SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 Reported): August 28, 1995
NATIONAL BANKSHARES, INC.
(Exact name of Registrant as specified in its charter)
Virginia 0-15204 54-1375874
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
P. O. Box 90002
Blacksburg, Virginia 24062-9002
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(540) 552-2011
Page 1 of 72 Pages
Exhibit Index appears on Page 5
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Item 5. Other Events.
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On August 29, 1995, National Bankshares, Inc. ("NBI") of
Blacksburg, Virginia, parent company of The National Bank of
Blacksburg, and the Bank of Tazewell County of Tazewell, Virginia
entered into an Agreement and Plan of Merger (the "Agreement" or
the "Plan") as of August 28, 1995, pursuant to which the Bank of
Tazewell County will become a wholly-owned subsidiary of NBI.
As a result of the Plan, each share of the $1.00 par value
Common Stock of the Bank of Tazewell County ("Bank of Tazewell
County Common Stock") outstanding immediately prior to the
effective time of the transaction (as described in the Agreement,
the "Effective Time") will be converted into the right to receive
one share of the $2.50 par value of the Common Stock of NBI ("NBI
Common Stock").
The Plan is intended to constitute a tax-free transaction
under the Internal Revenue Code of 1986, as amended, and to be
accounted for as a pooling-of-interests. The Agreement
contemplates that NBI will declare a share dividend totalling
190,768 shares of NBI Common Stock to its shareholders of record
shortly before the Effective Time provided certain conditions are
met.
The Agreement provides for a mutual bust up fee to be paid
under certain circumstances. Consummation of the Plan is subject
to various conditions, including, without limitation, (1) receipt
of required shareholder approvals; (2) receipt of certain
regulatory approvals from, including but not limited to, the
Board of Governors of the Federal Reserve System, the Federal
Deposit Insurance Corporation and the Virginia Bureau of
Financial Institutions; and (3) receipt of opinions from KPMG
Peat Marwick as to the tax-free nature of certain aspects of the
Plan and to the effect that the Plan qualifies for
pooling-of-interests accounting treatment.
The Agreement and the Plan will be submitted for approval at
a meeting of shareholders of the Bank of Tazewell County. Prior
to that meeting, NBI will file a registration statement with the
Securities and Exchange Commission registering under the
Securities Act of 1933, as amended, the NBI Common Stock to be
issued in exchange for the outstanding shares of Bank of Tazewell
Common Stock. Such shares of stock of NBI will be offered to the
Bank of Tazewell County shareholders pursuant to an NBI
prospectus that will also serve as the Bank of Tazewell County's
proxy statement for its shareholders meeting.
For additional information regarding the Agreement, please
refer to the copy of that document which is incorporated herein
by reference and included as an Exhibit to this Current Report on
Page 2 of 72 Pages
Exhibit Index appears on Page 5
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Form 8-K. The foregoing discussion is qualified in its entirety
by reference to such document.
Item 7. Financial Statements and Exhibits.
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The Exhibit listed in the Exhibit Index is filed as a part
of this Current Report on Form 8-K.
Page 3 of 72 Pages
Exhibit Index appears on Page 5
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SIGNATURES
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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.
NATIONAL BANKSHARES, INC.
By /s/James G. Rakes
----------------------------
James G. Rakes
President
Date: September 5, 1995
Page 4 of 72 Pages
Exhibit Index appears on Page 5
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EXHIBIT INDEX
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TO
--
CURRENT REPORT ON FORM 8-K
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OF
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NATIONAL BANKSHARES, INC.
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Sequential
Exhibit Page No.
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2.1. Agreement and Plan of Merger 6
Page 5 of 72 Pages
Exhibit Index appears on Page 5
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of the 28th day of
August, 1995 (this "Plan"), by and among National Bankshares,
Inc., a Virginia corporation ("NBI") and the Bank of Tazewell
County, a Virginia bank ("BTC").
RECITALS:
(A) NBI. NBI is a corporation duly organized and existing
in good standing under the laws of the Commonwealth of Virginia,
with its principal executive offices located in Blacksburg,
Virginia. As of the date hereof, NBI has 5,000,000 authorized
shares of Common Stock, each of $2.50 par value ("NBI Common
Stock"), and 5,000,000 authorized shares of Preferred Stock, no
par value ("NBI Preferred Stock") (no other class of capital
stock being authorized), of which 1,714,152 shares of NBI Common
Stock and no shares of NBI Preferred Stock, respectively, are
issued and outstanding as of July 31, 1995. NBI has one
subsidiary, The National Bank of Blacksburg, a national banking
association ("NBB") and NBI owns 100% of the stock of NBB ("NBB
Stock"). NBB has one subsidiary, NB Operating, Inc., which has
no assets, no liabilities, no operations and engages in no
business activities as of the date hereof and NBB owns 100% of
the stock of such subsidiary.
(B) BTC. BTC is a corporation duly organized and existing
in good standing under the laws of the Commonwealth of Virginia,
with its principal executive offices located in Tazewell,
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Virginia and is authorized to do business as a bank in Virginia.
BTC is an insured bank as defined in the Federal Deposit
Insurance Act, as amended, and is a member of the Federal Reserve
System. As of the date hereof, BTC has 6,000,000 authorized
shares of Common Stock, each of $1.00 par value ("BTC Common
Stock"), (no other class of capital stock being authorized), of
which 1,888,209 shares of BTC Common Stock were issued and
outstanding as of July 31, 1995. The holders of BTC Common Stock
presently have preemptive rights. BTC does not have any
subsidiary corporations or other entities. BTC Common Stock is
not and never has been subject to the provisions of Section 12,
13, 14(a), 14(c), 14(d), 15(d) or 16 of the Securities Exchange
Act of 1934, as amended, (together with the rules and regulations
promulgated thereunder, the "Exchange Act") nor has BTC ever been
nor is it now subject to Section 12 of the Exchange Act and the
regulations of the Office of the Comptroller of the Currency, the
Board of Governors of the Federal Reserve System, the Federal
Deposit Insurance Corporation ("FDIC") or the Securities and
Exchange Commission ("SEC") thereunder. BTC is not subject to
regulation under 12 CFR, Section 11, Section 206 or Section 335,
and does not file and has never filed any reports or disclosures
pursuant thereto.
(C) Rights, Etc. There are no shares of NBI Common Stock,
NBI Preferred Stock, NBB Stock, or BTC Common Stock authorized
and reserved for issuance, and neither NBI, NBB, nor BTC has any
commitment to authorize, issue or sell any such shares or any
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securities or obligations convertible into or exchangeable for,
or giving any person any right to subscribe for or acquire from
such party, any such shares and no securities or obligations
representing any such rights are outstanding. Neither NBI, NBB,
nor BTC has granted or made any commitment to grant any options
or share appreciation rights with respect to the BTC Common
Stock, the NBI Common Stock, or the NBB Stock, as the case may
be.
(D) This Transaction. NBI will, prior to the Merger
Effective Date, own 100% of the outstanding shares ("NBI Interim
Bank Common Stock") of a duly chartered Virginia bank ("NBI
Interim Bank") and the Boards of Directors of NBI and BTC,
respectively, deem it advisable and in the best interests of NBI
and BTC and their stockholders that BTC be acquired by NBI
through a merger of NBI Interim Bank into BTC pursuant to this
Agreement and Plan of Merger.
(E) Approvals. The Board of Directors of each of NBI and
BTC has approved and adopted, at meetings of each of such Board
of Directors, this Plan and has authorized, subject to such
further modifications as may be agreed by the Presidents of NBI
and BTC, respectively, not inconsistent herewith, the execution
hereof in counterparts. At the meeting of the BTC Board of
Directors, the Board of Directors of BTC recommended the Plan as
so executed to its shareholders.
(F) Share Dividend. In connection with the consummation of
this Plan, it is intended that NBI shall cause a share dividend
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totalling 190,768 shares of NBI Common Stock to be declared and
issued pro rata to and among the holders of shares of NBI Common
Stock in accordance with the provisions of Paragraph (F) of
Article II.
(G) NASDAQ. Trading of the NBI Common Stock and BTC Common
Stock, respectively, is presently reflected on the Over the
Counter Electronic Bulletin Board ("NASD Bulletin Board") of the
National Association of Securities Dealers ("NASD").
(H) Benefits of Plan. NBI and BTC believe the Plan and its
consummation are in the respective best interests of each
corporation and its shareholders for the following reasons, among
others: (1) the Merger will allow them to provide banking and
related financial services more effectively and efficiently; (2)
the Merger will expand the range of banking and related financial
services which they can provide; (3) the Merger will enhance the
safety and soundness of their operations; (4) the Merger will
enable them to expand the market for their banking and related
financial services; and (4) the Merger will expand the number and
diversity of their shareholder bases and enhance the liquidity of
such investments.
NOW, THEREFORE, in consideration of their mutual promises
and obligations, the parties hereto adopt and make this Plan and
prescribe the terms and conditions thereof and the manner and
basis of carrying it into effect, which shall be as follows:
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I. THE MERGER
(A) The Continuing Corporation. On the Merger Effective
Date (as hereinafter defined), NBI Interim Bank shall merge into
BTC (the "Merger"), the separate existence of NBI Interim Bank
shall cease and BTC (the "Continuing Corporation") shall survive.
(B) Rights, Etc. Upon consummation of the Merger, the
Continuing Corporation shall thereupon and thereafter possess all
of the rights, privileges, immunities and franchises, of a public
as well as of a private nature, of each of the merging
corporations; and all property, real, personal and mixed, and all
debts due on whatever account, and all other choses in action,
and all and every other interest, of or belonging to or due to
each of the corporations so merged, shall be deemed to be vested
in the Continuing Corporation without further act or deed; and
the title to any real estate or any interest therein, vested in
any of such corporations, shall not revert or be in any way
impaired by reason of the Merger as provided by the laws of the
Commonwealth of Virginia.
(C) Liabilities. Upon consummation of the Merger, the
Continuing Corporation shall thenceforth be responsible and
liable for all the liabilities, obligations and penalties of each
of the corporations so merged.
(D) Articles of Incorporation; Bylaws; Directors; Officers
of Continuing Corporation. The Articles of Incorporation of the
Continuing Corporation shall be those of BTC, as amended pursuant
to the Charter Amendment as more particularly described in
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Paragraph (B) of Article V, and the Bylaws of the Continuing
Corporation shall be those of BTC, as amended pursuant to the
requirements of Paragraph (K) of Article V. The officers
and directors of BTC in office immediately prior to the Merger
becoming effective shall be the officers and directors of the
Continuing Corporation, who shall hold office until such time as
their successors are elected and qualified in accordance with the
Articles and Bylaws of the Continuing Corporation.
(E) Merger Closing; Merger Effective Date. The Merger
shall become effective at 11:59 p.m. on the date the Virginia
State Corporation Commission ("SCC") issues a certificate of
merger reflecting the Merger (the "Merger Effective Date").
