Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BETWEEN
F.N.B. CORPORATION
AND
NSD BANCORP, INC.
October 14, 2004
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TABLE OF CONTENTS
Page
----
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)
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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)
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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 Andrew W. Hasley 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.
5
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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.
22
<PAGE>
(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.
23
<PAGE>
(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
<PAGE>
(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
<PAGE>
(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
<PAGE>
(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
<PAGE>
(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
<PAGE>
(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
<PAGE>
(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
