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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event report) March 14, 1997
LSB BANCSHARES, INC.
(Exact Name of Registrant as Specified in Its Charter)
North Carolina
(State or Other Jurisdiction of Incorporation)
0-11448 56-1348147
(Commission File Number) (I.R.S. Employer Identification No.)
One LSB Plaza, Lexington, North Carolina 27292
(Address of Principal Executive Offices) (Zip Code)
(910) 248-6500
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
On March 14, 1997, LSB Bancshares, Inc. (the "Company), Lexington State Bank,
for which the Company serves as a holding company, and Old North State Bank
entered into an Agreement and Plan of Reorganization and Merger (the "Merger
Agreement"). Under the terms of the Merger Agreement, Old North State Bank
shareholders will receive shares of the Company's common stock in exchange for
their shares of common stock of Old North State Bank. Each share of Old North
State Bank common stock outstanding would be exchanged for 0.948 shares of the
Company's common stock, subject to adjustment based on the price of the
Company's common stock at the time the merger is completed.
The total value of the merger transaction is $30 million, or $18.96 per share of
Old North State Bank common stock, based on the recent trading price of the
Company's common stock of $20.00 per share. Under the Merger Agreement, Old
North State Bank has granted the Company an option to purchase from Old North
State Bank 265,675 shares of Old North State Bank common stock at a price of
$8.00 per share, exercisable only upon the occurrence of certain events. The
merger is subject to regulatory and shareholder approvals and is expected to be
completed in the third quarter of 1997.
Old North State Bank has $128 million in assets and seven branch offices
located in Forsyth and Stokes Counties in North Carolina. Based on data as of
September 30, 1996, the merger transaction would increase the Company's asset
base to approximately $554 million, which would make the Company the largest
community bank based in the Piedmont area of North Carolina and the tenth
largest commercial bank in the state.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) The following exhibits are filed herewith:
Exhibit No. Description of Exhibit
- ----------- ----------------------
2 Form of Agreement and Plan of Reorganization and Merger by and
among LSB Bancshares, Inc., Lexington State Bank, and Old
North State Bank.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LSB BANCSHARES, INC.
Date: March 26, 1997 By: /s/ Monty J. Oliver
---------------------- -------------------------------
Monty J. Oliver
Executive Vice President
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EXHIBIT INDEX
Exhibit No. Description of Exhibit
- ----------- ----------------------
2 Form of Agreement and Plan of Reorganization and Merger by and
among LSB Bancshares, Inc., Lexington State Bank, and Old
North State Bank.
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EXHIBIT 2
EXECUTION COPY
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
BY AND AMONG
LSB BANCSHARES, INC.,
LEXINGTON STATE BANK,
AND
OLD NORTH STATE BANK
DATED AS OF MARCH , 1997
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TABLE OF CONTENTS
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Preamble..................................................................................... 1
ARTICLE 1 TRANSACTIONS AND TERMS OF MERGER........................................... 2
1.1 Merger..................................................................... 2
1.2 Time and Place of Closing.................................................. 2
1.3 Effective Time............................................................. 2
ARTICLE 2 TERMS OF MERGER............................................................ 3
2.1 Business of Surviving Bank................................................. 3
2.2 Assumption of Rights....................................................... 3
2.3 Assumption of Liabilities.................................................. 3
2.4 Accounts and Deposits...................................................... 3
2.5 Articles of Incorporation.................................................. 3
2.6 Bylaws..................................................................... 4
2.7 Directors and Officers..................................................... 4
ARTICLE 3 MANNER OF CONVERTING SHARES................................................ 4
3.1 Conversion of Shares....................................................... 4
3.2 Anti-Dilution Provisions................................................... 5
3.3 Shares Held by ONSB or LSB................................................. 5
3.4 Dissenting Shareholders.................................................... 5
3.5 Fractional Shares.......................................................... 6
3.6 Conversion of Stock Options and Warrants; Restricted Stock................. 6
ARTICLE 4 EXCHANGE OF SHARES......................................................... 8
4.1 Exchange Procedures........................................................ 8
4.2 Rights of Former ONSB Shareholders......................................... 8
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF ONSB..................................... 9
5.1 Organization, Standing and Power........................................... 9
5.2 Authority; No Breach By Agreement.......................................... 10
5.3 Capital Stock.............................................................. 11
5.4 ONSB Subsidiaries.......................................................... 11
5.5 Financial Statements; Regulatory Authority Filings......................... 12
5.6 Absence of Certain Changes or Events and Undisclosed Liabilities........... 12
5.7 Tax Matters................................................................ 13
5.8 Assets..................................................................... 14
5.9 Environmental Matters...................................................... 14
5.10 Compliance with Laws....................................................... 15
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5.11 Labor Relations............................................................ 15
5.12 Employee Benefit Plans..................................................... 16
5.13 Material Contracts......................................................... 18
5.14 Legal Proceedings.......................................................... 19
5.15 Reports.................................................................... 19
5.16 Statements True and Correct................................................ 19
5.17 Accounting, Tax and Regulatory Matters..................................... 20
5.18 State Takeover Laws........................................................ 20
5.19 Charter Provisions......................................................... 20
5.20 Support Agreements......................................................... 20
5.21 Derivatives Contracts...................................................... 21
5.22 D&O Insurance.............................................................. 21
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF LSB...................................... 21
6.1 Organization, Standing and Power........................................... 21
6.2 Authority; No Breach By Agreement.......................................... 21
6.3 Capital Stock.............................................................. 22
6.4 SEC Filings; Financial Statements.......................................... 23
6.5 Absence of Certain Changes or Events and Undisclosed Liabilities........... 23
6.6 Tax Matters................................................................ 24
6.7 Compliance with Laws....................................................... 24
6.8 Legal Proceedings.......................................................... 25
6.9 Reports.................................................................... 25
6.10 Statements True and Correct................................................ 26
6.11 Accounting, Tax and Regulatory Matters..................................... 26
6.12 Authority of LSB Bank...................................................... 26
6.13 Environmental Matters...................................................... 27
6.14 Labor Relations............................................................ 28
6.15 Employee Benefit Plans..................................................... 28
ARTICLE 7 CONDUCT OF BUSINESS PENDING CONSUMMATION................................... 30
7.1 Affirmative Covenants of ONSB.............................................. 30
7.2 Negative Covenants of ONSB................................................. 31
7.3 Covenants of LSB........................................................... 33
7.4 Adverse Changes in Condition............................................... 33
7.5 Reports.................................................................... 34
7.6 ONSB Right to Recommend Directors; Additional Officers..................... 34
7.7 ONSB's Disposition of Federal Reserve Bank Stock........................... 35
ARTICLE 8 ADDITIONAL AGREEMENTS...................................................... 35
8.1 Registration Statement; ONSB Proxy Statement; Shareholder Approval......... 35
8.2 Nasdaq/NMS Listing......................................................... 36
8.3 Applications............................................................... 36
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8.4 Agreement as to Efforts to Consummate...................................... 36
8.5 Investigation and Confidentiality.......................................... 37
8.6 Press Releases............................................................. 37
8.7 No-Shop Covenant........................................................... 37
8.8 Accounting and Tax Treatment............................................... 38
8.9 State Takeover Laws........................................................ 38
8.10 Charter Provisions......................................................... 38
8.11 Agreement of Affiliates.................................................... 38
8.12 Employee Benefits and Contracts............................................ 39
8.13 Tax Free Reorganization.................................................... 40
8.14 D&O Insurance.............................................................. 40
ARTICLE 9 CONDITIONS PRECEDENT TO OBLIGATIONS
TO CONSUMMATE.............................................................. 41
9.1 Conditions to Obligations of Each Party.................................... 41
9.2 Conditions to Obligations of LSB........................................... 43
9.3 Conditions to Obligations of ONSB.......................................... 44
ARTICLE 10 TERMINATION................................................................ 46
10.1 Termination................................................................ 46
10.2 Effect of Termination...................................................... 47
10.3 Non-Survival of Representations and Covenants.............................. 48
ARTICLE 11 MISCELLANEOUS.............................................................. 48
11.1 Definitions................................................................ 48
11.2 Expenses................................................................... 58
11.3 Brokers and Finders........................................................ 58
11.4 Entire Agreement........................................................... 58
11.5 Amendments................................................................. 59
11.6 Waivers.................................................................... 59
11.7 Assignment................................................................. 59
11.8 Notices.................................................................... 60
11.9 Governing Law.............................................................. 60
11.10 Counterparts............................................................... 61
11.11 Captions................................................................... 61
11.12 Interpretations............................................................ 61
11.13 Enforcement of Agreement................................................... 61
11.14 Severability............................................................... 61
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LIST OF EXHIBITS
EXHIBIT NUMBER DESCRIPTION
1. Form of Plan of Merger. (ss. ss. 1.1, 9.1(i)).
2. Form of Affiliate Agreement between LSB and affiliates of
ONSB. (ss. ss. 8.11, 9.2(g)).
3. Form of Support Agreement between LSB and ONSB directors
and executive officers. (ss. ss. 5.20, 9.2(h)).
4. Matters as to which Bell, Davis & Pitt, P.A., counsel for ONSB,
will opine. (ss.9.2(d)).
5. Matters as to which Hunton & Williams, counsel for LSB and
LSB Bank, will opine. (ss. 9.3(d)).
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AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
THIS AGREEMENT AND PLAN OF REORGANIZATION AND MERGER (this
"Agreement") is made and entered into as of March , 1997, by and among LSB
BANCSHARES, INC. ("LSB"), a North Carolina corporation, having its principal
office located in Lexington, North Carolina; LEXINGTON STATE BANK ("LSB Bank"),
a North Carolina chartered bank and a wholly-owned subsidiary of LSB, having its
principal office located in Lexington, North Carolina; and OLD NORTH STATE BANK
("ONSB"), a North Carolina chartered bank having its principal office located in
Winston-Salem, North Carolina.
PREAMBLE
The respective Boards of Directors of ONSB and LSB are of the
opinion that the transactions described herein are in the best interests of the
parties and their respective shareholders. This Agreement provides for the
acquisition of ONSB by LSB pursuant to the merger of ONSB with and into LSB
Bank. At the effective time of such merger, the outstanding shares of the
capital stock of ONSB shall be converted into the right to receive shares of the
common stock of LSB (except as provided herein). As a result, shareholders of
ONSB shall become shareholders of LSB. The transactions described in this
Agreement are subject to the approvals of the shareholders of ONSB and LSB, the
Federal Deposit Insurance Corporation, the North Carolina State Banking
Commission, and the satisfaction of certain other conditions described in this
Agreement. It is the intention of the parties to this Agreement that the merger
(i) for federal income tax purposes shall qualify as a "reorganization" within
the meaning of Section 368(a) of the Internal Revenue Code, and (ii) for
accounting purposes shall qualify for treatment as a "pooling of interests"
consistent with GAAP and the rules and regulations of the SEC.
As a condition and inducement to LSB's willingness to enter into this
Agreement, certain of ONSB's directors and executive officers will execute and
deliver to LSB, on the date hereof, a Support Agreement (a "Support Agreement"),
in substantially the form of Exhibit 3 to this Agreement.
As an inducement to LSB's willingness to consummate the transactions
contemplated by this Agreement, ONSB and LSB have entered into a certain Option
Agreement dated as of January 20, 1997 (the "Option Agreement"), pursuant to
which ONSB has granted to LSB an option to purchase shares of common stock of
ONSB in accordance with the terms of such Option Agreement.
Certain terms used in this Agreement are defined in Section
11.1 hereof.
NOW, THEREFORE, in consideration of the premises and the
mutual warranties, representations, covenants and agreements set forth herein,
and other good and
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valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER. Subject to the terms and conditions of this
Agreement and the Plan of Merger, at the Effective Time, ONSB shall be merged
with and into LSB Bank, pursuant to Section 53-12 of Chapter 53 of the General
Statutes of North Carolina and in accordance with the provisions of Sections
53-13 and 53-17 of Chapter 53 and Section 55-11- 06 of Chapter 55 of the General
Statutes of North Carolina. LSB Bank shall be the Surviving Bank resulting from
the Merger and shall continue to be operated as a wholly-owned, first tier
Subsidiary of LSB and shall continue to be governed by the Laws of the State of
North Carolina as a state chartered bank, operating under the name "LSB". The
Merger shall be consummated pursuant to the terms of this Agreement, which has
been approved and adopted by the respective Boards of Directors of ONSB and LSB,
and the terms of the Plan of Merger to be entered into by LSB Bank and ONSB.
1.2 TIME AND PLACE OF CLOSING. The closing (the "Closing")
will take place at 9:00 A.M. (Eastern Standard Time) on the date that the
Effective Time occurs (or the immediately preceding day if the Effective Time is
earlier than 9:00 A.M.), or at such other time as the Parties, acting through
their chief executive officers or chairmen of the board of directors, may
mutually agree. The place of Closing shall be at the offices of Hunton &
Williams in Charlotte, North Carolina, or such other location as LSB shall
designate.
1.3 EFFECTIVE TIME. The Merger and other transactions
contemplated by this Agreement shall become effective on the date and at the
time the Articles of Merger reflecting the Merger shall become effective with
the Secretary of State of the State of North Carolina (the "Effective Time").
Subject to the terms and conditions hereof, unless otherwise mutually agreed
upon in writing by the chief executive officers or chairmen of the board of
directors of each Party, the Parties shall use their commercially reasonable
best efforts to cause the Effective Time to occur as soon as practicable
following the last to occur of (i) the effective date (including expiration of
any applicable waiting period) of the last required Consent of any Regulatory
Authority having authority over and approving or exempting the Merger, and (ii)
the date on which the shareholders of ONSB and LSB approve this Agreement and
the Plan of Merger to the extent such approval is required by applicable Law.
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ARTICLE 2
TERMS OF MERGER
2.1 BUSINESS OF SURVIVING BANK. The business of the Surviving
Bank from and after the Effective Time shall continue to be that of a state
chartered bank organized under the laws of the State of North Carolina, and
shall be conducted at the main office of the Surviving Bank, which shall be
located at One LSB Plaza, Lexington, North Carolina 27292, and at its legally
established branches, offices, agencies, and facilities, whether in operation or
approved but unopened, at the Effective Time, including all such branches,
offices, agencies, and facilities of ONSB.
2.2 ASSUMPTION OF RIGHTS. As of the Effective Time, all
assets, rights, franchises, and interests of ONSB in every type of property
(real, personal and mixed) and choses in action shall be transferred to and
vested in the Surviving Bank by virtue of the Merger without any deed or other
transfer. The Surviving Bank, upon the Merger and 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, and
receiver, and in every other fiduciary capacity, in the same manner and to the
same extent as such rights, franchises, and interests were held or enjoyed by
ONSB at the Effective Time.
2.3 ASSUMPTION OF LIABILITIES. As of the Effective Time, the
Surviving Bank shall be liable for all liabilities of every kind and description
of ONSB and all deposits, debts, liabilities, obligations and contracts of ONSB,
whether matured or unmatured, accrued, absolute, contingent, or otherwise, shall
be those of the Surviving Bank, none of which shall be released or impaired by
the Merger, including liabilities arising out of the operation of a trust
department; all rights of creditors and other obligees and all liens on property
of ONSB shall be preserved unimpaired; and all actions and legal proceedings to
which ONSB was a party prior to the Merger shall be unaffected by the
consummation thereof and shall proceed as if the Merger had not taken place.
2.4 ACCOUNTS AND DEPOSITS. As of the Effective Time, all
accounts and deposits of ONSB shall be and continue to be accounts and deposits
of the Surviving Bank, without change in their respective terms, maturity,
minimum required balances or withdrawal value. As of the Effective Time, each
account or deposit of ONSB shall be considered for dividend or interest purposes
as an account or deposit of the Surviving Bank from the time said account or
deposit was opened in ONSB and at all times thereafter until such account or
deposit ceases to be an account or deposit of the Surviving Bank.
2.5 ARTICLES OF INCORPORATION. The Articles of Incorporation
of LSB Bank in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Bank, until otherwise amended or
repealed in accordance with applicable law.
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2.6 BYLAWS. The Bylaws of LSB Bank in effect immediately prior
to the Effective Time shall be the Bylaws of the Surviving Bank, until otherwise
amended or repealed in accordance with applicable law.
2.7 DIRECTORS AND OFFICERS. The directors of LSB Bank in
office immediately prior to the Effective Time, together with such additional
persons as elected in accordance with Section 7.6 hereof, shall serve as the
directors of the Surviving Bank from and after the Effective Time in accordance
with the Bylaws of the Surviving Bank. The officers of LSB Bank in office
immediately prior to the Effective Time, together with such additional persons
as appointed in accordance with Section 7.6 hereof, shall serve as the officers
of the Surviving Bank from and after the Effective Time in accordance with the
Bylaws of the Surviving Bank.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. Subject to the provisions of this
Article 3, at the Effective Time, by virtue of the Merger and without any
action the part of LSB, LSB Bank, ONSB, or the shareholders of the foregoing,
the shares of the constituent corporations shall be converted as follows:
(a) Each share of LSB Common Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and
outstanding from and after the Effective Time.
(b) Each share of LSB Bank Common Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and
outstanding from and after the Effective Time.
(c) Each share of ONSB Common Stock (excluding shares held by
(i) any ONSB Company or any LSB Company (in each case other than in a
fiduciary capacity or as a result of debts previously contracted) which
shares shall be canceled as provided in Section 3.3 hereof, and (ii)
shareholders who perfect their statutory appraisal rights as provided
in Section 3.4 hereof) issued and outstanding at the Effective Time
shall cease to be outstanding and shall be converted into and exchanged
for the right to receive 0.948 of a share of LSB Common Stock, subject
to adjustment at Closing pursuant to subparagraphs a. and b. of this
Section 3.1(c) (as adjusted, the "Exchange Ratio"):
a. If the Average LSB Closing Price is above $20.00
per share (subject to each Party's right to terminate this
Agreement set forth in Section 10.1(i) hereof), the "Exchange
Ratio" shall be adjusted and calculated in
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accordance with the following equation (rounded to the nearest
one-thousandth):
ER = [[(ALCP*$250,000)+$25,000,000]/IOS]/ALCP
Where:
ER = Exchange Ratio.
ALCP = Average LSB Closing Price.
IOS = 1,582,678 shares of ONSB Common Stock, less any
shares canceled as provided in Section 3.3 hereof.