Unless otherwise agreed upon in writing by the chief executive
officers of NBI and BTC, subject to the conditions to the
obligations of the parties to effect the Merger as set forth in
Article VI, the parties shall use their reasonable efforts to
cause the Merger Effective Date to occur as soon as practicable
following the satisfaction of the conditions set forth in
Paragraphs (A), (B) and (C) of Article VI. All documents
required by the terms of this Agreement to be delivered at or
prior to consummation of the Merger will be exchanged by the
parties at the closing of the Merger (the "Merger Closing"),
which shall be held on the Merger Effective Date at the principal
executive offices of NBI (or at such other location as may be
mutually agreed upon by the parties). Prior to the Merger
Closing, NBI Interim Bank and BTC shall execute and deliver to
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the SCC, Articles of Merger containing a Plan of Merger in
substantially the form of Exhibit A hereto (the "Plan of
Merger").
(F) Bylaws and Directors of NBI. Effective as of the
Merger Effective Date, NBI shall cause its Bylaws to be amended
as follows: (1) the number of NBI directors shall be set at nine
(9); (2) the affirmative vote of six (6) out of the nine (9) NBI
directors shall be required to approve any of the following
actions: (a) membership on the Board of Directors of the
Continuing Corporation (provided, however, that notwithstanding
the foregoing, a director of the Continuing Corporation may be
removed by action of NBI as sole shareholder of the Continuing
Corporation authorized by the vote of a simple majority of NBI
directors in the event that such director commits a violation of
law applicable to his duties as a director of the Continuing
Corporation which has a material adverse financial affect on the
Continuing Corporation or engages in any conduct in connection
with his duties as a director for which he would not be entitled
to indemnification under the Articles of Incorporation of the
Continuing Corporation); (b) amendments to the Articles of
Incorporation or Bylaws of the Continuing Corporation; (c) the
merger, consolidation or sale of all or substantially all of the
assets of the Continuing Corporation; and (d) a recommendation to
the shareholders of NBI to merge, consolidate or sell all or
substantially all of the assets of NBI, where such recommendation
is required by law; (3) to change the provisions requiring that
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NBI directors also be NBB directors to permit BTC directors to
serve on the NBI Board as well; and (4) the Executive Committee
shall not authorize or approve any action on behalf of NBI
described in Paragraph (2) hereof. NBI agrees that the foregoing
Bylaw amendments shall not be amended or rescinded by action of
its Board of Directors without the affirmative vote of at least
six (6) directors until January 1, 2001, on and after which time
such Bylaw amendments may be amended or rescinded by a simple
majority vote of its Board of Directors as provided in the Bylaws
of NBI.
(G) NBI Corporate Actions. Effective as of the Merger
Effective Date, NBI shall obtain the resignations of five
directors currently serving on the NBI Board of Directors spread
as nearly equally as possible among the three classes of NBI
directors, thereby reducing the number of persons then serving on
the NBI Board of Directors to five and, in conjunction with the
amendment to the NBI Bylaws referred to in (F)(1) above, creating
four vacancies on the NBI Board of Directors ("NBI Board
Vacancies"). NBI agrees that the remaining five NBI directors
shall fill the NBI Board Vacancies with four persons selected by
BTC ("BTC Board Representatives") from among the current members
of the BTC Board of Directors by electing them to the NBI Board
Vacancies until the next following annual shareholders meeting.
NBI further agrees that, unless any BTC Board Representative's
service on the Board is terminated for cause in accordance with
the provisions of NBI's Articles of Incorporation, it shall
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renominate the BTC Board Representatives for reelection to the
remaining term of their respective classes at the next annual
shareholders meeting following the Merger Effective Date and
shall continue to renominate for reelection by the NBI
shareholders those of the BTC Board Representatives who must
stand for reelection as a result of the expiration of their class
term as of the NBI annual shareholders meetings in 1997, 1998,
1999, and 2000, respectively. In the event of the death or
resignation of any BTC Board Representative creating a vacancy on
the NBI Board of Directors at any time before the NBI annual
shareholders meeting in 2000, the Board of the Continuing
Corporation shall be entitled to select a replacement to fill
such vacancy and the NBI Board shall elect such replacement to
fill the vacancy created by such death or resignation.
Thereafter, such replacement director shall be deemed to be a BTC
Board Representative within the meaning of this Paragraph (G).
On the Merger Effective Date, or as soon thereafter as
practicable, the NBI Board of Directors shall appoint an
Executive Committee consisting of five (5) of its members, two
(2) of whom shall be BTC Board Representatives.
II. MERGER CONSIDERATION
(A) Outstanding NBI Interim Bank Common Stock. Each share
of NBI Interim Bank Common Stock issued and outstanding
immediately prior to the Merger Effective Date, on and after the
Merger Effective Date, shall be converted automatically into
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1,888.209 shares of common stock of the Continuing Corporation
and shall constitute the only issued and outstanding shares of
common stock of the Continuing Corporation.
(B) Outstanding BTC Common Stock. Each share (excluding
shares held by BTC or by NBI or by its subsidiary, in each case
other than in a fiduciary capacity or as a result of debts
previously contracted) of BTC Common Stock issued and outstanding
immediately prior to the Merger Effective Date shall, by virtue
of the Merger, automatically and without any action on the part
of the holder thereof on the Merger Effective Date, become and be
converted into the right to receive one share of NBI Common Stock
(the "Exchange Ratio"), it being understood that such Exchange
Ratio takes into account the share dividend to be declared by the
NBI Board of Directors as set forth in Paragraph (F) below.
(C) Stockholder Rights; Stock Transfers. On the Merger
Effective Date, holders of BTC Common Stock shall cease to be,
and shall have no rights as, stockholders of BTC other than to
receive the Merger consideration provided under Paragraph (B)
above and Paragraph (D) below. After the Merger Effective Date,
there shall be no transfers on the stock transfer books of BTC or
the Continuing Corporation of the shares of BTC Common Stock
which were issued and outstanding immediately prior to the Merger
becoming effective.
(D) Fractional Shares. Notwithstanding any other provision
hereof, no fractional shares of NBI Common Stock and no
certificates or scrip therefor, or other evidence of ownership
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thereof, will be issued in the Merger; instead, NBI shall pay to
each holder of BTC Common Stock who would otherwise be entitled
to a fractional share an amount in cash determined by multiplying
such fractional share by the closing sale price of BTC Common
Stock for the final bona fide trade on the last day on which such
stock has traded prior to the Merger Effective Date, as reflected
in the NASD Bulletin Board.
(E) Exchange Procedures. As promptly as practicable after
the Merger Effective Date, NBI shall send or cause to be sent to
each former stockholder of BTC of record immediately prior to the
Merger Effective Date transmittal materials for use in exchanging
such stockholder's certificates of BTC for the consideration set
forth in Paragraphs (B) and (D) above. Any fractional share
checks which a BTC stockholder shall be entitled to receive in
exchange for such stockholder's shares of BTC Common Stock, and
any dividends paid on any shares of NBI Common Stock, that such
stockholder shall be entitled to receive prior to the delivery to
NBI of such stockholder's certificates representing all of such
stockholder's shares of BTC Common Stock will be delivered to
such stockholder only upon delivery to NBI of the certificates
representing all of such shares (or indemnity satisfactory to
NBI, in its judgment, after consultation with the President of
the Continuing Corporation, if any of such certificates are lost,
stolen or destroyed). No interest will be paid on any such
fractional share checks or dividends which the holder of such
shares shall be entitled to receive upon such delivery. After
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the Merger Effective Date, to the extent permitted by law, former
stockholders of record of BTC shall be entitled to vote at any
meeting of holders of NBI Common Stock, the number of whole
shares of NBI Common Stock into which their respective shares of
BTC Common Stock are converted, regardless of whether such
holders have exchanged their certificates representing BTC Common
Stock for certificates representing NBI Common Stock in
accordance with the provisions of this Plan.
(F) Share Dividend. NBI agrees to increase the number of
shares of NBI Common Stock issued and outstanding by means of a
stock dividend totalling 190,768 shares of NBI Common Stock, the
record date therefor which shall be prior to the Merger Effective
Date; provided, however, that NBI shall not be required to
declare such stock dividend until: (1) satisfaction of the
conditions set forth in Paragraphs (A), (B) and (C) of Article
VI; and (2) such time as BTC acknowledges in writing that all
conditions to its obligation to consummate the Merger (and BTC's
right to terminate this Plan) have been waived or satisfied.
(G) Shares Held by BTC or NBI. Each of the shares of BTC
Common Stock held by BTC, by NBI or its subsidiary, in each case
other than in a fiduciary capacity or as a result of debts
previously contracted, shall be canceled and retired at the
Merger Effective Date and no consideration shall be issued in
exchange therefor.
(H) Dissenting Stockholders. Any holder of shares of BTC
Common Stock who perfects his dissenters' rights of appraisal in
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accordance with and as contemplated by Article 15 of the Virginia
Stock Corporation Act shall be entitled to receive the value of
such shares in cash as determined pursuant to the provision of
such law; provided, however, that no such payment shall be made
to any dissenting stockholder unless and until such dissenting
stockholder has complied with the applicable provisions of the
Virginia Stock Corporation Act and duly surrendered the
certificate or certificates representing the shares for which
payment is being made. In the event that a dissenting BTC
shareholder fails to perfect, or effectively withdraws or loses,
his right to appraisal and payment for his shares, after the
Merger Effective Date, NBI shall issue and deliver the
consideration to which such holder of BTC Common Stock is
entitled under Article II (without interest) upon surrender by
such holder of the certificate or certificates representing
shares of BTC Common Stock held by him.
