (B) there is no unresolved violation, criticism or exception by
any Bank Regulatory Authority with respect to the business, operations,
policies or procedures of NSD or NorthSide Bank since January 1, 2001 that
are reasonably likely to have, either individually or in the aggregate, a
NSD Material Adverse Effect.
(j) Compliance With Laws. Each of NSD and its Subsidiaries:
(i) is in material compliance with all applicable federal, state,
local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees applicable thereto or to the employees
conducting such businesses, including, without limitation, Sections 23A and
23B of the Federal Reserve Act and FDIC, Department and OCC regulations
pursuant thereto, the Equal Credit Opportunity Act, the Fair Housing Act,
the Community Reinvestment Act, the Home Mortgage Disclosure Act, the Bank
Secrecy Act and all other applicable fair lending laws and other laws
relating to discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and approvals
of, and has made all filings, applications and registrations with, all
Governmental Authorities that are required in order to permit it to own or
lease its properties and to conduct its business as presently conducted;
all such permits, licenses, certificates of authority, orders and approvals
are in full force and effect and, to NSD's knowledge, no suspension or
cancellation of any of them is threatened; and
26
(iii) has received, since December 31, 2001, no notification or
communication from any Governmental Authority (A) asserting that NSD or any
of its Subsidiaries is not in compliance with any of the statutes,
regulations or ordinances that such Governmental Authority enforces or (B)
threatening to revoke any license, franchise, permit or governmental
authorization nor, to NSD's knowledge, do any grounds for any of the
foregoing exist.
(k) Material Contracts; Defaults.
(i) Except for documents listed as exhibits to NSD's Securities
Documents or as set forth in Schedule 5.03(k) of the NSD Disclosure
Schedule, neither NSD nor any of its Subsidiaries is a party to, bound by
or subject to any agreement, contract, arrangement, commitment or
understanding, whether written or oral, (A) with respect to the employment
of any of its directors, officers, employees or consultants; (B) that would
entitle any present or former director, officer, employee or agent of NSD
or any of its Subsidiaries to indemnification from NSD or any of its
Subsidiaries; (C) that is a material contract (as defined in Item
601(b)(10) of Regulation S-K of the SEC); (D) that is a consulting
agreement, including data processing, software programming and licensing
contracts, not terminable on 60 days or less notice and involving the
payment of more than $25,000 per annum or (E) that materially restricts the
conduct of any business by NSD or by any of its Subsidiaries (collectively,
"Material Contracts"). NSD has set forth in Schedule 5.03(k) of the NSD
Disclosure Schedule and made available to Parent true, correct and complete
copies of each such Material Contract.
(ii) Neither NSD nor any of its Subsidiaries is in material default
under any contract, agreement, commitment, arrangement, lease, insurance
policy or other instrument to which it is a party, by which its assets,
business or operations may be bound or affected, or under which it or its
respective assets, business or operations receives benefits, and there has
not occurred any event that, with the lapse of time or the giving of notice
or both, would constitute such a default. Except as provided in this
Agreement, no power of attorney or similar authorization given directly or
indirectly by NSD or any of its Subsidiaries is currently outstanding.
(l) No Brokers. Except as set forth in Schedule 5.03(l) of the NSD
Disclosure Schedule, no action has been taken by NSD or any of its Subsidiaries
that would give rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the Transaction.
(m) Employee Benefit Plans.
(i) All benefit and compensation plans, contracts, policies or
arrangements covering current or former employees of NSD and its
Subsidiaries and current or former directors of NSD and its Subsidiaries
including, but not limited to, "employee benefit plans" within the meaning
of Sections 3(1), 3(2), 3(3) and 3(37) of ERISA, and deferred compensation,
stock option, stock purchase, stock appreciation rights, stock based,
incentive and bonus plans (the "Benefit Plans"), have been set forth in
Schedule 5.03(m) of the NSD Disclosure Schedule. True and complete copies
of the following have been provided or made available to Parent: (A) all
Benefit Plans including, but not limited to, any trust instruments and
insurance contracts forming a part of any Benefit Plans and all amendments
thereto; (B) the most recent annual report (Form 5500), together with all
schedules, as required, filed with the Internal Revenue Service ("IRS") or
Department of Labor (the "DOL"), as applicable, and any financial
statements and opinions required by Section 103(e)(3) of ERISA with respect
to each Benefit Plan; (C) for each Benefit Plan that is a "top-hat" plan, a
copy of filings with the DOL; (D) the most recent determination letter
issued by the IRS for each Benefit Plan that is intended to be "qualified"
under Section 401(a) of the Code; (E) the most recent summary plan
description and any summary of material modifications, as required, for
each Benefit Plan; (F) the most recent actuarial report, if any, relating
to each Benefit Plan; (G) the most recent actuarial valuation, study or
estimate of any retiree medical and life insurance benefits plan or
supplemental retirement benefits plan and (H) the most recent summary
annual report for each Benefit Plan required to provide summary annual
reports by Section 104 of ERISA.
27
(ii) Each Benefit Plan has been administered to date in all material
respects in accordance with the applicable provisions of ERISA, the Code
and applicable law and with the terms and provisions of all documents,
contracts or agreements pursuant to which such Benefit Plan is maintained.
Each Benefit Plan that is an "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA (a "Pension Plan") and that is intended to
be qualified under Section 401(a) of the Code, has received a favorable
determination letter from the IRS or is the adoption of a prototype plan
for which the prototype sponsor has a favorable determination letter from
the IRS, and NSD is not aware of any circumstances likely to result in
revocation of any such favorable determination letter or the loss of the
qualification of such Pension Plan under Section 401(a) of the Code.
Neither NSD nor any of its Subsidiaries has received any correspondence or
written or verbal notice from the IRS, DOL, any other governmental agency,
any participant in or beneficiary of, a Benefit Plan or any agent
representing any of the foregoing that brings into question the
qualification of any such Benefit Plan. There is no material pending or, to
NSD's knowledge, threatened litigation relating to the Benefit Plans.
Neither NSD nor any of its Subsidiaries has engaged in a transaction with
respect to any Benefit Plan or Pension Plan that, assuming the taxable
period of such transaction expired as of the date hereof, could subject NSD
or any of its Subsidiaries to a tax or penalty imposed by either Section
4975 of the Code or Section 502(i) of ERISA. There are no matters pending
before the IRS, DOL or other governmental agency with respect to any
Benefit Plans, nor does NSD have knowledge that any is threatened.
28
(iii) No liability under Subtitle C or D of Title IV of ERISA has been
or to NSD's knowledge is presently expected to be incurred by NSD or any of
its Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them or the single-employer plan
of any entity that is considered one employer with NSD under Section 4001
of ERISA or Section 414 of the Code (an "ERISA Affiliate"). Neither NSD nor
any of its Subsidiaries has incurred, and neither expects to incur, to
NSD's knowledge, any withdrawal liability with respect to a multiemployer
plan under Subtitle E of Title IV of ERISA, regardless of whether based on
contributions of an ERISA Affiliate. No notice of a "reportable event,"
within the meaning of Section 4043 of ERISA for which the 30-day reporting
requirement has not been waived, has been required to be filed for any
Pension Plan or by any ERISA Affiliate.
(iv) All contributions required to be made under the terms of any
Benefit Plan have been timely made. Neither any Pension Plan nor any
single-employer plan of an ERISA Affiliate has an "accumulated funding
deficiency", whether or not waived, within the meaning of Section 412 of
the Code or Section 302 of ERISA and no ERISA Affiliate has an outstanding
funding waiver. Except as set forth in Schedule 5.03(m) of the NSD
Disclosure Schedule, neither NSD nor any of its Subsidiaries has provided,
or is required to provide, security to any Pension Plan or to any
single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29)
of the Code.
(v) Except as set forth in Schedule 5.03(m) of the NSD Disclosure
Schedule, neither NSD nor any of its Subsidiaries has any obligations for
retiree health and life benefits under any Benefit Plan, other than
coverage as may be required under Section 4980B of the Code or Part 6 of
Title I of ERISA, or under the continuation of coverage provisions of the
laws of any state or locality. No event or condition exists with respect to
a Benefit Plan that could subject NSD to tax under Section 4980B of the
Code.
(vi) None of the execution of this Agreement, stockholder approval of
this Agreement or consummation of the Transaction will, except as set forth
in Schedule 5.03(m) of the NSD Disclosure Schedule, (A) entitle any
employees of NSD or any of its Subsidiaries to severance pay or any
increase in severance pay upon any termination of employment after the date
hereof, (B) accelerate the time of payment or vesting or trigger any
payment or funding, through a grantor trust or otherwise, of compensation
or benefits under, increase the amount payable or trigger any other
material obligation pursuant to, any of the Benefit Plans, (C) result in
any breach or violation of, or a default under, any of the Benefit Plans or
(D) result in any payment that would be a "parachute payment" to a
"disqualified individual" as those terms are defined in Section 280G of the
Code, without regard to whether such payment is reasonable compensation for
personal services performed or to be performed in the future.
29
(vii) All required reports and descriptions, including but not limited
to Form 5500 annual reports and required attachments, Forms 1099-R, summary
annual reports, Forms PBGC-1 and summary plan descriptions, have been filed
or distributed appropriately with respect to each Benefit Plan. All
required tax filings with respect to each Benefit Plan have been made, and
any taxes due in connection with such filings have been paid.
(n) Labor Matters. Neither NSD nor any of its Subsidiaries is a party to or
is bound by any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization, nor is NSD or any of its
Subsidiaries the subject of a proceeding asserting that it has committed an
unfair labor practice within the meaning of the National Labor Relations Act or
seeking to compel NSD or any of its Subsidiaries to bargain with any labor
organization as to wages or conditions of employment, nor is there any strike or
other labor dispute involving it or any of its Subsidiaries pending or, to NSD's
knowledge, threatened, nor is NSD or any of its Subsidiaries aware of any
activity involving its employees seeking to certify a collective bargaining unit
or engaging in other organizational activity.
(o) Environmental Matters.
(i) NSD and its Subsidiaries are in compliance with applicable
Environmental Laws; (ii) except as Previously Disclosed [or as set forth in
Schedule 5.03(o) of the NSD Disclosure Schedule], to NSD's knowledge, no
real property, including buildings or other structures, currently or
formerly owned or operated by NSD or any of its Subsidiaries, or any
property in which NSD or any of its Subsidiaries has held a security
interest, Lien or a fiduciary or management role ("NSD Loan Property"), has
been contaminated with, or has had any release of, any Hazardous Substance
except in compliance with Environmental Laws; (iii) neither NSD nor any of
its Subsidiaries could be deemed the owner or operator of, nor has it
participated in the management regarding Hazardous Substances of, any NSD
Loan Property that has been contaminated with, or has had any release of,
any Hazardous Substance; (iv) neither NSD nor any of its Subsidiaries has
any liability for any Hazardous Substance disposal or contamination on any
third party property; (v) neither NSD nor any of its Subsidiaries has
received any notice, demand letter, claim or request for information
alleging any violation of, or liability under, any Environmental Law; (vi)
neither NSD nor any of its Subsidiaries is subject to any order, decree,
injunction or other agreement with any Governmental Authority or any third
party relating to any Environmental Law; (vii) except as set forth in
Schedule 5.03(o) of the NSD Disclosure Schedule, to NSD's knowledge, there
are no circumstances or conditions (including the presence of asbestos,
underground storage tanks, lead products, polychlorinated biphenyls, prior
manufacturing operations, dry-cleaning or automotive services) involving
NSD or any of its Subsidiaries, any currently or formerly owned or operated
property, or any NSD Loan Property, that could reasonably be expected to
result in any claims, liability or investigations against NSD or any of its
Subsidiaries, result in any restrictions on the ownership, use or transfer
of any property pursuant to any Environmental Law or adversely affect the
value of any NSD Loan Property, (viii) NSD has set forth in Schedule
5.03(o) of the NSD Disclosure Schedule and made available to Parent copies
of all environmental reports or studies, sampling data, correspondence and
filings in its possession or reasonably available to it relating to NSD,
its Subsidiaries and any currently owned or operated property of NSD and
(ix) NSD has made available to Parent copies of all environmental reports
or studies, sampling data, correspondence and filings in the possession or
reasonably available to it relating to any NSD Loan.
30
(ii) As used herein, the term "Environmental Laws" means any federal,
state or local law, regulation, order, decree, permit, authorization,
opinion or agency requirement relating to: (A) the protection or
restoration of the environment, health, safety or natural resources; (B)
the handling, use, presence, disposal, release or threatened release of any
Hazardous Substance or (C) wetlands, indoor air, pollution, contamination
or any injury or threat of injury to persons or property in connection with
any Hazardous Substance; and the term "Hazardous Substance" means any
substance that is: (A) listed, classified or regulated pursuant to any
Environmental Law; (B) any petroleum product or by-product,
asbestos-containing material, lead-containing paint or plumbing,
polychlorinated biphenyls, radioactive materials or radon or (C) any other
substance that is the subject of regulatory action by any Governmental
Authority in connection with any Environmental Law.
(p) Tax Matters.
(i) (A) All Tax Returns that are required to be filed on or before the
Effective Date (taking into account any extensions of time within which to
file that have not expired) by or with respect to the NSD Group, including
NSD and its Subsidiaries, have been or will be timely filed on or before
the Effective Date; (B) all such Tax Returns are or will be true and
complete in all material respects; (C) all Taxes due of the NSD Group,
including NSD and its Subsidiaries, shown on the Tax Returns referred to in
clause (A) have been or will be timely paid in full; (D) the Tax Returns
referred to in clause (A) have not been examined by the IRS or the
appropriate Tax authority, the NSD Group has not extended the statute of
limitations for any such Tax Returns and the period for assessment of the
Taxes in respect of which such Tax Returns were required to be filed has
expired; (E) all deficiencies asserted or assessments made as a result of
examinations conducted by any taxing authority have been paid in full; (F)
no issues that have been raised by the relevant taxing authority in
connection with the examination of any of the Tax Returns referred to in
clause (A) are currently pending and (G) no member of the NSD Group has
extended any statutes of limitation with respect to any Taxes of NSD.