For example, assuming that (i) the Average LSB Closing Price
is determined to be $23.00, and (ii) none of such shares are
canceled as provided in Section 3.3 hereof; then, the adjusted
Exchange Ratio would be 0.845.
b. If the Average LSB Closing Price is below $20.00
per share (subject to each Party's right to terminate this
Agreement set forth in Section 10.1(i) hereof), the "Exchange
Ratio" shall be adjusted and calculated (using the same
abbreviated terms as in subparagraph a. above) in accordance
with the following equation (rounded to the nearest one
one-thousandth):
ER = [[(ALCP*$1,000,000)+$10,000,000]/IOS]/ALCP
For example, assuming that (i) the Average LSB Closing Price
is determined to be $16.00, and (ii) none of such shares are
canceled as provided in Section 3.3 hereof; then, the adjusted
Exchange Ratio would be 1.027.
3.2 ANTI-DILUTION PROVISIONS. In the event LSB or ONSB (in
breach of Section 7.2 hereof) changes the number of shares of LSB Common Stock
or ONSB Common Stock, respectively, issued and outstanding prior to the
Effective Time as a result of a stock split, stock dividend, or similar
recapitalization with respect to such stock and the record date therefor (in the
case of a stock dividend) or the effective date thereof (in the case of a stock
split or similar recapitalization for which a record date is not established)
shall be prior to the Effective Time, the Exchange Ratio shall be
proportionately adjusted.
3.3 SHARES HELD BY ONSB OR LSB. Each of the shares of ONSB
Common Stock held by any ONSB Company or by any LSB Company, in each case other
than in a fiduciary capacity or as a result of debts previously contracted,
shall be canceled and retired at the Effective Time, and no consideration shall
be issued in exchange therefor.
3.4 DISSENTING SHAREHOLDERS. Any holder of shares of ONSB
Common Stock who perfects such holder's dissenters' rights of appraisal in
accordance with and as
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contemplated by Article 13 of the NCBCA shall be entitled to receive the value
of such shares in cash as determined pursuant to such provision of Law;
provided, however, that no such payment shall be made to any dissenting
shareholder unless and until such dissenting shareholder has complied with the
applicable provisions of the NCBCA and surrendered to the Surviving Bank the
certificate or certificates representing the shares for which payment is being
made. In the event that after the Effective Time a dissenting shareholder of
ONSB fails to perfect, or effectively withdraws or loses, such holder's right to
appraisal and of payment for such holder's shares, LSB shall issue and deliver
the consideration to which such holder of shares of ONSB Common Stock is
entitled under this Article 3 (without interest) upon surrender by such holder
of the certificate or certificates representing shares of ONSB Common Stock held
by such holder. ONSB will establish an escrow account with an amount sufficient
to satisfy the maximum aggregate payment that may be required to be paid to
dissenting shareholders. Upon satisfaction of all claims of dissenting
shareholders, the remaining escrowed amount, reduced by payment of the fees and
expenses of the escrow agent, will be returned to the Surviving Bank.
3.5 FRACTIONAL SHARES. Notwithstanding any other provision of
this Agreement, each holder of shares of ONSB Common Stock exchanged pursuant to
the Merger who would otherwise have been entitled to receive a fraction of a
share of LSB Common Stock (after taking into account all certificates delivered
by such holder) shall receive, in lieu thereof, cash (without interest) in an
amount equal to such fractional part of a share of LSB Common Stock multiplied
by the Average LSB Closing Price. No such holder will be entitled to dividends,
voting rights, or any other rights as a shareholder in respect of any fractional
shares.
3.6 CONVERSION OF STOCK OPTIONS AND WARRANTS; RESTRICTED
STOCK.
(a) At the Effective Time, each option, warrant or other right
to purchase shares of ONSB Common Stock pursuant to stock options,
warrants or stock appreciation rights ("ONSB Options") granted by ONSB
under the ONSB Stock Plans or the ONSB Warrants, which are outstanding
at the Effective Time, whether or not exercisable, shall be converted
into and become rights with respect to LSB Common Stock, and LSB shall
assume each ONSB Option, in accordance with the terms of the ONSB Stock
Plan and stock option agreement or the ONSB Warrant, as the case may
be, by which it is evidenced, except that from and after the Effective
Time, (i) LSB and its Compensation Committee shall be substituted for
ONSB and the Committee of ONSB's Board of Directors (including, if
applicable, the entire Board of Directors of ONSB) administering such
ONSB Stock Plan and ONSB Warrants, (ii) each ONSB Option assumed by LSB
may be exercised solely for shares of LSB Common Stock (or cash in the
case of stock appreciation rights), (iii) the number of shares of LSB
Common Stock subject to such ONSB Option shall be equal to the number
of shares of ONSB Common Stock subject to such ONSB Option immediately
prior to the Effective Time multiplied by the Exchange Ratio, and (iv)
the per share exercise price
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under each such ONSB Option shall be adjusted by dividing the per share
exercise price under each such ONSB Option by the Exchange Ratio and
rounding up to the nearest cent. Notwithstanding the provisions of
clause (iii) of the preceding sentence, LSB shall not be obligated to
issue any fraction of a share of LSB Common Stock upon exercise of ONSB
Options and any fraction of a share of LSB Common Stock that otherwise
would be subject to a converted ONSB Option shall represent the right
to receive a cash payment upon exercise of such converted ONSB Option
equal to the product of such fraction and the difference between the
market value of one share of LSB Common Stock at the time of exercise
of such Option and the per share exercise price of such ONSB Option.
The market value of one share of LSB Common Stock at the time of
exercise of an ONSB Option shall be the last sale price of such common
stock on the Nasdaq/NMS (as reported by The Wall Street Journal or, if
not reported thereby, any other authoritative source selected by LSB)
on the last trading day preceding the date of exercise. In addition,
notwithstanding the clauses (iii) and (iv) of the first sentence of
this Section 3.6(a), each ONSB Option which is an "incentive stock
option" shall be adjusted as required by Section 424 of the Internal
Revenue Code, so as not to constitute a modification, extension or
renewal of the option, within the meaning of Section 424(h) of the
Internal Revenue Code. ONSB agrees to take all necessary steps to
effectuate the foregoing provisions of this Section 3.6(a).
(b) As soon as practicable after the Effective Time, LSB shall
deliver to the participants in each ONSB Stock Plan and the holders of
the ONSB Warrants, as the case may be, an appropriate notice setting
forth such participant's or holder's, as the case may be, rights
pursuant thereto, and the grants pursuant to such ONSB Stock Plan and
ONSB Warrants shall continue in effect on the same terms and conditions
(subject to the adjustments required by Section 3.6(a) after giving
effect to the Merger), and LSB shall comply with the terms of each ONSB
Stock Plan to ensure, to the extent required by, and subject to the
provisions of, such ONSB Stock Plan, that ONSB Options which qualified
as incentive stock options prior to the Effective Time continue to
qualify as incentive stock options after the Effective Time. At or
prior to the Effective Time, LSB shall take all corporate action
necessary to reserve for issuance sufficient shares of LSB Common Stock
for delivery upon exercise ONSB Options assumed by it in accordance
with this Section 3.6.
(c) All restrictions or limitations on transfer with respect
to ONSB Common Stock awarded under the ONSB Stock Plans, the ONSB
Warrants, or any other plan, program, or arrangement of any ONSB
Company, to the extent that such restrictions or limitations shall not
have already lapsed, and except as otherwise expressly provided in such
plan, program, or arrangement, shall remain in full force and effect
with respect to shares of LSB Common Stock into which such restricted
stock is converted pursuant to Section 3.1 hereof.
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(d) Notwithstanding the foregoing provisions of this Section
3.6, in no event shall options and warrants issued by ONSB to purchase
more than 151,636 shares of ONSB Common Stock be converted into or
become rights with respect to LSB Common Stock in connection with the
transactions contemplated by this Agreement.
ARTICLE 4
EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES. Promptly after the Effective Time,
LSB shall cause the exchange agent selected by LSB (the "Exchange Agent") to
mail to the former shareholders of ONSB appropriate transmittal materials (which
shall specify that delivery shall be effected, and risk of loss and title to the
certificates theretofore representing shares of ONSB Common Stock shall pass,
only upon proper delivery of such certificates to the Exchange Agent. After the
Effective Time, each holder of shares of ONSB Common Stock (other than shares to
be canceled pursuant to Section 3.3 hereof or as to which statutory dissenters'
rights have been perfected as provided in Section 3.4 hereof) issued and
outstanding at the Effective Time shall surrender the certificate or
certificates representing such shares (or, if applicable, a lost certificate
affidavit (including indemnification) in form and substance reasonably
acceptable to LSB and the Exchange Agent) to the Exchange Agent and shall
promptly upon surrender thereof receive in exchange therefor the consideration
provided in Section 3.1 hereof, together with all undelivered dividends or
distributions in respect of such shares (without interest thereon) pursuant to
Section 4.2 hereof. To the extent required by Section 3.5 hereof, each holder of
shares of ONSB Common Stock issued and outstanding at the Effective Time also
shall receive, upon surrender of the certificate or certificates representing
such shares (or a lost certificate affidavit referenced above), cash in lieu of
any fractional share of LSB Common Stock to which such holder may be otherwise
entitled (without interest). LSB shall not be obligated to deliver the
consideration to which any former holder of ONSB Common Stock is entitled as a
result of the Merger until such holder surrenders such holder's certificate or
certificates representing the shares of ONSB Common Stock (or a lost certificate
affidavit referenced above) for exchange as provided in this Section 4.1. The
certificate or certificates of ONSB Common Stock so surrendered shall be duly
endorsed, or accompanied with executed blank stock powers with signatures
guaranteed, as the Exchange Agent may require. Any other provision of this
Agreement notwithstanding, neither LSB, the Surviving Bank nor the Exchange
Agent shall be liable to a holder of ONSB Common Stock for any amounts paid or
property delivered in good faith to a public official pursuant to any applicable
abandoned property Law.
4.2 RIGHTS OF FORMER ONSB SHAREHOLDERS. At the Effective Time,
the stock transfer books of ONSB shall be closed as to holders of ONSB Common
Stock immediately prior to the Effective Time, and no subsequent transfer of
ONSB Common
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Stock by any such holder shall thereafter be made or recognized. Until
surrendered for exchange in accordance with the provisions of Section 4.1
hereof, each certificate theretofore representing shares of ONSB Common Stock
(other than shares to be canceled pursuant to Section 3.3 hereof or as to which
the holder thereof has perfected dissenters' rights of appraisal as contemplated
in Section 3.4 hereof) shall from and after the Effective Time represent for all
purposes only the right to receive the consideration provided in Sections 3.1
and 3.5 hereof; subject, however, to the Surviving Bank's obligation to pay any
dividends or make any other distributions with a record date prior to the
Effective Time which have been declared or made by ONSB in respect of such
shares of ONSB Common Stock in accordance with the terms of this Agreement and
which remain unpaid at the Effective Time. To the extent permitted by Law,
former shareholders of record of ONSB shall be entitled to vote after the
Effective Time at any meeting of LSB shareholders the number of whole shares of
LSB Common Stock into which their respective shares of ONSB Common Stock are
converted, regardless of whether such holders have exchanged their certificates
representing ONSB Common Stock for certificates representing LSB Common Stock in
accordance with the provisions of this Agreement. Whenever a dividend or other
distribution is declared by LSB on the LSB Common Stock, the record date for
which is at or after the Effective Time, the declaration shall include dividends
or other distributions on all shares of LSB Common Stock issuable pursuant to
this Agreement, but no dividend or other distribution payable to the holders of
record of LSB Common Stock as of any time subsequent to the Effective Time shall
be delivered to the holder of any certificate representing shares of ONSB Common
Stock issued and outstanding at the Effective Time until such holder surrenders
such certificate for exchange as provided in Section 4.1 hereof. However, upon
surrender of such ONSB Common Stock certificate, both the LSB Common Stock
certificate (together with all such undelivered dividends or other distributions
without interest) and any undelivered cash payments to be paid for fractional
share interests (without interest) shall be delivered and paid with respect to
each share represented by such certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF ONSB
ONSB hereby represents and warrants to LSB and LSB Bank as
follows:
5.1 ORGANIZATION, STANDING AND POWER. ONSB is a state
chartered bank duly organized, validly existing, and in good standing under the
Laws of the State of North Carolina, and has the corporate power and authority
to carry on its business as now conducted and to own, lease and operate its
Assets. ONSB is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on ONSB.
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5.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) ONSB has the corporate power and authority necessary to
execute, deliver, and perform its obligations under this Agreement, the
Option Agreement, the Confidentiality Agreement and the Plan of Merger
and to consummate the transactions contemplated hereby and thereby,
subject to the approval of this Agreement and the Plan of Merger by the
holders of two-thirds of the outstanding shares of ONSB Common Stock.
The execution, delivery, and performance of this Agreement, the Option
Agreement, the Confidentiality Agreement and the Plan of Merger and the
consummation of the transactions contemplated herein and therein,
including the Merger, have been duly and validly authorized by all
necessary corporate action in respect thereof on the part of ONSB,
subject to the approval of this Agreement and the Plan of Merger by the
holders of two-thirds of the outstanding shares of ONSB Common Stock.
Subject to such requisite shareholder approval, this Agreement, the
Option Agreement and the Confidentiality Agreement represent, and, when
executed and delivered, the Plan of Merger will represent, legal,
valid, and binding obligations of ONSB, enforceable against ONSB in
accordance with their respective terms (except in all cases as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar Laws affecting the enforcement
of creditors' rights generally and except that the availability of the
equitable remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any such proceeding
may be brought).
(b) Neither the execution and delivery of this Agreement, the
Option Agreement, the Confidentiality Agreement and the Plan of Merger
by ONSB, nor the consummation by ONSB of the transactions contemplated
hereby and thereby, nor compliance by ONSB with any of the provisions
hereof and thereof, will (i) conflict with or result in a breach of any
provision of ONSB's Articles of Incorporation or Bylaws, or (ii) except
as disclosed in Section 5.2(b) of the ONSB Disclosure Memorandum,
constitute or result in a Default under, or require any Consent
pursuant to, or result in the creation of any Lien on any Asset of any
ONSB Company under, any Contract or Permit of any ONSB Company, or,
(iii) except as disclosed in Section 5.2(b) of the ONSB Disclosure
Memorandum, violate any Law or Order applicable to any ONSB Company or
any of their respective Assets.
(c) Except as disclosed in Section 5.2(c) of the ONSB
Disclosure Memorandum, no notice to, filing with, or Consent of, any
public body or authority is necessary for the consummation by ONSB of
the Merger and the other transactions contemplated in this Agreement,
the Option Agreement, the Confidentiality Agreement and the Plan of
Merger.
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5.3 CAPITAL STOCK.
(a) The authorized capital stock of ONSB consists of 2,000,000
shares of ONSB Common Stock, of which 1,582,678 shares are issued and
outstanding as of the date of this Agreement and not more than
1,734,314 shares will be issued and outstanding at the Effective Time.
All of the issued and outstanding shares of ONSB Common Stock are duly
and validly issued and outstanding and are fully paid and
nonassessable. None of the outstanding shares of ONSB Common Stock has
been issued in violation of any preemptive rights of the current or
past shareholders of ONSB. ONSB has reserved 111,294 shares of ONSB
Common Stock for issuance under the ONSB Stock Plans, pursuant to which
options to purchase not more than 111,294 shares of ONSB Common Stock
are outstanding. ONSB has reserved 40,342 shares of ONSB Common Stock
for issuance under the ONSB Warrants, pursuant to which warrants to
purchase not more than 40,342 shares of ONSB Common Stock are
outstanding.
(b) Except as set forth in Section 5.3(a) hereof, or as
provided in the Option Agreement, there are no shares of capital stock
or other equity securities of ONSB outstanding and no outstanding
Rights relating to the capital stock of ONSB.
5.4 ONSB SUBSIDIARIES. ONSB has disclosed in Section 5.4 of
the ONSB Disclosure Memorandum all of the ONSB Subsidiaries as of the date of
this Agreement. Except as disclosed in Section 5.4 of the ONSB Disclosure
Memorandum, ONSB or one of its Subsidiaries owns all of the issued and
outstanding shares of capital stock of each ONSB Subsidiary. No equity
securities of any ONSB Subsidiary are or may become required to be issued (other
than to another ONSB Company) by reason of any Rights relating to the capital
stock of such ONSB Subsidiary, and there are no Contracts by which any ONSB
Subsidiary is bound to issue (other than to another ONSB Company) additional
shares of its capital stock or Rights relating thereto or by which any ONSB
Company is or may be bound to transfer any shares of the capital stock of any
ONSB Subsidiary (other than to another ONSB Company). There are no Contracts
relating to the rights of any ONSB Company to vote or to dispose of any shares
of the capital stock of any ONSB Subsidiary. All of the issued and outstanding
shares of capital stock of each ONSB Subsidiary are duly authorized, validly
issued and fully paid and nonassessable under the applicable corporation Law of
the jurisdiction in which such Subsidiary is incorporated or organized and are
owned by a ONSB Company free and clear of any Lien. Each ONSB Subsidiary is a
corporation, and is duly organized, validly existing, and in good standing under
the Laws of the jurisdiction in which it is incorporated or organized, and has
the corporate power and authority necessary for it to own, lease, and operate
its Assets and to carry on its business as now conducted. Each ONSB Subsidiary
is duly qualified or licensed to transact business as a foreign corporation in
good standing in the States of the United States and foreign jurisdictions where
the character of its Assets or the nature or conduct of its business requires it
to be so qualified or licensed, except for such jurisdictions in which the
failure to be so qualified or licensed is not
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reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on ONSB.
5.5 FINANCIAL STATEMENTS; REGULATORY AUTHORITY FILINGS.
(a) ONSB has disclosed in Section 5.5 of the ONSB Disclosure
Memorandum, and has delivered to LSB copies of, all ONSB Financial
Statements prepared for periods ended prior to the date hereof and will
deliver to LSB copies of all ONSB Financial Statements prepared
subsequent to the date hereof. The ONSB Financial Statements (as of the
dates thereof and for the periods covered thereby): (i) are, or, if
dated after the date of this Agreement, will be, in accordance with the
books and records of the ONSB Companies, which are or will be, as the
case may be, complete and correct and which have been or will have
been, as the case may be, maintained in accordance with good business
practices; and (ii) present or will present, as the case may be, fairly
the consolidated financial position of the ONSB Companies as of the
dates indicated and the consolidated results of operations, changes in
shareholders' equity, and cash flows of the ONSB Companies for the
periods indicated, in accordance with GAAP (subject to any exceptions
as to consistency specified therein or as may be indicated in the notes
thereto or, in the case of interim financial statements, to normal
recurring year-end adjustments that are not material).