III. ACTIONS PENDING MERGER
A. Without the prior written consent or approval of a proper
officer of the other party, BTC and NBI will not and NBI will
cause its subsidiary NBB, not to:
(1) Stock Distributions. Make, declare or pay any dividend
other than dividends from NBB to NBI, the NBI share dividend as
provided in Paragraph (F) of Article II, or BTC or NBI Common
Stock cash dividends consistent with past practice and in an
amount not greater than the last previous cash dividend paid
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prior hereto by NBI or BTC, as the case may be (provided,
however, that in the case of BTC, it may at its option accelerate
the record and payment dates of its semi-annual cash dividend, if
any, which would regularly in accordance with past practice be
payable in January, 1996 or July, 1996 ("BTC January or July cash
dividend", as the case may be) so that the record and payment
dates of the BTC January or July cash dividend, as the case may
be, occur prior to the Merger Effective Date if the Merger
Effective Date will occur: (a) after the record date of the
second semi-annual NBI cash dividend, if any, for 1995 which
would regularly in accordance with past practices be payable in
December, 1995, but prior to the BTC January cash dividend if it
were not so accelerated or (b) after the record date of the first
semi-annual NBI cash dividend, if any, for 1996 which would
regularly in accordance with past practices be payable in June,
1996 but prior to the BTC July cash dividend if it were not so
accelerated) and any limitations on the payment of dividends
Previously Disclosed or declare or make any distribution on, or
directly or indirectly combine, redeem, reclassify, purchase or
otherwise acquire, any shares of its capital stock (other than in
a fiduciary capacity in the ordinary course of its business and
consistent with past practice or in connection with stock
received on a debt previously contracted basis) or authorize the
creation or issuance of, or issue, any additional shares of its
capital stock, or any options, calls or commitments relating to
its capital stock or any securities or obligations convertible
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into or exchangeable for, or giving any person any right to
subscribe for or acquire from its shares of its capital stock or
any securities or obligations convertible into or exchangeable
for shares of its capital stock, or issue any long-term debt;
(2) Employment Contracts. Enter into any employment
contracts with, increase the rate of compensation of (except in
accordance with existing policy consistent with past practice or
pursuant to any agreement existing and as in effect on the date
hereof and Previously Disclosed), or pay or agree to pay any
bonus to, any of its directors, officers or employees, except in
accordance with plans or agreements existing and as in effect on
the date hereof and Previously Disclosed;
(3) Employee Benefit Plans. Enter into or modify (except
as may be required by applicable law) any pension, retirement,
stock option, stock purchase, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other
employee benefit, incentive or welfare contract, plan or
arrangement, or any trust agreement related thereto, in respect
of any of its directors, officers or other employees, including
without limitation taking any action that accelerates (1) the
vesting or exercise of any benefits payable thereunder, or (2)
the right to exercise any employee stock options or stock
appreciation rights outstanding thereunder;
(4) Asset Disposition. Dispose of, grant an encumbrance
against or discontinue any portion of its assets, business or
properties, which is material to BTC or to NBI and its subsidiary
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taken as a whole, as the case may be, or merge or consolidate
with, or acquire all or any substantial portion of, the business
or property of any other entity (except foreclosures,
acquisitions of control in its fiduciary capacity or
securitization transactions, in each case in the ordinary course
of business consistent with past practice or the formation and
capitalization of NBI Interim Bank by NBI in accordance with the
Plan);
(5) Constituent Documents. Amend its Articles of
Incorporation or Bylaws except as contemplated by this Plan.
True and correct copies of its Articles of Incorporation and
Bylaws have been delivered to the other;
(6) Material Transactions. (a) Settle any material
litigation or (b) enter into any material transaction or make any
material commitment relating to the assets and business of BTC or
NBI and its subsidiary taken as a whole, otherwise than as
contemplated hereby or in the ordinary course of business
consistent with past practice;
(7) Actions Not in Ordinary Course. Take any other action
not in the ordinary course of business consistent with past
practice; or
(8) Agreements. Agree to take any of the foregoing
actions.
B. Formation of NBI Interim Bank. NBI agrees that, promptly
after the execution hereof, it shall cause to be formed a
Virginia corporation which shall be named and become NBI Interim
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Bank. The authorized capital stock of NBI Interim Bank shall
consist of 50,000 shares of common stock, $1.00 par value, of
which 1,000 shares shall be subscribed for by NBI pending
consummation of the Plan. NBI shall file any governmental
applications necessary to qualify NBI Interim Bank to merge with
BTC as contemplated hereby. NBI shall cause NBI to execute the
Articles of Merger and to take all steps necessary to consummate
the Merger provided that no such steps need be taken which
materially adversely impacts the economic or business benefits of
the transactions contemplated by this Plan so as to render
inadvisable the consummation of the Merger.
IV. REPRESENTATIONS AND WARRANTIES
BTC hereby represents and warrants to NBI, and NBI hereby
represents and warrants to BTC, as follows:
(A) Recitals. The facts set forth in the Recitals of this
Plan with respect to it and, in the case of NBI, its subsidiary,
are true and correct;
(B) Capitalization. The outstanding shares of it and, in
the case of NBI, its subsidiary, are validly issued and
outstanding, fully paid and nonassessable, and in the case of NBI
only, subject to no preemptive rights;
(C) General Corporate Power and Ownership of Properties.
It, and in the case of NBI, its subsidiary, have the corporate
power and authority to carry on its business as it is now being
conducted and to own all of its material properties and assets
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and it and, in the case of NBI, its subsidiary have good and
marketable title to or a valid leasehold interest in all of the
properties and assets thereof reflected as owned or leased in its
balance sheet as of December 31, 1994, and included in the
Financial Reports as hereinafter defined and in all properties
and assets acquired or leased by it or, in the case of NBI, its
subsidiary, since December 31, 1994. None of such properties is
subject to any mortgage, pledge, lien, security interest,
encumbrance, restriction or charge of any kind except: (1)
mechanic's, carrier's, worker's or similar liens arising in the
ordinary course of business; (2) as Previously Disclosed; (3)
imperfections of title, if any, none of which is material in
amount or materially detracts from the value or impairs the
existing use of the property subject thereto or the operations of
BTC or, in the case of NBI, NBI and its subsidiary taken as a
whole; and (4) liens of current taxes not due and payable;
(D) Specific Corporate Authority. Subject to any necessary
receipt of approval by its stockholders and the regulatory
approvals referred to in Paragraphs (B) and (C) of Article VI,
this Plan has been authorized by all necessary corporate action
of it and is a valid and binding agreement of it enforceable
against it in accordance with its terms, subject to (1)
bankruptcy, insolvency and other laws of general applicability
relating to or affecting creditors' rights; (2) general equity
principles; and (3) in the case of BTC, Section 8 of the Federal
Deposit Insurance Act;
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(E) No Default. The execution, delivery and performance of
this Plan and the consummation of the transactions contemplated
hereby and thereby by it, will not constitute: (1) a breach of
violation of, or a default under, any law, rule or regulation or
any judgment, decree, order, governmental permit or license,
franchise or agreement, indenture, instrument or authorization of
or held by it or, in the case of NBI, its subsidiary or to which
it or, in the case of NBI, its subsidiary or their respective
properties is subject or bound, which breach, violation or
default is reasonably likely to have a Material Adverse Effect on
it; or (2) a breach or violation of, or a default under, its
Articles of Incorporation or Bylaws;
(F) Financial Reports. Except as Previously Disclosed, (1)
in the case of NBI only, its Annual Report on Form 10-K, for the
fiscal year ended December 31, 1994, and all other documents
filed or to be filed subsequent to December 31, 1994 under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act in the
form filed with the Securities and Exchange Commission (the
"SEC"), all of which have been Previously Disclosed, and (2) in
the case of BTC only (a) its reports to shareholders for the
fiscal years ended December 31, 1993 and December 31, 1994,
together with the audited balance sheets and related statements
of income, stockholder's equity and changes in financial position
for the same periods as Previously Disclosed; (b) all
correspondence and other reports to BTC shareholders during 1993,
1994 and 1995, all of which have been Previously Disclosed; (c)
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all proxy solicitations related to BTC's meetings of shareholders
(whether annual or special) during 1993, 1994 and 1995 (all of
the foregoing reports and documents of NBI and BTC are
hereinafter referred to as "Financial Reports") did not and will
not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary
to make the statements made therein, in light of the
circumstances under which they were made, not misleading; and
each of the balance sheets in or incorporated by reference into
the Financial Reports (including the related notes and schedules
thereto) fairly presents and will fairly present the financial
position of the entity or entities to which it relates as of its
date and each of the statements of income and changes in
stockholders' equity and cash flows or equivalent statements in
the Financial Reports (including any related notes and schedules
thereto) fairly presents and will fairly present the results of
operations, changes in stockholders' equity and changes in cash
flows, as the case may be, of the entity or entities to which it
relates for the periods set forth therein, in each case in
accordance with generally accepted accounting principles
consistently applied, except as may be noted therein, subject to
normal and recurring year-end audit adjustments in the case of
unaudited statements;
(G) Regulatory Reports. BTC has Previously Disclosed to
NBI, and NBI has Previously Disclosed to BTC, copies of (1) BTC's
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and, in the case of NBI, NBB's "Annual Report of Condition and
Income" on Form FFIEC 033, as delivered to the appropriate bank
regulatory authority for the years ended December 31, 1993 and
December 31, 1994, and for the periods ending March 31, 1995 and
June 30, 1995, respectively; (2) all other material reports and
documents filed with or sent to any federal or state regulatory
authority by it, or in the case of NBI, NBB during 1994 and 1995;
and (3) to the extent not prohibited by law, all reports of any
state or federal regulatory authority relating to it or, in the
case of NBI, NBB and received during or relating to matters in
1994 or 1995 (all of the foregoing reports and documents are
hereinafter referred to as "Regulatory Reports"). As of their
respective dates the Regulatory Reports referred to in (1) and
(2) above complied in all material respects with all legal and
regulatory requirements applicable thereto and the Regulatory
Reports referred to in (1) above are accurate in all material
respects and fairly present the financial condition and income of
the reporting entity for the period(s) covered thereby.