(ii) NSD has made available to Parent true and correct copies of the
United States federal income Tax Returns filed by NSD for each of the three
most recent fiscal years for which such returns have been filed.
31
(iii) Neither NSD nor any of its Subsidiaries has any liability with
respect to income, franchise or similar Taxes that accrued on or before the
end of the most recent period covered by NSD's Securities Documents filed
prior to the date hereof in excess of the amounts accrued or subject to a
reserve with respect thereto that are reflected in the financial statements
included in NSD's Securities Documents filed on or prior to the date
hereof.
(iv) Neither NSD nor any of its Subsidiaries is a party to any Tax
allocation or sharing agreement, is or has been a member of an affiliated
group filing consolidated or combined Tax Returns other than a group the
common parent of which is or was NSD or otherwise has any liability for the
Taxes of any Person other than a member of the NSD Group.
(v) No closing agreements, private letter rulings, technical advice
memoranda or similar agreements or rulings have been entered into or issued
by any taxing authority with respect to NSD and its Subsidiaries.
(vi) Neither NSD nor any of its Subsidiaries maintains any
compensation plans, programs or arrangements the payments under which would
not reasonably be expected to be deductible as a result of the limitations
under Section 162(m) of the Code and the regulations issued thereunder.
(vii) As of the date hereof, NSD has no reason to believe that any
conditions exist that might prevent or impede the Merger from qualifying as
a reorganization within the meaning of Section 368(a) of the Code.
(viii) (A) No Tax is required to be withheld pursuant to Section 1445
of the Code as a result of the Transaction and (B) all Taxes that NSD or
any of its Subsidiaries is or was required by law to withhold or collect
have been duly withheld or collected and, to the extent required by
applicable law, have been paid to the proper Governmental Authority or
other Person.
(ix) There are no Liens for Taxes on any of the assets of NSD or any
of its Subsidiaries, except for Liens for Taxes not yet due and payable.
(x) Neither NSD nor any of its Subsidiaries (A) has agreed, or is
required, to make any adjustment under Section 481(a) of the Code or any
comparable provision of state, local or foreign law or has any knowledge
that a Governmental Authority has proposed any such adjustment or change in
accounting method with respect to NSD or its Subsidiaries or (B) has any
application pending with any Governmental Authority requesting permission
for any change in accounting method.
(xi) Neither NSD nor any of its Subsidiaries is a successor for Tax
purposes to any Person by way of merger, reorganization or similar
transaction.
32
(xii) No claim has ever been made by a Governmental Authority in a
jurisdiction where NSD or any of its Subsidiaries does not file Tax Returns
that NSD or such Subsidiaries is or may be subject to taxation by that
jurisdiction.
(xiii) Neither NSD nor any of its Subsidiaries has been the
"distributing corporation" within the meaning of Section 355(c)(2) of the
Code or has been the subject of a distribution with respect to a
transaction described in Section 355 of the Code within the five-year
period ending as of the date of this Agreement.
(xiv) Neither NSD nor any of its Subsidiaries has participated in any
"reportable transaction" or "listed transaction" that is required to be
reported pursuant to Section 1.6011-4 of the Treasury Regulations.
(q) Risk Management Instruments. Neither NSD nor any of its Subsidiaries is
a party or has agreed to enter into an exchange traded or over-the-counter
equity, interest rate, foreign exchange or other swap, forward, future, option,
cap, floor or collar or any other contract that is not included on NSD's
consolidated statement of financial condition and is a derivatives contract
(including various combinations thereof) (each, a "Derivatives Contract") nor
does NSD or any of its Subsidiaries own securities that (i) are referred to
generically as "structured notes," "high risk mortgage derivatives," "capped
floating rate notes" or "capped floating rate mortgage derivatives" or (ii) are
likely to have changes in value as a result of interest or exchange rate changes
that significantly exceed normal changes in value attributable to interest or
exchange rate changes.
(r) Loans; Nonperforming and Classified Assets.
(i) Except as set forth in Schedule 5.03(r) of the NSD Disclosure
Schedule, each Loan on the books and records of NSD and its Subsidiaries
was made and has been serviced in all material respects in accordance with
their customary lending standards in the ordinary course of business, is
evidenced in all material respects by appropriate and sufficient
documentation and, to the knowledge of NSD, constitutes the legal, valid
and binding obligation of the obligor named therein, subject to bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar
laws of general applicability relating to or affecting creditor's rights or
by general equity principles.
(ii) NSD has set forth in Schedule 5.03(r) of the NSD Disclosure
Schedule as to NSD and each NSD Subsidiary as of the latest practicable
date prior to the date of this Agreement: (A) any written or, to NSD's
knowledge, oral Loan under the terms of which the obligor is 60 or more
days delinquent in payment of principal or interest, or to NSD's knowledge,
in default of any other material provision thereof; (B) each Loan that has
been classified as "substandard," "doubtful," "loss" or "special mention"
or words of similar import by NSD, a NSD Subsidiary or an applicable
regulatory authority; (C) a listing of the OREO acquired by foreclosure or
by deed-in-lieu thereof, including the book value thereof and (D) each Loan
with any director, executive officer or five percent or greater stockholder
of NSD or a NSD Subsidiary, or to the knowledge of NSD, any Person
controlling, controlled by or under common control with any of the
foregoing.
33
(s) Properties. All real and personal property owned by NSD or a Subsidiary
of NSD or presently used by any of them in their respective business is in an
adequate condition, ordinary wear and tear excepted, and is sufficient to carry
on its business in the ordinary course of business consistent with its past
practices. NSD has good and marketable fee simple title free and clear of all
Liens to all of the material properties and assets, real and personal, reflected
on the consolidated statement of financial condition of NSD as of December 31,
2003 included in NSD's Securities Documents or acquired after such date, other
than properties sold by NSD in the ordinary course of business, except (i) Liens
for current taxes and assessments not yet due or payable, (ii) pledges to secure
deposits and other Liens incurred in the ordinary course of its banking business
and (iii) such imperfections of title, easements and encumbrances, if any, as
are not material in character, amount or extent and as are reflected on the
consolidated statement of financial condition of NSD as of December 31, 2003
included in NSD's Securities Documents. Except as set forth in Schedule 5.03(s)
of the NSD Disclosure Schedule, all real and personal property that is material
to NSD's business on a consolidated basis and leased or licensed by NSD or a
Subsidiary of NSD is held pursuant to leases or licenses that are valid and
enforceable in accordance with their respective terms and such leases will not
terminate or lapse prior to the Effective Time.
(t) Intellectual Property. NSD and each Subsidiary of NSD owns or possesses
valid and binding licenses and other rights to use without payment of any
material amount all material patents, copyrights, trade secrets, trade names,
service marks and trademarks used in its businesses, all of which have been
Previously Disclosed by NSD, and none of NSD or any of its Subsidiaries has
received any notice of conflict with respect thereto that asserts the right of
others. NSD and each of its Subsidiaries have performed in all material respects
all the obligations required to be performed by them and are not in default
under any contract, agreement, arrangement or commitment relating to any of the
foregoing. Schedule 5.03(t) to the NSD Disclosure Schedule sets forth a
description of all intellectual property rights of NSD and each Subsidiary of
NSD, including, without limitation, patents, trademarks, copyrights, service
marks and all licenses relating thereto.
(u) Fiduciary Accounts. NSD and each of its Subsidiaries has properly
administered all accounts for which it acts as a fiduciary, including but not
limited to accounts for which it serves as a trustee, agent, custodian, personal
representative, guardian, conservator or investment advisor, in accordance with
the terms of the governing documents and applicable laws and regulations.
Neither NSD nor any of its Subsidiaries, nor any of their respective directors,
officers or employees, has committed any breach of trust to NSD's knowledge with
respect to any fiduciary account and the records for each such fiduciary account
are true and correct and accurately reflect the assets of such fiduciary
account.
34
(v) Books and Records. The books and records of NSD and its Subsidiaries
have been fully, properly and accurately maintained in material compliance with
applicable legal and accounting requirements, and such books and records
accurately reflect in all material respects all dealings and transactions in
respect of the business, assets, liabilities and affairs of NSD and its
Subsidiaries.
(w) Insurance. NSD has set forth in Schedule 5.03(w) of the NSD Disclosure
Schedule a description of all of the material insurance policies, binders or
bonds currently maintained by NSD and its Subsidiaries ("Insurance Policies").
NSD and its Subsidiaries are insured with reputable insurers against such risks
and in such amounts as the management of NSD reasonably has determined to be
prudent in accordance with industry practices. All the Insurance Policies are in
full force and effect; NSD and its Subsidiaries are not in material default
thereunder and all claims thereunder have been filed in due and timely fashion.
(x) Allowance For Loan Losses. NSD's allowance for loan losses is
sufficient at the date of this Agreement for its reasonably anticipated loan
losses, is in compliance with the standards established by applicable
Governmental Authorities and GAAP and, to the knowledge of NSD, is adequate.
(y) Required Vote. The affirmative vote of the holders of 75 % of the
outstanding shares of NSD Common Stock is necessary to approve this Agreement
and the Merger on behalf of NSD unless the Agreement and the Merger have
received the prior approval of at least 75% of the members of the NSD Board, in
which case a Majority Vote is required. No other vote of the stockholders of NSD
is required by law, the NSD Articles, the NSD Bylaws or otherwise to approve
this Agreement and the Merger.
(z) Fairness Opinion. The NSD Board has received an opinion of Xxxxx,
Xxxxxxxx & Xxxxx, Inc. to the effect that as of the date hereof the Merger
Consideration is fair to the holders of NSD Common Stock from a financial point
of view.
(aa) Absence of Certain Changes or Events.
(i) Except as publicly disclosed in the NSD Securities Documents filed
prior to the date of this Agreement, since June 30, 2004, no event or
events have occurred that have had or are reasonably likely to have, either
individually or in the aggregate, a NSD Material Adverse Effect.
(ii) Except as publicly disclosed in the NSD Securities Documents
filed prior to the date of this Agreement, NSD and its Subsidiaries have
carried on their respective business in all material respects in the
ordinary course.
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(bb) State Takeover Laws. The Board of Directors of NSD has approved this
Agreement and the transactions contemplated hereby as required to render
inapplicable to such Agreement and the Transaction the provisions of the PBCL
applicable to registered corporations.
(cc) Disclosure. The representations and warranties contained in this
Section 5.03, when considered as a whole, do not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements and information contained in this Section 5.03 not misleading.
5.04 Representations and Warranties of Parent. Subject to Sections 5.01 and
5.02, Parent hereby represents and warrants to NSD as follows:
(a) Organization, Standing and Authority. Parent is duly organized, validly
existing and in good standing under the laws of the State of Florida. Parent is
duly qualified to do business and is in good standing in each jurisdiction where
its ownership or leasing of property or assets or the conduct of its business
requires it to be so qualified, except where the failure to be so qualified
would not have a Material Adverse Effect on Parent. Parent has in effect all
federal, state, local and foreign governmental authorizations necessary for it
to own or lease its properties and assets and to carry on its business as it is
now conducted.
(b) Parent Stock.
(i) As of the date hereof, the authorized capital stock of Parent
consists solely of 500,000,000 shares of Parent Common Stock, of which
46,644,484 shares were issued and outstanding as of August 31, 2004, and
20,000,000 shares of Parent Preferred Stock, of which no shares were issued
and outstanding as of the date hereof. The outstanding shares of Parent
Common Stock have been duly authorized and validly issued and are fully
paid and non-assessable, and none of the shares of Parent Common Stock have
been issued in violation of the preemptive rights of any Person. As of the
date hereof, there are no Rights authorized, issued or outstanding with
respect to the capital stock of Parent, except for shares of Parent Common
Stock issuable pursuant to the Parent Benefits Plans and by virtue of this
Agreement.
(ii) The shares of Parent Common Stock to be issued in exchange for
shares of NSD Common Stock in the Merger, when issued in accordance with
the terms of this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable and the issuance thereof is not subject to any
preemptive right.
(c) Subsidiaries.
(i) Each of Parent's Subsidiaries has been duly organized and is
validly existing in good standing under the laws of the jurisdiction of its
organization, and is duly qualified to do business and is in good standing
in the jurisdictions where its ownership or leasing of property or the
conduct of its business requires it to be so qualified, except where the
failure to be so qualified would not have a Material Adverse Effect on
Parent. Parent Bank is duly licensed by the OCC and its deposits are
insured by the Bank Insurance Fund in the manner and to the maximum extent
provided by law.
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(ii) As of the date hereof, (A) except as set forth in Schedule
5.04(c) of Parent's Disclosure Schedule, Parent owns, directly or
indirectly, all the issued and outstanding equity securities of each of its
Subsidiaries; (B) no equity securities of any of Parent's Subsidiaries are
or may become required to be issued other than to Parent by reason of any
Right or otherwise; (C) there are no contracts, commitments, understandings
or arrangements by which Parent's Subsidiaries are or may be bound to sell
or otherwise transfer any of its equity securities other than to Parent or
any of its wholly owned Subsidiaries and (D) there are no contracts,
commitments, understandings or arrangements relating to Parent's right to
vote or to dispose of such securities.
(d) Corporate Power. Each of Parent and its Subsidiaries has the corporate
power and authority to carry on its business as it is now being conducted and to
own all its properties and assets. Parent has the corporate power and authority
to execute, deliver and perform its obligations under this Agreement and to
consummate the Transaction, subject to the receipt of all necessary approvals of
Governmental Authorities, and no other corporate proceedings are necessary on
the part of Parent to approve this Agreement or the consummation of the
Transaction.