(b) ONSB has filed, and made copies available to LSB of, all
forms, reports, and documents required to be filed by ONSB with the FRB
or the FDIC since December 31, 1993 (collectively, the "ONSB FRB/FDIC
Reports"). The ONSB FRB/FDIC Reports (i) at the time filed, complied in
all material respects with the applicable requirements of the Laws that
the FRB and the FDIC, as the case may be, are charged to administer and
enforce, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the
date of such filing) contain any untrue statement of a material fact or
omit to state a material fact required to be stated in such ONSB
FRB/FDIC Reports or necessary in order to make the statements in such
ONSB FRB/FDIC Reports, in light of the circumstances under which they
were made, not misleading. Except for ONSB Subsidiaries that are
registered as a broker, dealer or investment advisor, neither ONSB nor
any ONSB Subsidiary is required to file any forms, reports, or other
documents with the SEC or NASD.
5.6 ABSENCE OF CERTAIN CHANGES OR EVENTS AND UNDISCLOSED
LIABILITIES.
(a) Since September 30, 1996, (i) there have been no events,
changes, or occurrences which have had, or are reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on
ONSB, and (ii) the ONSB Companies have not taken any action, or failed
to take any action, prior to the date of this Agreement,
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which action or failure, if taken after the date of this Agreement,
would represent or result in a material breach or violation of any of
the covenants and agreements of ONSB provided in Article 7 hereof.
(b) No ONSB Company has any Liabilities that are reasonably
likely to have, individually or in the aggregate, a Material Adverse
Effect on ONSB, except Liabilities which are accrued or reserved
against in the consolidated balance sheets of ONSB as of September 30,
1996 included in the ONSB Financial Statements or reflected in the
notes thereto. No ONSB Company has incurred or paid any Liability since
September 30, 1996, except for such Liabilities incurred or paid in the
ordinary course of business consistent with past business practice and
which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on ONSB.
5.7 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of
any of the ONSB Companies have been timely filed, or requests for
extensions have been timely filed, granted, and have not expired for
periods ended on or before December 31, 1995, and on or before the date
of the most recent fiscal year end immediately preceding the Effective
Time, and all Tax Returns filed are complete and accurate to the
Knowledge of ONSB. All Taxes shown on filed Tax Returns have been paid.
Except as disclosed in Section 5.7(a) of the ONSB Disclosure
Memorandum, there is no audit examination, deficiency, or refund
Litigation with respect to any Taxes. All Taxes and other Liabilities
due with respect to completed and settled examinations or concluded
Litigation have been paid.
(b) None of the ONSB Companies has executed an extension or
waiver of any statute of limitations on the assessment or collection of
any Tax due that is currently in effect.
(c) Adequate provision for any Taxes due or to become due for
any of the ONSB Companies for the period or periods through and
including the date of the respective ONSB Financial Statements has been
made and is reflected on such ONSB Financial Statements.
(d) Deferred Taxes of the ONSB Companies have been provided
for in the ONSB Financial Statements in accordance with GAAP.
(e) Each of the ONSB Companies is in compliance with, and its
records contain all information and documents (including properly
completed IRS Forms W-9) necessary to comply with, all applicable
information reporting and Tax withholding requirements under federal,
state, and local Tax Laws, and such records identify with specificity
all accounts subject to backup withholding under Section 3406 of the
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Internal Revenue Code, except for such instances of noncompliance and
such omissions as are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on ONSB.
5.8 ASSETS. Except as disclosed or reserved against in the
ONSB Financial Statements, the ONSB Companies have good and marketable title,
free and clear of all Liens, to all of their respective Assets. All tangible
properties used in the businesses of the ONSB Companies are in good condition,
reasonable wear and tear excepted, and are usable in the ordinary course of
business consistent with ONSB's past practices. All Assets which are material to
the business of the ONSB Companies, held under leases or subleases by any of the
ONSB Companies, are held under valid Contracts enforceable in accordance with
their respective terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other Laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceedings may be brought), and
each such Contract is in full force and effect. The ONSB Companies currently
maintain insurance similar in amounts, scope, and coverage to that maintained by
other peer banking organizations. None of the ONSB Companies has received notice
from any insurance carrier that (i) such insurance will be canceled or that
coverage thereunder will be reduced or eliminated, or (ii) premium costs with
respect to such policies of insurance will be substantially increased. The
Assets of the ONSB Companies include all assets required to operate the business
of the ONSB Companies as presently conducted.
5.9 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of ONSB, each ONSB Company, its
Participation Facilities, and its Loan Properties are, and have been,
in compliance with all Environmental Laws, except for violations which
are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on ONSB.
(b) There is no Litigation pending or, to the Knowledge of
ONSB, threatened before any court, governmental agency, or board or
other forum in which any ONSB Company or any of its Loan Properties or
Participation Facilities has been or, with respect to threatened
Litigation, may be named as a defendant or potentially responsible
party (i) for alleged noncompliance (including by any predecessor) with
any Environmental Law or (ii) relating to the release into the
environment of any Hazardous Material, whether or not occurring at, on,
under, or involving a site owned, leased, or operated by any ONSB
Company or any of its Loan Properties or Participation Facilities.
(c) To the Knowledge of ONSB, there is no reasonable basis for
any Litigation of a type described in subsection (b) above, except such
as is not
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reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on ONSB.
(d) To the Knowledge of ONSB, there have been no releases of
Hazardous Materials in, on, under, or affecting any ONSB Company's
current properties, or any Participation Facility or Loan Property of
an ONSB Company, except such as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on ONSB.
5.10 COMPLIANCE WITH LAWS. ONSB is an "insured institution" as
defined in the Federal Deposit Insurance Act and applicable regulations
thereunder, and the deposits of ONSB are insured by the Bank Insurance Fund.
Each ONSB Company has in effect all Permits necessary for it to own, lease, or
operate its Assets and to carry on its business as now conducted, except for
those Permits the absence of which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on ONSB, and there
has occurred no Default under any such Permit, other than Defaults which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on ONSB. Except as disclosed in Section 5.10 of the ONSB Disclosure
Memorandum, no ONSB Company:
(a) Is in violation of any Laws, Orders, or Permits applicable
to its business or employees conducting its business, except for
violations which are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on ONSB; and
(b) Has received any notification or communication from any
agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting that any ONSB
Company is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, where such
noncompliance is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on ONSB, (ii) threatening to
revoke any Permits, the revocation of which is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on
ONSB, or (iii) requiring any ONSB Company (A) to enter into or consent
to the issuance of a cease and desist order, formal agreement,
directive, commitment, or memorandum of understanding, or (B) to adopt
any Board resolution or similar undertaking which restricts materially
the conduct of its business, or in any manner relates to its capital
adequacy, its credit or reserve policies, its management, or the
payment of dividends.
5.11 LABOR RELATIONS. No ONSB Company is the subject of any
Litigation asserting that it or any other ONSB Company has committed an unfair
labor practice (within the meaning of the National Labor Relations Act or
comparable state law) or seeking to compel it or any other ONSB Company to
bargain with any labor organization as to wages or conditions of employment, nor
is any ONSB Company a party to or bound by any collective
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bargaining agreement, contract, or other agreement or understanding with a labor
union or labor organization, nor is there any strike or other labor dispute
involving any ONSB Company, pending or threatened, or to the Knowledge of ONSB
is there any activity involving any ONSB Company's employees seeking to certify
a collective bargaining unit or engaging in any other organization activity.
5.12 EMPLOYEE BENEFIT PLANS.
(a) ONSB has disclosed in Section 5.12 of the ONSB Disclosure
Memorandum, and has delivered or made available to LSB prior to the
execution of this Agreement correct and complete copies, in each case,
of all pension, retirement, profit-sharing, deferred compensation,
stock option, employee stock ownership, severance pay, vacation, bonus,
or other incentive plan, all other written employee programs,
arrangements, or agreements, all medical, vision, dental, or other
health plans, all life insurance plans, and all other employee benefit
plans or fringe benefit plans, including, without limitation, "employee
benefit plans" as that term is defined in Section 3(3) of ERISA,
currently or previously adopted, maintained by, sponsored in whole or
in part by, or contributed to by any ONSB Company or ERISA Affiliate
thereof for the benefit of employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries and under
which employees, retirees, dependents, spouses, directors, independent
contractors, or other beneficiaries are eligible to participate
(collectively, the "ONSB Benefit Plans"). Any of the ONSB Benefit Plans
which is an "employee pension benefit plan," as that term is defined in
Section 3(1) of ERISA, is referred to herein as a "ONSB ERISA Plan."
Any ONSB ERISA Plan which is also a "defined benefit plan" (as defined
in Section 414(j) of the Internal Revenue Code or Section 3(35) of
ERISA) is referred to herein as a "ONSB Pension Plan." On or after
September 26, 1980, neither ONSB nor any ONSB Company has had an
"obligation to contribute" (as defined in ERISA Section 4212) to a
"multi-employer plan" (as defined in ERISA Sections 4001(a)(3) and
3(37)(A)).
(b) ONSB has delivered or made available to LSB prior to the
execution of this Agreement correct and complete copies of the
following documents: (i) all trust agreements or other funding
arrangements for such ONSB Benefit Plans (including insurance
contracts), and all amendments thereto, (ii) with respect to any such
ONSB Benefit Plans or amendments, all determination letters, rulings,
opinion letters, information letters, or advisory opinions issued by
the Internal Revenue Service, the United States Department of Labor, or
the Pension Benefit Guaranty Corporation after December 31, 1974, (iii)
annual reports or returns, audited or unaudited financial statements,
actuarial valuations and reports, and summary annual reports prepared
for any ONSB Benefit Plan with respect to the most recent three plan
years, and (iv) the most recent summary plan descriptions and any
material modifications thereto.
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(c) All ONSB Benefit Plans are in compliance with the
applicable terms of ERISA, the Internal Revenue Code, and any other
applicable Laws, the breach or violation of which are reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on
ONSB. Each ONSB ERISA Plan which is intended to be qualified under
Section 401(a) of the Internal Revenue Code has received a favorable
determination letter from the Internal Revenue Service, and ONSB is not
aware of any circumstances which will or could result in revocation of
any such favorable determination letter. Each trust created under any
ONSB ERISA Plan has been determined to be exempt from Tax under Section
501(a) of the Internal Revenue Code and ONSB is not aware of any
circumstance which will or could result in revocation of such
exemption. With respect to each ONSB Benefit Plan, except as disclosed
in Section 5.12(c) of the ONSB Disclosure Memorandum, no event has
occurred which will or could give rise to a loss of any intended Tax
consequences under the Internal Revenue Code or to any Tax under
Section 511 of the Internal Revenue Code. There is no material pending
or threatened Litigation relating to any ONSB ERISA Plan. No ONSB
Company has engaged in a transaction with respect to any ONSB Benefit
Plan that, assuming the taxable period of such transaction expired as
of the date hereof, would subject any ONSB Company to a Tax or penalty
imposed by either Section 4975 of the Internal Revenue Code or Section
502(i) of ERISA in amounts which are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on ONSB.
(d) No ONSB Pension Plan has any "unfunded current liability,"
as that term is defined in Section 302(d)(8)(A) of ERISA, and the fair
market value of the assets of any such plan exceeds the plan's "benefit
liabilities," as that term is defined in Section 4001 (a)(16) of ERISA,
when determined under actuarial factors that would apply if the plan
terminated in accordance with all applicable legal requirements. Since
the date of the most recent actuarial valuation, there has been (i) no
material change in the financial position of any ONSB Pension Plan,
(ii) no change in the actuarial assumptions with respect to any ONSB
Pension Plan, and (iii) no increase in benefits under any ONSB Pension
Plan as a result of plan amendments or changes in applicable Law which
is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on ONSB or materially adversely affect the
funding status of such plan. Neither any ONSB Pension Plan nor any
"single-employer plan," within the meaning of Section 4001(a)(15) of
ERISA, currently or formerly maintained by any ONSB Company, or
single-employer plan of any entity which is considered an employer with
ONSB under Section 4001 of ERISA or Section 414 of the Internal Revenue
Code or Section 302 of ERISA (whether or not waived) (an "ERISA
Affiliate") has an "accumulated funding deficiency" within the meaning
of Section 412 of the Internal Revenue Code or Section 302 of ERISA. No
ONSB Company has provided, or is required to provide, security to a
ONSB Pension Plan or to any single-employer plan of an ERISA Affiliate
pursuant to Section 401(a)(29) of the Internal Revenue Code.
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(e) No liability under Title IV of ERISA has been or is
expected to be incurred by any ONSB Company with respect to any defined
benefit plan currently or formerly maintained by any of them or by any
ERISA Affiliate.
(f) No ONSB Company has any obligations for retiree health and
life benefits under any of the ONSB Benefit Plans.
(g) Except as disclosed in Section 5.12 of the ONSB Disclosure
Memorandum, neither the execution and delivery of this Agreement, the
Option Agreement or the Plan of Merger nor the consummation of the
transactions contemplated hereby and thereby will (i) result in any
payment (including, without limitation, severance, unemployment
compensation, golden parachute, or otherwise) becoming due to any
director or any employee of any ONSB Company from any ONSB Company
under any ONSB Benefit Plan or otherwise, (ii) increase any benefits
otherwise payable under any ONSB Benefit Plan, or (iii) result in any
acceleration of the time of payment or vesting of any such benefit.
(h) To the Knowledge of ONSB, no oral or written
representation or communication with respect to any aspect of the ONSB
Benefit Plans has been made to employees of any of the ONSB Companies
prior to the date hereof which is not in accordance with the written or
otherwise preexisting terms and provisions of such plans. All ONSB
Benefit Plan documents and annual reports or returns, audited or
unaudited financial statements, actuarial valuations, summary annual
reports, and summary plan descriptions issued with respect to the ONSB
Benefit Plans are correct and complete in all material respects and
there have been no changes in the information set forth therein.
(i) Except as disclosed in Section 5.12(i) of the ONSB
Disclosure Memorandum, none of the ONSB Companies has paid, or
committed to pay, any bonus or commissions to any agent, manager or
other employee of any ONSB Company with respect to any period
commencing after December 31, 1995.
5.13 MATERIAL CONTRACTS. Except as disclosed in Section 5.13
of the ONSB Disclosure Memorandum, none of the ONSB Companies, nor any of their
respective Assets, businesses, or operations, is a party to, or is bound or
affected by, or receives benefits under: (i) any employment, severance,
termination, consulting, or retirement Contract providing for aggregate payments
to any Person in any calendar year in excess of $50,000; (ii) any Contract
relating to the borrowing of money by any ONSB Company or the guarantee by any
ONSB Company of any such obligation (other than Contracts evidencing deposit
liabilities, purchases of federal funds, fully-secured repurchase agreements,
and Federal Home Loan Bank advances of depository institution Subsidiaries,
trade payables, and Contracts relating to borrowings or guarantees made in the
ordinary course of business); (iii) any Contracts between or among ONSB
Companies; and (iv) any other Contract or
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amendment thereto that would be required to be filed as an exhibit to a Form
10-K filed by ONSB with the SEC as of the date of this Agreement if ONSB were
required to file a Form 10-K with the SEC (together with all Contracts referred
to in Sections 5.8 and 5.12(a) hereof, the "ONSB Contracts"). With respect to
each ONSB Contract: (i) the Contract is in full force and effect; (ii) no ONSB
Company is in Default thereunder; (iii) no ONSB Company has repudiated or waived
any material provision of any such Contract; and (iv) no other party to any such
Contract is, to the Knowledge of ONSB, in Default in any respect, or has
repudiated or waived any material provision thereunder. Except as disclosed in
Section 5.13 of the ONSB Disclosure Memorandum, all of the indebtedness of any
ONSB Company for money borrowed is prepayable at any time by such ONSB Company
without penalty or premium.
5.14 LEGAL PROCEEDINGS. Except as disclosed in Section 5.14 of
the ONSB Disclosure Memorandum, there is no Litigation instituted or pending,
or, to the Knowledge of ONSB, threatened (or unasserted but considered probable
of assertion and which if asserted would have at least a reasonable probability
of an unfavorable outcome) against any ONSB Company, or against any Asset,
interest, or right of any of them, nor are there any Orders of any Regulatory
Authorities, other governmental authorities, or arbitrators outstanding against
any ONSB Company. Section 5.14 of the ONSB Disclosure Memorandum includes a
summary report of all Litigation as of the date of this Agreement to which any
ONSB Company is a party and in which the estimated maximum exposure is $50,000
or more.
5.15 REPORTS. Since January 1, 1992, or the date of
organization if later, each ONSB Company has timely filed all reports and
statements, together with any amendments required to be made with respect
thereto, that it was required to file with any Regulatory Authority. As of their
respective dates, each of such reports and documents, including the financial
statements, exhibits, and schedules thereto, complied in all material respects
with all applicable Laws. As of its respective date, each such report and
document did not, in all material respects, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
5.16 STATEMENTS TRUE AND CORRECT. None of the information
supplied or to be supplied by any ONSB Company or any Affiliate thereof for
inclusion in the Registration Statement to be filed by LSB with the SEC will,
when the Registration Statement becomes effective, be false or misleading with
respect to any material fact, or contain any untrue statement of material fact,
or omit to state any material fact required to be stated thereunder or necessary
to make the statements therein not misleading. None of the information supplied
or to be supplied by any ONSB Company or any Affiliate thereof for inclusion in
the ONSB Proxy Statement to be mailed to ONSB's shareholders in connection with
the Shareholders Meeting, and any other documents to be filed by a ONSB Company
or any Affiliate thereof with the SEC or any other Regulatory Authority in
connection with the
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transactions contemplated hereby, will, at the respective time such documents
are filed, and with respect to the ONSB Proxy Statement, when first mailed to
the shareholders of ONSB, be false or misleading with respect to any material
fact, or contain any untrue statement of material fact, or omit to state any
material fact required to be stated thereunder or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or, in the case of the ONSB Proxy Statement or any amendment
thereof or supplement thereto, at the time of the Shareholders' Meeting, be
false or misleading with respect to any material fact, or omit to state any
material fact required to be stated thereunder or necessary to correct any
material statement in any earlier communication with respect to the solicitation
of any proxy for the Shareholders' Meeting. All documents that any ONSB Company
or any Affiliate thereof is responsible for filing with any Regulatory Authority
in connection with the transactions contemplated hereby will comply as to form
in all material respects with the provisions of applicable Law.