(H) Material Events. Except as Previously Disclosed, since
December 31, 1994, no event has occurred which is reasonably
likely to have a Material Adverse Effect on it;
(I) Litigation. Except as Previously Disclosed, no
litigation, proceeding or controversy before any court or
governmental agency is pending which is reasonably likely to have
a Material Adverse Effect on it and, to the best of its
knowledge, no such litigation, proceeding or controversy has been
threatened; and except as Previously Disclosed neither it, nor in
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the case of NBI, NBB, nor their respective properties is a party
to or is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter
or similar submission to, any federal or state governmental
agency or authority charged with the supervision or regulation of
depository institutions or engaged in the insurance of deposits
which restricts or purports to restrict in any material respect
the conduct of the business of it, in the case of NBI, NBB or
their respective properties, or in any manner relates to the
capital, liquidity, credit policies or management of it or, in
the case of NBI, NBB; and, except as Previously Disclosed,
neither it nor, in the case of NBI, NBB has been advised by any
such regulatory authority that such authority is contemplating
issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, decree, agreement,
memorandum of understanding, commitment letter or similar
submission;
(J) Material Contracts. Except as Previously Disclosed or
as previously disclosed in the Financial Reports and except for
this Plan, neither it nor in the case of NBI, NBB is bound by any
material (as to it and its subsidiaries taken as a whole)
contract to be performed after the date hereof;
(K) Commissions. All negotiations relative to this Plan
and the transactions contemplated hereby have been carried on by
it directly with the other parties hereto and no action has been
taken by it that would give rise to any valid claim against any
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party hereto for a brokerage commission, finder's fee or other
like payment, excluding a fee in an amount Previously Disclosed
to be paid to McKinnon Co., Inc., who have acted as financial
advisors to NBI, and a fee to be paid to Baxter Fentriss &
Company, who has acted as financial advisor to BTC;
(L) ERISA. Except as Previously Disclosed:
(1) all "employee benefit plans" within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), covering employees or former
employees of it and its subsidiaries (the "Employees") are
Previously Disclosed, true and complete copies of which have been
made available to the other party;
(2) all employee benefit plans covering Employees, to
the extent subject to ERISA (the "ERISA Plans"), are in
compliance with ERISA, except for failure to so comply which are
not reasonably likely, individually or in the aggregate, to have
a Material Adverse Effect on it; each ERISA Plan which is an
"employee pension benefit plan" within the meaning of Section
3(2) of ERISA ("Pension Plan") and which is intended to be
qualified under Section 401(a) of the Internal Revenue Code of
1986, as amended (the "Code"), has either (a) received a
favorable determination letter from the Internal Revenue Service,
or (b) is or will be the subject of an application for a
favorable determination letter, and it is not aware of any
circumstances likely to result in the revocation or denial of any
such favorable determination letter; there is no pending or, to
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the best of its knowledge, threatened litigation relating to the
ERISA Plans which is reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on it; and neither
it nor, in the case of NBI, NBB has engaged in a transaction with
respect to any ERISA Plan that, assuming the taxable period of
such transaction expired as of the date hereof, would subject it
or, in the case of NBI, NBB to a tax or penalty imposed by either
Section 4975 of the Code or Section 502(i) of ERISA in an amount
which is reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect on it;
(3) no liability under Subtitle C or D of Title IV of
ERISA has been or is expected to be incurred by it or, in the
case of NBI, NBB with respect to any ongoing, frozen or
terminated "single-employer plan", within the meaning of Section
4001(a)(15) of ERISA, currently or formerly maintained by any of
them or any entity which is considered one "employer" with it
under Section 4001(a)(14) of ERISA or Section 414 of the Code (an
"ERISA Affiliate"), which liability is reasonably likely to have
a Material Adverse Effect on it; it and its subsidiaries have not
incurred and do not expect to incur any withdrawal liability with
respect to a multiemployer plan under Subtitle E of Title IV of
ERISA; and to its knowledge no notice of a "reportable event"
within the meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required to
be filed for any Pension Plan or the Pension Plan of an ERISA
Affiliate within the 12-month period ending on the date hereof;
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(4) during the current plan year and the immediately
preceding three plan years of such ERISA Plan, all contributions
required to be made under the terms of any ERISA Plan of it, or
in the case of NBI, NBB or an ERISA Affiliate have been timely
made; and no pension plan of it, in the case of NBI, NBB, or an
ERISA Affiliate has an "accumulated funding deficiency" (whether
or not waived) within the meaning of Section 412 of the Code or
Section 302 of ERISA which is reasonably likely, individually or
in the aggregate, to have a Material Adverse Effect on it;
(5) under each Pension Plan which is a single-employer
plan, as of the last day of the most recent plan year ended prior
to the date hereof, the actuarially determined present value of
all "benefit liabilities", within the meaning of Section
4001(a)(16) of ERISA (as determined on the basis of the actuarial
assumptions contained in the ERISA Plan's most recent actuarial
valuation) did not exceed the then current value of the assets of
such ERISA Plan, and there has been no material adverse change in
the financial position of such ERISA Plan since the last day of
the most recent plan year; and
(6) there are no material current or projected
liabilities for retiree health or life insurance benefits;
(M) Regulatory Approvals. It knows of no reason why the
regulatory approvals referred to in Paragraphs (B) and (C) of
Article VI should not be obtained without the imposition of any
condition of the type referred to in the proviso following such
Paragraph (C);
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(N) Subsidiaries. In the case of BTC, it has no
subsidiaries. NBI has one subsidiary, which is NBB, and NBB has
one subsidiary, which is NB Operating, Inc.
(O) Collective Bargaining Contracts. Neither it nor in the
case of NBI, NBB is a party to, or is bound by any collective
bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization, nor is it
or in the case of NBI, NBB the subject of a proceeding asserting
that it and in the case of NBI, NBB has committed an unfair labor
practice (within the meaning of the National Labor Relations Act)
or seeking to compel it or such subsidiary to bargain with any
labor organization as to wages and conditions of employment, nor
is there any strike or other labor dispute involving it or in the
case of NBI, NBB pending or, to the best of its knowledge,
threatened, nor is it aware of any activity involving it or in
the case of NBI, NBB's employees seeking to certify a collective
bargaining unit or engaging in any other organization activity;
(P) Classified Assets. (1) NBI has Previously Disclosed a
list of the aggregate amounts of loans, extensions of credit or
other assets of NBB, that have been classified as of June 30,
1995 by NBB ("NBB Asset Classification") and (2) BTC has
Previously Disclosed a list of the loans, extensions of credit or
other assets of BTC that were classified by the examiners of the
Board of Governors of the Federal Reserve System in its last
preceding examination ("BTC Asset Classification") and has
Previously Disclosed a list of its loans and extensions of credit
26
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by BTC in the respective initial principal amount of $100,000 or
more, any payment of which is, as of the date so disclosed,
delinquent ("BTC Delinquent Loan List"). The NBB Asset
Classification, the BTC Asset Classification and the BTC
Delinquent Loan List are, respectively, accurate and complete in
all material respects and no amounts of loans, extensions of
credit or other assets that have been classified as of the
respective date of the NBB or BTC Asset Classification by any
regulatory examiner as "Other Loans Specially Mentioned",
"Substandard", "Doubtful", "Loss", or words of similar import are
excluded from the amounts disclosed in the NBB or BTC Asset
Classification as of the respective date thereof other than
amounts of loans, extensions of credit or other assets that were
charged off by BTC or NBB, as the case may be, prior to the
respective date of the NBB or BTC Asset Classification;
(Q) Affiliates. Except as Previously Disclosed, to the
best of its knowledge, there is no person who, as of the date of
this Plan, may be deemed to be an "affiliate" of BTC or NBI as
that term is used in Rule 145 under the Securities Act of 1933,
as amended (together with the rules and regulations thereunder,
the "Securities Act"; hereinafter the Securities Act and the
Exchange Act are referred to as the "Federal Securities Laws");
(R) Insurance Policies. It has made available to the other
party correct and complete copies of all of its and in the case
of NBI, NBB's insurance policies respecting the properties,
operations, liabilities, officers, directors and employees
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thereof, all of which are in full force and effect or provide
coverage to it, and in the case of NBI, NBB or their officers,
directors and employees.
(S) NBI Stock. In the case of NBI only, the shares of NBI
Common Stock to be issued in exchange for shares of BTC Common
Stock, upon consummation of the Merger, will have been duly
authorized and, when issued in accordance with the terms of this
Plan, will be validly issued, fully paid and nonassessable and
subject to no preemptive rights;
(T) Takeover Laws. It has taken all necessary action to
exempt the transactions contemplated by this Plan from, or the
transactions contemplated by this Plan are otherwise exempt from,
any applicable state takeover laws in effect as of the date of
this Plan, including, without limitation, Articles 14 and 14.1 of
the Virginia Stock Corporation Act;
(U) Approval of This Transaction. It has taken all action
so that the entering into of this Plan and the consummation of
the transactions contemplated hereby and thereby (including
without limitation the Merger) or any other action or combination
of actions, or any other transactions, contemplated hereby or
thereby do not and will not (1) require a vote of stockholders
(other than as set forth in Paragraph (A) of Article VI); or (2)
result in the grant of any rights to any person under its
Articles of Incorporation or Bylaws or under any agreement; or
(3) except as set forth in Paragraphs (B) and (C) of Article VI,
require any consent or approval under any law, rule, regulation,
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judgment, decree, order, governmental permit or license or,
except as Previously Disclosed, the consent or approval of any
other party to any agreement, indenture or instrument.
(V) Environmental Laws. (1) To its knowledge, it and in
the case of NBI, NBB, the Participation Facilities and the Loan
Properties (each as defined below) are, and have been, in
compliance with all Environmental Laws (as defined below), except
for instances of noncompliance which are not reasonably likely,
individually or in the aggregate, to have a Material Adverse
Effect on it;
(2) there is no proceeding pending or, to its
knowledge, threatened before any court, governmental agency or
board or other forum in which it or in the case of NBI, NBB or
any Participation Facility has been, or with respect to
threatened proceedings, reasonably would be expected to be, named
as a defendant or potentially responsible party (a) for alleged
noncompliance (including by any predecessor) with any
Environmental Law or (b) relating to the release or threatened
release into the environment of any Hazardous Material (as
defined below), whether or not occurring at or on a site owned,
leased or operated by it or in the case of NBI, NBB or any
Participation Facility, except for such proceedings pending or
threatened that are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on it;
(3) to its knowledge, there is no proceeding pending
or threatened before any court, governmental agency or board or
29
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other forum in which any Loan Property (or it or in the case of
NBI, NBB in respect of any Loan Property) has been, or with
respect to threatened proceedings, reasonably would be expected
to be, named as a defendant or potentially responsible party (a)
for alleged noncompliance (including by any predecessor) with any
Environmental Law or (b) relating to the release or threatened
release into the environment of any Hazardous Material, whether
or not occurring at or on a Loan Property, except for such
proceedings pending or threatened that are not reasonably likely,
individually or in the aggregate, to have a Material Adverse
Effect on it;
(4) to its knowledge, there is no reasonable basis for
any proceeding of a type described in subparagraphs (2) or (3)
above;
(5) to its knowledge, during the period of (a) its or
in the case of NBI, NBB's ownership or operation of any of their
respective current properties, (b) its or in the case of NBI,
NBB's participation in the management of any Participation
Facility, or (c) its or in the case of NBI, NBB's holding of a
security interest in a Loan Property, there have been no releases
of Hazardous Material in, on, under or affecting any such
property, Participation Facility or Loan Property, except for
such releases that are not reasonably likely, individually or in
the aggregate, to have a Material Adverse Effect on it;
(6) to its knowledge, prior to the period of (a) its
or in the case of NBI, NBB's ownership or operation of any of
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their respective current properties, (b) its or in the case of