(e) Corporate Authority. This Agreement and the Transaction have been
authorized by all necessary corporate action of Parent and the Parent Board.
This Agreement has been duly executed and delivered by Parent and, assuming due
authorization, execution and delivery by NSD, this Agreement is a valid and
legally binding agreement of Parent enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles.
(f) Regulatory Approvals; No Defaults.
(i) No consents or approvals of, or waivers by, or filings or
registrations with, any Governmental Authority or with any third party are
required to be made or obtained by Parent or any of its Subsidiaries in
connection with the execution, delivery or performance by Parent and Parent
Bank of this Agreement and the Bank Merger Agreement, respectively, or to
consummate the Transaction, except as Previously Disclosed, and except for
(A) filings of applications or notices with and approvals or waivers by the
Federal Reserve Board, the OCC and the Department; (B) filings with the SEC
and state securities authorities, as applicable, in connection with the
registration of Parent Common Stock issuable in the Merger; (C) the
approval of the listing on the NYSE of the Parent Common Stock to be issued
in the Merger and (D) the filing of Articles of Merger with the Secretary
of State of the Commonwealth of Pennsylvania pursuant to the PBCL and with
the Secretary of State of the State of Florida pursuant to the FLBC with
respect to the Merger. As of the date hereof, Parent is not aware of any
reason why the approvals set forth above and referred to in Section 7.01(b)
will not be received in a timely manner and without the imposition of a
condition, restriction or requirement of the type described in Section
7.01(b).
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(ii) Subject to receipt, or the making, of the consents, approvals,
waivers and filings referred to in the preceding paragraph and expiration
of the related waiting periods, the execution, delivery and performance of
this Agreement and the Bank Merger Agreement by Parent and Parent Bank,
respectively, and the consummation of the Transaction do not and will not
(A) constitute a breach or violation of, or a default under, or give rise
to any Lien, any acceleration of remedies or any right of termination
under, any law, rule or regulation or any judgment, decree, order,
governmental permit or license, or agreement, indenture or instrument of
Parent or of any of its Subsidiaries or to which Parent or any of its
Subsidiaries or properties is subject or bound, (B) constitute a breach or
violation of, or a default under, the articles of incorporation or bylaws
or similar governing documents of Parent or any of its Subsidiaries or (C)
require any consent or approval under any such law, rule, regulation,
judgment, decree, order, governmental permit or license, agreement,
indenture or instrument.
(g) Financial Reports and Securities Documents; Material Adverse Effect.
(i) Parent's Annual Report on Form 10-K for the years ended December
31, 2003, 2002 and 2001 and all other reports, registration statements,
definitive proxy statements or information statements filed or to be filed
by it subsequent to December 31, 2001 under the Securities Act, or under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act in the form filed or
to be filed (collectively, Parent's "Securities Documents") with the SEC,
as of the date filed or to be filed, (A) complied or will comply in all
material respects as to form with the applicable requirements under the
Securities Act or the Exchange Act, as the case may be and (B) did not and
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that information as of a later date shall be
deemed to modify information as of an earlier date. Each of the
consolidated statements of financial condition contained in or incorporated
by reference into any such Securities Document, including the related notes
and schedules thereto, fairly presents, or will fairly present, the
consolidated financial position of Parent and its Subsidiaries as of its
date, and each of the consolidated statements of operations, stockholders'
equity and comprehensive income and cash flows or equivalent statements in
such Securities Documents, including any related notes and schedules
thereto, fairly presents, or will fairly present, the consolidated results
of operations, changes in stockholders' equity and cash flows, as the case
may be, of Parent and its Subsidiaries for the periods to which they
relate, in each case in accordance with GAAP consistently applied during
the periods involved, except in each case as may be noted therein.
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(ii) Except as Previously Disclosed, since December 31, 2003, neither
Parent nor any of its Subsidiaries has incurred any liability other than in
the ordinary course of business consistent with past practice, excluding
the incurrence of expenses related to this Agreement and the Transaction.
(iii) Since December 31, 2003, (A) Parent and its Subsidiaries have
conducted their respective businesses in the ordinary and usual course
consistent with past practice (excluding the incurrence of expenses related
to this Agreement and the Transaction); (B) except as Previously Disclosed,
neither Parent nor any of its Subsidiaries has taken nor permitted any of
the actions set forth in Section 4.02 between December 31, 2003 and the
date hereof and (C) no event has occurred or circumstance arisen that,
individually or taken together with all other facts, circumstances and
events described in any paragraph of this Section 5.04 or otherwise, is
reasonably likely to have a Material Adverse Effect with respect to Parent.
(iv) Parent maintains disclosure controls and procedures required by
Rule 13a-15 or 15d-15 under the Exchange Act; such controls and procedures
are effective to ensure that all material information concerning Parent and
its Subsidiaries is made known on a timely basis to the individuals
responsible for the preparation of Parent's Securities Documents and other
public disclosure documents. The Chief Executive Officer and the Chief
Financial Officer of Parent have signed, and Parent has furnished to the
SEC, all certifications required by Rule 13a-14 or 15d-14 under the
Exchange Act or 18 U.S.C. ss. 1350; such certifications contain no
qualifications or exceptions to the matters certified therein and have not
been modified or withdrawn; and neither Parent nor any of its officers has
received notice from any Governmental Authorities questioning or
challenging the accuracy, completeness, form or manner of filing or
submission of such certifications.
(h) Litigation. No litigation, claim or other proceeding before any court
or governmental agency is pending against Parent or its Subsidiaries that could
reasonably be expected to have a Material Adverse Effect with respect to Parent
and, to Parent's knowledge, no such litigation, claim or other proceeding has
been threatened and there are no facts that could reasonably give rise to such
litigation, claim or other proceeding. Neither Parent nor any of its
Subsidiaries is a party to any order, judgment or decree that has or could
reasonably be expected to have a Material Adverse Effect with respect to Parent.
(i) Regulatory Matters.
(i) Neither Parent nor any of its Subsidiaries nor any of any of their
respective properties is a party to or is subject to any order or decree,
agreement, memorandum of understanding or similar arrangement with, or
commitment letter or similar submission to, or extraordinary supervisory
letter from, any federal or state governmental agency or authority charged
with the supervision or regulation of financial institutions or issuers of
securities or engaged in the insurance of deposits or the supervision or
regulation of it. Parent and its Subsidiaries have paid all assessments
made or imposed by any Parent Regulatory Authority.
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(ii) Neither Parent nor any its Subsidiaries has been advised by, and
does not have any knowledge of facts that could give rise to an advisory
notice by, any Parent Regulatory Authority that such Parent Regulatory
Authority is contemplating issuing or requesting, or is considering the
appropriateness of issuing or requesting, any such order, decree,
agreement, memorandum of understanding, commitment letter, supervisory
letter or similar submission.
(iii) Parent and each of its Subsidiaries have timely filed all
reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file
since January 1, 2001 with (A) the Federal Reserve Board, (B) the FDIC, (C)
the OCC, (D) any state regulatory authority and (E) the SEC, and all other
reports and statements required to be filed by them since January 1, 2001,
and have paid all fees and assessments due and payable in connection
therewith. Except as set forth in Schedule 5.04(i) of Parent Disclosure
Schedule and except for normal examinations conducted by Bank Regulatory
Authorities, (A) no Bank Regulatory Authority has initiated or has pending
any proceeding or, to the knowledge of Parent, investigation into the
business or operations of Parent or any of its Subsidiaries since January
1, 2001, except where such proceedings or investigation are not reasonably
likely to have, either individually or in the aggregate, a Parent Material
Adverse Effect and (B) there is no unresolved violation, criticism or
exception by any Bank Regulatory Authority with respect to the business,
operations, policies or procedures of Parent or Parent Bank since January
1, 2001 that are reasonably likely to have, either individually or in the
aggregate, a Parent Material Adverse Effect.
(j) Compliance With Laws. Except for matters that could not reasonably be
expected to have a Material Adverse Effect with respect to Parent and its
Subsidiaries, each of Parent and its Subsidiaries:
(i) is in material compliance with all applicable federal, state,
local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees applicable thereto or to the employees
conducting such businesses, including without limitation Sections 23A and
23B of the Federal Reserve Act and OCC regulations pursuant thereto, the
Equal Credit Opportunity Act, the Fair Housing Act, the Community
Reinvestment Act, the Home Mortgage Disclosure Act, the Bank Secrecy Act
and all other applicable fair lending laws and other laws relating to
discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and approvals
of, and has made all filings, applications and registrations with, all
Governmental Authorities that are required in order to permit them to own
or lease their properties and to conduct their businesses as presently
conducted; all such permits, licenses, certificates of authority, orders
and approvals are in full force and effect and, to Parent's knowledge, no
suspension or cancellation of any of them is threatened; and
40
(iii) has received, since December 31, 2001, no notification or
communication from any Governmental Authority (A) asserting that Parent or
any of its Subsidiaries is not in compliance with any of the statutes,
regulations or ordinances which such Governmental Authority enforces or (B)
threatening to revoke any license, franchise, permit or governmental
authorization nor, to Parent's knowledge, do any grounds for any of the
foregoing exist.
(k) No Brokers. No action has been taken by Parent or its Subsidiaries that
would give rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the Transaction,
except a fee to be paid to Milestone Advisors, LLC.
(l) Tax Matters. As of the date hereof, Parent does not have any reason to
believe that any conditions exist that might prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code.
(m) Risk Management Instruments. Neither Parent nor any of its Subsidiaries
is a party or has agreed to enter into any Derivatives Contract that is not
included on Parent's consolidated statement of financial condition nor does
Parent or any of its Subsidiaries own securities that (i) are referred to
generically as "structured notes," "high risk mortgage derivatives," "capped
floating rate notes" or "capped floating rate mortgage derivatives" or (ii) are
likely to have changes in value as a result of interest or exchange rate changes
that significantly exceed normal changes in value attributable to interest or
exchange rate changes.
(n) Ownership of NSD Common Stock. Except as set forth on Schedule 5.04(n)
of the Parent Disclosure Schedule, none of Parent or any of its Subsidiaries, or
to Parent's knowledge, any of its other affiliates or associates as such terms
are defined under the Exchange Act, owns beneficially or of record, directly or
indirectly, or is a party to any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of, shares of NSD Common
Stock other than shares held in a fiduciary capacity that are beneficially owned
by third parties or as a result of debts previously contracted.
(o) Disclosure. The representations and warranties contained in this
Section 5.04, when considered as a whole, do not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements and information contained in this Section 5.04 not misleading.
41
(p) Absence of Certain Changes or Events.
(i) Except as publicly disclosed in the Parent Securities Documents
filed prior to the date of this Agreement, since June 30, 2004, no event or
events have occurred that have had or are reasonably likely to have, either
individually or in the aggregate, a Parent Material Adverse Effect.
(ii) Except as publicly disclosed in the Parent Securities Documents
filed prior to the date of this Agreement, Parent and its Subsidiaries have
carried on their respective businesses in all material respects in the
ordinary course.
ARTICLE VI
COVENANTS
6.01 Reasonable Best Efforts. Subject to the terms and conditions of this
Agreement, each of NSD, Parent and their Subsidiaries agrees to use its
reasonable best efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation of
the Transaction as promptly as practicable and otherwise to enable consummation
of the Transaction, including the satisfaction of the conditions set forth in
Article VII, and shall cooperate fully with the other party hereto to that end.
6.02 Stockholder Meeting. NSD shall take, in accordance with applicable law
and the NSD Articles and the NSD Bylaws, all action necessary to duly call, give
notice of, convene and hold as soon as reasonably practicable after the date on
which the Registration Statement becomes effective a special meeting of its
stockholders (including any adjournment or postponement, the "NSD Meeting") to
consider and vote upon the approval of this Agreement and any other matters
required to be approved by NSD's stockholders for consummation of the
Transaction unless this Agreement shall have been terminated in accordance with
its terms. Subject to the right of NSD and its Board of Directors to take any
action permitted by Section 6.08(b) with respect to a Superior Proposal, NSD
shall, through its Board of Directors, recommend to its stockholders approval of
this Agreement and the transactions contemplated hereby and shall take all
reasonable lawful action to solicit such approval by its stockholders (the
"Approval Recommendation").
6.03 Registration Statement.
(a) Parent agrees to prepare a registration statement on Form S-4 or other
applicable form (the "Registration Statement") to be filed by Parent with the
SEC in connection with the issuance of Parent Common Stock in the Merger
including the proxy statement and prospectus and other proxy solicitation
materials of NSD constituting a part thereof (the "Proxy Statement") and all
related documents. NSD shall prepare and furnish such information relating to it
and its directors, officers and stockholders as may be reasonably required in
connection with the above referenced documents based on its knowledge of and
access to the information required for said documents, and NSD, and its legal,
financial and accounting advisors, shall have the right to review in advance
such Registration Statement prior to its filing. NSD agrees to cooperate with
Parent and Parent's counsel and accountants in requesting and obtaining
appropriate opinions, consents and letters from its financial advisor and
independent auditor in connection with the Registration Statement and the Proxy
Statement. Provided that NSD has cooperated as described above, Parent agrees to
file, or cause to be filed, the Registration Statement and the Proxy Statement
with the SEC as promptly as reasonably practicable. Each of NSD and Parent
agrees to use its reasonable best efforts to cause the Registration Statement to
be declared effective under the Securities Act as promptly as reasonably
practicable after the filing thereof. Parent also agrees to use its reasonable
best efforts to obtain all necessary state securities law or "Blue Sky" permits
and approvals required to carry out the transactions contemplated by this
Agreement. After the Registration Statement is declared effective under the
Securities Act, NSD shall promptly mail at its expense the Proxy Statement to
its stockholders.