5.17 ACCOUNTING, TAX AND REGULATORY MATTERS. No ONSB Company
or any Affiliate thereof has taken any action, or agreed to take any action, or
has any Knowledge of any fact or circumstance that is reasonably likely to (i)
prevent the transactions contemplated hereby, including the Merger, from
qualifying, for "pooling-of-interests" accounting treatment consistent with GAAP
and the rules and regulations of the SEC or treatment as a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code, or (ii)
materially impede or delay receipt of any Consents of Regulatory Authorities
referred to in Section 9.1(b) hereof or result in the imposition of a condition
or restriction of the type referred to in the last sentence of such Section.
5.18 STATE TAKEOVER LAWS. No action is necessary by any ONSB
Company to exempt the transactions contemplated by this Agreement from any
applicable "moratorium," "control share," "fair price," "business combination,"
or other anti-takeover Laws of the State of North Carolina (collectively,
"Takeover Laws"), including Articles 9 and 9A of the NCBCA.
5.19 CHARTER PROVISIONS. Each ONSB Company has taken all
action so that the entering into of this Agreement and the Option Agreement and
the consummation of the Merger and the other transactions contemplated by this
Agreement and the Option Agreement do not and will not result in the grant of
any rights to any Person (other than a LSB Company) under the Articles of
Incorporation, Bylaws, or other governing instruments of any ONSB Company or
restrict or impair the ability of LSB or any of its Subsidiaries to vote, or
otherwise to exercise the rights of a shareholder with respect to, shares of any
ONSB Company that may be directly or indirectly acquired or controlled by LSB.
5.20 SUPPORT AGREEMENTS. At least a majority of the
directors of ONSB and the President and Chief Executive Officer and the Chairman
of the Board of ONSB have executed and delivered to LSB Support Agreements.
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5.21 DERIVATIVES CONTRACTS. Neither ONSB nor any of its
Subsidiaries is a party to or has agreed to enter into an exchange-traded or
over-the-counter swap, forward, future, option, cap, floor or collar financial
contract, or any other interest rate or foreign currency protection contract
that is not included in the ONSB Financial Statements, which is a financial
derivative contract (including various combinations thereof).
5.22 D&O INSURANCE. ONSB has (i) reported all claims to its
Knowledge under its past and present directors' and officers' liability
insurance policies in accordance with the terms and conditions of such policies
to permit coverage thereunder, and (ii) paid on a timely basis all premiums due
under such policies, and such policies have been in effect since the
organization of ONSB and no lapse of coverage has occurred since such date of
organization of ONSB.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF LSB
LSB and LSB Bank hereby jointly and severally represent and
warrant to ONSB as follows:
6.1 ORGANIZATION, STANDING AND POWER. LSB is a corporation
duly organized, validly existing, and in good standing under the Laws of the
State of North Carolina, and has the corporate power and authority to carry on
its business as now conducted and to own, lease and operate its Assets. LSB is
duly qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on LSB.
6.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) LSB has the corporate power and authority necessary to
execute, deliver and perform its obligations under this Agreement, the
Option Agreement and the Confidentiality Agreement and to consummate
the transactions contemplated hereby and thereby, subject to the
approval of the issuance of LSB Common Stock contemplated herein by the
holders of a majority of the outstanding shares of LSB Common Stock.
The execution, delivery and performance of this Agreement, the Option
Agreement and the Confidentiality Agreement and the consummation of the
transactions contemplated herein and therein, including the Merger,
have been duly and validly authorized by all necessary corporate action
in respect thereof on the part of LSB, subject to the approval of the
issuance of LSB Common Stock contemplated
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herein by the holders of a majority of the outstanding shares of LSB
Common Stock. Subject to such shareholder approval, this Agreement, the
Option Agreement and the Confidentiality Agreement represent legal,
valid, and binding obligations of LSB, enforceable against LSB in
accordance with their respective terms (except in all cases as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar Laws affecting the enforcement
of creditors' rights generally and except that the availability of the
equitable remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any proceeding may
be brought).
(b) Neither the execution and delivery of this Agreement, the
Option Agreement and the Confidentiality Agreement by LSB, nor the
consummation by LSB of the transactions contemplated hereby and
thereby, nor compliance by LSB with any of the provisions hereof and
thereof, will (i) conflict with or result in a breach of any provision
of LSB's Articles of Incorporation or Bylaws, or (ii) except as
disclosed in Section 6.2(b) of the LSB Disclosure Memorandum,
constitute or result in a Default under, or require any Consent
pursuant to, or result in the creation of any Lien on any Asset of any
LSB Company under, any Contract or Permit of any LSB Company, or, (iii)
except as disclosed in Section 6.2(b) of the LSB Disclosure Memorandum,
violate any Law or Order applicable to any LSB Company or any of their
respective Assets.
(c) Except as disclosed in Section 6.2(c) of the LSB
Disclosure Memorandum, no notice to, filing with, or Consent of, any
public body or authority is necessary for the consummation by LSB or
LSB Bank of the Merger and the other transactions contemplated in this
Agreement, the Option Agreement, the Confidentiality Agreement and the
Plan of Merger.
6.3 CAPITAL STOCK.
(a) The authorized capital stock of LSB consists of 10,000,000
shares of LSB Common Stock, of which 5,403,539 shares were issued and
outstanding as of September 30, 1996. All of the issued and outstanding
shares of LSB Common Stock are, and all of the shares of LSB Common
Stock to be issued in exchange for shares of ONSB Common Stock upon
consummation of the Merger, when issued in accordance with the terms of
this Agreement, will be, duly and validly issued and outstanding and
fully paid and nonassessable. None of the outstanding shares of LSB
Common Stock has been, and none of the shares of LSB Common Stock to be
issued in exchange for shares of ONSB Common Stock upon consummation of
the Merger, will be, issued in violation of any preemptive rights of
the current or past shareholders of LSB. LSB has reserved 750,000
shares of LSB Common Stock for issuance under the LSB Stock Plans,
pursuant to which options to purchase not more
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than 271,395 shares of LSB Common Stock were outstanding as of February
21, 1997.
(b) Except as disclosed in Section 6.3(a) hereof, there are no
shares of capital stock or other equity securities of LSB outstanding
as of September 30, 1996 and no outstanding Rights relating to the
capital stock of LSB as of February 21, 1997.
6.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) LSB has filed and made available to ONSB all forms,
reports, and documents required to be filed by LSB with the SEC since
December 31, 1993, other than registration statements on Forms S-4 and
S-8 (collectively, the "LSB SEC Reports"). The LSB SEC Reports (i) at
the time filed, complied in all material respects with the applicable
requirements of the 1933 Act and the 1934 Act, as the case may be, and
(ii) did not at the time they were filed (or if amended or superseded
by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to
state a material fact required to be stated in such LSB SEC Reports or
necessary in order to make the statements in such LSB SEC Reports, in
light of the circumstances under which they were made, not misleading.
(b) Each of the LSB Financial Statements contained in the LSB
SEC Reports, including any LSB SEC Reports filed after the date of this
Agreement until the Effective Time, complied or will comply as to form
in all material respects with the applicable published rules and
regulations of the SEC with respect thereto, was or will be prepared in
accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to such
financial statements or, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC), and fairly presented or will fairly
present the consolidated financial position of LSB and its Subsidiaries
as at the respective dates and the consolidated results of its
operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal
and recurring year-end adjustments which were nor or are not expected
to be material in amount.
6.5 ABSENCE OF CERTAIN CHANGES OR EVENTS AND UNDISCLOSED
LIABILITIES.
(a) Since September 30, 1996, (i) there have been no events,
changes or occurrences which have had, or are reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on
LSB, and (ii) the LSB Companies have not taken any action, or failed to
take any action, prior to the date of this Agreement, which action or
failure, if taken after the date of this Agreement, would represent or
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result in a material breach or violation of any of the covenants and
agreements of LSB provided in Article 7 hereof.
(b) No LSB Company has any Liabilities that are reasonably
likely to have, individually or in the aggregate, a Material Adverse
Effect on LSB, except Liabilities which are accrued or reserved against
in the consolidated balance sheets of LSB as of September 30, 1996
included in the LSB Financial Statements or reflected in the notes
thereto. No LSB Company has incurred or paid any Liability since
September 30, 1996, except for such Liabilities incurred or paid in the
ordinary course of business consistent with past business practice and
which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on LSB.
6.6 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of
any of the LSB Companies have been timely filed, or requests for
extensions have been timely filed, granted, and have not expired for
periods ended on or before December 31, 1995, and on or before the date
of the most recent fiscal year end immediately preceding the Effective
Time, and all Tax Returns filed are complete and accurate to the
Knowledge of LSB. All Taxes shown on filed returns have been paid.
Except as disclosed in Section 6.6(a) of the LSB Disclosure Memoranda,
there is no audit examination, deficiency, or refund Litigation with
respect to any Taxes. All Taxes and other Liabilities due with respect
to completed and settled examinations or concluded Litigation have been
paid.
(b) None of the LSB Companies has executed an extension or
waiver of any statute of limitations on the assessment or collection of
any Tax due that is currently in effect.
(c) Adequate provision for any Taxes due or to become due for
any of the LSB Companies for the period or periods through and
including the date of the respective LSB Financial Statements has been
made and is reflected on such LSB Financial Statements.
(d) Deferred Taxes of the LSB Companies have been provided for
in the LSB Financial Statements in accordance with GAAP.
6.7 COMPLIANCE WITH LAWS. LSB is duly registered as a bank
holding company under the BHC Act. Each LSB Company has in effect all Permits
necessary for it to own, lease or operate its Assets and to carry on its
business as now conducted, except for those Permits the absence of which is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on LSB, and there has occurred no Default under any such Permit, other
than Defaults which are not reasonably likely to have, individually or in
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the aggregate, a Material Adverse Effect on LSB. Except as disclosed in Section
6.7 of the LSB Disclosure Memorandum, no LSB Company:
(a) is in violation of any Laws, Orders or Permits applicable
to its business or employees conducting its business, except for
violations which are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on LSB; and
(b) has received any notification or communication from any
agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting that any LSB
Company is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, where such
noncompliance is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on LSB, (ii) threatening to revoke
any Permits, the revocation of which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on LSB, or
(iii) requiring any LSB Company (A) to enter into or consent to the
issuance of a cease and desist order, formal agreement, directive,
commitment or memorandum of understanding, or (B) to adopt any Board or
similar undertaking, which restricts materially the conduct of its
business, or in any manner relates to its capital adequacy, its credit
or reserve policies, its management, or the payment of dividends.
6.8 LEGAL PROCEEDINGS. Except as disclosed in Section 6.8 of
the LSB Disclosure Memorandum, there is no Litigation instituted or pending, or,
to the Knowledge of LSB, threatened (or unasserted but considered probable of
assertion and which if asserted would have at least a reasonable probability of
an unfavorable outcome) against any LSB Company, or against any Asset, interest,
or right of any of them that is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on LSB, nor are the any Orders of any
Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against any LSB Company, that are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on LSB.
6.9 REPORTS. Since January 1, 1992, or the date of
organization if later, each LSB Company has timely filed all reports and
statements, together with any amendments required to be made with respect
thereto, that it was required to file with (i) the SEC, including, but not
limited to, Forms 10-K, Forms 10-Q, Form 8-K, and proxy statements; (ii) other
Regulatory Authorities; and (iii) any applicable state securities or banking
authorities (except, in the case of state securities authorities, failures to
file which are not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on LSB). As of their respective date, each of such
reports and documents, including the financial statements, exhibits, and
schedules thereto, complied in all material respects with all applicable Laws.
As of its respective date, each such report and document did not, in all
material respects, contain any untrue statement of a material fact or omit to
state a material
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fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
6.10 STATEMENTS TRUE AND CORRECT. None of the information
supplied or to be supplied by any LSB Company or any Affiliate thereof for
inclusion in the Registration Statement to be filed by LSB with the SEC, will,
when the Registration Statement becomes effective, be false or misleading with
respect to any material fact, or contain any untrue statement of a material
fact, or omit to state any material fact required to be stated thereunder or
necessary to make the statements therein not misleading. None of the information
supplied or to be supplied by any LSB Company or any Affiliate thereof for
inclusion in the ONSB Proxy Statement to be mailed to ONSB's shareholders in
connection with the Shareholders' Meeting, and any other documents to be filed
by any LSB Company or any Affiliate thereof with the SEC or any other Regulatory
Authority in connection with the transactions contemplated hereby, will, at the
respective time such documents are filed, and with respect to the ONSB Proxy
Statement, when first mailed to the shareholders of ONSB, be false or misleading
with respect to any material fact, or contain any untrue statement of a material
fact, or omit to state any material fact required to be stated thereunder or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or, in the case of the ONSB Proxy
Statement or any amendment thereof or supplement thereto, at the time of the
Shareholders' Meeting, be false or misleading with respect to any material fact,
or contain any untrue statements of material fact, or omit to state any material
fact required to be stated thereunder or necessary to correct any statement in
any earlier communication with respect to the solicitation of any proxy for the
Shareholders' Meeting. All documents that any LSB Company or any Affiliate
thereof is responsible for filing with any Regulatory Authority in connection
with the transactions contemplated hereby will comply as to form in all material
respects with the provisions of applicable Law.
6.11 ACCOUNTING, TAX AND REGULATORY MATTERS. No LSB Company or
any Affiliate thereof has taken any action, or agreed to take any action, or has
any Knowledge of any fact or circumstance that is reasonably likely to (i)
prevent the transactions contemplated hereby, including the Merger, from
qualifying for "pooling-of-interests" accounting treatment consistent with GAAP
and the rules and regulations of the SEC or treatment as a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code, or (ii)
materially impede or delay receipt of any Consents of Regulatory Authorities
referred to in Section 9.1(b) hereof or result in the imposition of a condition
or restriction of the type referred to in the last sentence of such Section.
6.12 AUTHORITY OF LSB BANK. LSB Bank is a state chartered bank
duly organized, validly existing, and in good standing under the Laws of the
State of North Carolina as a wholly owned, first tier Subsidiary of LSB. LSB
Bank has the corporate power and authority necessary to execute, deliver, and
perform its obligations under this Agreement and the Plan of Merger and to
consummate the transactions contemplated hereby
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and thereby, subject to the approval of this Agreement and the Plan of Merger by
LSB, its sole shareholder. The execution, delivery, and performance of this
Agreement and the Plan of Merger and the consummation of the transactions
contemplated herein and therein, including the Merger, will be duly and validly
authorized by all necessary corporate action in respect thereof on the part of
LSB Bank, subject to the approval of this Agreement and the Plan of Merger by
LSB, its sole shareholder. Subject to such shareholder approval, this Agreement,
and, when executed and delivered, the Plan of Merger will, represent legal,
valid, and binding obligations of LSB Bank, enforceable against LSB Bank in
accordance with their respective terms (except in all cases as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding may be brought).
6.13 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of LSB, each LSB Company, its
Participation Facilities, and its Loan Properties are, and have been,
in compliance with all Environmental Laws, except for violations which
are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on LSB.
(b) There is no Litigation pending or, to the Knowledge of
LSB, threatened before any court, governmental agency, or board or
other forum in which any LSB Company or any of its Loan Properties or
Participation Facilities has been or, with respect to threatened
Litigation, may be named as a defendant or potentially responsible
party (i) for alleged noncompliance (including by any predecessor) with
any Environmental Law or (ii) relating to the release into the
environment of any Hazardous Material, whether or not occurring at, on,
under, or involving a site owned, leased, or operated by any LSB
Company or any of its Loan Properties or Participation Facilities.
(c) To the Knowledge of LSB, there is no reasonable basis for
any Litigation of a type described in subsection (b) above, except such
as is not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on LSB.
(d) To the Knowledge of LSB, there have been no releases of
Hazardous Materials in, on, under, or affecting any LSB Company's
current properties, or any Participation Facility or Loan Property of
an LSB Company, except such as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on LSB.
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6.14 LABOR RELATIONS. No LSB Company is the subject of any
Litigation asserting that it or any other LSB Company has committed an unfair
labor practice (within the meaning of the National Labor Relations Act or
comparable state law) or seeking to compel it or any other LSB Company to
bargain with any labor organization as to wages or conditions of employment, nor
is any LSB Company a party to or bound by any collective bargaining agreement,
contract, or other agreement or understanding with a labor union or labor
organization, nor is there any strike or other labor dispute involving any LSB
Company, pending or threatened, or to the Knowledge of LSB is there any activity
involving any LSB Company's employees seeking to certify a collective bargaining
unit or engaging in any other organization activity.
6.15 EMPLOYEE BENEFIT PLANS.
(a) LSB has disclosed in Section 6.15 of the LSB Disclosure
Memorandum, and has delivered or made available to ONSB prior to the
execution of this Agreement correct and complete copies, in each case,
of all pension, retirement, profit-sharing, deferred compensation,
stock option, employee stock ownership, severance pay, vacation, bonus,
or other incentive plan, all other written employee programs,
arrangements, or agreements, all medical, vision, dental, or other
health plans, all life insurance plans, and all other employee benefit
plans or fringe benefit plans, including, without limitation, "employee
benefit plans" as that term is defined in Section 3(3) of ERISA,
currently or previously adopted, maintained by, sponsored in whole or
in part by, or contributed to by any LSB Company or ERISA Affiliate
thereof for the benefit of employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries and under
which employees, retirees, dependents, spouses, directors, independent
contractors, or other beneficiaries are eligible to participate
(collectively, the "LSB Benefit Plans"). Any of the LSB Benefit Plans
which is an "employee pension benefit plan," as that term is defined in
Section 3(1) of ERISA, is referred to herein as a "LSB ERISA Plan." Any
LSB ERISA Plan which is also a "defined benefit plan" (as defined in
Section 414(j) of the Internal Revenue Code or Section 3(35) of ERISA)
is referred to herein as a "LSB Pension Plan." On or after September
26, 1980, neither LSB nor any LSB Company has had an "obligation to
contribute" (as defined in ERISA Section 4212) to a "multi-employer
plan" (as defined in ERISA Sections 4001(a)(3) and 3(37)(A)).