NBI, NBB's participation in the management of any Participation
Facility, or (c) its or in the case of NBI, NBB's holding of a
security interest in a Loan Property, there were no releases of
Hazardous Material in, on, under or affecting any such property,
Participation Facility or Loan Property, except for such releases
that are not reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect on it;
(7) the following definitions apply for purposes of
this Paragraph (V): "Loan Property" means any property owned by
it or in the case of NBI, NBB or in which it or in the case of
NBI, NBB holds a security interest, and, where required by the
context, includes the owner or operator of such property, but
only with respect to such property; "Participation Facility"
means any facility in which it or in the case of NBI, NBB
participates in the management and, where required by the
context, includes the owner or operator or such property, but
only with respect to such property; "Environmental Law" means (a)
any federal, state and local law, statute, ordinance, rule,
regulation, code, license, permit, authorization, approval,
consent, legal doctrine, order, judgment, decree, injunction,
requirement or agreement with any governmental entity, relating
to (i) the protection, preservation or restoration of the
environment (including, without limitation, air, water vapor,
surface water, groundwater, drinking water supply, surface land,
subsurface land, plant and animal life or any other natural
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resource), or to human health or safety, or (ii) the exposure to,
or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production,
release or disposal of Hazardous Material, in each case as
amended and as now in effect and includes, without limitation,
the federal Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act, the federal Water Pollution Control Act of
1972, the federal Clean Air Act, the federal Clean Water Act, the
federal Resource Conservation and Recovery Act of 1976 (including
the Hazardous and Solid Waste Amendments thereto), the federal
Solid Waste Disposal Act and the federal Toxic Substances Control
Act, and the Federal Insecticide, Fungicide and Rodenticide Act,
the Federal Occupational Safety and Health Act of 1970, the
Consumer Protection Act, each as amended and as now in effect,
and (b) any common law or equitable doctrine (including, without
limitation, injunctive relief and tort doctrines such as
negligence, nuisance, trespass and strict liability) that may
impose liability or obligations for injuries or damages due to,
or threatened as a result of, the presence of or exposure to any
Hazardous Material; "Hazardous Material" means any substance
presently listed, defined, designated or classified as hazardous,
toxic, radioactive or dangerous, or otherwise regulated, under
any Environmental Law, whether by type or quantity, and includes,
without limitation, any oil or other petroleum product, toxic
waste, pollutant, contaminant, hazardous substance, toxic
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substance, hazardous waste, special waste or petroleum or any
derivative or by-product thereof, radon, radioactive material,
asbestos, asbestos containing material, urea formaldehyde foam
insulation, lead and polychlorinated biphenyl;
(W) Taxes. Except as Previously Disclosed, (1) all reports
and returns with respect to Taxes (as defined below) that are
required to be filed by or with respect to it or in the case of
NBI, NBB, including without limitation consolidated federal
income tax returns of it and in the case of NBI, NBB
(collectively, the "Tax Returns"), have been duly filed, or
requests for extensions have been timely filed and have not
expired, for periods ended on or prior to June 30, 1995, and on
or prior to the date of the most recent fiscal year end
immediately preceding the Merger Effective Date, except to the
extent all such failures to file, taken together, are not
reasonably likely to have a Material Adverse Effect on it, and
such Tax Returns were true, complete and accurate in all material
respects, (2) all taxes (which shall mean federal, state, local
or foreign income, gross receipts, windfall profits, severance,
property, production, sales, use, license, excise, franchise,
employment, withholding or similar taxes imposed on the income,
properties or operations of it or in the case of NBI, NBB,
together with any interest, additions, or penalties with respect
thereto and any interest in respect of such additions or
penalties, collectively the "Taxes") shown to be due on the Tax
Returns have been paid in full, (3) the Tax Returns have been
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examined by the Internal Revenue Service or the appropriate
state, local or foreign taxing authority or the period for
assessment of the Taxes in respect of which such Tax Returns were
required to be filed has expired, (4) all Taxes due with respect
to completed and settled examinations have been paid in full, (5)
no issues have been raised by the relevant taxing authority in
connection with the examination of any of the Tax Returns which
are reasonably likely to result in a determination that would
have a Material Adverse Effect on it, except as reserved against
in its Financial Reports, and (6) no waivers of statutes of
limitations (excluding such statutes that relate to years
currently under examination by the Internal Revenue Service) have
been given by or requested with respect to any Taxes of it or in
the case of NBI, NBB;
(X) Legal Compliance. It and in the case of NBI, NBB are
in substantial compliance with all applicable laws relating to
their business or employment practices or the ownership of their
properties and are in substantial compliance with each applicable
law, ordinance, order, decree or resolution of any governmental
entity applicable to the conduct thereof or the ownership of the
properties thereto in each case which either alone or in the
aggregate have or would have a Material Adverse Effect on it.
(Y) Certain Interests. Except in arm's length transactions
pursuant to normal commercial terms and conditions, no executive
officer or director of it or in the case of NBI, NBB has any
material interest in any property, real or personal, tangible or
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intangible, used in or pertaining to the business of it and in
the case of NBI, NBB, except for the usual rights of a
shareholder in it; no such person is indebted to it or in the
case of NBI, NBB, except for normal business expense advances;
and neither it nor in the case of NBI, NBB is indebted to such
person except for amounts due under normal and disclosed
compensation arrangements or reimbursement of ordinary business
expenses.
(Z) Licenses. It and in the case of NBI, NBB have in
effect all approvals, authorizations, consents, licenses,
clearances, and orders of and registrations with all governmental
and regulatory authorities the failure to have and comply with
which either alone or in the aggregate would have a Material
Adverse Effect on it.
(AA) Liabilities. Except to the extent reflected or
reserved against in it's Financial Reports and except as
Previously Disclosed or incurred in the ordinary course of
business since the date of its most recent Financial Report, it
and in the case of NBI, NBB has no material liability or
obligation of any nature whether accrued, absolute, contingent or
otherwise and whether due or to become due;
(BB) Pooling of Interests. It has taken no action that
would cause the Merger to fail to qualify for pooling of
interests accounting treatment; and
(CC) Ten Percent Shareholders. It has no shareholder who
owns of record or beneficially 10% or more of the outstanding
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shares of BTC Common Stock, or NBI Common Stock, as the case may
be, and there is no person known to it who, directly or
indirectly, through any contract, arrangement, understanding,
relationship or otherwise has or shares (1) voting power which
includes the power to vote or to direct the voting of, such
shares and/or (2) investment power, which includes the power to
dispose or to direct the disposition, of 10% or more of the
outstanding shares of BTC Common Stock or NBI Common Stock, as
the case may be (all of the foregoing, "10% Ownership"). There
is no person to its knowledge who, directly or indirectly, has
created or uses a trust, proxy, power of attorney, pooling
arrangement or any other contract, arrangement or device with the
purpose or effect of divesting such person of 10% Ownership or
preventing the vesting of 10% Ownership. A person shall also be
deemed to be a beneficial owner for purposes of the foregoing if
that person has the right to acquire beneficial of such shares
within 60 days.
V. COVENANTS
BTC hereby covenants to NBI, and NBI hereby covenants to
BTC, that:
(A) Best Efforts to Complete Merger. Subject to the terms
and conditions of this Plan, it shall use its best efforts in
good faith to take, or cause to be taken, all actions, and to do,
or cause to be done, all things necessary, proper or desirable,
or advisable under applicable laws, as promptly as practicable so
36
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as to permit consummation of the Merger as soon as reasonably
practicable and to otherwise enable consummation of the
transactions contemplated hereby and shall cooperate fully with
the other parties hereto to that end (it being understood that
any amendments to the Registration Statement (as hereinafter
defined) or a resolicitation of proxies as a consequence of an
acquisition agreement by NBI or any of its subsidiaries shall not
violate this covenant), including (1) using its 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 referred to in Article VI, and each
of BTC and NBI shall use, and shall cause each of their
respective subsidiaries to use, its best efforts to obtain all
consents (governmental or other) necessary or desirable for the
consummation of the transactions contemplated by this Plan; and
(2) in the case of BTC, cooperating with NBI in supplying such
information as NBI may reasonably request in connection with any
public offerings of securities by NBI prior to the Merger
Effective Date;
(B) BTC Proxy Statement. In the case of BTC only, (1) it
shall promptly prepare and provide to NBI prior to its filing and
mailing a proxy statement (the "Proxy Statement") to be mailed to
the holders of BTC Common Stock in connection with the Merger and
to be filed by NBI in a registration statement (the "Registration
Statement") with the SEC, which shall conform to all applicable
legal requirements; (2) without limiting the foregoing, at the
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time such Proxy Statement or any amendment or supplement thereto
is mailed to holders of BTC Common Stock and at all times
thereafter up to and including the meeting of BTC shareholders
referred to in Subparagraph (3) of this Paragraph (B), the Proxy
Statement and such amendments and supplements will comply in all
material respects with the provisions (to the extent applicable)
of the Exchange Act and will not contain any untrue statement of
a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained
therein not misleading; provided, however, in no event shall any
party hereto be liable for any untrue statement of a material
fact or omission to state a material fact in the Proxy Statement
made in reliance upon, and in conformity with, written
information concerning another party furnished by such other
party specifically for use in the Proxy Statement; (3) it shall
hold a special meeting (the "Meeting") of the holders of BTC
Common Stock as soon as practicable after the Registration
Statement has become effective for purposes of voting upon this
Plan, the Plan of Merger and the Merger contemplated hereby and
thereby, together with amendments to the BTC Articles of
Incorporation eliminating the preemptive rights of the holders of
shares of BTC Common Stock and conforming the BTC Articles
precisely to the provisions of Articles III and V of the Articles
of Incorporation of NBI Interim Bank by adding the same to and
eliminating any contrary, inconsistent or similar provisions from
the BTC Articles, including but not limited to the elimination in
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their entirety of the First and Third Amendments to the BTC
Articles which were adopted by the shareholders of BTC on March
17, 1992 (the "BTC Charter Amendment"); and (4) subject to the
fiduciary duties of the Board of Directors of BTC (as advised in
writing by its counsel), it shall use its best efforts to solicit
and obtain votes of the holders of BTC Common Stock in favor of
the above proposals and shall once, at NBI's request, recess or
adjourn the meeting for a period up to 45 days if such recess or
adjournment is deemed by NBI to be necessary or desirable;
(C) Registration Statement Contents. When the Registration
Statement or any post-effective amendment or supplement thereto
shall become effective, and at all times subsequent to such
effectiveness, up to and including the date of the Meeting, such
Registration Statement and all amendments or supplements thereto,
with respect to all information set forth therein furnished or to
be furnished by BTC relating to BTC and by NBI relating to NBI
and NBB, (1) will comply in all material respects with the
provisions of the Securities Act and any other applicable
statutory or regulatory requirements, and (2) will not contain
any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements contained therein not misleading; provided,
however, in no event shall any party hereto be liable for any
untrue statement of a material fact or omission to state a
material fact in the Registration Statement made in reliance
upon, and in conformity with, written information concerning
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another party furnished by such other party specifically for use
in the Registration Statement. In connection with the
preparation of the Registration Statement and related
Prospectus/Proxy Statement, each will cooperate with the other
and will furnish the information concerning itself required by
law to be included therein;
(D) Effectiveness of Registration Statement. NBI will
provide BTC a copy of the Registration Statement and any
supplement or amendment thereto before the same is filed and
advise BTC, promptly after NBI receives notice thereof, of the