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(b) Each of NSD and Parent agrees that none of the information supplied or
to be supplied by it for inclusion or incorporation by reference in the
Registration Statement shall, at the time the Registration Statement and each
amendment or supplement thereto, if any, becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading. Each of NSD and Parent agrees that none of the
information supplied or to be supplied by it for inclusion or incorporation by
reference in the Proxy Statement and any amendment or supplement thereto shall,
at the date of mailing to NSD's stockholders and at the time of the NSD Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading. Each of NSD and Parent further agrees that if such party shall
become aware prior to the Effective Date of any information furnished by such
party that would cause any of the statements in the Registration Statement or
the Proxy Statement to be false or misleading with respect to any material fact,
or to omit to state any material fact necessary to make the statements therein
not false or misleading, to promptly inform the other parties thereof and to
take the necessary steps to correct the Registration Statement or the Proxy
Statement.
(c) Parent agrees to advise NSD, promptly after Parent receives notice
thereof, of the time when the Registration Statement has become effective or any
supplement or amendment has been filed, of the issuance of any stop order or the
suspension of the qualification of Parent Common Stock for offering or sale in
any jurisdiction, of the initiation or, to the extent Parent is aware thereof,
threat of any proceeding for any such purpose, or of any request by the SEC for
the amendment or supplement of the Registration Statement or for additional
information.
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6.04 Regulatory Filings.
(a) Each of Parent and NSD and their respective Subsidiaries shall
cooperate and use their respective reasonable best efforts to prepare all
documentation, to effect all filings and to obtain all permits, consents,
approvals and authorizations of all third parties and Governmental Authorities
necessary to consummate the Transaction; and any initial filings with
Governmental Authorities shall be made by Parent as soon as reasonably
practicable after the execution hereof. Each of Parent and NSD shall have the
right to review in advance, and to the extent practicable each shall consult
with the other, in each case subject to applicable laws relating to the exchange
of information, all written information submitted to any third party or any
Governmental Authority in connection with the Transaction. In exercising the
foregoing right, each of such parties agrees to act reasonably and as promptly
as practicable and shall, in any event, provide its response to any proposed
filing within five business days after its receipt of the proposed filing from
the other party. Each party hereto agrees that it shall consult with the other
party with respect to the obtaining of all permits, consents, approvals, waivers
and authorizations of all third parties and Governmental Authorities necessary
or advisable to consummate the Transaction, and each party shall keep the other
parties apprised of the status of material matters relating to completion of the
Transaction.
(b) Each party agrees, upon request, to furnish the other parties with all
information concerning itself, its Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with any filing, notice or application made by or on behalf of
such other parties or any of their respective Subsidiaries to any third party or
Governmental Authority.
6.05 Press Releases. NSD and Parent shall consult with each other before
issuing any press release with respect to the Transaction or this Agreement and
shall not issue any such press release or make any such public statements
without the prior consent of the other party, which shall not be unreasonably
withheld; provided, however, that a party may, without the prior consent of the
other party, but after such consultation, to the extent practicable under the
circumstances, issue such press release or make such public statements as may
upon the advice of outside counsel be required by law or the rules or
regulations of the SEC, the NYSE or the NASD. NSD and Parent shall cooperate to
develop all public announcement materials and make appropriate management
available at presentations related to the Transaction as reasonably requested by
the other party.
6.06 Access; Information.
(a) NSD agrees that upon reasonable notice and subject to applicable laws
relating to the exchange of information, it shall afford Parent and Parent's
officers, employees, counsel, accountants and other authorized representatives
such access during normal business hours throughout the period prior to the
Effective Time to the books, records, including, without limitation, Tax Returns
and work papers of independent auditors, properties and personnel of NSD and to
such other information relating to NSD as Parent may reasonably request and,
during such period, it shall furnish promptly to Parent all information
concerning the business, properties and personnel of NSD as Parent may
reasonably request.
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(b) Parent agrees that upon reasonable notice and subject to applicable
laws relating to the exchange of information, it shall afford NSD and NSD's
officers, employees, counsel, accountants and other authorized representatives
such access during normal business hours throughout the period prior to the
Effective Time to the books, records, including without limitation, Tax Returns
and work papers of independent auditors, properties and personnel of Parent and
to such other information relating to Parent as NSD may reasonably request and,
during such period, it shall furnish promptly to NSD all information concerning
the business, properties and personnel of Parent and its Subsidiaries as NSD may
reasonably request.
(c) All information furnished to either party by the other party pursuant
to this Section 6.06 shall be subject to, and such receiving party shall hold
all such information in confidence in accordance with the provisions of the
Confidentiality Agreements, dated as of August 18, 2004 and September 23, 2004
between Parent and NSD (the "Confidentiality Agreements").
(d) As soon as reasonably available but in no event more than five business
days after filing, NSD will deliver to Parent each report, financial or
otherwise, filed by it or NorthSide Bank with any Bank Regulatory Authority or
the SEC.
(e) Within 20 calendar days after the end of each month, NSD will deliver
to Parent the unaudited consolidated balance sheet and unaudited consolidated
statement of operations of NSD for the immediately preceding month prepared in
accordance with GAAP except for the absence of footnotes and subject to year end
audit and adjustment or as otherwise noted therein.
(f) Within 20 calendar days after the end of each month, Parent will
deliver to NSD the unaudited consolidated balance sheet and unaudited
consolidated statement of operations of Parent for the immediately preceding
month prepared in accordance with GAAP except for the absence of footnotes and
subject to year end audit and adjustment or as otherwise noted therein.
6.07 Affiliates. NSD shall use its reasonable best efforts to identify
those persons who may be deemed to be "affiliates" of NSD within the meaning of
Rule 145 promulgated by the SEC under the Securities Act and to cause each
person so identified to deliver to Parent as soon as practicable, and in any
event prior to the date of the NSD Meeting, a written agreement to comply with
the requirements of Rule 145 under the Securities Act in connection with the
sale or other transfer of Parent Common Stock received in the Merger, which
agreement shall be in the form attached as Annex B (the "Affiliate Letter").
45
6.08 Certain Actions.
(a) From the date of this Agreement through the Effective Time, except as
otherwise permitted by this Section 6.08, NSD will not, and will not authorize
or permit any of its directors, officers, agents, employees, investment bankers,
attorneys, accountants, advisors, agents, Affiliates or representatives
(collectively, "Representatives") to, directly or indirectly, (i) initiate,
solicit, encourage or take any action to facilitate, including by way of
furnishing information, any Acquisition Proposal (as defined below) or any
inquiries with respect to or the making of any Acquisition Proposal, (ii) enter
into or participate in any discussions or negotiations with, furnish any
information relating to NSD or any of its Subsidiaries or afford access to the
business, properties, assets, books or records of NSD or any of its Subsidiaries
to, otherwise cooperate in any way with, or knowingly assist, participate in,
facilitate or encourage any effort by any third party that is seeking to make,
or has made, an Acquisition Proposal or (iii) except in accordance with Section
8.01(g), approve, endorse or recommend or enter into any letter of intent or
similar document or any contract, agreement or commitment contemplating or
otherwise relating to an Acquisition Proposal.
(b) Notwithstanding anything herein to the contrary, NSD and its Board of
Directors shall be permitted (i) to comply with Rule 14d-9 and Rule 14e-2
promulgated under the Exchange Act with regard to an Acquisition Proposal
provided that the Board of Directors of NSD shall not withdraw or modify in a
manner adverse to Parent its Approval Recommendation except as set forth in
subsection (iii) below; (ii) to engage in any discussions or negotiations with,
or provide any information to, any person in response to a Superior Proposal (as
defined below) by any such person, if and only to the extent that (x) NSD's
Board of Directors concludes in good faith, after consultation with outside
counsel, that failure to do so would breach its fiduciary duties to NSD's
stockholders under applicable law, (y) prior to providing any information or
data to any person in connection with a Superior Proposal by any such person,
NSD's Board of Directors receives from such person an executed confidentiality
agreement, which confidentiality terms shall be no less favorable to NSD than
those contained in the Confidentiality Agreement between NSD and Parent, a copy
of which executed confidentiality agreement shall have been provided to Parent
for informational purposes, and (z) at least 72 hours prior to providing any
information or data to any person or entering into discussions or negotiations
with any person, NSD promptly notifies Parent in writing of the name of such
person and the material terms and conditions of any such Superior Proposal and
(iii) to withdraw, modify, qualify in a manner adverse to Parent, condition or
refuse to make its Approval Recommendation (the "Change in NSD Recommendation")
if NSD's Board of Directors concludes in good faith, after consultation with
outside counsel and financial advisors, that failure to do so would breach its
fiduciary duties to NSD's stockholders under applicable law.
46
(c) NSD will promptly, and in any event within 24 hours, notify Parent in
writing of the receipt of any Acquisition Proposal or any information related
thereto, which notification shall describe the Acquisition Proposal and identify
the third party making the same.
(d) NSD agrees that it will, and will cause its Representatives to,
immediately cease and cause to be terminated any activities, discussions or
negotiations existing as of the date of this Agreement with any parties
conducted heretofore with respect to any Acquisition Proposal.
(e) For purposes of this Agreement:
(i) The term "Acquisition Proposal" means any inquiry, proposal or
offer, filing of any regulatory application or notice, whether in draft or
final form, or disclosure of an intention to do any of the foregoing from
any person relating to any (w) direct or indirect acquisition or purchase
of a business that constitutes a substantial portion of the net revenues,
net income or net assets of NSD or any of its Subsidiaries, (x) direct or
indirect acquisition or purchase of NSD Common Stock after the date of this
Agreement by a Person who on the date of this Agreement does not own 10% or
more of NSD's Common Stock and such Person by reason of such purchase or
acquisition first becomes the owner of 10% or more of NSD's Common Stock
after the date of this Agreement or the direct or indirect acquisition or
purchase of 5% or more of NSD's Common Stock after the date of this
Agreement by a Person who on the date of this Agreement owns 10% or more of
NSD's Common Stock, (y) tender offer or exchange offer that if consummated
would result in any person beneficially owning 10% or more of any class of
equity securities of NSD or (z) merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar
transaction involving NSD other than the transactions contemplated by this
Agreement other than the transactions contemplated by this Agreement.
(ii) The term "Superior Proposal" means any bona fide, unsolicited
written Acquisition Proposal made by a Third Party to acquire more than 50%
of the combined voting power of the shares of NSD Common Stock then
outstanding or all or substantially all of NSD's consolidated assets for
consideration consisting of cash and/or securities that is on terms that
the Board of Directors of NSD in good faith concludes, after consultation
with its financial advisors and outside counsel, taking into account, among
other things, all legal, financial, regulatory and other aspects of the
proposal and the person making the proposal, including any break-up fees,
expense reimbursement provisions and conditions to consummation, (A) is on
terms that the Board of Directors of NSD in its good faith judgment
believes to be more favorable from a financial point of view to its
stockholders than the Merger; (B) for which financing, to the extent
required, is then fully committed or reasonably determined to be available
by the Board of Directors of NSD and (C) is reasonably capable of being
completed.
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(f) If a Payment Event (as hereinafter defined) occurs, NSD shall pay to
Parent by wire transfer of immediately available funds, within two business days
following such Payment Event, a fee of $6,000,000 (the "Break-up Fee"),
provided, however, that if a Payment Event occurs, NSD shall have no obligation
to pay Parent's expenses under Section 9.05(b).
(g) The term "Payment Event" means any of the following:
(i) the termination of this Agreement by Parent pursuant to Section
8.01(f);
(ii) the termination of this Agreement by NSD pursuant to Section
8.01(g);
(iii) a tender offer or exchange offer for 25% or more of the
outstanding common stock of NSD is commenced and NSD shall not have sent to
its stockholders, within 10 business days after the commencement of such
tender offer or exchange offer, a statement that the NSD Board recommends
rejection of such tender offer or exchange offer; or
(iv) the occurrence of any of the following events within eighteen
months of the termination of this Agreement pursuant to Section 8.01(e),
provided that an Acquisition Proposal shall have been made by a Third Party
after the date hereof and prior to such termination that shall not have
been withdrawn in good faith prior to such termination: (A) NSD enters into
an agreement to merge with or into, or be acquired, directly or indirectly,
by merger or otherwise by, such Third Party; (B) such Third Party, directly
or indirectly, acquires substantially all of the total assets of NSD and
its Subsidiaries, taken as a whole; or (C) such Third Party, directly or
indirectly, acquires more than 50% of the outstanding NSD Common Stock. As
used herein, "Third Party" means any person as defined in Section 13(d) of
the Exchange Act other than Parent or its Affiliates.
(h) NSD acknowledges that the agreements contained in Section 6.08(e) are
an integral part of the transactions contemplated in this Agreement and that
without these agreements Parent would not enter into this Agreement.
Accordingly, in the event NSD fails to pay to Parent the Break-up Fee, promptly
when due, NSD shall, in addition thereto, pay to Parent all costs and expenses,
including attorneys' fees and disbursements, incurred in collecting such
Break-up Fee together with interest on the amount of the Break-up Fee or any
unpaid portion thereof, from the date such payment was due until the date such
payment is received by Parent, accrued at the fluctuating prime rate as quoted
in The Wall Street Journal as in effect from time to time during the period.
6.09 Certain Policies. Prior to the Effective Date, each of NSD and its
Subsidiaries shall, consistent with GAAP, the rules and regulations of the SEC
and applicable banking laws and regulations, modify or change its loan, OREO,
accrual, reserve, tax, litigation and real estate valuation policies and
practices, including loan classifications and levels of reserves, so as to be
applied on a basis that is consistent with that of Parent; provided, however,
that no such modifications or changes need be made prior to the satisfaction of
the conditions set forth in Section 7.01(b); and further provided that in any
event, no accrual or reserve made by NSD or any of its Subsidiaries pursuant to
this Section 6.09 shall constitute or be deemed to be a breach, violation of or
failure to satisfy any representation, warranty, covenant, agreement, condition
or other provision of this Agreement or otherwise be considered in determining
whether any such breach, violation or failure to satisfy shall have occurred.