(b) LSB has delivered or made available to ONSB prior to the
execution of this Agreement correct and complete copies of the
following documents: (i) all trust agreements or other funding
arrangements for such LSB Benefit Plans (including insurance
contracts), and all amendments thereto, (ii) with respect to any such
LSB Benefit Plans or amendments, all determination letters, rulings,
opinion letters, information letters, or advisory opinions issued by
the Internal Revenue Service, the United States Department of Labor, or
the Pension Benefit Guaranty Corporation after December 31, 1974, (iii)
annual reports or returns, audited or unaudited financial
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statements, actuarial valuations and reports, and summary annual
reports prepared for any LSB Benefit Plan with respect to the most
recent three plan years, and (iv) the most recent summary plan
descriptions and any material modifications thereto.
(c) All LSB Benefit Plans are in compliance with the
applicable terms of ERISA, the Internal Revenue Code, and any other
applicable Laws, the breach or violation of which are reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on
LSB. Each LSB ERISA Plan which is intended to be qualified under
Section 401(a) of the Internal Revenue Code has received a favorable
determination letter from the Internal Revenue Service, and LSB is not
aware of any circumstances which will or could result in revocation of
any such favorable determination letter. Each trust created under any
LSB ERISA Plan has been determined to be exempt from Tax under Section
501(a) of the Internal Revenue Code and LSB is not aware of any
circumstance which will or could result in revocation of such
exemption. With respect to each LSB Benefit Plan, except as disclosed
in Section 6.15(c) of the LSB Disclosure Memorandum, no event has
occurred which will or could give rise to a loss of any intended Tax
consequences under the Internal Revenue Code or to any Tax under
Section 511 of the Internal Revenue Code. There is no material pending
or threatened Litigation relating to any LSB ERISA Plan. No LSB Company
has engaged in a transaction with respect to any LSB Benefit Plan that,
assuming the taxable period of such transaction expired as of the date
hereof, would subject any LSB Company to a Tax or penalty imposed by
either Section 4975 of the Internal Revenue Code or Section 502(i) of
ERISA in amounts which are reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on LSB.
(d) No LSB Pension Plan has any "unfunded current liability,"
as that term is defined in Section 302(d)(8)(A) of ERISA, and the fair
market value of the assets of any such plan exceeds the plan's "benefit
liabilities," as that term is defined in Section 4001 (a)(16) of ERISA,
when determined under actuarial factors that would apply if the plan
terminated in accordance with all applicable legal requirements. Since
the date of the most recent actuarial valuation, there has been (i) no
material change in the financial position of any LSB Pension Plan, (ii)
no change in the actuarial assumptions with respect to any LSB Pension
Plan, and (iii) no increase in benefits under any LSB Pension Plan as a
result of plan amendments or changes in applicable Law which is
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on LSB or materially adversely affect the funding status
of such plan. Neither any LSB Pension Plan nor any "single-employer
plan," within the meaning of Section 4001(a)(15) of ERISA, currently or
formerly maintained by any LSB Company, or single-employer plan of any
entity which is considered an employer with LSB under Section 4001 of
ERISA or Section 414 of the Internal Revenue Code or Section 302 of
ERISA (whether or not waived) (an "ERISA Affiliate") has an
"accumulated funding deficiency" within the meaning of Section 412 of
the Internal Revenue Code or Section 302 of ERISA. No LSB Company has
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provided, or is required to provide, security to a LSB Pension Plan or
to any single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Internal Revenue Code.
(e) No liability under Title IV of ERISA has been or is
expected to be incurred by any LSB Company with respect to any defined
benefit plan currently or formerly maintained by any of them or by any
ERISA Affiliate.
(f) Except as disclosed in Section 6.15(f) of the LSB
Disclosure Memorandum, no LSB Company has any obligations for retiree
health and life benefits under any of the LSB Benefit Plans.
(g) Except as disclosed in Section 6.15(g) of the LSB
Disclosure Memorandum, neither the execution and delivery of this
Agreement, the Option Agreement or the Plan of Merger nor the
consummation of the transactions contemplated hereby and thereby will
(i) result in any payment (including, without limitation, severance,
unemployment compensation, golden parachute, or otherwise) becoming due
to any director or any employee of any LSB Company from any LSB Company
under any LSB Benefit Plan or otherwise, (ii) increase any benefits
otherwise payable under any LSB Benefit Plan, or (iii) result in any
acceleration of the time of payment or vesting of any such benefit.
(h) To the Knowledge of LSB, no oral or written representation
or communication with respect to any aspect of the LSB Benefit Plans
has been made to employees of any of the LSB Companies prior to the
date hereof which is not in accordance with the written or otherwise
preexisting terms and provisions of such plans. All LSB Benefit Plan
documents and annual reports or returns, audited or unaudited financial
statements, actuarial valuations, summary annual reports, and summary
plan descriptions issued with respect to the LSB Benefit Plans are
correct and complete in all material respects and there have been no
changes in the information set forth therein.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 AFFIRMATIVE COVENANTS OF ONSB. From the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement in accordance with Article 10 hereof, unless the prior written consent
of LSB shall have been obtained, and except as otherwise expressly contemplated
herein, ONSB shall, and shall cause each of its Subsidiaries to: (a) operate its
business only in the usual, regular, and ordinary course; (b) preserve intact
its business organization and Assets and maintain its rights and franchises; (c)
take no action which would (i) adversely affect the ability of any Party to
obtain any
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Consents required for the transactions contemplated hereby without imposition of
a condition or restriction of the type referred to in the last sentence of
Section 9.1(b) hereof, or (ii) adversely affect the ability of any Party to
perform its covenants and agreements under this Agreement and to consummate the
Merger; and (d) work with LSB and its Representatives to achieve appropriate
operating efficiencies and to conform the accounting policies and practices of
all ONSB Companies to those of LSB and its Subsidiaries.
7.2 NEGATIVE COVENANTS OF ONSB. From the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement in accordance with Article 10 hereof, ONSB covenants and agrees that
it will not do or agree or commit to do, or permit any of its Subsidiaries to do
or agree or commit to do, any of the following without the prior written consent
of the chief executive officer or president of LSB:
(a) amend the Articles of Incorporation, Bylaws or other
governing instruments of any ONSB Company; or
(b) incur, guarantee, or otherwise become responsible for, any
additional debt obligation or other obligation for borrowed money
(other than indebtedness of a ONSB Company to another ONSB Company) in
excess of an aggregate of $100,000 (for the ONSB Companies on a
consolidated basis) except in the ordinary course of the business of
ONSB Companies consistent with past practices (which shall include, for
ONSB, creation of deposit liabilities, purchases of federal funds,
advances from the Federal Home Loan Bank with maturities of less than
six (6) months, and entry into repurchase agreements fully secured by
U.S. government or agency securities), or forgive any indebtedness of
any Person owed to any ONSB Company in excess of $10,000, or impose, or
suffer the imposition, on any Asset of any ONSB Company of any Lien or
permit any such Lien to exist (other than in connection with deposits,
repurchase agreements, bankers acceptances, "treasury tax and loan"
accounts established in the ordinary course of business, the
satisfaction of legal requirements in the exercise of trust powers, and
Liens in effect as of the date hereof that are disclosed in the ONSB
Disclosure Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange
(other than exchanges in the ordinary course under employee benefit
plans), directly or indirectly, any shares, or any securities
convertible into any shares, of the capital stock of any ONSB Company,
or declare or pay any dividend or make any other distribution in
respect of ONSB's capital stock; or
(d) except for this Agreement, or pursuant to the exercise of
stock options or warrants outstanding as of the date hereof and
pursuant to the terms thereof in existence on the date hereof, or
pursuant to the Option Agreement, issue, sell, pledge, encumber,
authorize the issuance of, enter into any Contract to issue, sell,
pledge, encumber, or authorize the issuance of, or otherwise permit to
become outstanding,
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any additional shares of ONSB Common Stock or any other capital stock
of any ONSB Company, or any stock appreciation rights, or any option,
warrant, conversion, or other right to acquire any such stock, or any
security convertible into any such stock; or
(e) adjust, split, combine, or reclassify any capital stock of
any ONSB Company or issue or authorize the issuance of any other
securities in respect of or in substitution for shares of ONSB Common
Stock, or sell, lease, mortgage or otherwise dispose of or otherwise
encumber (i) any shares of capital stock of any ONSB Subsidiary (unless
any such shares of stock are sold or otherwise transferred to another
ONSB Company), or (ii) any Asset other than in the ordinary course of
business for reasonable and adequate consideration; or
(f) except for purchases of U.S. Treasury securities or U.S.
Government agency securities, which in either case have maturities of
three (3) years or less, purchase any securities or make any material
investment, either by purchase of stock of securities, contributions to
capital, Asset transfers, or purchase of any Assets, in any Person
other than a wholly owned ONSB Subsidiary, or otherwise acquire direct
or indirect control over any Person, other than in connection with (i)
foreclosures in the ordinary course of business, or (ii) acquisitions
of control by ONSB in its fiduciary capacity; or
(g) grant any increase in compensation or benefits to the
employees or officers of any ONSB Company, except in accordance with
past practice disclosed in Section 7.2(g) of the ONSB Disclosure
Memorandum or as required by Law; pay any severance or termination pay
or any bonus other than pursuant to written policies or written
Contracts in effect on the date of this Agreement and disclosed in
Section 7.2(g) of the ONSB Disclosure Memorandum, and enter into or
amend any severance agreements with officers of any ONSB Company; grant
any increase in fees or other increases in compensation or other
benefits to directors of any ONSB Company; or voluntarily accelerate
the vesting of any stock options or other stock-based compensation or
employee benefits; or
(h) except as contemplated in this Agreement, enter into or
amend any employment Contract between any ONSB Company and any Person
(unless such amendment is required by Law) that the ONSB Company does
not have the unconditional right to terminate without Liability (other
than Liability for services already rendered), at any time on or after
the Effective Time; or
(i) adopt any new employee benefit plan or program of any ONSB
Company or make any change in or to any existing employee benefit plans
or programs of any ONSB Company other than any such change that is
required by Law
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or that, in the opinion of counsel, is necessary or advisable to
maintain the tax qualified status of any such plan; or
(j) make any significant change in any Tax or accounting
methods, principles, or practices or systems of internal accounting
controls, except as may be necessary to conform to changes in Tax Laws
or regulatory accounting requirements or GAAP; or
(k) commence any Litigation other than in accordance with past
practice, settle any Litigation involving any Liability of any ONSB
Company for money damages in excess of $10,000 or restrictions upon the
operations of any ONSB Company; or
(l) except in the ordinary course of business, enter into,
modify, amend or terminate any material Contract or waive, release,
compromise or assign any material rights or claims thereunder.
7.3 COVENANTS OF LSB. From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement in
accordance with Article 10 hereof, LSB covenants and agrees that it shall (a)
continue to conduct its business and the business of its Subsidiaries in a
manner, designed in its reasonable judgment, to enhance the long-term value of
the LSB Common Stock and the business prospects of the LSB Companies and to the
extent consistent therewith use all commercially reasonable best efforts to
preserve intact the LSB Companies' core businesses and goodwill with their
respective employees and the communities they serve, and (b) take no action
which would (i) materially adversely affect the ability of any Party to obtain
any Consents required for the transactions contemplated hereby without
imposition of a condition or restriction of the type referred to in the last
sentence of Section 9.1(b) hereof, or (ii) materially adversely affect the
ability of any Party to perform its covenants and agreements under this
Agreement; provided, that the foregoing shall not prevent any LSB Company from
acquiring any other company or discontinuing or disposing of any of its Assets
or business if such action is, in the judgment of LSB, desirable in the conduct
of the business of LSB and its Subsidiaries. LSB further covenants and agrees
that it will not: (x) without the prior written consent of the chief executive
officer, president or chairman of the Board of ONSB, amend the Articles of
Incorporation or Bylaws of LSB, in each case, in any manner adverse to the
holders of ONSB Common Stock, or (y) declare and pay any cash dividends on the
LSB Common Stock except for regular cash dividends on the LSB Common Stock with
record and payment dates in accordance with LSB's past record dates for cash
dividends.
7.4 ADVERSE CHANGES IN CONDITION. Each Party agrees to give
written notice promptly to the other Party upon becoming aware of the occurrence
or impending occurrence of any event or circumstance relating to it or any of
its Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it,
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or (ii) is reasonable likely to cause or constitute a material breach of any of
its representations, warranties, or covenants contained herein, and to use its
commercially reasonable best efforts to prevent or promptly to remedy the same.
7.5 REPORTS. Each Party and its Subsidiaries shall file all
reports required to be filed by it with Regulatory Authorities between the date
of this Agreement and the Effective Time and such Party shall deliver to the
other Party copies of all such reports filed by such Party and its Subsidiaries
promptly after the same are filed. If financial statements are contained in any
such reports filed with the SEC, in the case of LSB, or the FRB, in the case of
ONSB, such financial statements will fairly present the consolidated financial
position of the entity filing such statements as of the dates indicated and the
consolidated results of operations, changes in shareholders' equity, and cash
flows for the periods then ended in accordance with GAAP (subject in the case of
interim financial statements to normal recurring year-end adjustments that are
not material). As of their respective dates, such reports filed with the SEC or
the FRB, as the case may be, will comply in all material respects with the
Securities Laws, in the case of reports filed with the SEC, and the applicable
Laws enforced by the FRB, in the case of reports filed with the FRB, 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 in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Any financial statements contained in any other reports to another
Regulatory Authority shall be prepared in accordance with Laws applicable to
such reports.
7.6 ONSB RIGHT TO RECOMMEND DIRECTORS; ADDITIONAL OFFICERS.
From the date of this Agreement until the earlier of the date ten (10) days
prior to the scheduled Closing Date or the termination of this Agreement in
accordance with Article 10 hereof, ONSB shall have the right (subject to
shareholder requirement and age restrictions in the Bylaws of LSB) to (i)
recommend candidates to fill two (2) additional directorships on the class of
directors which terms expire at the 1998 annual meeting of LSB shareholders (the
"1998 Class"), which two additional directorships on the 1998 Class LSB's Board
of Directors will authorize on or before the Closing Date (expanding the Board
from 12 to 14 directorships), and (ii) specify which of those candidates shall
be reelected upon expiration of his or her term to fill (x) one (1) additional
directorship on the class of directors which terms expire at the 1999 annual
meeting of LSB shareholders (the "1999 Class"), and (y) one (1) additional
directorship on the class of directors which terms expire at the 2000 annual
meeting of LSB shareholders (the "2000 Class"), which additional directorships
on the 1999 Class and the 2000 Class LSB's Board of Directors will authorize on
or before the 1998 annual meeting of LSB shareholders. LSB shall notify ONSB in
writing of its Board's decisions whether to accept or reject candidates
recommended by ONSB to fill such two (2) additional directorships on the 1998
Class and to fill such additional directorships on the 1999 Class and the 2000
Class. Prior to the Effective Time, LSB's Board of Directors shall (subject to
shareholder requirement and age restrictions in the Bylaws of LSB) elect the two
candidates accepted by the LSB Board to fill the two (2) additional
directorships on the 1998
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Class, provided such elections shall be contingent and become effective upon the
Closing of the Merger, and in connection with the 1998 annual meeting of LSB
shareholders, LSB's Board of Directors shall (subject to the Articles of
Incorporation and Bylaws of LSB and the occurrence of the Merger) recommend in
the proxy statement to the LSB shareholders the election of the particular
candidates accepted by the LSB Board to fill the one (1) additional directorship
on the 1999 Class and the one (1) additional directorship on the 2000 Class.
Notwithstanding anything to the contrary in this Section, the LSB Board may
reject any person(s) recommended by ONSB pursuant to this Section which in the
reasonable good faith judgment of the LSB Board could reasonably likely have an
adverse effect upon the LSB Board's ability to deliberate and take actions for
the benefit of the shareholders of LSB. Shortly after the election to LSB's
Board of Directors of the candidates recommended by ONSB as provided above (and
prior to the Effective Time with respect to candidates to fill the additional
directorships on the 1998 Class), LSB shall (subject to the Articles of
Incorporation and Bylaws of LSB Bank) cause such persons to be elected to LSB
Bank's Board of Directors for the same terms as such persons will serve as
directors on LSB's Board of Directors. Prior to the Effective Time, LSB Bank's
Board of Directors shall (subject to the Articles of Incorporation and Bylaws of
LSB Bank) appoint Nicholas A. Daves to the office of Senior Vice President of
LSB Bank, Charles V. Darnell to the office of Senior Vice President of LSB Bank,
Suzanne J. Bullotta to the office of Senior Vice President of LSB Bank, and all
other officers of ONSB to offices at LSB Bank that carries titles equivalent to
the titles held by such officers at ONSB (except for the corporate secretary of
ONSB that shall be appointed as an assistant corporate secretary of LSB Bank),
provided such appointments shall be contingent and become effective upon the
Closing of the Merger.
7.7 ONSB'S DISPOSITION OF FEDERAL RESERVE BANK STOCK. Prior to
the Effective Time, ONSB shall, and shall cause each of its Subsidiaries to,
take all necessary steps to sell or cause the cancellation of any and all shares
of Federal Reserve Bank stock owned by ONSB and its Subsidiaries.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 REGISTRATION STATEMENT; ONSB PROXY STATEMENT; SHAREHOLDER
APPROVAL. As soon as reasonably practicable after execution of this Agreement,
LSB shall file the Registration Statement with the SEC, provided ONSB has
provided, on a reasonably timely basis, all information concerning ONSB and its
Subsidiaries necessary for inclusion in the Registration Statement, and shall
use its commercially reasonable best efforts to cause the Registration Statement
to become effective under the 1933 Act as soon as reasonably practical after the
filing thereof and take any action required to be taken under the applicable
state Blue Sky or securities Laws in connection with the issuance of the shares
of LSB Common Stock upon consummation of the Merger. ONSB shall promptly furnish
all
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information concerning it and the holders of its capital stock as LSB may
reasonably request in connection with such action. ONSB shall call a
Shareholders' Meeting, to be held as soon as reasonably practicable after the
Registration Statement is declared effective by the SEC, for the purpose of
voting upon approval of (i) this Agreement and the Plan of Merger, and (ii) such
other related matters as it deems appropriate. In connection with the
Shareholders' Meetings, (A) ONSB shall, if required, file the ONSB Proxy
Statement (which shall be included in the Registration Statement) with the FRB
and mail such ONSB Proxy Statement to its shareholders, (B) the Parties shall
furnish to each other all information concerning them that they may reasonably
request in connection with such ONSB Proxy Statement, (C) the Board of Directors
of ONSB shall recommend (subject to compliance with their fiduciary duties as
advised in writing by counsel to such Board) to its shareholders the approval of
this Agreement and the Plan of Merger, and (D) the Board of Directors and
officers of ONSB shall (subject to compliance with their fiduciary duties as
advised in writing by counsel to such Board) use their commercially reasonable
best efforts to obtain such shareholders' approval.