time when the Registration Statement has become effective, of the
issuance of any stop order or the suspension of the qualification
of the NBI Common Stock for offering or sale in any jurisdiction,
of the initiation or threat of any proceeding for any such
purpose, or of any request by the SEC for the amendment or
supplement of the Registration Statement or for additional
information;
(E) Public Announcements. It agrees that, unless approved
by the other party hereto in advance, it will not issue any press
release or written statement for general circulation relating to
the transactions contemplated hereby, except as otherwise
required by law or applicable NASD or stock exchange rule;
(F) Review of Information. (1) Upon reasonable notice, it
shall afford the other party hereto, and its officers, employees,
counsel, accountants and other authorized representatives,
access, during normal business hours throughout the period prior
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<PAGE>
to the Merger Effective Date, to all of its and in the case of
NBI, NBB's properties, books contracts, commitments and records
and, during such period, it shall furnish promptly to the other
party hereto (a) a copy of each material report, schedule and
other document filed by it pursuant to the requirements of the
Securities Laws or any state laws, rules and regulations
regulating the issuance, sale or exchange of securities or the
markets in which any of the foregoing occurs ("Blue Sky Law(s)"
which together with the Federal Securities Laws are hereinafter
referred to as the "Securities Laws") or banking laws, and (b)
all other information concerning its business, properties and
personnel as the other parties hereto may reasonably request,
provided that no investigation pursuant to this Paragraph (F) by
any party shall affect or be deemed to modify or waive any
representation or warranty made by any other party hereto or the
conditions to the obligation of the first party to consummate the
transactions contemplated by the Plan; and (2) each party hereto
will not use any information obtained pursuant to this Paragraph
(F) for any purpose unrelated to the consummation of the
transactions contemplated by this Plan and, if the Merger is not
consummated, will hold all information and documents obtained
pursuant to this paragraph in confidence (as provided in
Paragraph (F) of Article VIII) unless and until such time as such
information or documents become publicly available other than by
reason of any action or failure to act by such party or as it is
advised by counsel that any such information or document is
41
<PAGE>
required by law or applicable NASD or stock exchange rule to be
disclosed,and in the event of the termination of this Plan, each
party will, upon request by the other party, deliver to the other
all documents so obtained by it or destroy such documents;
(G) No Solicitation. It: (1) shall not, and shall direct
the officers, directors, employees and other persons affiliated
with it or any investment banker, attorney, accountant or other
representative of it, not to, directly or indirectly, solicit or
encourage inquiries or proposals with respect to, or (except as
required by the fiduciary duties of its Board of Directors as
advised in writing by its counsel) furnish any nonpublic
information relating to or participate in any negotiations or
discussion concerning, any acquisition or purchase of all or a
substantial portion of the assets of, or a substantial equity
interest in, it or in the case of NBI, NBB or any merger or other
business combination with it or in the case of NBI, NBB other
than as contemplated by this Plan; (2) shall notify the other
party immediately if any such inquiries or proposals are received
by, or any such negotiations or discussions are sought to be
initiated with, it or in the case of NBI, NBB; and (3) shall
instruct its officers, directors, agents, advisors and affiliates
(and in the case of NBI, NBB's executive officers and directors)
to refrain from doing any of the foregoing;
(H) Filing of Registration Statement. In the case of NBI
only, it shall, as promptly as practicable following the date of
this Plan, prepare and file the Registration Statement with the
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SEC and NBI shall use its best efforts to cause the Registration
Statement to be declared effective as soon as practicable after
the filing thereof;
(I) Blue Sky. In the case of NBI only, it shall use its
best efforts to obtain, prior to the effective date of the
Registration Statement, all necessary Blue Sky Law permits and
approvals, provided that NBI shall not be required by virtue
thereof to submit to general jurisdiction in any state. NBI
agrees to provide copies to BTC of applications for Blue Sky Law
permits and approvals prior to filing the same;
(J) Affiliates. It will cause each person who may be
deemed to be an "affiliate" of it for purposes of Rule 145 under
the Securities Act to execute and deliver to NBI on or before the
mailing of the Proxy Statement an agreement in the form attached
hereto as Exhibit B-1 (in the case of BTC affiliates) or in the
form attached hereto as Exhibit B-2 (in the case of NBI
affiliates) restricting the disposition of such affiliate's
shares of BTC or NBI Common Stock, as the case may be and, in the
case of BTC affiliates, the shares of NBI Common Stock to be
received by such person in exchange for such person's shares BTC
Common Stock;
(K) BTC Bylaws, Policies and Practices. In the case of BTC
only: (1) it shall cause its Board of Directors to conform its
Bylaws to those of NBI Interim Bank by adopting the Bylaws of NBI
Interim Bank which are in the form attached hereto as Exhibit C
as those of BTC excepting only the use of the name of NBI Interim
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Bank; and (2) it shall use its best efforts to modify and change
its credit, investment, litigation, real estate valuation and
trust department policies and practices (including loan
classifications and levels of reserves) prior to the Merger
Effective Date so as to be consistent on a mutually satisfactory
basis with those of NBB and generally accepted accounting
principles. BTC shall not be required to modify or change any
such bylaws, policies or practices, however, until (x)
satisfaction of the conditions set forth in Paragraphs (A), (B)
and (C) of Article VI, (y) such time as BTC and NBI shall
reasonably agree that the Merger Effective Date will occur prior
to public disclosure of such modifications or changes in regular
periodic earnings releases or periodic reports filed with the
FDIC, and (2) such time as NBI acknowledges in writing that all
conditions to NBI's obligation to consummate the Merger (and
NBI's rights to terminate this Plan) have been waived or
satisfied; provided, however, that in all circumstances BTC shall
make such modifications and changes not later than immediately
prior to the Merger Effective Date and provided, further, that
such modifications and changes, once implemented, shall not
affect the Exchange Ratio. BTC's representations, warranties and
covenants and contained in the Plan shall not be deemed to be
untrue or breached in any respect for any purpose as a
consequence of any modifications or changes undertaken solely on
account of this Paragraph (K);
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(L) State Takeover Laws. It shall not take any action that
would cause the transactions contemplated by this Plan to be
subject to any applicable state takeover statute in effect as of
the date of this Plan and shall take all necessary steps to
exempt (or ensure the continued exemption of) the transactions
contemplated by this Plan from, or if necessary challenge the
validity or applicability of, any applicable state takeover law,
as now or hereafter in effect, including, without limitation,
Articles 14 and 14.1 of the Virginia Stock Corporation Act;
(M) BTC Special Shareholder Rights. In the case of BTC
only: (1) it shall take all necessary steps to ensure that the
entering into of this Plan and the consummation of the
transactions contemplated hereby and thereby (including without
limitation the Merger) and any other action or combination of
actions, or any other transactions contemplated hereby or thereby
do not and will not result in the grant of any rights to any
person under the Articles of Incorporation of Bylaws of BTC
(other than the right, if any, of a dissenting stockholder under
Article 15 of the Virginia Stock Corporation Act and the right of
holders of BTC Common Stock to vote to approve this Plan) or
under any agreement to which BTC is a party, and (2) it shall use
its best efforts to cause the Charter Amendment to be adopted by
the shareholders of BTC and filed with and made effective by the
SCC prior to the Merger Effective Date;
(N) BTC Shareholder Approval Rights. In the case of BTC,
only, it shall not adopt any plan or other arrangement that would
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adversely affect in any way the rights of the holders of BTC
Common Stock to vote to approve this Plan;
(O) Best Efforts for Merger. It undertakes and agrees to
use its best efforts to cause the Merger to be effected and to
take no action which would cause the Merger to fail to qualify
for pooling of interests accounting treatment;
(P) Government Applications. In the case of NBI only, it
shall promptly seek the following consents and approvals with
respect to the Merger: (1) approval of the charter of the NBI
Interim Bank by the SCC ("Interim Approval"); (2) approval of the
Merger by the FDIC under the Bank Merger Act of 1960 ("FDIC
Approval"); (3) approval of the Merger by the BFI pursuant to Va.
Code @ 6.1-44 ("State Bank Merger Approval"); (4) approval of the
Merger by the Board of Governors of the Federal Reserve Board
under the Bank Holding Company Act, as amended ("FRB Approval");
and (5) approval of the BFI, to the extent necessary, under
Chapter 13 of Title 6.1 of the Code of Virginia ("State Holding
Company Approval"). Both NBI and BTC will use their best efforts
to obtain and will cooperate with each other in making
applications for the foregoing approvals or other actions
advisable in the reasonable judgment of NBI and BTC to consummate
the Merger including, but not limited to, promptly furnishing
information relating to it and its subsidiaries required to be
set forth therein; provided, however, that any approval shall not
require a change which materially adversely impacts the economic
or business benefits of the transactions contemplated by this
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Plan so as to render inadvisable the consummation of the Merger;
and provided, further, that NBI shall provide drafts of
applications for the foregoing approvals to BTC for review and
comment prior to their filing with the responsible governmental
agency, will inform BTC of any comments received from the
responsible governmental agency with respect to any of such
applications and filings and will notify BTC of the action, if
any, of the responsible governmental agency thereon as soon as
reasonably practicable after it receives notice thereof and BTC
agrees to review and provide any comments it may have promptly so
as not to delay or disrupt the application process;
(Q) Environmental Tests. It will allow the other to
conduct, through designated representatives, environmental and
engineering tests provided that no test or information discovered
pursuant thereto shall be deemed to affect or modify or waive any
representation or warranty made by the other party hereto or the
conditions to the obligation of the first party to consummate the
transactions contemplated by the Plan;
(R) Listing of NBI Common Stock. NBI will use its best
efforts, after the consummation of the Plan, to cause the NBI
Common Stock, including but not limited to the shares of NBI
Common Stock to be issued to the holders of shares of BTC Common
Stock in connection with the consummation of the Plan, to be
listed on the NASDAQ Stock Market ("NASDAQ Stock Market").
(S) Certain Continuing Corporation Obligations. After the
consummation of the Plan, the Continuing Corporation shall not
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<PAGE>
change, alter or amend its Bylaws as in effect at the time of the
Merger or issue or authorize to be issued any stock, common or
preferred, or other securities or options, warrants, rights to
subscribe to or securities or rights convertible into shares of
stock, common or preferred, or other securities, without the
consent of NBI.
VI. CONDITIONS TO CONSUMMATION OF THE MERGER.
Consummation of the Merger is conditioned upon:
(A) Approval of the Merger, the Charter Amendment and the
other transactions contemplated hereby by the requisite vote of
the stockholders of the parties hereto, as may be required;
(B) Issuance of a certificate of effectiveness for the
Charter Amendment by the SCC and procurement of the Interim
Approval, FDIC Approval, the State Bank Merger Approval, the FRB
Approval, and the State Holding Company Approval, as may be
necessary, and the expiration of any statutory waiting period
relating thereto;
(C) Procurement of all other regulatory consents and
approvals and satisfaction of all other requirements prescribed
by law which are necessary to the consummation of the Merger;
provided, however, that no approval or consent in Paragraph (B)
or (C) of this Article VI shall have imposed any condition or
requirement which would materially adversely impact the economic
or business benefits of the transactions contemplated by this
Plan so as to render inadvisable the consummation of the Merger;
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<PAGE>
(D) There shall not be in effect any order, decree or
injunction of any court or agency of competent jurisdiction that
enjoins or prohibits consummation of the Merger;
(E) BTC and its directors shall have received from KPMG Peat
Marwick letters, dated the date of or shortly prior to (i) the
mailing of the Proxy Statement, and (ii) the Merger Effective
Date, in form and substance satisfactory to BTC with respect to
NBI's consolidated financial position and results of operations,
which letters shall be based upon customary specified procedures
undertaken by such firm; and (iii) the Merger Effective Date to
the effect that they are not aware of any facts or circumstances
relating to actions taken by NBI or actions that NBI has failed
to take that might cause the Merger not to qualify for pooling of
interests accounting treatment.