The recording of any such adjustments shall not be deemed to imply any
misstatement of previously furnished financial statements or information and
shall not be construed as a concurrence of NSD or its management with any such
adjustments.
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6.10 NYSE Listing. Parent agrees to use its reasonable best efforts to list
on the NYSE, upon official notice of issuance prior to the Effective Date, the
shares of Parent Common Stock to be issued in connection with the Merger.
6.11 Indemnification.
(a) From and after the Effective Time through the sixth anniversary of the
Effective Time, Parent (the "Indemnifying Party") shall indemnify and hold
harmless each present and former director, officer and employee of NSD or a NSD
Subsidiary, as applicable, (the "Indemnified Parties") against any costs or
expenses, including reasonable attorneys' fees, judgments, fines, losses,
claims, damages or liabilities incurred in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of matters existing or occurring at or prior to the
Effective Time, whether asserted or claimed prior to, at or after the Effective
Time, arising in whole or in part out of or pertaining to the fact that he or
she was a director, officer, employee, fiduciary or agent of NSD or any NSD
Subsidiary or is or was serving at the request of NSD or any of the NSD
Subsidiaries as a director, officer, employee, fiduciary or agent of another
corporation, partnership, joint venture, trust or other enterprise, including
without limitation matters related to the negotiation, execution and performance
of this Agreement or consummation of the Transaction, to the fullest extent that
such Indemnified Parties would be entitled under the NSD Articles and the NSD
Bylaws or equivalent documents of any NSD Subsidiary, as applicable, or any
agreement, arrangement or understanding that has been Previously Disclosed by
NSD pursuant to this Section, in each case as in effect on the date hereof.
(b) Any Indemnified Party wishing to claim indemnification under this
Section 6.11, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Indemnifying Party, but the failure to
so notify shall not relieve the Indemnifying Party of any liability it may have
to such Indemnified Party if such failure does not actually prejudice the
Indemnifying Party. In the event of any such claim, action, suit, proceeding or
investigation, whether arising before or after the Effective Time, (i) the
Indemnifying Party shall have the right to assume the defense thereof and the
Indemnifying Party shall not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except that if the
Indemnifying Party elects not to assume such defense or counsel for the
Indemnified Parties advises that there are issues that raise conflicts of
interest between the Indemnifying Party and the Indemnified Parties, the
Indemnified Parties may retain counsel which is reasonably satisfactory to the
Indemnifying Party, and the Indemnifying Party shall pay, promptly as statements
therefor are received, the reasonable fees and expenses of such counsel for the
Indemnified Parties, which may not exceed one firm in any jurisdiction, (ii) the
Indemnified Parties will cooperate in the defense of any such matter, (iii) the
Indemnifying Party shall not be liable for any settlement effected without its
prior written consent which shall not be unreasonably withheld and (iv) the
Indemnifying Party shall have no obligation hereunder in the event that a
federal or state banking agency or a court of competent jurisdiction shall
determine that indemnification of an Indemnified Party in the manner
contemplated hereby is prohibited by applicable laws and regulations.
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(c) Prior to the Effective Time, Parent shall cause the persons serving as
directors and officers of NSD immediately prior to the Effective Time to be
covered by the directors' and officers' liability insurance policy maintained by
NSD for a period of six years after the Effective Time, provided that Parent may
substitute therefor policies of at least the same coverage and amounts
containing terms and conditions that are not materially less advantageous than
such policy or single premium tail coverage with policy limits equal to NSD's
existing coverage limits, with respect to acts or omissions occurring prior to
the Effective Time that were committed by such directors and officers in their
capacities as such, provided that in no event shall Parent be required to expend
for any one year an amount in excess of 150% of the annual premium currently
paid by NSD for such insurance (the "Insurance Amount"), and further provided
that if Parent is unable to maintain or obtain the insurance called for by this
Section 6.11(c) as a result of the preceding provision, Parent shall use its
commercially reasonable best efforts to obtain the most advantageous coverage as
is available for the Insurance Amount.
(d) The provisions of this Section 6.11 are intended to be for the benefit
of and shall be enforceable by each of the Indemnified Parties and his or her
heirs.
6.12 Benefit Plans.
(a) As soon as administratively practicable after the Effective Time,
Parent shall take all reasonable action so that employees of NSD and its
Subsidiaries shall be entitled to participate in each employee benefit plan,
program or arrangement of Parent of general applicability (the "Parent Benefit
Plans") to the same extent as similarly-situated employees of Parent and its
Subsidiaries, it being understood that inclusion of the employees of NSD and its
Subsidiaries in the Parent Benefit Plans may occur at different times with
respect to different plans, provided that coverage shall be continued under
corresponding Benefit Plans of NSD and its Subsidiaries until such employees are
permitted to participate in the Parent Benefit Plans and provided further,
however, that nothing contained herein shall require Parent or any of its
Subsidiaries to make any grants to any former employee of NSD under any
discretionary equity compensation plan of Parent. Parent shall cause each Parent
Benefit Plan in which employees of NSD and its Subsidiaries are eligible to
participate to recognize, for purposes of determining eligibility to participate
in, the vesting of benefits and for all other purposes, but not for accrual of
pension benefits, under the Parent Benefit Plans, the service of such employees
with NSD and its Subsidiaries to the same extent as such service was credited
for such purpose by NSD, provided, however, that such service shall not be
recognized to the extent that such recognition would result in a duplication of
benefits. Except for the commitment to continue those Benefit Plans of NSD and
its Subsidiaries that correspond to Parent Benefit Plans until employees of NSD
and its Subsidiaries are included in such Parent Benefit Plans, nothing herein
shall limit the ability of Parent to amend or terminate any of NSD's Benefit
Plans in accordance with and to the extent permitted by their terms at any time
permitted by such terms.
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(b) At and following the Effective Time, and except as otherwise provided
in Sections 6.12(d) and (e) Parent shall honor, and the Surviving Corporation
shall continue to be obligated to perform, in accordance with their terms, all
benefit obligations to, and contractual rights of, current and former employees
of NSD and its Subsidiaries and current and former directors of NSD and its
Subsidiaries existing as of the Effective Date, as well as all employment,
executive severance or "change-in-control" or similar agreements, plans or
policies of NSD that are set forth on Schedule 6.12(b) of the NSD Disclosure
Schedule, subject to the receipt of any necessary approval from any Bank
Regulatory Authority. The severance or termination payments that are payable
pursuant to such agreements, plans or policies of NSD are set forth on Schedule
6.12(b) of the NSD Disclosure Schedule. Following the consummation of the Merger
and for one year thereafter, Parent shall, to the extent not duplicative of
other severance benefits, pay employees of NSD or its Subsidiaries who are
terminated for other than cause, severance as set forth on Schedule 6.12(b) of
the Parent Disclosure Schedule. Following the expiration of the foregoing
severance policy, any years of service recognized for purposes of this Section
6.12(b) will be taken into account under the terms of any applicable severance
policy of Parent or its Subsidiaries.
(c) At such time as employees of NSD and its Subsidiaries become eligible
to participate in a medical, dental or health plan of Parent or its
Subsidiaries, Parent shall cause each such plan to (i) waive any preexisting
condition limitations to the extent such conditions are covered under the
applicable medical, health or dental plans of Parent, (ii) provide full credit
under such plans for any deductibles, co-payment and out-of-pocket expenses
incurred by the employees and their dependents during the portion of the
calendar year prior to such participation and (iii) waive any waiting period
limitation or evidence of insurability requirement that would otherwise be
applicable to such employee or dependent on or after the Effective Time to the
extent such employee or dependent had satisfied any similar limitation or
requirement under an analogous Benefit Plan prior to the Effective Time.
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(d) Immediately prior to the Effective Time, NSD shall, at the written
request of Parent, freeze or terminate such of the NSD Benefit Plans as is
requested by Parent.
6.13 Parent Board and Parent Bank Board.
(a) Parent shall take all action necessary to appoint or elect, effective
as of the Effective Time, as a director of Parent the NSD Parent Designee. Such
person shall fill a vacancy on the Parent Board as a Class II director and shall
serve until the 2006 annual meeting of stockholders of Parent (the "Parent 2006
Annual Meeting") and until his or her successor is elected and qualified.
Subject to the fiduciary duties of the Parent Board, Parent shall include the
NSD Parent Designee on the list of nominees for director presented by the Parent
Board and for which the Parent Board shall solicit proxies at the Parent 2006
Annual Meeting. Subject to the fiduciary duties of the Parent Board, Parent
agrees that to the extent that the NSD Parent Designee dies or becomes
incapacitated prior to the Effective Time, NSD may recommend to the Parent Board
a person to serve as successor, and provided that such person is reasonably
acceptable to the Parent Board, such person shall be appointed to fill the
vacancy so created. If, prior to the Parent 2006 Annual Meeting or the term
immediately following the Parent Bank 2006 Annual Meeting, the NSD Parent
Designee vacates the seat to which he or she has been elected for any reason,
Parent agrees, subject to the fiduciary duties of the Parent Board, to appoint a
current NSD director to replace that director. Subject to its fiduciary duties,
the Parent Board agrees to recommend the Parent Designee for nomination as a
Parent Board Director to the Parent Board Nominating Committee for election at
Parent's 2007 Annual Meeting of Stockholders.
(b) Parent agrees to take all action necessary to appoint or elect,
effective as of the Effective Time, as directors of Parent Bank three current
members of NSD's Board of Directors (the "NSD Parent Bank Designees") as are
mutually agreed by Parent and NSD. Such persons shall serve until the 2006
annual meeting of stockholders of Parent Bank (the "Parent Bank 2006 Annual
Meeting") and until their successors are elected and qualified. Subject to the
fiduciary duties of the Parent Bank Board, Parent Bank shall include the NSD
Parent Bank Designees on the list of nominees for director presented by the
Parent Bank Board for the Parent Bank 2006 Annual Meeting. Subject to the
fiduciary duties of the Parent Bank Board, Parent Bank agrees that to the extent
that one or more of the NSD Parent Bank Designees dies or becomes incapacitated
prior to the Effective Time, the remaining NSD Parent Bank Designees may
recommend to the Parent Bank Board a person to serve as successor, and provided
that such person is reasonably acceptable to the Parent Bank Board, such person
shall be appointed to fill the vacancy so created. If, prior to the Parent Bank
2006 Annual Meeting or the term immediately following the Parent Bank 2006
Annual Meeting, any of the NSD Parent Bank Designees vacates the seat to which
they have been elected for any reason, Parent Bank agrees, subject to the
fiduciary duties of the Parent Bank Board, to appoint a current NSD director to
replace that director. Subject to its fiduciary duties, the Parent Bank Board
agrees to recommend the Parent Bank Designees for nomination as Parent Bank
Directors for election at Parent Bank's 2007 Annual Meeting of Stockholders.
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6.14 Notification of Certain Matters. Each of NSD and Parent shall give
prompt notice to the other of any fact, event or circumstance known to it that
(i) is reasonably likely, individually or taken together with all other facts,
events and circumstances known to it, to result in any Material Adverse Effect
with respect to it or (ii) would cause or constitute a material breach of any of
its representations, warranties, covenants or agreements contained herein.
6.15 Regulatory Conditions. In the event of the imposition of any
conditions, restrictions or requirements in connection with the regulatory
approvals required by Section 7.01(b) that Parent determines would materially
reduce the benefits of the Merger as provided in Section 7.01(b), Parent shall
use its commercially reasonable efforts to obtain the removal of any such
condition, restriction or requirement.
6.16 Exemption From Liability Under Section 16(b). Assuming that NSD
delivers to Parent the Section 16 Information not less than five Business Days
in advance of the Effective Time, the Board of Directors of Parent, or a
committee of Non-Employee Directors thereof (as such term is defined for
purposes of Rule 16b-3(d) under the Exchange Act), shall reasonably promptly
thereafter and in any event prior to the Effective Time adopt a resolution
providing that the receipt by the NSD Insiders of Parent Common Stock in
exchange for shares of NSD Common Stock, and of options to purchase Parent
Common Stock upon conversion of NSD Options pursuant to the transactions
contemplated hereby and to the extent such securities are listed in the Section
16 Information provided by NSD to Parent prior to the Effective Time, are
intended to be exempt from liability pursuant to Section 16(b) under the
Exchange Act such that any such receipt shall be so exempt.
6.17 Certain Post-Closing Matters.
(a) From and after the Effective Time, Parent shall cause Parent Bank to
establish a new Pittsburgh Region that will consist of Parent Bank's existing
Pittsburgh branches and the existing branches of NSD Bank with the exception of
the branches that NSD Bank is currently planning to close.
(b) At the Effective Time, Parent shall cause Parent Bank to name Xxxxxx X.
Xxxxxx as President and Chief Executive Officer of Parent Bank's Pittsburgh
Region to serve in such position in accordance with the terms of his Employment
Agreement with Parent Bank.
(c) From and after the Effective Time, Parent shall cause Parent Bank to
provide commercially reasonable assistance to the current employees of NSD Bank
whose positions will be eliminated because of the Merger and identify employment
opportunities with Parent Bank. Such assistance shall include training for
positions with Parent Bank, notice of the posting of all new job postings with
Parent Bank and priority bidding for open positions with Parent Bank.
53
(d) The commitments set forth in this Section 6.17 shall survive the
Effective Time as reflected in a formal resolution of the Parent Bank Board to
be reflected in the minutes of Parent Bank as the surviving corporation in the
Bank Merger.
6.18 Employment Matters.
(a) NSD shall pay the bonuses described on Schedule 4.01(d) not later than
December 31, 2004.