8.2 NASDAQ/NMS LISTING. LSB shall, prior to the Effective
Time, (i) file with the NASD a notification for the listing on the Nasdaq/NMS
relating to the proposed issuance of the shares of LSB Common Stock to be issued
to the holders of ONSB Common Stock pursuant to the Merger, and (ii) take all
other steps reasonably necessary to cause such shares to become listed on the
Nasdaq/NMS at the Effective Time.
8.3 APPLICATIONS. As soon as reasonably practical after
execution of this Agreement, LSB shall prepare and file, and ONSB shall
cooperate in the preparation and, where appropriate, filing of, applications
with all Regulatory Authorities having jurisdiction over the transactions
contemplated by this Agreement seeking the requisite Consents necessary to
consummate the transactions contemplated by this Agreement. The Parties shall
use their commercially reasonable best efforts to obtain the requisite Consents
of all Regulatory Authorities as soon as reasonably practical after the filing
of the appropriate applications.
8.4 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the
terms and conditions of this Agreement, each Party agrees to use, and to cause
its Subsidiaries to use, its commercially reasonable best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper, or advisable under applicable Laws to consummate and make
effective, as soon as practicable after the date of this Agreement, the
transactions contemplated by this Agreement, including, which limitation, using
its commercially reasonable best efforts to lift or rescind any Order adversely
affecting its ability to consummate the transactions contemplated herein and to
cause to be satisfied the conditions applicable to such Party referred to in
Article 9 hereof; provided, that nothing herein shall preclude either Party from
exercising its rights under this Agreement or the Option Agreement. Each Party
shall use, and shall cause each of its Subsidiaries to use, its
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commercially reasonable best efforts to obtain all Consents necessary or
desirable for the consummation of the transactions contemplated by this
Agreement.
8.5 INVESTIGATION AND CONFIDENTIALITY.
(a) Prior to the Effective Time, each Party shall keep the
other Party advised of all material developments relevant to its
business and to consummation of the Merger and shall permit the other
Party and its Representatives to make or cause to be made such
investigation of the business, books, records, contracts, employees,
and properties of it and its Subsidiaries during normal business hours
and of their respective financial and legal conditions as the other
Party reasonably requests, provided that such investigation shall be
reasonably related to the transactions contemplated hereby and shall
not interfere unreasonably with normal operations. No investigation by
a Party shall affect the representations and warranties of the other
Party.
(b) Each Party shall, and shall cause its advisers and agents
to, maintain the confidentiality of all confidential information
furnished to it by the other Party concerning its and its Subsidiaries'
businesses, operations, and financial positions and shall not use such
information for any purpose except in furtherance of the transactions
contemplated by this Agreement. If this Agreement is terminated prior
to the Effective Time, each Party shall promptly return or certify the
destruction of all documents, electronic files and copies thereof, and
all work papers containing confidential information received from other
Party.
(c) ONSB shall use its commercially reasonable best efforts to
exercise its rights under confidentiality agreements entered into with
Persons which were considering an acquisition transaction with ONSB to
preserve the confidentiality of the information relating to ONSB
provided to such parties.
8.6 PRESS RELEASES. Prior to the Effective Time, ONSB and LSB
shall consult with each other as to the form and substance of any press release
or other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, however, that nothing in this Section
8.6 shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
8.7 NO-SHOP COVENANT. Except with respect to this Agreement
and the transactions contemplated hereby, no ONSB Company nor any Affiliate
thereof nor any Representatives thereof retained by any ONSB Company shall
directly or indirectly solicit any Acquisition Proposal by any Person. Except to
the extent necessary to comply with the fiduciary duties of ONSB's Board of
Directors as advised in writing by counsel to such Board of Directors, no ONSB
Company or any Affiliate or Representative thereof shall
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furnish any non-public information that it is not legally obligated to furnish,
negotiate with respect to, or enter into any Contract with respect to, any
Acquisition Proposal, but ONSB may communicate information about such an
Acquisition Proposal to its shareholders if and to the extent that it is
required to do so in order to comply with its legal obligations as advised in
writing by counsel. ONSB shall promptly notify LSB orally and in writing in the
event that it receives any inquiry or proposal relating to any such transaction.
ONSB shall (i) immediately cease and cause to be terminated as of the date of
this Agreement any existing activities, discussions or negotiations with any
Persons conducted heretofore with respect to any of the foregoing, and (ii)
direct and use its commercially reasonable best efforts to cause all of its
Representatives not to engage in any of the foregoing. The Parties agree that
nothing in this Section 8.7 shall affect ONSB's no-shop obligations and LSB's
right of first refusal and right to a break-up fee set forth in Section 8 of the
Letter of Intent.
8.8 ACCOUNTING AND TAX TREATMENT. Each of the Parties
undertakes and agrees to use its commercially reasonable best efforts to cause
the Merger, and to take no action which would cause the Merger not, to qualify
for "pooling-of-interests" accounting treatment consistent with GAAP and the
rules and regulations of the SEC and treatment as a "reorganization" within the
meaning of Section 368(a) of the Internal Revenue Code for federal income tax
purposes.
8.9 STATE TAKEOVER LAWS. No ONSB Company shall take any steps
to make the transactions contemplated by this Agreement subject to any Takeover
Law, including Articles 9 and 9A of the NCBCA.
8.10 CHARTER PROVISIONS. Each ONSB Company shall take all
necessary action to ensure that the entering into of this Agreement, the Option
Agreement, the Confidentiality Agreement and the Plan of Merger, and the
consummation of the Merger and the other transactions contemplated hereby and
thereby do not and will not result in the grant of any rights to any Person
under the Articles of Incorporation, Bylaws or other governing instruments of
any ONSB Company or restrict or impair the ability of LSB or any of its
Subsidiaries to vote, or otherwise exercise the rights of a shareholder with
respect to, shares of any ONSB Company that may be directly or indirectly
acquired or controlled by LSB.
8.11 AGREEMENT OF AFFILIATES. ONSB has disclosed in Section
8.11 of the ONSB Disclosure Memorandum each Person whom it reasonably believes
to be an "affiliate" of ONSB for purposes of Rule 145 under the 1933 Act. ONSB
shall use its commercially reasonable best efforts to cause each such Person to
execute and deliver to LSB not later than thirty (30) days prior to the
Effective Time, an Affiliate Agreement in substantially the form of Exhibit 2
(an "Affiliate Agreement"), providing that such Person will not sell, pledge,
transfer, or otherwise dispose of the shares of ONSB Common Stock held by such
Person, except as contemplated by such Affiliate Agreement or by this Agreement,
and will not sell, pledge, transfer, or otherwise dispose of the shares of LSB
Common Stock to be received by such Person upon consummation of the Merger,
except in compliance with applicable
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provisions of the 1933 Act and the rules and regulations thereunder and until
such time as financial results covering at least thirty (30) days of combined
operations of LSB and ONSB have been published within the meaning of Section
201.01 of the SEC's Codification of Financial Reporting Policies. In order that
the Merger will qualify for "pooling-of-interests" accounting treatment
consistent with GAAP and the rules and regulations of the SEC, shares of LSB
Common Stock issued to such affiliates of ONSB in exchange for shares of ONSB
Common Stock shall not be transferable until such time as financial results
covering at least thirty (30) days of combined operations of LSB and ONSB have
been published within the meaning of Section 201.01 of the SEC's Codification of
Financial Reporting Policies, regardless of whether each such affiliate has
provided the Affiliate Agreement referred to in this Section 8.11 (and LSB shall
be entitled to place restrictive legends upon certificates for shares of LSB
Common Stock issued to affiliates of ONSB pursuant to this Agreement to enforce
the provisions of this Section 8.11). LSB shall not be required to maintain the
effectiveness of the Registration Statement under the 1933 Act for the purposes
of resale of LSB Common Stock by such affiliates.
8.12 EMPLOYEE BENEFITS AND CONTRACTS.
(a) Following the Effective Time, LSB shall provide generally
to officers and employees of the ONSB Companies who at or after the
Effective Time become employees of a LSB Company (other than Mr. Daves,
Mr. Marziano and Mr. Darnell who shall have rights to employee benefits
as provided under their existing agreements), employee benefits under
employee benefit plans (other than stock option or other plans
involving the potential issuance of LSB Common Stock, except as set
forth in this Section 8.12), on terms and conditions substantially
similar to those currently provided by the LSB Companies to their
similarly situated officers and employees. For purposes of
participation and vesting (but not accrual of benefits) under such
employee benefit plans, (i) service under any qualified defined benefit
plans of ONSB shall be treated as service under LSB's qualified defined
benefit plans, (ii) service under any qualified defined contribution
plans of ONSB shall be treated as service under LSB's qualified defined
contribution plans, and (iii) service under any other employee benefit
plans of ONSB shall be treated as service under any similar employee
benefit plans maintained by LSB. LSB shall cause its, and its
Subsidiaries', employee benefit plans to waive any pre-existing
condition limitations covered under the applicable employee benefit
plans of the ONSB Companies for any employees of the ONSB Companies who
become or remain employees of any LSB Company. LSB also shall, and
shall cause its Subsidiaries to, honor all employment, consulting and
other compensation Contracts disclosed in Section 8.12 of the ONSB
Disclosure Memorandum between any ONSB Company and any current or
former director, officer, or employee thereof and all provisions for
vested benefits or other vested amounts earned or accrued through the
Effective Time under the ONSB Benefit Plans disclosed in Section 8.12
of the ONSB Disclosure Memorandum.
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(b) Each person employed by an ONSB Company on a full-time
basis at the Effective Time (other than Mr. Daves, Mr. Marziano and Mr.
Darnell) who, following the Merger and at LSB's sole discretion, is
terminated by an LSB Company for reasons other than Cause (as defined
below) within six (6) months following the Effective Time shall be
entitled to a severance payment by LSB Bank in an amount equal to one
(1) week's salary or wages for each full year of prior continuous
service with an ONSB Company, provided that any severance payment shall
consist of a minimum of two (2) weeks' salary or wages. For purposes of
this Section, the term "Cause" shall mean (i) failure or refusal of
employee to comply with duties and responsibilities substantially
similar to those assigned to the employee immediately prior to the
Merger, (ii) employee being charged by any duly constituted law
enforcement agency or authority with a crime involving moral turpitude,
theft, embezzlement, or fraud, or (iii) employee's excessive use or
abuse of drugs, alcohol or other toxic substances. To the extent any
ONSB Company maintains any plan or arrangement for the payment of
severance or salary continuation benefits to employees, such plan or
arrangement (except as provided in this Section 8.12(c)) shall be
terminated at the Effective Time and be of no force and effect
thereafter.
8.13 TAX FREE REORGANIZATION. The Parties agree to use their
commercially reasonable best efforts to obtain a written opinion of Bell, Davis
& Pitt, P.A., in form reasonably satisfactory to such Parties (the "Tax
Opinion"), to the effect that (i) the Merger will constitute a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code, (ii) the
exchange in the Merger of ONSB Common Stock for LSB Common Stock will not give
rise to gain or loss to the shareholders of ONSB with respect to such exchange
(except that a shareholder who receives cash hereunder (as a result of the
exercise of dissenters' rights or in lieu of fractional shares) will recognize a
taxable gain up to the extent of any cash received, but will not recognize any
taxable loss), and (iii) each of ONSB, LSB, and LSB Bank will be a party to that
"reorganization" within the meaning of Section 368(b) of the Internal Revenue
Code and none of such parties will recognize gain or loss as a consequence of
the Merger. In rendering such Tax Opinion, counsel shall be entitled to rely
upon representations of officers of ONSB, LSB and LSB Bank reasonably
satisfactory in form and substance to such counsel.
8.14 D&O INSURANCE.
(a) LSB shall use its commercially reasonable best efforts
(and ONSB shall cooperate prior to the Effective Time in these efforts)
to maintain in effect for a period of three (3) years after the
Effective Time ONSB's existing directors' and officers' liability
insurance policy (provided that LSB may substitute therefor (i)
policies of at least the same coverage and amounts containing terms and
conditions which are substantially no less advantageous or (ii) with
the consent of ONSB given prior to the Effective Time, any other
policy) with respect to claims arising from facts or events which
occurred prior to the Effective Time and covering persons who are
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currently covered by such insurance; provided, that LSB shall not be
obligated to make aggregate premium payments for such three-year period
in respect of such policy (or coverage replacing such policy) which
exceed, for the portion related to ONSB's directors and officers, 250%
of the annual premium payments on ONSB's current policy in effect as of
the date of this Agreement (the "Maximum Amount"). If the amount of the
premiums necessary to maintain or procure such insurance coverage
exceeds the Maximum Amount, LSB shall use its commercially reasonable
best efforts to maintain the most advantageous policies of directors'
and officers' liability insurance obtainable for a premium equal to the
Maximum Amount.
(b) If the Surviving Bank or any of its successors or assigns
shall consolidate with or merge into any other Person and shall not be
the continuing or surviving Person of such consolidation or merger or
shall transfer all or substantially all of its assets to any Person,
then and in each case, proper provision shall be made so that the
successors and assigns of the Surviving Bank shall assume the
obligations set forth in this Section 8.14.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective
obligations of each Party to perform this Agreement and consummate the Merger
and the other transactions contemplated hereby are subject to the satisfaction
of the following conditions, unless waived by both Parties pursuant to Section
11.6 hereof:
(a) Shareholder Approval. The shareholders of ONSB and LSB
shall have approved this Agreement and the Plan of Merger and the
consummation of the transactions contemplated hereby and thereby,
including the Merger, as and to the extent required by Law or by the
provisions of any governing instruments.
(b) Regulatory Approvals. All Consents of, filings and
registrations with, and notifications to, all Regulatory Authorities
required for consummation of the Merger shall have been obtained or
made and shall be in full force and effect and all waiting periods
required by Law, including the HSR Act, shall have expired. No Consent
obtained from any Regulatory Authority which is necessary to consummate
the transactions contemplated hereby shall be conditioned or restricted
in a manner (including requirements relating to the raising of
additional capital or the disposition of Assets) which in the
reasonable good faith judgment of the Board of Directors of either
Party would so materially adversely impact the economic or business
assumptions of the transactions contemplated by this Agreement that,
had such condition or requirement been known, such Party would not, in
its reasonable good faith judgment have entered into this Agreement.
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(c) Consents and Approvals. Each Party shall have obtained any
and all Consents required for consummation of the Merger (other than
those referred to in Section 9.1(b) hereof) or for the preventing of
any Default under any Contract or Permit of such Party which, if not
obtained or made, is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on such Party.
(d) Legal Proceeding. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any Law or Order (whether temporary,
preliminary or permanent) or taken any other action which prohibits,
restricts or makes illegal consummation of the transactions
contemplated by this Agreement.
(e) Registration Statement. The Registration Statement shall
be effective under the 1933 Act, no stop orders suspending the
effectiveness of the Registration Statement shall have been issued, no
action, suit, proceeding or investigation by the SEC to suspend the
effectiveness thereof shall have been initiated and be continuing, and
all necessary approvals under state securities Laws or the 1933 Act or
1934 Act relating to the issuance or trading of the shares of LSB
Common Stock issuable pursuant to the Merger shall have been received.
(f) Nasdaq/NMS Listing. The shares of LSB Common Stock
issuable pursuant to the Merger shall have been approved for listing on
the Nasdaq/NMS.
(g) Pooling Letters. Each of the Parties shall have received a
letter, dated as of the Effective Time, in form and substance
reasonably acceptable to such Party, from Arthur Anderson LLP to the
effect that the Merger will qualify for "pooling-of-interests"
accounting treatment under Accounting Principles Board Opinion No. 16
and consistent with the rules and regulations of the SEC if closed and
consummated in accordance with this Agreement. Each of the Parties also
shall have received a letter, dated as of the Effective Time, and in
form and substance reasonably acceptable to such Party, from Larrowe,
Cardwell & Company, LC to the effect that such firm is not aware of any
matters relating to ONSB and its Subsidiaries which would preclude the
Merger from qualifying for "pooling-of-interests" accounting treatment
under Accounting Principles Board Opinion No. 16 and consistent with
the rules and regulations of the SEC.
(h) Tax Matters. Each Party shall have received a copy of the
Tax Opinion referred to in Section 8.13 hereof. In addition, each Party
shall have delivered to the other Parties a Certificate, dated as of
the date of the Tax Opinion, signed by its duly authorized officers, to
the effect that, to the best knowledge and belief of such officers, the
statement of facts and representations made on behalf of the management
of such Party, presented to the legal counsel delivering the Tax
Opinion, were at the date of such presentation, true, correct, and
complete, and are
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on the date of such Certificate, to the extent contemplated by the
presentation, true, correct, and complete, as though such presentation
had been made on the date of such Certificate.
(i) Plan of Merger; Articles of Merger. Each Party shall have
received from LSB Bank and ONSB the executed Plan of Merger and the
executed Articles of Merger.