(F) NBI shall have received from Cook Associates letters,
dated the date of or shortly prior to (1) the mailing of the
Proxy Statement, (2) the public offerings of any securities by
NBI prior to the Merger Effective Date, and (3) the Merger
Effective Date, in form and substance satisfactory to NBI with
respect to BTC's financial position and results of operations,
which letters shall be based upon customary specified procedures
undertaken by such firm, and NBI shall have received from Cook
Associates a letter, dated as of the Merger Effective Date in
form and substance satisfactory to NBI, to the effect that Cook
Associates are not aware of any facts or circumstances relating
to actions taken by BTC or actions that BTC has failed to take
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<PAGE>
that might cause the Merger not to qualify for pooling of
interests accounting treatment;
(G) BTC shall have received an opinion, dated the Merger
Effective Date, of Marilyn Buhyoff, counsel for NBI and the NBI
Interim Bank, in form reasonably satisfactory to BTC, which shall
cover the matters contained in Exhibit D hereto;
(H) NBI and its directors and officers who sign the
Registration Statement shall have received an opinion, dated the
Merger Effective Date: (1) of Bowen, Bowen & Bowen, P.C. in form
reasonably satisfactory to NBI, which shall cover the matters
contained in Exhibit E hereto and (2) of John F. Stuart, A
Professional Corporation to the effect that he has acted as
special counsel to BTC in connection with the negotiation,
approval and adoption of this Plan, and the provision of
information by BTC to NBI with respect to the Proxy Statement,
and that: (a) the Proxy Statement (including any documents
relating to BTC incorporated by reference therein as of the
mailing date thereof), complied in all material respects as to
form with the requirements of applicable laws, rules and
regulations; and (b) he does not believe that, insofar as it
relates to BTC, the Proxy Statement on the mailing date contained
any untrue statement of material fact or omitted to state any
material fact required to be stated therein or necessary to make
the statements therein not misleading (such opinion may state
that such counsel does not assume any responsibility for the
accuracy or fairness of the statements contained in the Proxy
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<PAGE>
Statement; and that he does not express any opinion or belief as
to material in the Proxy Statement insofar as it includes or
reflects any information relating to or supplied by entities
other than BTC or as to any financial statements or other
financial data contained in the Proxy Statement);
(I) (1) Each of the representations and warranties contained
herein of NBI shall be true and correct as of the date of this
Plan and upon the Merger Effective Date with the same effect as
though all such representations and warranties had been made on
the Merger Effective Date, except (a) for any such
representations and warranties made as of a specified date, which
shall be true and correct as of such date, (b) as expressly
contemplated by this Plan, or (c) for representations and
warranties (other than the representations and warranties set
forth in Paragraph (A) of Article IV, which shall be true and
correct in all material respects) the inaccuracies of which
relate to matters that, individually or in the aggregate, do not
materially adversely affect the Merger and the other transactions
contemplated by this Plan, and (2) each and all of the agreements
and covenants of NBI to be performed and complied with pursuant
to this Plan and the other agreements contemplated hereby prior
to the Merger Effective Date shall have been duly performed and
complied with in all material respects, and BTC shall have
received a certificate or certificates signed by the Chief
Executive Officer and Chief Financial Officer of NBI dated the
Merger Effective Date, to such effect;
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(J) (1) Each of the representations and warranties contained
herein of BTC shall be true and correct as of the date of this
Plan and upon the Merger Effective Date with the same effect as
though all such representations and warranties had been made
on the Merger Effective Date, except (a) for any such
representations and warranties made as of a specified date, which
shall be true and correct as of such date, (b) as expressly
contemplated by this Plan, or (c) for representations and
warranties (other than the representations and warranties set
forth in Paragraph (A) of Article IV, which shall be true and
correct in all material respects) the inaccuracies of which
relate to matters that, individually or in the aggregate, do not
materially adversely affect the Merger and the other transactions
contemplated by this Plan, and (2) each and all of the agreements
and covenants of BTC to be performed and complied with pursuant
to this Plan and the other agreements contemplated hereby prior
to the Merger Effective Date shall have been duly performed and
complied with in all material respects, and NBI shall have
received a certificate signed by the Chief Executive Officer and
the Chief Financial Officer of BTC dated the Merger Effective
Date, to such effect;
(K) The Registration Statement shall have become effective
and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings
for that purpose shall have been initiated or threatened by the
SEC or any other regulatory authority;
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(L) NBI shall have received all Blue Sky Law approvals,
permits and other authorizations necessary to consummate the
Merger;
(M) NBI and BTC shall have received an opinion from KPMG
Peat Marwick to the effect that (1) the acquisition of BTC Common
Stock by NBI and the Merger constitutes a reorganization under
Section 368 of the Internal Revenue Code, and (2) no gain or loss
will be recognized by stockholders of BTC who receive shares of
NBI Common Stock in exchange for their shares of BTC Common Stock
except that gain or loss may be recognized as to cash received in
lieu of fractional share interests and, in rendering their
opinion, may require and rely upon representations contained in
certificates of officers of NBI, BTC and others;
(N) NBI and BTC shall have received a letter, dated as of
the Merger Effective Date, in form and substance reasonably
acceptable to NBI and BTC, from KPMG Peat Marwick to the effect
that the acquisition of BTC Common Stock by NBI and the Merger
will qualify for pooling of interests accounting treatment; and
(O) NBI shall have received from each affiliate of BTC and
NBI, respectively, the affiliates letter referred to in Paragraph
(J) of Article V, to the extent necessary to assure in the
reasonable judgment of NBI that the acquisition of BTC Common
Stock by NBI and the Merger will qualify for pooling of interests
accounting treatment;
(P) At the time the Proxy Statement is mailed to the
holders of BTC Common Stock and on the Merger Effective Date, the
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Board of Directors of NBI shall have received an opinion from
McKinnon & Company, Inc. that the terms of the Merger are fair to
the shareholders of NBI from a financial point of view.
(Q) At the time the Proxy Statement is mailed to the
holders of shares of BTC Common Stock and on the Merger Date, the
Board of Directors of BTC shall have received an opinion from
Baxter, Fentriss & Company that the terms of the Merger are fair
to the shareholders of BTC from a financial point of view.
provided, however, that a failure to satisfy any of the
conditions set forth in the proviso following Paragraph (C)
or in Paragraph (F), (H), (J), (L), (O), or (P) of this
Article VI shall only constitute conditions if asserted by
NBI and a failure to satisfy any of the conditions set forth
in the proviso following Paragraph (C), Paragraph (E), (G),
(I), or Q of this Article VI shall only constitute
conditions if asserted by BTC.
VII. TERMINATION.
This Plan may be terminated prior to the Merger Effective
Date, either before or after receipt of required stockholder
approval:
(A) by the mutual consent of NBI and BTC, if the Board of
Directors of each so determines by vote of a majority of the
members of its entire Board;
(B) by NBI or BTC, if its Board of Directors so determines
by vote of a majority of the members of its entire Board, in the
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event of (1) a breach by the other party of any representation or
warranty contained herein, which breach cannot be or has not been
cured within thirty (30) days after the giving of written notice
to the breaching party of such breach and which breaches,
individually or in the aggregate, materially adversely affect the
Merger and the other transactions contemplated by this Plan, or
(2) a material breach by the other party of any of the covenants
or agreements contained herein, which breach cannot be or has not
been cured within thirty (30) days after the giving of written
notice to the breaching party of such breach; provided, however,
that a breach can only be asserted as a basis for termination
pursuant to this paragraph (B) by a party who is not itself at
such time in breach hereof and provided, further, that
termination under this Paragraph (B) shall not relieve any party
from liability under Paragraph (E)(2) of Article VIII;
(C) by NBI or BTC, it its Board of Directors so determines
by vote of a majority of the members of its entire Board, in the
event that the Merger is not consummated by June 30, 1996, and
provided, further, that termination under this Paragraph (C)
shall not relieve any party from liability under Paragraph (E)(2)
of Article VIII;
(D) by NBI or BTC, if its Board of Directors so determines
by a vote of a majority of the members of its entire Board, in
the event that (1) any common stockholder approval contemplated
by Paragraph (A) of Article VI is not obtained at a meeting or
meetings called for the purpose of obtaining such approval; (2)
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Interim Approval, FDIC Approval, State Bank Merger Approval, FRB
Approval, or State Holding Company Approval, to the extent
necessary to consummate the Merger legally, is finally and
unconditionally denied; or (3) the Board of Directors of NBI
recommends to NBI shareholders approval of a sale of all or
substantially all of the assets of NBI or the merger or
consolidation of NBI with and into another entity with the effect
that NBI will not be the surviving corporation in such merger or
consolidation; provided, however, that termination under this
Paragraph (D) shall not relieve any party from liability under
Paragraph (E)(2) of Article VIII.
VIII. OTHER MATTERS.
(A) Survival. If the Merger Effective Date occurs, the
agreements of the parties in Paragraphs (F) and (G) of Article I,
Paragraph (E) of Article II, Paragraphs (R) and (S) of Article V,
and Paragraphs (A), (C), (D), (F), (I), (J) and (K) of this
Article VIII shall survive the Merger Effective Date; all other
representations, warranties, agreements and covenants contained
in this Plan shall be deemed to be conditions of the Merger and
shall not survive the Merger Effective Date. If this Plan is
terminated prior to the Merger Effective Date, the agreements and
representations of the parties in Paragraph (K) of Article IV,
Paragraphs (F)(2) and (G) of Article V and Paragraphs (A), (E),
(F) and (I) of this Article VIII shall survive such termination.
In the event of the termination and abandonment of this Plan
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pursuant to the provisions of Article VII, this Plan shall become
void and have no effect, except (1) as provided in the
immediately preceding sentence; and (2) no party shall be
relieved or released from any liability arising out of a breach
of any provisions of this Plan except as provided in Paragraph
(E)(2) of this Article.
(B) Waiver, Amendment. Prior to the Merger Effective Date,
any provision of this Plan may be (1) waived by the party
benefitted by the provision, or (2) amended or modified at any
time (including the structure of the transaction), by an
agreement in writing among the parties hereto approved by their
respective Boards of Directors and executed in the same manner as
this Plan, except that, after the vote by the stockholders of
BTC, the consideration to be received by the stockholders of BTC
for each share BTC Common Stock shall not be decreased.