(b) Parent agrees to cause Parent Bank to enter into an employment
agreement with Xxxxxx X. Xxxxxx simultaneously with the execution of this
Agreement.
6.19 Director Agreements. Parent shall have received from each director of
NSD and NorthSide Bank an executed Voting Agreement in the form of Annex C and
an executed Non-Solicitation Agreement in the form of Annex D.
6.20 Rights Plan. NSD shall redeem the Rights under the NSD Bancorp. Inc.
Rights Agreement dated as of September 12, 2002 as promptly as possible after
the execution of this Agreement in accordance with the terms of such Rights
Agreement.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each of the parties hereto to consummate the Merger is
subject to the fulfillment or, to the extent permitted by applicable law,
written waiver by the parties hereto prior to the Closing Date of each of the
following conditions:
(a) Stockholder Approval. This Agreement and the Merger shall have been
duly approved by the requisite vote of the holders of outstanding shares of NSD
Common Stock.
(b) Regulatory Approvals. All regulatory approvals required to consummate
the Merger shall have been obtained and shall remain in full force and effect
and all statutory waiting periods in respect thereof shall have expired and no
such approvals shall contain any conditions, restrictions or requirements that
the Parent Board reasonably determines in good faith would, individually or in
the aggregate, materially reduce the benefits of the Transaction to such a
degree that Parent would not have entered into this Agreement had such
conditions, restrictions or requirements been known at the date hereof.
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(c) No Injunction. No Governmental Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, judgment, decree, injunction or other order, whether temporary,
preliminary or permanent, that is in effect and prohibits consummation of the
Transaction.
(d) Registration Statement. The Registration Statement shall have become
effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated by the SEC and not
withdrawn.
(e) Listing. The shares of Parent Common Stock to be issued in the Merger
shall have been approved for listing on the NYSE.
7.02 Conditions to Obligation of NSD. The obligation of NSD to consummate
the Merger is also subject to the fulfillment by Parent or written waiver by NSD
prior to the Closing Date of each of the following conditions:
(a) Representations and Warranties. The representations and warranties of
Parent set forth in this Agreement, subject in all cases to the standard set
forth in Section 5.02, shall be true and correct as of the date of this
Agreement and as of the Effective Date as though made on and as of the Effective
Date, except that representations and warranties that by their terms speak as of
the date of this Agreement or some other date shall be true and correct as of
such date, and NSD shall have received a certificate, dated the Effective Date,
signed on behalf of Parent by the Chief Executive Officer and the Chief
Financial Officer of Parent to such effect.
(b) Performance of Obligations of Parent. Parent shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Effective Time in order to consummate the Merger,
and NSD shall have received a certificate, dated the Effective Date, signed on
behalf of Parent by the Chief Executive Officer and the Chief Financial Officer
of Parent to such effect.
(c) Tax Opinion. NSD shall have received the written opinion of Xxxxxxxx
Xxxxxxxx, P.C., dated as of the Effective Date, which shall be based on such
written representations from Parent, NSD and others as such counsel shall
reasonably request, to the effect that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code.
(d) Other Actions. Parent shall have furnished NSD with such certificates
of its respective officers or others and such other documents to evidence
fulfillment of the conditions set forth in Sections 7.01 and 7.02 as NSD may
reasonably request.
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7.03 Conditions to Obligation of Parent. The obligation of Parent to
consummate the Merger is also subject to the fulfillment by NSD or written
waiver by Parent prior to the Closing Date of each of the following conditions:
(a) Representations and Warranties. The representations and warranties of
NSD set forth in this Agreement, subject in all cases to the standard set forth
in Section 5.02, shall be true and correct as of the date of this Agreement and
as of the Effective Date as though made on and as of the Effective Date, except
that representations and warranties that by their terms speak as of the date of
this Agreement or some other date shall be true and correct as of such date, and
Parent shall have received a certificate, dated the Effective Date, signed on
behalf of NSD by the President and the Chief Financial Officer of NSD to such
effect.
(b) Performance of Obligations of NSD. NSD shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Effective Time in order to consummate the Merger,
and Parent shall have received a certificate, dated the Effective Date, signed
on behalf of NSD by the President and the Chief Financial Officer of NSD to such
effect.
(c) Tax Opinion. Parent shall have received the written opinion of Xxxxx
Xxxxxx LLP, dated as of the Effective Date, which shall be based on such written
representations from Parent, NSD and others as such counsel shall reasonably
request, to the effect that the Merger will constitute a reorganization within
the meaning of Section 368(a) of the Code.
(d) Environmental Reports. NSD shall have furnished Parent with a Phase I
environmental study with respect to all real property owned by NSD or NorthSide
Bank, the findings of which studies shall be acceptable to Parent who shall not
unreasonably withhold such acceptance.
(e) Other Actions. NSD shall have furnished Parent with such certificates
of its officers or others and such other documents to evidence fulfillment of
the conditions set forth in Sections 7.01 and 7.03 as Parent may reasonably
request.
ARTICLE VIII
TERMINATION
8.01 Termination. This Agreement may be terminated at any time prior to the
Effective Date, and the Transaction may be abandoned:
(a) Mutual Consent. By the mutual consent in writing of Parent and NSD if
the Board of Directors of each so determines by vote of a majority of the
members of its entire Board.
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(b) Breach. Provided that the terminating party is not then in material
breach of any representation, warranty, covenant or agreement contained therein,
subject in all cases to the standard set forth in Section 5.02, by Parent or
NSD, if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event of: (i) a breach by Parent, on the one
hand, or NSD, on the other hand, as the case may be, of any representation or
warranty contained herein, subject to the standard set forth in Section 5.02,
which breach cannot be or has not been cured within 30 days after the giving of
written notice to the breaching party or parties of such breach; or (ii) a
breach by Parent, on the one hand, or NSD, on the other hand, as the case may
be, of any of the covenants or agreements contained herein, which breach cannot
be or has not been cured within 30 days after the giving of written notice to
the breaching party or parties of such breach, which breach, whether under (i)
or (ii), would be reasonably expected, individually or in the aggregate with
other breaches, to result in a Material Adverse Effect with respect to Parent or
NSD, as the case may be.
(c) Delay. By Parent or NSD, if its Board of Directors so determines by
vote of a majority of the members of its entire Board, in the event that the
Merger is not consummated by June 30, 2005, except to the extent that the
failure of the Merger then to be consummated by such date shall be due to the
failure of the party seeking to terminate pursuant to this Section 8.01(c) to
perform or observe the covenants and agreements of such party, in the case of
Parent, set forth in this Agreement.
(d) No Regulatory Approval. By Parent or NSD, if its Board of Directors so
determines by a vote of a majority of the members of its entire Board, in the
event the approval of any Governmental Authority required for consummation of
the Merger and the other transactions contemplated by this Agreement shall have
been denied by final nonappealable action of such Governmental Authority or an
application therefor shall have been permanently withdrawn at the request of a
Governmental Authority, provided, however, that no party shall have the right to
terminate this Agreement pursuant to this Section 8.01(d) if such denial shall
be due to the failure of the party seeking to terminate this Agreement to
perform or observe the covenants of such party set forth herein.
(e) No NSD Stockholder Approval. By Parent, or by NSD provided that NSD
shall not be in material breach of any of its obligations under Section 6.02, if
any approval of the stockholders of NSD contemplated by this Agreement shall not
have been obtained by reason of the failure to obtain the required vote at the
NSD Meeting or at any adjournment or postponement thereof.
(f) NSD Failure to Recommend. At any time prior to the NSD Meeting, by
Parent if (i) NSD shall have breached Section 6.08 in any respect materially
adverse to Parent, (ii) the NSD Board shall have failed to make its Approval
Recommendation or shall have effected a Change in NSD Recommendation, (iii) the
NSD Board shall have recommended approval of an Acquisition Proposal or (iv) NSD
shall have materially breached its obligations under Section 6.02 by failing to
call, give notice of, convene and hold the NSD Meeting.
57
(g) Superior Proposal. At any time prior to the date of mailing of the
Proxy Statement, by NSD in order to enter concurrently into an Acquisition
Proposal that has been received by NSD and the NSD Board of Directors in
compliance with Sections 6.08(a) and (b) and that NSD's Board of Directors
concludes in good faith, in consultation with its financial and legal advisors,
that such Acquisition Proposal is a Superior Proposal; provided, however, that
this Agreement may be terminated by NSD pursuant to this Section 8.01(g) only
after the fifth Business Day following NSD's provision of written notice to
Parent advising Parent, that the NSD Board of Directors is prepared to accept a
Superior Proposal and only if (i) during such five-Business Day period, NSD has
caused its financial and legal advisors to negotiate with Parent in good faith
to make such adjustments in the terms and conditions of this Agreement such that
such Acquisition Proposal would no longer constitute a Superior Proposal, (ii)
NSD's Board of Directors has considered such adjustments in the terms and
conditions of this Agreement resulting from such negotiations and has concluded
in good faith, based upon consultation with its financial and legal advisers,
that such Acquisition Proposal remains a Superior Proposal even after giving
effect to the adjustments proposed by Parent and further provided that such
termination shall not be effective until NSD has paid the Break-up Fee to
Parent.
(h) Possible Adjustment. By NSD at any time during the two-day period
following the Determination Date, if both of the following conditions (1) and
(2) are satisfied:
(1) the Average Closing Price determined as of the Determination Date
shall be less than the product of 0.800 and the Starting Price; and
(2) the number obtained by dividing the Average Closing Price by the
Starting Price, such number being referred to herein as the "Parent Ratio",
shall be less than the number obtained by dividing the Index Closing Price
by the Starting Index Price, such number being referred to herein as the
"Index Ratio", and subtracting 0.200 from such quotient;
provided, that if NSD elects to exercise such termination right, it shall
give prompt written notice to Parent, and further provided that such notice
of election to terminate may be withdrawn at any time within the
aforementioned period. Notwithstanding the foregoing, if within two
business days after the date of receipt of such notice from NSD, Parent
notifies NSD in writing that Parent will increase the Exchange Ratio to (A)
a number equal to a quotient, the numerator of which is the product of (x)
0.800, (y) the Starting Price and (z) the Exchange Ratio, and the
denominator of which is the Average Closing Price or (B) if the Index Ratio
is less than 1.0, a number equal to a quotient, the numerator of which is
the product of (w) the Index Ratio, (x) 0.800, (y) the Starting Price and
(z) the Exchange Ratio and the denominator of which is the Average Closing
Price, the Exchange Ratio shall be so adjusted and no termination shall
have occurred pursuant to this Section 8.01(h).
58
8.02 Effect of Termination. In the event of termination of this Agreement
by either Parent or NSD as provided in Section 8.01, this Agreement shall
forthwith become void and have no effect except (i) Sections 6.06(c), 6.08(e)
and (f), 8.02 and 9.05 shall survive any termination of this Agreement and (ii)
notwithstanding anything to the contrary contained in this Agreement, no party
shall be relieved or released from any liability or damages arising out of its
willful breach of any of the provisions of this Agreement.
ARTICLE IX
MISCELLANEOUS
9.01 Survival. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the Effective Time, other than
agreements or covenants contained herein that by their express terms are to be
performed in whole or in part after the Effective Time, or the termination of
this Agreement if this Agreement is terminated prior to the Effective Time,
other than Sections 6.06(c), 8.02 and, excepting Section 9.12, this Article IX,
which shall survive any such termination. Notwithstanding anything in the
foregoing to the contrary, no representations, warranties, agreements and
covenants contained in this Agreement shall be deemed to be terminated or
extinguished so as to deprive a party hereto or any of its affiliates of any
defense at law or in equity that otherwise would be available against the claims
of any Person, including without limitation any stockholder or former
stockholder.
9.02 Waiver; Amendment. Prior to the Effective Time, any provision of this
Agreement may be (i) waived, by the party benefited by the provision or (ii)
amended or modified at any time, by an agreement in writing among the parties
hereto executed in the same manner as this Agreement, except that after the NSD
Meeting no amendment shall be made that by law requires further approval by the
stockholders of NSD without obtaining such approval.
9.03 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04 Governing Law. This Agreement shall be governed by, and interpreted in
accordance with, the laws of the Commonwealth of Pennsylvania applicable to
contracts made and to be performed entirely within such State.
9.05 Expenses.
(a) Except as set forth in Section 9.05(b), each party hereto will bear all
expenses incurred by it in connection with this Agreement and the transactions
contemplated hereby, including fees and expenses of its own financial
consultants, accountants and counsel, except that expenses of printing the Proxy
Statement and the registration fee to be paid to the SEC in connection with the
Registration Statement shall be shared equally between NSD and Parent, and
provided further that nothing contained herein shall limit either party's rights
to recover any liabilities or damages arising out of the other party's willful
breach of any provision of this Agreement.
59
(b) In the event that this Agreement is terminated by either NSD or Parent
pursuant to Section 8.01(b), then the breaching party shall pay, or by Parent
pursuant to Section 8.01(e), then NSD shall pay Parent, by wire transfer of
immediately available funds, within two business days following delivery of a
statement of such expenses, all out-of-pocket costs and expenses (including
without limitation, professional fees of legal counsel, financial advisors and
accountants, and their expenses) actually incurred by Parent in connection with
the Merger and this Agreement.
9.06 Notices. All notices, requests and other communications hereunder to a
party shall be in writing and shall be deemed given if personally delivered,
telecopied (with confirmation) or mailed by registered or certified mail (return
receipt requested) to such party at its address set forth below or such other
address as such party may specify by notice to the parties hereto.
If to NSD to:
NSD Bancorp, Inc.
0000 XxXxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx,
President and Chief Operating Officer
Fax: _____________
With a copy to:
Xxxxxxxx Xxxxxxxx, P.C.