9.2 CONDITIONS TO OBLIGATIONS OF LSB. The obligations of LSB
to perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by LSB pursuant to Section 11.6(a) hereof:
(a) Representations and Warranties. For purposes of this
Section 9.2(a), the accuracy of the representations and warranties of
ONSB set forth in this Agreement shall be assessed as of the date of
this Agreement and as of the Effective Time with the same effect as
though all such representations and warranties had been made on and as
of the Effective Time (provided that representations and warranties
which are confined to a specified date shall speak only as of such
date). The representations and warranties of ONSB set forth in Sections
5.3 and 5.7 hereof shall be true and correct (except for inaccuracies
which are de minimus in amount). The representations and warranties of
ONSB set forth in Sections 5.17, 5.18, and 5.19 hereof shall be true
and correct in all material respects. There shall not exist
inaccuracies in the representations and warranties of ONSB set forth in
this Agreement (including the representations and warranties set forth
in Sections 5.3, 5.7, 5.17, 5.18, and 5.19) such that the aggregate
effect of such inaccuracies has, or is reasonably likely to have, a
Material Adverse Effect on ONSB; provided that, for purposes of this
sentence only, those representations and warranties which are qualified
by references to "material" or "Material Adverse Effect" shall be
deemed not to include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of
the agreements and covenants of ONSB to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied
with in all material respects.
(c) Certificates. ONSB shall have delivered to LSB (i) a
certificate, dated as of the Effective Time and signed on its behalf by
its Chairman of the Board and its President and Chief Executive
Officer, to the effect that the conditions of its obligations set forth
in Section 9.2(a) and 9.2(b) hereof have been satisfied, and (ii)
certified copies of resolutions duly adopted by ONSB's Board of
Directors and shareholders evidencing the taking of all corporate
action necessary to authorize the execution, delivery and performance
of this Agreement, the Option Agreement and
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the Plan of Merger, and the consummation of the transactions
contemplated hereby and thereby, all in such reasonable detail as LSB
and its counsel shall request.
(d) Opinion of Counsel. LSB shall have received a written
opinion of Bell, Davis & Pitt, P.A., counsel to ONSB, dated as of the
Effective Time, in form reasonably satisfactory to LSB and its counsel,
as to the matters set forth in Exhibit 4.
(e) Fairness Opinion. LSB shall have received from The Carson
Medlin Company a letter, dated not more than five (5) business days
prior to the date of the LSB Proxy Statement, to the effect that, in
the opinion of such firm, the terms of the Merger are fair, from a
financial point of view, to the holders of LSB Common Stock.
(f) Accountant's Letters. LSB shall have received from
Larrowe, Cardwell & Company, LC letters dated not more than five (5)
days prior to (i) the date of the ONSB Proxy Statement, (ii) the date
of the LSB Proxy Statement, and (iii) the Effective Time, with respect
to certain financial information regarding ONSB, in form and substance
reasonably satisfactory to LSB, which letters shall be based upon
customary specified procedures undertaken by such firm in accordance
with Statement of Auditing Standard No. 72.
(g) Affiliate Agreements. LSB shall have received from each
affiliate of ONSB an executed Affiliate Agreement referred to in
Section 8.11 hereof, to the extent necessary to assure in the
reasonable judgment of LSB that the transactions contemplated hereby
will qualify for "pooling-of-interests" accounting treatment consistent
with GAAP and the rules and regulations of the SEC.
(h) Support Agreement. LSB Bank shall have received from at
least a majority of the directors of ONSB and the President and Chief
Executive Officer and the Chairman of the Board of ONSB executed
Support Agreements referred to in the Preamble of this Agreement.
(i) Address Existing Dispute. ONSB shall have addressed the
dispute referred to in Section 5.14 of the ONSB Disclosure Memorandum
in a manner (including, without limitation, on terms and conditions, if
resolved) reasonably satisfactory to LSB.
9.3 CONDITIONS TO OBLIGATIONS OF ONSB. The obligations of ONSB
to perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction or the following conditions,
unless waived by ONSB pursuant to Section 11.6(b) hereof:
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(a) Representations and Warranties. For purposes of this
Section 9.3(a), the accuracy of the representations and warranties of
LSB set forth in this Agreement shall be assessed as of the date of
this Agreement and as of the Effective Time with the same effect as
though all such representations and warranties had been made on and as
of the Effective Time (provided that representations and warranties
which are confined to a specified date shall speak only as of such
date). The representations and warranties of LSB set forth in Section
6.3 hereof shall be true and correct (except for inaccuracies which are
de minimus in amount). The representations and warranties of LSB set
forth in Section 6.11 hereof shall be true and correct in all material
respects. There shall not exist inaccuracies in the representations and
warranties of LSB set forth in this Agreement (including the
representations and warranties set forth in Sections 6.3 and 6.11) such
that the aggregate effect of such inaccuracies has, or is reasonably
likely to have, a Material Adverse Effect on LSB; provided that, for
purposes of this sentence only, those representations and warranties
which are qualified by references to "material" or "Material Adverse
Effect" shall be deemed not to include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of
the agreements and covenants of LSB to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied
with in all material respects.
(c) Certificates. LSB shall have delivered to ONSB (i) a
certificate, dated as of the Effective Time and signed on its behalf by
its Chairman of the Board, President and Chief Executive Officer, to
the effect that the conditions of its obligations set forth in Section
9.3(a) and 9.3(b) hereof have been satisfied, and (ii) certified copies
of resolutions duly adopted by LSB's Board of Directors and the
shareholders evidencing the taking of all corporate action necessary to
authorize the execution, delivery and performance of this Agreement and
the Option Agreement, and the consummation of the transactions
contemplated hereby and thereby, all in such reasonable detail as ONSB
and its counsel shall request.
(d) Opinion of Counsel. ONSB shall have received a written
opinion of Hunton & Williams, counsel to LSB and LSB Bank, dated as of
the Effective Time, in form reasonably satisfactory to ONSB and its
counsel, as to the matters set forth in Exhibit 5.
(e) Fairness Opinion. ONSB shall have received from Scott &
Stringfellow, Inc. a letter, dated not more than five (5) business days
prior to the date of the ONSB Proxy Statement, to the effect that, in
the opinion of such firm, the terms of the Merger are fair, from a
financial point of view, to the holders of ONSB Common Stock.
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ARTICLE 10
TERMINATION
10.1 TERMINATION. Notwithstanding any other provision of this
Agreement and the Plan of Merger, and notwithstanding the approval of this
Agreement by the shareholders of ONSB or LSB, this Agreement may be terminated
and the Merger abandoned at any time prior to the Effective Time:
(a) By mutual consent of the Board of Directors of LSB and the
Board of Directors of ONSB; or
(b) By the Board of Directors of either Party (provided that
the terminating Party is not then in breach of any representation or
warranty contained in this Agreement under the applicable standard set
forth in Section 9.2(a) hereof in the case of ONSB and Section 9.3(a)
in the case of LSB or in material breach of any covenant or other
agreement contained in this Agreement) in the event of an inaccuracy of
any representation or warranty of the other Party contained in this
Agreement which cannot be or has not been cured within thirty (30) days
after receipt of written notice by the breaching Party of such
inaccuracy and which inaccuracy would provide the terminating Party the
ability to refuse to consummate the Merger under the applicable
standard set forth in Section 9.2(a) hereof in the case of ONSB and
Section 9.3(a) hereof in the case of LSB; or
(c) By the Board of Directors of either Party (provided that
the terminating Party is not then in breach of any representation or
warranty contained in this Agreement under the applicable standard set
forth in Section 9.2(a) hereof in the case of ONSB and Section 9.3(a)
in the case of LSB or in material breach of any covenant or other
agreement contained in this Agreement) in the event of a material
breach by the other Party of any covenant or agreement contained in
this Agreement which cannot be or has not been cured within thirty (30)
days after the receipt of written notice by the breaching Party of such
breach; or
(d) By the Board of Directors of either Party in the event (i)
any Consent of any Regulatory Authority required for consummation of
the Merger and the other transactions contemplated hereby shall have
been denied by final nonappealable action of such authority or if any
action taken by such authority is not appealed within the time limit
for appeal, or (ii) the shareholders of ONSB or LSB fail to vote their
approval of this Agreement and the Plan of Merger and the transactions
contemplated hereby and thereby, as required by the Laws of the State
of North Carolina at the shareholders' meeting where the transactions
were presented to such shareholders for approval and voted upon; or
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(e) By the Board of Directors of either Party in the event
that the Merger shall not have been consummated by September 30, 1997,
if the failure to consummate the transactions contemplated hereby on or
before such date is not caused by any breach of this Agreement by the
Party electing to terminate pursuant to this Section 10.1(e); or
(f) By the Board of Directors of either Party (provided that
the terminating Party is not then in breach of any representation or
warranty contained in this Agreement under the applicable standard set
forth in Section 9.2(a) hereof in the case of ONSB and Section 9.3(a)
in the case of LSB or in material breach of any covenant or other
agreement contained in this Agreement) in the event that any of the
conditions precedent to the obligations of such Party to consummate the
Merger (other than as contemplated by Section 10.1(d) hereof) cannot be
satisfied or fulfilled by the date specified in Section 10.1(e) hereof;
or
(g) By the Board of Directors of LSB, in the event that the
Board of Directors of ONSB shall have affirmed, recommended or
authorized entering into any Acquisition Proposal in conflict with this
Agreement or other transaction involving a merger, share exchange,
consolidation or transfer of substantially all of the Assets of ONSB;
or
(h) By the Board of Directors of LSB, at any time prior to the
90th day after the date of this Agreement, in the event that the review
of the Assets, business, financial condition, results of operations,
and prospects of ONSB undertaken by LSB and its Representatives during
such time period or any of the disclosures contained in the ONSB
Disclosure Memorandum causes the Board of Directors of LSB to
determine, in its reasonable good faith judgment, that a fact or
circumstance exists or is likely to exist or result which materially
and adversely impacts the economic benefits taken as whole to LSB of
the transactions contemplated by this Agreement so as to render
inadvisable the consummation of the Merger; or
(i) By the Board of Directors of either Party in the event the
Average LSB Closing Price is either below $15.00 or above $24.00,
provided that such termination must occur during the 7-day period
commencing after the Pricing Period by the terminating Party giving
written notice of termination to the other Party.
10.2 EFFECT OF TERMINATION. In the event of the termination of
this Agreement and abandonment of the Merger pursuant to Section 10.1 hereof,
this Agreement shall become void and have no effect, except that (i) the
provisions of this Section 10.2 and Article 11 and Section 8.5(b) hereof shall
survive any such termination and abandonment, and (ii) a termination pursuant to
Sections 10.1(b), 10.1(c), 10.1(f) or 10.1(g) hereof shall not relieve the
breaching Party from liability for an uncured willful breach of a
representation, warranty, covenant, or agreement giving rise to such
termination. The
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Parties agree that a termination of the Agreement under this Article 10 shall
have no effect upon their rights and obligations under the Option Agreement and
the Letter of Intent except as otherwise provided therein.
10.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS. The
respective representations, warranties, obligations, covenants, and agreements
of the Parties shall not survive the Effective Time except this Section 10.3 and
Articles 2, 3, 4 and 11 and Sections 7.6, 8.11, 8.12 and 8.14 hereof.
ARTICLE 11
MISCELLANEOUS
11.1 DEFINITIONS.
(a) Except as otherwise provided herein, the capitalized terms
set forth below shall have the following meanings:
"ACQUISITION PROPOSAL" with respect to a Party shall mean any
tender offer or exchange offer or any proposal for a merger,
acquisition of all of the stock or assets of, or other business
combination involving such Party or any of its Subsidiaries or the
acquisition of a substantial equity interest in, or a substantial
portion of the assets of, such Party or any of its Subsidiaries.
"AFFILIATE" of a Person shall mean: (i) any other Person
directly, or indirectly through one or more intermediaries,
controlling, controlled by or under common control with such Person;
(ii) any officer, director, partner, employer, or direct or indirect
beneficial owner of any ten percent (10%) or greater equity or voting
interest of such Person; or (iii) any other Person for which a Person
described in clause (ii) acts in any such capacity.
"AGREEMENT" shall mean this Agreement and Plan of
Reorganization and Merger, including the Exhibits, the LSB Disclosure
Memorandum and the ONSB Disclosure Memorandum delivered pursuant hereto
and incorporated herein by reference.
"ARTICLES OF MERGER" shall mean the Articles of Merger (which
shall contain the Plan of Merger) to be executed by LSB Bank and filed
with the Secretary of State of the State of North Carolina relating to
the Merger as contemplated by Section 1.1 hereof.
"ASSETS" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character
and description, whether real,
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personal or mixed, tangible or intangible, accrued or contingent, or
otherwise relating to or utilized in such Person's business, directly
or indirectly, in whole or in part, whether or not carried on the books
and records of such Person, and whether or not owned in the name of
such Person or any Affiliate of such Person and wherever located.
"AVERAGE LSB CLOSING PRICE" shall mean the simple average of
the last sale prices for LSB Common Stock on the Nasdaq/NMS (as
reported by The Wall Street Journal or, if not reported thereby, any
other authoritative source selected by LSB) on the trading days during
the Pricing Period.
"BHC ACT" shall mean the federal Bank Holding Company Act of
1956, as amended.
"CLOSING DATE" shall mean the date on which the Closing
occurs.
"CONFIDENTIALITY AGREEMENT" shall mean that certain
Confidentiality Agreement dated as of January 20, 1997 between LSB and
ONSB.
"CONSENT" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order, or Permit.
"CONTRACT" shall mean any written or oral agreement,
arrangement, authorization, commitment, contract, indenture,
instrument, lease, obligation, plan, practice, restriction,
understanding, or undertaking of any kind or character, or other
document to which any Person is a party or that is binding on any
Person or its capital stock, Assets or business.
"DEFAULT" shall mean (i) any breach or violation of or default
under any Contract, Order or Permit, (ii) any occurrence of any event
that with the passage of time or the giving of notice or both would
constitute a breach or violation of or default under any Contract,
Order or Permit, or (iii) any occurrence of any event that with or
without the passage of time or the giving of notice would give rise to
a right to terminate or revoke, change the current terms of, or
renegotiate, or to accelerate, increase, or impose any Liability under,
any Contract, Order or Permit.
"ENVIRONMENTAL LAWS" shall mean all Laws relating to pollution
or protection of human health or the environment (including ambient
air, surface water, ground water, land surface or subsurface strata)
and which are administered, interpreted or enforced by the United
States Environmental Protection Agency or state or local agencies with
jurisdiction over, and including common law in respect of, pollution or
protection of human health or the environment, including the
Comprehensive
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Environmental Response Compensation and Liability Act, as amended, 42
U.S.C. 9601 et seq., the Resource Conservation and Recovery Act, as
amended, 4213.S.C. 6901 et seq., and other Laws relating to emissions,
discharges, releases or threatened releases of any Hazardous Material,
or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of any
Hazardous Material.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"EXHIBITS" 1 through 5, inclusive, shall mean the Exhibits so
marked, copies of which are attached to this Agreement. Such Exhibits
are hereby incorporated by reference herein and made a part hereof, and
may be referred to in this Agreement and any other related instrument
or document without being attached hereto or thereto.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"FRB" shall mean the Board of Governors of the Federal Reserve
System.
"FRB/FDIC DOCUMENTS" shall mean all forms, proxy statements,
registration statements, reports, schedules, and other documents filed,
or required to be filed, by a Party or any of its Subsidiaries with the
FRB or the FDIC pursuant to applicable Laws.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"HAZARDOUS MATERIAL" shall mean (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance or toxic
substance (as those terms are defined by any applicable Environmental
Laws) and (ii) any chemicals, pollutants, contaminants, petroleum,
petroleum products, or oil (and specifically shall include asbestos
requirement abatement, removal or encapsulation pursuant to the
requirements of governmental authorities and any polychlorinated
biphenyls).
"HSR ACT" shall mean Section 7A of the Clayton Act, as added
by Title II of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code
of 1986, as amended, and the rules and regulations promulgated
thereunder.
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"KNOWLEDGE" as used with respect to a Person (including
references to such Person being aware of a particular matter) shall
mean the actual knowledge after due inquiry of the Chairman, President,
Chief Executive Officer, Corporate Secretary, Chief Financial Officer,
Chief Accounting Officer, Chief Credit Officer, General Counsel, any
Assistant or Deputy General Counsel, or any Senior or Executive Vice
President of such Person.
"LAW" shall mean any code, law, ordinance, regulation,
reporting or licensing requirement, rule, or statute applicable to a
Person or its Assets, Liabilities or business, including, without
limitation, those promulgated, interpreted or enforced by any of the
Regulatory Authorities.
"LETTER OF INTENT" shall mean that certain letter of intent
dated January 20, 1997 between LSB and ONSB, as amended on February 12,
1997, relating to the transactions herein.
"LIABILITY" shall mean any direct or indirect, primary or
secondly, liability, indebtedness, obligation, penalty, cost or expense
(including without limitation, costs of investigation, collection and
defense), claim, deficiency, guaranty or endorsement of or by any
Person (other than endorsements of notes, bills, checks and drafts
presented for collection or deposit in the ordinary course of business)
of any type, whether accrued, absolute or contingent, liquidated or
unliquidated, matured or unmatured, or otherwise.
"LIEN" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation,
infringement, lien, mortgage, pledge, reservation, restriction,
security interest, title retention, or other security arrangement, or
any adverse right or interest, charge, or claim of any nature
whatsoever of, on, or with respect to any property or property
interest, other than (i) Liens for current property Taxes not yet due
and payable, and (ii) for depository institution, pledges to secure
deposits and other Liens incurred in the ordinary course of the banking
business.
"LITIGATION" shall mean any action, arbitration, cause of
action, complaint, criminal prosecution, demand letter, governmental or
other investigation, hearing, inquiry, administrative or other
proceeding, relating to or affecting a Party, its Subsidiaries, its or
their business, its or their Assets (including Contracts related to it
or them), or the transactions contemplated by this Agreement, but shall
not include regular, periodic examinations of depository institutions
and their Affiliates by Regulatory Authorities.
"LOAN PROPERTY" shall mean any property owned by the Party in
question or by any of its Subsidiaries or in which such Party or
Subsidiary holds a security
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interest or other lien (including an interest in a fiduciary capacity),
and, where required by the context, includes the owner or operator of
such property, but only with respect to such property.
"LSB BANK COMMON STOCK" shall mean the common stock, par value
$5.00 per share, of LSB Bank.
"LSB COMMON STOCK" shall mean the common stock, par value
$5.00 per share, of LSB.
"LSB COMPANIES" shall mean, collectively, LSB and all LSB
Subsidiaries.