0000 Xxxxxxx Xxxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxxxxx Xxxxx, Xx., Esq.
Fax: (000) 000-0000
60
If to Parent to:
F.N.B. Corporation
Xxx X.X.X. Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx
President and Chief Executive Officer
Fax: (000) 000-0000
With a copy to:
Xxxxx Xxxxxx LLP
0000 Xxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
9.07 Entire Understanding; No Third Party Beneficiaries. This Agreement,
the Bank Merger Agreement and the Confidentiality Agreements represent the
entire understanding of the parties hereto and thereto with reference to the
Transaction, and this Agreement, the Bank Merger Agreement and the
Confidentiality Agreements supersede any and all other oral or written
agreements heretofore made. Except for the Indemnified Parties' right to enforce
Parent's obligations under Section 6.11, which is expressly intended to be for
the irrevocable benefit of, and shall be enforceable by, each Indemnified Party
and his or her heirs and representatives, nothing in this Agreement, expressed
or implied, is intended to confer upon any Person, other than the parties hereto
or their respective successors, any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
9.08 Severability. Except to the extent that application of this Section
9.08 would have a Material Adverse Effect on NSD or Parent, any term or
provision of this Agreement that is invalid or unenforceable in any jurisdiction
shall, as to that jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable. In all such cases, the parties shall use their reasonable best
efforts to substitute a valid, legal and enforceable provision that, insofar as
practicable, implements the original purposes and intents of this Agreement.
9.09 Enforcement. The parties hereto agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity. In the event attorneys' fees or other costs
are incurred to secure performance of any of the obligations herein provided
for, or to establish damages for the breach thereof, or to obtain any other
appropriate relief, whether by way of prosecution or defense, the prevailing
party shall be entitled to recover reasonable attorneys' fees and costs incurred
therein.
61
9.10 Interpretation. When a reference is made in this Agreement to
Sections, Annexes or Schedules, such reference shall be to a Section of, or
Annex or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." Whenever the words "as of the date
hereof" are used in this Agreement, they shall be deemed to mean the day and
year first above written.
9.11 Assignment. No party may assign either this Agreement or any of its
rights, interests or obligations hereunder without the prior written approval of
the other parties. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
9.12 Alternative Structure. Notwithstanding any provision of this Agreement
to the contrary, until the Registration Statement is declared effective, Parent
may at any time modify the structure of the acquisition of NSD set forth herein,
subject to the prior written consent of NSD, which consent shall not be
unreasonably withheld or delayed, provided that (i) the Merger Consideration to
be paid to the holders of NSD Common Stock is not thereby changed in kind or
reduced in amount as a result of such modification, (ii) such modification will
not adversely affect the tax treatment to NSD's stockholders as a result of
receiving the Merger Consideration and (iii) such modification will not
materially delay or jeopardize receipt of any required approvals of Governmental
Authorities.
[Signature page follows]
62
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
F.N.B. CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------
Xxxxxxx X. Xxxxxxxxx,
President and Chief Executive Officer
NSD BANCORP INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Xxxxxx X. Xxxxxx,
President and Chief Operating Officer
63
ANNEX A
-------
AGREEMENT OF MERGER
Agreement of Merger, dated as of ___________ ___, 2004, by and between
First National Bank of Pennsylvania (the "Parent Bank") and NorthSide Bank
("NorthSide Bank"). All capitalized terms used herein but not defined herein
shall have the respective meanings assigned to them in the Agreement and Plan of
Merger (the "Agreement") dated as of October 14, 2004 between F.N.B. Corporation
("Parent") and NSD Bancorp, Inc. ("NSD").
WlTNESSETH:
WHEREAS, NorthSide Bank is a Pennsylvania banking institution and a wholly
owned subsidiary of NSD; and
WHEREAS, Parent Bank is a national association and a wholly owned
subsidiary of Parent; and
WHEREAS, Parent and NSD have entered into the Agreement, pursuant to which
NSD will merge with and into Parent (the "Parent Merger"); and
WHEREAS, NorthSide Bank and Parent Bank desire to merge on the terms and
conditions herein provided immediately following the effective time of the
Parent Merger.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the parties hereto, intending to be legally
bound hereby, agree as follows:
1. The Merger. Subject to the terms and conditions of the Agreement and
this Agreement of Merger, at the Effective Time (as defined in Section 2),
NorthSide Bank shall merge with and into Parent Bank (the "Bank Merger") under
the laws of the United States and of the Commonwealth of Pennsylvania. Parent
Bank shall be the surviving bank of the Bank Merger (the "Surviving Bank").
2. Effective Time. The Bank Merger shall become effective on the date and
at the time that Articles of Combination are filed with the Office of the
Comptroller of the Currency (the "OCC") and Articles of Merger are filed with
the Pennsylvania Department of State (the "Department") unless a later date and
time is specified as the Effective Time in such Articles of Combination and
Articles of Merger (the "Effective Time").
3. Charter; Bylaws. The Charter and Bylaws of Parent Bank in effect
immediately prior to the Effective Time shall be the Charter and Bylaws of the
Surviving Bank, until altered, amended or repealed in accordance with their
terms and applicable law.
A-1
4. Name; Offices. The name of the Surviving Bank shall be "First National
Bank of Pennsylvania." The main office of the Surviving Bank shall be the main
office of Parent Bank immediately prior to the Effective Time. All branch
offices of NorthSide Bank and Parent Bank that were in lawful operation
immediately prior to the Effective Time shall be the branch offices of the
Surviving Bank upon consummation of the Bank Merger, subject to the opening or
closing of any offices that may be authorized by NorthSide Bank, Parent Bank,
the OCC or the Department after the date hereof. Schedule I hereto contains a
list of each of the deposit taking offices of NorthSide Bank and Parent Bank
that shall be operated by the Surviving Bank, subject to the opening or closing
of any offices that may be authorized by NorthSide Bank, Parent Bank, the OCC
and the Department after the date hereof.
5. Directors and Executive Officers. Upon consummation of the Merger, (i)
the directors of the Surviving Bank immediately prior to the Effective Time
shall continue as directors of the Surviving Bank and as provided for in Section
6.13(b) of the Agreement, three directors of NorthSide Bank shall be appointed
as directors of the Surviving Bank to serve until the first annual meeting of
shareholders following the Effective Time and (ii) the executive officers of the
Surviving Bank shall be the executive officers of Parent Bank immediately prior
to the Effective Time.
6. Effects of the Merger. Upon consummation of the Bank Merger, and in
addition to the effects set forth at 12 U.S.C. ss. 215a and the Pennsylvania
Banking Code and other applicable law:
(a) all rights, franchises and interests of NorthSide Bank in and to every
type of property (real, personal and mixed), tangible and intangible, and choses
in action shall be transferred to and vested in the Surviving Bank by virtue of
the Bank Merger without any deed or other transfer, and the Surviving Bank,
without any order or other action on the part of any court or otherwise, shall
hold and enjoy all rights of property, franchises and interests, including
appointments, designations and nominations, and all other rights and interests
as trustee, executor, administrator, registrar of stocks and bonds, guardian of
estates, assignee, receiver and committee, and in every other fiduciary
capacity, in the same manner and to the same extent as such rights, franchises
and interest were held or enjoyed by NorthSide Bank immediately prior to the
Effective Time; and
(b) the Surviving Bank shall be liable for all liabilities of NorthSide
Bank, fixed or contingent, including all deposits, accounts, debts, obligations
and contracts thereof, matured or unmatured, whether accrued, absolute,
contingent or otherwise, and whether or not reflected or reserved against on
balance sheets, books of account or records thereof, and all rights of creditors
or obligees and all liens on property of NorthSide Bank shall be preserved
unimpaired; after the Effective Time, the Surviving Bank will continue to issue
savings accounts on the same basis as immediately prior to the Effective Time.
A-2
7. Effect on Shares of Stock.
(a) Each share of Parent Bank common stock issued and outstanding
immediately prior to the Effective Time shall be unchanged and shall remain
issued and outstanding.
(b) At the Effective Time, each share of NorthSide Bank capital stock
issued and outstanding prior to the Bank Merger shall, by virtue of the Bank
Merger and without any action on the part of the holder thereof, be canceled.
Any shares of Northside Bank capital stock held in the treasury of NorthSide
Bank immediately prior to the Effective Time shall be retired and canceled.
8. Additional Actions. If, at any time after the Effective Time, the
Surviving Bank shall consider that any further assignments or assurances in law
or any other acts are necessary or desirable to (a) vest, perfect or confirm, of
record or otherwise, in the Surviving Bank its rights, title or interest in, to
or under any of the rights, properties or assets of NorthSide Bank acquired or
to be acquired by the Surviving Bank as a result of, or in connection with, the
Bank Merger, or (b) otherwise carry out the purposes of this Agreement of
Merger, NorthSide Bank and its proper officers and directors shall be deemed to
have granted to the Surviving Bank an irrevocable power of attorney to (i)
execute and deliver all such proper deeds, assignments and assurances in law and
to do all acts necessary or proper to vest, perfect or confirm title to and
possession of such rights, properties or assets in the Surviving Bank and (ii)
otherwise to carry out the purposes of this Agreement of Merger. The proper
officers and directors of the Surviving Bank are fully authorized in the name of
NorthSide Bank or otherwise to take any and all such action.
9. Counterparts. This Agreement of Merger may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one agreement.
10. Governing Law. This Agreement of Merger shall be governed in all
respects, including, but not limited to, validity, interpretation, effect and
performance, by the laws of the United States and the Commonwealth of
Pennsylvania.
11. Amendment. Subject to applicable law, this Agreement of Merger may be
amended, modified or supplemented only by written agreement of Parent Bank and
NorthSide Bank at any time prior to the Effective Time.
12. Waiver. Any of the terms or conditions of this Agreement of Merger may
be waived at any time by whichever of the parties hereto is, or the shareholders
of which are, entitled to the benefit thereof by action taken by the Board of
Directors of such waiving party
13. Assignment. This Agreement of Merger may not be assigned by any party
hereto without the prior written consent of the other party.
A-3
14. Termination. This Agreement of Merger shall terminate upon the
termination of the Agreement in accordance with its terms.
15. Procurement of Approvals. This Agreement of Merger shall be subject to
the approval of Parent as the sole shareholder of Parent Bank and NSD as the
sole shareholder of NorthSide Bank at meetings to be called and held or by
consent in lieu thereof in accordance with the applicable provisions of law and
their respective organizational documents. Parent Bank and NorthSide Bank shall
proceed expeditiously and cooperate fully in the procurement of any other
consents and approvals and in the taking of any other action, and the
satisfaction of all other requirements prescribed by law or otherwise necessary
for consummation of the Merger on the terms provided herein, including without
limitation the preparation and submission of such applications or other filings
for approval of the Merger to the OCC and the Department as may be required by
applicable laws and regulations.
16. Conditions Precedent. The obligations of the parties under this
Agreement of Merger shall be subject to: (i) the approval of this Agreement of
Merger by Parent as the sole shareholder of Parent Bank and NSD as the sole
shareholder of NorthSide Bank at meetings of shareholders duly called and held
or by consent or consents in lieu thereof, in each case without any exercise of
such dissenters' rights as may be applicable; (ii) receipt of approval of the
Merger from all governmental and banking authorities whose approval is required;
(iii) receipt of any necessary regulatory approval to operate the main office
and the branch offices of NorthSide Bank as offices of the Surviving Bank and
(iv) the consummation of the Parent Merger pursuant to the Agreement on or
before the Effective Time.
17. Effectiveness of Agreement. Notwithstanding anything to the contrary
contained herein, the execution and delivery of this Agreement of Merger by the
parties hereto shall not be deemed to be effective unless and until the
requirements of 12 C.F.R. ss. 5.33 are met.
A-4
IN WITNESS WHEREOF, each of Parent Bank and NorthSide Bank has caused this
Agreement of Merger to be executed on its behalf by its duly authorized
officers.
FIRST NATIONAL BANK OF PENNSYLVANIA
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Xxxx X. Xxxxxxx,
President and Chief Executive Officer
NORTHSIDE BANK
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Xxxxxx X. Xxxxxx,
President and Chief Operating Officer
A-5
ANNEX B
-------
___________, 2004
F.N.B. Corporation
Xxx X.X.X. Xxxxxxxxx
Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
I have been advised that I may be deemed an "affiliate" of NSD Bancorp,
Inc., a Pennsylvania corporation ("NSD"), as that term is defined in Rule 144
and used in Rule 145 promulgated by the Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933, as amended (the "Securities Act"). I
understand that pursuant to the terms of the Agreement and Plan of Merger, dated
as of October __, 2004 (the "Agreement"), between F.N.B. Corporation, a Florida
corporation ("Parent") and NSD, NSD plans to merge with and into Parent (the
"Merger").
I further understand that as a result of the Merger, I will be entitled to
receive shares of common stock, par value $.01 per share, of Parent ("Parent
Common Stock") in exchange for shares of common stock, par value $1.00 per
share, of NSD ("NSD Common Stock").
I have carefully read this letter and reviewed the Agreement, discussed its
requirements and other applicable limitations upon my ability to sell, transfer
or otherwise dispose of Parent Common Stock, to the extent I felt necessary,
with my counsel or counsel for NSD.
I represent, warrant and covenant with and to Parent with respect to the
shares of Parent Common Stock I receive as a result of the Merger:
I shall not make any sale, transfer or other disposition of such shares of
Parent Common Stock unless (i) such sale, transfer or other disposition has been
registered under the Securities Act, (ii) such sale, transfer or other
disposition is made in conformity with the provisions of Rule 145 under the
Securities Act or (iii) in the opinion of counsel in form and substance
reasonably satisfactory to Parent or under a "no-action" letter obtained by me
from the staff of the SEC, such sale, transfer or other disposition will not
violate the registration requirements of, or is otherwise exempt from
registration under, the Securities Act.
I understand that Parent is under no obligation to register the sale,
transfer or other disposition of shares of Parent Common Stock by me or on my
behalf under the Securities Act or to take any other action necessary in order
to make compliance with an exemption from such registration available.