"LSB DISCLOSURE MEMORANDUM" shall mean the written information
entitled "LSB Bancshares, Inc. Disclosure Memorandum" delivered to ONSB
prior to ONSB's execution of this Agreement, describing in reasonable
detail the matters contained therein and, with respect to each
disclosure made therein, specifically referencing each Section of this
Agreement under which such disclosure is being made. Information
disclosed with respect to one Section shall not be deemed to be
disclosed for purposes of any other Section not specifically referenced
with respect thereto. Such LSB Disclosure Memorandum is hereby
incorporated by reference herein and made a part hereof, and may be
referred to in this Agreement and any other related instrument or
document without being attached hereto or thereto.
"LSB FINANCIAL STATEMENTS" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of LSB
as of September 30, 1996, and as of December 31, 1995 and 1994, and the
related statements of income, changes in shareholders' equity, and cash
flows (including related notes and schedules, if any), for the nine
months ended September 30, 1996, and for each of the three fiscal years
ended December 31, 1995, 1994 and 1993, as filed by LSB in SEC
Documents, and (ii) the consolidated balance sheets of LSB (including
related notes and schedules, if any) and related statements of income,
changes in shareholders' equity, and cash flows (including related
notes and schedules, if any) included in SEC Documents filed with
respect to periods ended subsequent to September 30, 1996.
"LSB PROXY STATEMENT" shall mean the proxy statement used by
LSB to solicit the approval of its shareholders of the transactions
contemplated by this Agreement.
"LSB STOCK PLANS" shall mean the existing stock option plans
of LSB designated as follows: (i) 1986 Employee Incentive Stock Option
Plan, (ii) 1994 Directors' Stock Option Plan, and (iii) 1996 Omnibus
Stock Incentive Plan.
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"LSB SUBSIDIARIES" shall mean the Subsidiaries of LSB,
including, without limitation, LSB Bank, Peoples Finance Company of
Lexington, Inc., LSB Financial Services, Inc., and LSB Properties, Inc.
"MATERIAL" for purposes of this Agreement shall be determined
in light of the facts and circumstances of the matter in question;
provided that any specific monetary amount stated in this Agreement
shall determine materiality in that instance.
"MATERIAL ADVERSE EFFECT" on a Party shall mean an event,
condition, occurrence, change in facts, conditions or circumstances
which, individually or in the aggregate, the other Party shall
reasonable determine could have an adverse effect resulting in: (i)
liability, loss, damage or injury and all reasonable costs and expenses
(including reasonable counsel fees and costs of any suit related
thereto) on the financial position, business, or results of operations
of such Party and its Subsidiaries, taken as a whole, exceeding five
(5%) percent of such Party's consolidated shareholders' equity set
forth on its balance sheet as of September 30, 1996, which is a part of
the ONSB Financial Statements or the LSB Financial Statements, as the
case may be; or (ii) the inability of such Party to perform its
obligations under this Agreement or to consummate the Merger or the
other transactions contemplated by this Agreement; provided that
"Material Adverse Effect" shall not be deemed to include the impact of
(a) changes in banking and similar Laws of general applicability or
interpretations thereof by courts or governmental authorities, (b)
changes in GAAP or regulatory accounting principles generally
applicable to banks and their holding companies, (c) the Merger and
compliance with the provisions of this Agreement on the operating
performance of the Parties, and (d) actions and omissions of a Party or
any of its Subsidiaries taken with the prior informed written consent
of the other Party.
"MERGER" shall mean the merger of ONSB with and into LSB Bank
referred to in Section 1.1 hereof.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"NASDAQ/NMS" shall mean the National Market System of the NASD
Automated Quotations System.
"NCBCA" shall mean the North Carolina Business Corporation
Act.
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as
amended.
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"ONSB COMMON STOCK" shall mean the common stock, par value
$5.00 per share, of ONSB.
"ONSB COMPANIES" shall mean, collectively, ONSB and all ONSB
Subsidiaries.
"ONSB DISCLOSURE MEMORANDUM" shall mean the written
information entitled "Old North State Bank Disclosure Memorandum"
delivered to LSB prior to LSB's execution of this Agreement, describing
in reasonable detail the matters contained therein and, with respect to
each disclosure made therein, specifically referencing each Section of
this Agreement under which such disclosure is being made. Information
disclosed with respect to one Section shall not be deemed to be
disclosed for purposes of any other Section not specifically referenced
with respect thereto. Such ONSB Disclosure Memorandum is hereby
incorporated by reference herein and made a part hereof, and may be
referred to in this Agreement and any other related instrument or
document without being attached hereto or thereto.
"ONSB FINANCIAL STATEMENTS" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of ONSB
as of September 30, 1996, and as of December 31, 1995 and 1994, and the
related statements of income, changes in shareholders' equity, and cash
flows (including related notes and schedules, if any) for the nine
months ended September 30, 1996, and for each of the three fiscal years
ended December 31, 1995, 1994 and 1993, as filed by ONSB in FRB/FDIC
Documents, and (ii) the consolidated balance sheets of ONSB (including
related notes and schedules, if any) and related statements of income,
changes in shareholders' equity, and cash flows (including related
notes and schedules, if any) included in FRB/FDIC Documents filed with
respect to periods ended subsequent to September 30, 1996.
"ONSB PROXY STATEMENT" shall mean the proxy statement used by
ONSB to solicit the approval of its shareholders of the transactions
contemplated by this Agreement, which shall include the prospectus of
LSB relating to the issuance of LSB Common Stock to holders of ONSB
Common Stock in connection with the transactions contemplated in this
Agreement.
"ONSB STOCK PLANS" shall mean the existing stock option plans
of ONSB designated as follows: (i) 1989 Employee Stock Option Plan of
Piedmont BancShares Corporation (assumed by ONSB in connection with its
merger with Piedmont BancShares Corporation on December 28, 1995), and
(ii) 1990 Incentive Stock Option Plan of Old North State Bank.
"ONSB SUBSIDIARIES" shall mean the Subsidiaries of ONSB, which
shall include the ONSB Subsidiaries described in Section 5.4 hereof and
any corporation,
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bank, savings association, or other organization acquired as a
Subsidiary of ONSB in the future and owned by ONSB at the Effective
Time.
"ONSB WARRANTS" shall mean the existing warrants issued by
ONSB to purchase 40,342 shares of ONSB Common Stock, immediately
exercisable at $9.09 per share, which expire on April 11, 2000.
"ORDER" shall mean any administrative decision or award,
decree, injunction, judgment, order, quasi-judicial decision or award,
ruling, or writ of any federal, state, local or foreign or other court,
arbitrator, mediator, tribunal, administrative agency or Regulatory
Authority.
"PARTICIPATION FACILITY" shall mean any facility or property
in which the Party in question or any of its Subsidiaries participates
in the management and, where required by the context, said term means
the owner or operator of such facility or property, but only with
respect to such facility or property.
"PARTY" shall mean either ONSB or LSB, and "Parties" shall
mean both ONSB and LSB.
"PERMIT" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a
party or that is or may be binding upon or inure to the benefit of any
Person or its securities, Assets or business.
"PERSON" shall mean 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, limited liability partnership, trust, business
association, group acting in concert, or any person acting in a
representative capacity.
"PLAN OF MERGER" shall mean the Plan of Merger, in
substantially in the form of Exhibit 1 hereto, to be entered into by
ONSB and LSB Bank setting forth the terms of the Merger.
"PRICING PERIOD" shall mean the fifteen (15) consecutive
trading days preceding the beginning of the 10-day period ending on the
Closing Date.
"REGISTRATION STATEMENT" shall mean the Registration Statement
on Form S-4, or other appropriate form, including any pre-effective or
post-effective amendments or supplements thereto, filed with the SEC by
LSB under the 1933 Act with respect to the shares of LSB Common Stock
to be issued to the shareholders of ONSB in connection with the
transactions contemplated by this Agreement.
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"REGULATORY AUTHORITIES" shall mean, collectively, the Federal
Trade Commission, the United States Department of Justice, the FRB, the
Office of Thrift Supervision (including its predecessor, the Federal
Home Loan Bank Board), the Office of the Comptroller of the Currency,
the FDIC, all state regulatory agencies having jurisdiction over the
Parties and their respective Subsidiaries, the NASD, and the SEC.
"REPRESENTATIVE" shall mean any investment banker, financial
advisor, attorney, accountant, consultant, or other representative of a
Person.
"RIGHTS" shall mean all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, scrip, understandings,
warrants, or other binding obligations of any character whatsoever
relating to, or securities or rights convertible into or exchangeable
for, shares of the capital stock of a Person or by which a Person is or
may be bound to issue additional shares of its capital stock or other
Rights.
"SEC" shall mean the United State Securities and Exchange
Commission.
"SEC DOCUMENTS" shall mean all forms, proxy statements,
registration statements, reports, schedules, and other documents filed,
or required to be filed, by a Party or any of its Subsidiaries with any
Regulatory Authority pursuant to the Securities Laws.
"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act
of 1940, as amended, the Trust Indenture Act of 1939, as amended, and
the rules and regulations of any Regulatory Authority promulgated
thereunder.
"SHAREHOLDERS' MEETING" shall mean the meeting of the
shareholders of ONSB to be held pursuant to Section 8.1 hereof,
including any adjournment or adjournments thereof.
"SUBSIDIARIES" shall mean all those corporations, banks,
associations, or other entities of which the entity in question owns or
controls fifty percent (50%) or more of the outstanding equity
securities either directly or through an unbroken chain of entities as
to each of which fifty percent (50%) or more of the outstanding equity
securities is owned directly or indirectly by its parent; provided,
however, there shall not be included any such entity acquired through
foreclosure or any such entity the equity securities of which are owned
or controlled in a fiduciary capacity.
"SURVIVING BANK" shall mean LSB Bank, as the surviving bank
resulting from the Merger.
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"TAX" or "TAXES" shall mean all federal, state, local, and
foreign taxes, charges, fees, levies, imposts, duties, or other
assessments, including income, gross receipts, excise, employment,
sales, use, transfer, license, payroll, franchise, severance, stamp,
occupation, windfall profits, environmental, federal highway use,
commercial rent, customs duties, capital stock, paid-up capital,
profits, withholding, Social Security, single business and
unemployment, disability, real property, personal property,
registration, ad valorem, value added, alternative or add-on minimum,
estimated, or other tax or governmental fee of any kind whatsoever,
imposed or required to be withheld by the United States or any state,
local, foreign government or subdivision or agency thereof, including
any interest, penalties or additions thereto.
"TAX RETURN" shall mean any report, return, information
return, or other information required to be supplied to a taxing
authority in connection with Taxes, including any return of an
affiliated or combined or unitary group that includes a Party or its
Subsidiaries.
(b) The terms set forth below shall have the meanings
ascribed thereto in the referenced sections:
Affiliate Agreement Section 8.11
Closing Section 1.2
Effective Time Section 1.3
ERISA Affiliate Section 5.12(d)
Exchange Agent Section 4.1
Exchange Ratio Section 3.1(c)
LSB Benefit Plans Section 6.15(a)
LSB ERISA Plan Section 6.15(a)
LSB Pension Plan Section 6.15(a)
LSB SEC Reports Section 6.4(a)
Maximum Amount Section 8.14
ONSB Benefit Plans Section 5.12(a)
ONSB Contracts Section 5.13
ONSB ERISA Plan Section 5.12(a)
ONSB Pension Plan Section 5.12(a)
ONSB Options Section 3.6
ONSB FRB/FDIC Reports Section 5.5(b)
Support Agreement Preamble
Takeover Law Section 5.18
Tax Opinion Section 8.13
(b) Any singular term in this Agreement shall be deemed to
include the plurals and any plural term the singular. Whenever the
words "include", "includes"
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or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitations."
11.2 EXPENSES.
(a) Except as otherwise provided in this Section 11.2, each of
the Parties shall bear and pay all direct costs and expenses incurred
by it or on its behalf in connection with the transactions contemplated
hereunder, including filing, registration and application fees,
printing fees, and fees and expenses of its own financial or other
consultants, investment bankers, accountants, and legal counsel, except
that each of the Parties shall bear and pay one-half of (i) the SEC and
Blue Sky filing fees incurred in connection with the Registration
Statement, the ONSB Proxy Statement and the LSB Proxy Statement, and
(ii) the printing and distribution costs incurred in connection with
the printing and distribution of the Registration Statement, the ONSB
Proxy Statement and the LSB Proxy Statement.
(b) Nothing contained in this Section 11.2 shall constitute or
shall be deemed to constitute liquidated damages for the willful breach
by a Party of the terms of this Agreement or otherwise limit the rights
of the non-breaching Party.
(c) Nothing contained in this Section 11.2 shall affect the
break-up fee arrangement between the Parties set forth in Section 8 of
the Letter of Intent.
11.3 BROKERS AND FINDERS. Except for Scott & Stringfellow,
Inc. as to ONSB, and The Carson Medlin Company as to LSB, each of the Parties
represents and warrants that neither it nor any of its officers, directors,
employees, or Affiliates has employed any broker or finder or incurred any
Liability for any financial advisory fees, investment bankers' fees, brokerage
fees, commissions, or finders' fees in connection with this Agreement or the
transactions contemplated hereby. In the event of a claim by any broker or
finder based upon his or its representing or being retained by or allegedly
representing or being retained by ONSB or LSB, each of ONSB and LSB, as the case
may be, agrees to indemnify and hold the other Party harmless of and from any
Liability in respect of any such claim.
11.4 ENTIRE AGREEMENT. Except for the binding provisions of
the Letter of Intent, the Option Agreement and the Confidentiality Agreement, or
as otherwise expressly provided herein, this Agreement (including the documents
and instruments referred to herein) constitutes the entire agreement among the
parties hereto with respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings with respect thereto,
written or oral. 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, other than as provided in Section 8.11 hereof.
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11.5 AMENDMENTS. To the extent permitted by Law, this
Agreement may be amended by a subsequent writing signed by each of the parties
hereto upon the approval of the Boards of Directors of each of the Parties,
whether before or after shareholder approval of this Agreement has been
obtained.
11.6 WAIVERS.
(a) Prior to or at the Effective Time, LSB, acting through its
Board of Directors, Chairman of the Board, President, Chief Executive
Officer, or other authorized officer, shall have the right to waive any
Default in the performance of any term of this Agreement by ONSB, to
waive on behalf of LSB and LSB Bank or extend the time for the
compliance or fulfillment by ONSB of any and all of its obligations
under this Agreement, and to waive any or all of the conditions
precedent to the obligations of LSB under this Agreement, except any
condition which, if not satisfied, would result in the violation of any
Law. No such waiver shall be effective unless in writing signed by such
duly authorized officer of LSB.
(b) Prior to or at the Effective Time, ONSB, acting though its
Board of Directors, Chairman of the Board, President, Chief Executive
Officer, or other authorized officer, shall have the right to waive on
behalf of ONSB any Default in the performance of any term of this
Agreement by LSB or LSB Bank, to waive or extend the time for the
compliance or fulfillment by LSB of any and all of its obligations
under this Agreement, and to waive any or all of the conditions
precedent to the obligations of ONSB under this Agreement, except any
condition which, if not satisfied, would result in the violation of any
Law. No such waiver shall be effective unless in writing signed by such
duly authorized officer of ONSB.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right
of such Party at a later time to enforce the same or any other
provision of this Agreement. No waiver of any condition or of the
breach of any term contained in this Agreement in one or more instances
shall be deemed to be or construed as a further or continuing waiver of
such condition or breach or a waiver of any other condition or of the
breach of any other term of this Agreement.
11.7 ASSIGNMENT. Except as expressly contemplated hereby,
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any party hereto (whether by operation of Law or otherwise)
without the prior written consent of the other parties hereto. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the parties hereto and their respective successors
and assigns.
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11.8 NOTICES. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
by hand, by facsimile transmission, by registered or certified mail, postage
pre-paid, or by courier or overnight carrier, to the persons at the address set
forth below (or at such other address as may be provided hereunder), and shall
be deemed to have been delivered as of the date so received:
LSB and LSB Bank: LSB Bancshares, Inc.
One LSB Plaza
Lexington, North Carolina 27292
Telecopy Number: (910) 249-1589
Attention: Robert F. Lowe
Chairman of the Board,
President and
Chief Executive Officer
Copy to Counsel: Hunton & Williams
One NationsBank Plaza, Suite 2650
101 South Tryon Street
Charlotte, North Carolina 28280
Telecopy Number: (704) 378-4890
Attention: David E. Johnston
ONSB: Old North State Bank
161 South Stratford Road
Winston-Salem, North Carolina 27104
Telecopy Number: (910) 631-3922
Attention: Nicholas A. Daves
Chairman of the Board
Copy to Counsel: Bell, Davis & Pitt, P.A.
635 West Fourth Street
Winston-Salem, North Carolina 27101
Telecopy Number: (910) 722-6558
Attention: John W. Babcock
11.9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the Laws of the State of North Carolina, without
regard to any applicable conflicts of Laws, except to extent that the federal
laws of the United States may apply to the Merger.
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11.10 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
11.11 CAPTIONS. The captions contained in this Agreement are
for reference purposes only and are not part of this Agreement
11.12 INTERPRETATIONS. Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed or resolved against any
party, whether under any rule of construction or otherwise. No party to this
Agreement shall be considered the draftsman. The parties acknowledge and agree
that this Agreement has been reviewed, negotiated and accepted by all parties
and their attorneys and shall be construed and interpreted according to the
ordinary meaning of the words used so as fairly to accomplish the purposes and
intentions of all parties hereto.
11.13 ENFORCEMENT OF AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
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 equity.
11.14 SEVERABILITY. Any term or provision of this Agreement
which 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 provision 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.
[Signatures On The Following Page]
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on its behalf and its corporate seal to be hereunto
affixed and attested by officers thereunto, all duly authorized, all as of the
day and year first above written.
ATTEST: LSB BANCSHARES, INC.
- ------------------------------- ------------------------------------------
Secretary Robert F. Lowe
Chairman, President and Chief Executive
Officer
[CORPORATE SEAL]
ATTEST: LEXINGTON STATE BANK
- ------------------------------- ------------------------------------------
Secretary Robert F. Lowe
Chairman, President and Chief Executive
Officer
[CORPORATE SEAL]
ATTEST: OLD NORTH STATE BANK
- ------------------------------- ------------------------------------------
Secretary Nicholas A. Daves
Chairman of the Board
[CORPORATE SEAL]
------------------------------------------
Robert E. Marziano
President and Chief Executive Officer
62