B-1
I understand that stop transfer instructions will be given to Parent's
transfer agent with respect to shares of Parent Common Stock issued to me as a
result of the Merger and that there will be placed on the certificates for such
shares, or any substitutions therefor, a legend stating in substance:
"The shares represented by this certificate were issued as a result of the
merger of NSD Bancorp, Inc. with and into F.N.B. Corporation, on _______
__, 2004 in a transaction to which Rule 145 promulgated under the
Securities Act of 1933 applies. The shares represented by this certificate
may be transferred only in accordance with the terms of a letter agreement
between the registered holder hereof and F.N.B. Corporation, a copy of
which agreement is on file at the principal offices of F.N.B. Corporation.
I understand that, unless transfer by me of the Parent Common Stock issued
to me as a result of the Merger has been registered under the Securities Act or
such transfer is made in conformity with the provisions of Rule 145(d) under the
Securities Act, Parent reserves the right, in its sole discretion, to place the
following legend on the certificates issued to my transferee:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933 and were acquired from [SHAREHOLDER] who, in
turn, received such shares as a result of the merger of NSD Bancorp, Inc.
with and into F.N.B. Corporation on ________, 2004 in a transaction to
which Rule 145 under the Securities Act of 1933 applies. The shares have
been acquired by the holder not with a view to, or for resale in connection
with, any distribution thereof within the meaning of the Securities Act of
1933 and may not be offered, sold, pledged or otherwise transferred except
in accordance with an exemption from the registration requirements of the
Securities Act of 1933."
It is understood and agreed that the legends set forth above shall be
removed by delivery of substitute certificates without such legends if I shall
have delivered to Parent (i) a copy of a "no action" letter from the staff of
the SEC, or an opinion of counsel in form and substance reasonably satisfactory
to Parent, to the effect that such legend is not required for purposes of the
Securities Act, or (ii) evidence or representations satisfactory to Parent that
the Parent Common Stock represented by such certificates is being or has been
sold in conformity with the provisions of Rule 145(d).
I further understand and agree that the provisions of Rule 145 shall apply
to all shares of Parent Common Stock that (i) my spouse, (ii) any relative of
mine or my spouse occupying my home, (iii) any trust or estate in which I, my
spouse or any such relative owns at least a 10% beneficial interest or of which
any of us serves as trustee, executor or in any similar capacity and (iv) any
corporation or other organization in which I, my spouse or any such relative
owns at least 10% of any class of equity securities or of the equity interest,
receives as a result of the Merger and I further represent, warrant and covenant
with and to Parent that I will have, and will cause each of such persons to
have, all shares of NSD Common Stock owned, other than shares held through tax
qualified retirement or benefit plans, by me or such persons registered in my
name or the name of such persons, as applicable, prior to the effective date of
the Merger and not in the name of any bank, broker or dealer, nominee or
clearing house.
B-2
By acceptance hereof, Parent agrees, for a period of one year after the
Effective Time (as defined in the Agreement) that, so long as it is obligated to
file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, it will use its reasonable best efforts to timely file such
reports so that the public information requirements of Rule 144(c) promulgated
under the Securities Act are satisfied and the resale provisions of Rule
145(d)(1) and (2) are therefore available to me in the event I desire to
transfer any Parent Common Stock issued to me in the Merger.
It is understood and agreed that this letter shall terminate and be of no
further force and effect if the Agreement is terminated in accordance with its
terms.
Execution of this letter should not be construed as an admission on my part
that I am an "affiliate" of NSD as described in the first paragraph of this
letter or as a waiver of any rights I might have to object to any claim that I
am such an affiliate on or after the date of this letter.
Very truly yours,
________________________________
Name:
Acknowledged this ____ day of ____________, 2005.
F.N.B. CORPORATION
By: ______________________________________
[name]
[title]
B-3
ANNEX C
-------
FORM OF VOTING AGREEMENT
__________, 2004
NSD Bancorp, Inc.
0000 XxXxxxxx Xxxx
Xxxxxxxxxx, XX 00000
F.N.B. Corporation
Xxx X.X.X. Xxxxxxxxx
Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
F.N.B. Corporation ("FNB") and NSD Bancorp, Inc. ("NSD") have entered into
an Agreement and Plan of Merger dated as of October 14, 2004 (the "Agreement")
whereby NSD will merge with and into FNB (the "Merger") and shareholders of NSD
will receive 1.8 shares of FNB common stock for each share of NSD common stock
owned on the closing date of the Merger. All defined terms used but not defined
herein shall have the meanings ascribed thereto in the Agreement.
A condition to FNB's obligations under the Agreement is that I execute and
deliver this Letter Agreement to FNB.
Intending to be legally bound hereby, I irrevocably agree and represent as
follows:
(a) I agree to vote or cause to be voted for approval and adoption of the
Agreement and the transactions contemplated thereby all shares of NSD common
stock over which I have or share voting power, individually or, to the extent of
my proportionate interest, jointly with other persons, and will use my
reasonable best efforts to cause any shares of NSD common stock over which I
share voting power to be voted for approval and adoption of the Agreement and
the transactions contemplated thereby. Beneficial ownership shall have the
meaning assigned to it under the Securities Exchange Act of 1934.
(b) On or prior to the record date for the meeting of the NSD shareholders
to vote on approval and adoption of the Agreement and the transactions
contemplated thereby, I agree not to offer, sell, transfer or otherwise dispose
of, or to permit the offer, sale, transfer or other disposition of, any shares
of NSD common stock over which I have sole or shared voting power and beneficial
ownership, except to the extent that I may be permitted under law to make
charitable gifts or as permitted by paragraph (g) hereof.
C-1
(c) I have sole or shared beneficial ownership over the number of shares of
NSD common stock, and hold stock options for the number of shares of NSD common
stock, if any, set forth below opposite my name below.
(d) I agree that NSD shall not be bound by any attempted sale of any shares
of NSD common stock over which I have sole voting power, and NSD's transfer
agent shall be given appropriate stop transfer orders and shall not be required
to register any such attempted sale, unless the sale has been effected in
compliance with the terms of this Letter Agreement.
(e) I agree that, if I exercise any options to purchase common stock, I
will not sell any of the shares of NSD common stock so acquired except as part
of a cashless exercise transaction from the date of such exercise until the
Effective Time.
(f) I represent that I have the capacity to enter into this Letter
Agreement and that it is a valid and binding obligation enforceable against me
in accordance with its terms, subject to bankruptcy, insolvency and other laws
affecting creditors' rights and general equitable principles.
(g) I may transfer any or all of the shares of NSD common stock over which
I have sole or shared beneficial ownership to my spouse, ancestors or
descendants; provided, however, that in any such case, prior to and as a
condition to the effectiveness of such transfer, each person to which any of
such shares or any interest in any of such shares is or may be transferred shall
have executed and delivered to FNB an agreement to be bound by the terms of this
Letter Agreement. In addition, I may sell, transfer or assign shares of NSD
Common Stock to the extent and on behalf of trusts or estates of which I am not
a beneficiary in order to comply with fiduciary obligations or legal
requirements.
I am signing this Letter Agreement solely in my capacity as a shareholder
of NSD, and as an optionholder if I am an optionholder, and not in any other
capacity, such as a director or officer of NSD or as a fiduciary of any trusts
in which I am not a beneficiary. Notwithstanding anything herein to the
contrary: (a) I make no agreement or understanding herein in any capacity other
than in my capacity as a beneficial owner of NSD common stock and (b) nothing
herein shall be construed to limit or affect any action or inaction by me or any
of my representatives, as applicable, serving on NSD's Board of Directors or as
an officer of NSD, acting in my capacity as a director, officer or fiduciary of
NSD or as fiduciary of any trust of which I am not a beneficiary.
C-2
This Letter Agreement shall be effective upon acceptance by FNB.
This Letter Agreement shall terminate and be of no further force and effect
concurrently with, and automatically upon, the earlier to occur of (a) the
consummation of the Merger, (b) June 30, 2005 and (c) any termination of the
Agreement in accordance with its terms, except that any such termination shall
be without prejudice to FNB's rights arising out of my willful breach of any
covenant or representation contained herein.
Very truly yours,
________________________________
[Name]
Number of Shares, and Shares Subject to Stock Options, Held:
Shares:_____________________ [_______ shares held individually]
Options: ___________________
Acknowledged and Agreed:
NSD BANCORP, INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Xxxxxx X. Xxxxxx,
President and Chief Operating Officer
F.N.B. CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------------
C-3
Xxxxxxx X. Xxxxxxxxx
President and Chief Executive Officer
C-4
ANNEX D
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FORM OF NON-COMPETITION AND NON-SOLICITATION AGREEMENT
------------------------------------------------------
This Non-Competition and Non-Solicitation Agreement (this "Agreement") is
entered into as of this ____ day of _____________, 2004, by and between F.N.B.
Corporation ("FNB") and undersigned director (the "Director") of NSD Bancorp,
Inc. ("NSD").
WHEREAS, FNB contemplates the consummation of a merger (the "Merger")
pursuant to an Agreement and Plan of Merger dated as of October 14, 2004 by and
between FNB and NSD (the "Merger Agreement"); and
WHEREAS, the Director is a well respected business person in the Greater
Pittsburgh business community of Allegheny County and counties contiguous
thereto and acknowledges that his or her position with NSD gives NSD significant
presence in that community and is an important factor in NSD's ability to
attract customers; and
WHEREAS, as a condition to FNB's willingness to enter into the Merger
Agreement, FNB wants to protect NSD's community relationships by requiring that
the Director execute this Agreement;
NOW, THEREFORE, in consideration of the premises and covenants contained in
this Agreement and intending to be legally bound hereby, the parties agree as
follows:
1. Term.
This Agreement will commence on the date of consummation of the Merger and
end on the first anniversary of such date (the "Term").
2. Non-Competition.
(a) For purposes of this Agreement, the term "Competitive Enterprise" means
any bank holding company or insured depository institution, including an
institution in the organization stage or in the process of applying for or
receiving appropriate regulatory approval, including, without limitation, any
federal or state chartered bank, savings bank or savings and loan association.
(b) During the Term, the Director shall not:
(i) accept a position as director or employee of any Competitive
Enterprise that is located in Allegheny County and counties contiguous
thereto during the Term.
D-1
(ii) directly or indirectly acquire an ownership interest in a
Competitive Enterprise that enables the Director to, directly or
indirectly, in a substantial manner, control, direct, influence, affect or
impact the operations, services or business activities of the Competitive
Enterprise in Allegheny County and counties contiguous thereto during the
Term, provided, however, that this restriction shall not apply to the
direct or indirect beneficial ownership of up to 7.5% of a class of
securities of a Competitive Enterprise.
3. Non-Solicitation.
During the Term, the Director shall not:
(a) Directly or indirectly, for the purpose of selling any product or
service that competes with a product or service offered by NSD or its present
subsidiaries or affiliates, solicit, divert, or entice any customer of NSD to
transfer such business to a Competitive Enterprise. Provided, however, that any
business activity or business pursuit that is currently undertaken or provided
by a Director or his or her controlled entities or affiliates shall not be
deemed a Competitive Enterprise or a violation of this Agreement. In addition,
this Agreement shall not prohibit a Director or his or her controlled entities
or affiliates from providing any service or product that he or she or his or her
controlled entities or affiliates has provided prior to the date hereof or that
may be provided in the future as part of the Director's or his or her controlled
entities' or affiliates' historical business pursuits.
(b) Employ or assist in employing any present employee of NSD or its
subsidiaries to perform services for any Competitive Enterprise.
(c) Directly or indirectly, make any oral or written statement, comments or
other communications that impugns or is intended to impugn, disparage or
otherwise malign the reputation, ethics, competency, morality or qualifications
of NSD or FNB or any of their current or former directors, officers, employees
or customers.
4. Confidentiality.
(a) For purposes of this Agreement, "Proprietary Information" shall mean
any information relating to the business of NSD or any of its present
subsidiaries that has not previously been publicly released by NSD or their
representatives, and shall include, but shall not be limited to, information
encompassed in all marketing and business plans, financial information, fees,
pricing information, customer and client lists and relationships between NSD and
its customers and clients and others who have business dealings with NSD.
(b) The Director agrees to maintain the confidentiality or her of all
Proprietary Information that has been disclosed to the Director in the course of
his service as a director of NSD, on or before the date of consummation of the
Merger. The Director shall not, without written authorization from FNB, use for
the Director's benefit or purposes, nor disclose to others, at any time during
the Term, any Proprietary Information. This prohibition shall not apply after
the Proprietary Information has been voluntarily disclosed to the public,
independently developed and disclosed by others, or otherwise enters the public
domain through lawful means.
D-2
5. Remedies.
In addition to any other rights and remedies FNB may have if the Director
violates this Agreement, the Director agrees that a breach or threatened breach
by the Director of his or her covenants set out in Sections 2 and 3 of this
Agreement is likely to cause NSD and FNB as its successor irreparable injury and
damage, and the Director hereby expressly agrees that NSD and FNB as its
successor shall be entitled to the remedies of injunction, specific performance
and other equitable relief to prevent a breach or threatened breach of Sections
2 and 3 of this Agreement by the Director. This provision shall not, however, be
construed as a waiver of any of the remedies which the Corporation may have for
damages or otherwise.
6. Successors, Assigns, Etc.
This Agreement shall be binding upon, and shall inure to the benefit of,
NSD and its successors and assigns.
7. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Pennsylvania, without giving effect to its conflicts
of laws principles.
D-3
IN WITNESS WHEREOF, FNB and the Director hereto have executed this
Agreement to be effective as of the date of consummation of the Merger.
F.N.B. CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxxxx,
President and Chief Executive Officer
DIRECTOR
------------------------------------------
D-4