(C) Counterparts. This Plan may be executed in one or more
counterparts, each of which shall be deemed to constitute an
original. This Plan shall become effective when one counterpart
has been signed by each party hereto.
(D) Governing Law. This Plan shall be governed by, and
interpreted in accordance with, the laws of the State of
Virginia.
(E) Fees and Expenses.
(1) In the event that the Plan is terminated in
accordance with the provisions of Article VII otherwise than on
account of a breach by NBI or in the event it is terminated in
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accordance with the provisions of Paragraph (D)(3) of Article
VII, and in either such event the provisions of Paragraph (2) of
this Paragraph E are not applicable, then the total documented
out-of-pocket costs, expenses and fees incurred by BTC and NBI
(regardless of when incurred) in connection with and arising out
of the Merger and the other transactions contemplated by this
Plan (including, without limitation, amounts paid or payable to
investment bankers, to counsel and accountants, and to
governmental and regulatory agencies) shall be aggregated and
each party hereto shall be responsible for paying one-half (1/2)
of the same, and shall promptly make such reimbursement to the
other party as is necessary to effectuate this result.
(2) To compensate NBI or BTC, as the case may be, for
entering into this Plan, taking action to consummate the
transactions contemplated hereunder and incurring the costs and
expenses related thereto, including but not limited to the
foregoing of other opportunities and other damages which would be
sustained but would also be difficult to ascertain in the event
that any of the following events occur, the subject party (as
hereinafter defined) agrees to pay the other party (if the
"subject party" is BTC, then the "other party" shall be NBI and
vice versa) unconditionally and absolutely the sum of $2,500,000
as the other party's exclusive remedy if, prior to the
termination of this Plan pursuant to Article VII hereof, any of
the following shall occur:
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(a) Without the consent of the other party, the subject
party shall have entered into an agreement with any
person (other than as contemplated by this Plan) to
effect (i) a merger, consolidation or similar
transaction involving the subject party or any of its
significant subsidiaries, (ii) the disposition, by
sale, lease, exchange or otherwise, of assets or
deposits of subject party or any of its significant
subsidiaries representing in either case 25% or more of
the consolidated assets or deposits of the subject
party and its subsidiaries or (iii) the issuance, sale
or other disposition by the subject party of (including
by way of merger, consolidation, share exchange or any
similar transaction) securities representing 25% or
more of the voting power of the subject party or any of
its significant subsidiaries (each of (i), (ii) or
(iii), an "Acquisition Transaction"); or
(b) Any person shall have acquired beneficial
ownership (as such term is defined in Rule
13d-3 promulgated under the Exchange Act) of,
or the right to acquire beneficial ownership
of, or any "group" (as such term is defined
in Section 13(d)(3) of the Exchange Act)
shall have been formed which beneficially
owns or has the right to acquire beneficial
ownership of, 20% or more of the voting power
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of the subject party or any of its
significant subsidiaries and, within one year
from termination of this Plan the subject
party enters into an Acquisition Transaction
with such person or group, as the case may
be.
(3) In the event that neither Paragraph (1) nor
Paragraph (2) of this Paragraph (E) are applicable, each party
hereto will bear all expenses incurred by it in connection with
this Plan and the transactions contemplated hereby, except
printing expenses which shall be shared equally between BTC and
NBI. It is understood and agreed that the printer of the
Registration Statement and Proxy Statement shall be mutually
selected by NBI and BTC.
(4) Payments to be made hereunder shall be made in
immediately available funds within thirty (30) days following the
day on which the party entitled to payment notifies the other
party in writing that the events entitling it to payment of the
same have occurred and upon failure to pay the same when due the
other party shall be entitled to recover from the other party all
collection costs and expenses, including but not limited to
reasonable legal fees.
(F) Confidentially. Except as otherwise provided in
Paragraph (F)(2) of Article V, each of the parties hereto and
their respective agents, attorneys and accountants will maintain
the confidentiality of all information provided in connection
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herewith which has not been publicly disclosed.
(G) Notices. All notices, requests and other
communications hereunder to a party shall be in writing and shall
be deemed to have been duly given when delivered by hand,
telegram or facsimile (confirmed in writing) to such party at its
address set forth below or such other address as such party may
specify by notice to the parties hereto.
If to NBI or NBI Interim Bank, to:
Mr. James G. Rakes
President
National Bankshares, Inc.
P.O. Box 90002
Blacksburg, Virginia 24062-9002
Copy to:
Douglas W. Densmore, Esq.
Woods, Rogers & Hazlegrove, P.L.C.
10 S. Jefferson Street
P.O. Box 14125
Roanoke, Virginia 24038-4125
If to BTC, to each:
T. C. Bowen, Jr.
R. E. Dodson
Bank of Tazewell County
P.O. Box 687
Tazewell, VA 24651
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Copy to:
John F. Stuart, Esq.
Farrell & Lavin
1735 I Street, N.W.
Suite 814
Washington, D.C. 20006
(H) Definitions. Any term defined anywhere in this Plan
shall have the meaning ascribed to it for all purposes of this
Plan (unless expressly noted to the contrary). In addition:
(1) the term "knowledge" when used with respect to a
party shall mean the knowledge, after due inquiry, of any
"Executive Officer" of such party or, in the case of NBI, of NBB,
as such term is defined in Regulation O of the Federal Reserve
Board;
(2) the term "Material Adverse Effect," when applied to
a party, shall mean an event, occurrence or circumstance
(including without limitation (a) the making of any provisions
for possible loan and lease losses, write-downs of other real
estate and taxes and (b) any breach of a representation or
warranty by such party) which (i) has or is reasonably likely to
have a material adverse effect on the financial position, results
of operations or business of the party and its subsidiaries,
taken as a whole, or (ii) would materially impair the party's
ability to perform its obligations under this Plan or the
consummation of the Merger and the other transactions
contemplated by this Plan; provided, however, that, solely for
purposes of measuring whether an event, occurrence or
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circumstance has a material adverse effect on such party's
results of operations, the term "results of operations" shall
mean net interest income plus non-interest income (less
securities gains) less gross expenses (excluding provisions for
possible loan and lease losses, write-downs of other real estate
and taxes); and provided, further, that material adverse effect
and material impairment shall not be deemed to include the impact
of (x) changes in banking and similar laws of general
applicability or interpretations thereof by courts or
governmental authorities, (y) changes in generally accepted
accounting principles or regulatory accounting requirements
applicable to banks and bank holding companies generally and (z)
the effects of Merger on the operating performance of the parties
to this Plan;
(3) the term "Previously Disclosed" by a party shall
mean information set forth in a written disclosure letter that is
delivered by that party to the other party contemporaneously with
the execution of this Plan and specifically designated as
information "Previously Disclosed" pursuant to this Plan;
provided, however, that any information so disclosed shall
specify the provision of this Plan pursuant to which such
information is being disclosed and shall not be deemed to be
disclosed pursuant to any other provision of, or for any other
purpose under, this Plan unless otherwise indicated; provided,
further, the mere inclusion of an item in a disclosure letter
shall not be deemed an admission by a party that such item
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represents a material exception of fact, event or circumstances
or that such item is reasonably likely to result in a Material
Adverse Effect.
(I) Entire Understanding. This Plan represents the entire
understanding of the parties hereto with reference to the
transactions contemplated hereby and supersede any and all other
oral or written agreements heretofore made, include without
limitation the Confidentiality Agreement, dated June 16, 1995
between NBI and BTC. Nothing in this Plan 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 Plan, other
than as provided in Paragraph (K) below.
(J) Benefit Plans. It is the parties' intention that upon
consummation of the Merger, or as soon as administratively
practicable thereafter, employees of BTC and its subsidiaries
shall be entitled to participate in NBI's severance, benefit and
similar plans (excluding qualified retirement plans) on the same
terms and conditions as employees NBI's and its subsidiaries,
giving effect to years of service and prior earnings with BTC and
its subsidiaries as if such service were with NBI. The parties
agree to engage experts, including but not limited to actuaries,
to make recommendations as to how the qualified retirement plans
should be handled and shall use their best efforts to come to an
agreement regarding all benefit plans which shall be in the form
of an amendment to this Agreement. The parties agree that to the
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extent possible no employee of BTC who elects coverage by NBI's
medical insurance plans shall be excluded coverage thereunder
(for such employee or any other covered person) on the basis of a
preexisting condition that was not also excluded under BTC's
medical insurance plans and that, if an NBI plan will not take
the place of a BTC plan pursuant to this Agreement, then such BTC
benefit plan shall remain in effect until the benefit plan of NBI
is available for participation by the officers and employees of
BTC.
(K) Indemnification. (1) In the case of NBI only, it agrees
that for the six-year period following the Merger Effective Date,
it shall cause the Continuing Corporation and any successor
thereto or any subsidiary thereof, as may be applicable, to
indemnify and hold harmless any person who has rights to
indemnification from BTC to the same extent and on the same
conditions as such person is entitled to indemnification pursuant
to BTC's Articles of Incorporation as in effect on the date of
this Plan, to the extent legally permitted to do so, with respect
to matters occurring on or prior to the Merger Effective Date
(regardless of whether a claim is asserted in connection
therewith on or prior to the Merger Effective Date or thereafter)
and the adoption of the Charter Amendment shall not affect the
right, if any, to indemnification of any person under this
Paragraph (K) with respect to such pre-Merger matters. Without
limiting the foregoing, in any case in which approval by the
Continuing Corporation may be required to effectuate any such
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indemnification, NBI shall cause the Continuing Corporation to
direct, at the election of the party to be indemnified, that the
determination of any such approval shall be made by independent
counsel mutually agreed upon between NBI and the indemnified
party. NBI shall use its reasonable best efforts to provide
coverage to the officers and directors of the Continuing
Corporation under NBI policy or policies of director and officers
liability insurance on the same or substantially similar terms
then in effect for the directors and officers of NBB and the
Continuing Corporation shall reimburse NBI for the additional
premium incurred by it in connection with providing such
coverage.
If NBI or any of its successors or assigns shall consolidate
with or merge into any other entity and shall not be the
continuing or surviving entity of such consolidation or merger or
shall transfer all or substantially all of its assets to any
entity, then and in each case, proper provisions shall be made so
that the successors and assigns of NBI shall assume the
obligations set forth in this Paragraph (K)(1). NBI shall pay
all reasonable costs, including attorneys' fees, that may be
incurred by any Indemnified Party in enforcing the indemnity and
other obligations provided for in this Paragraph (K)(1).
(2) With respect to matters occurring after the Merger
Effective Date, the rights, if any, of any person to be held
harmless or indemnified shall be governed by the Articles of
Incorporation and Bylaws of the Continuing Corporation as
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provided in Paragraph (D) of Article I, and by the Articles of
Incorporation of NBI, to the extent applicable by their terms.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed in counterparts by their duly
authorized officers, all as of the day and year first above
written.
National Bankshares, Inc.
By:/s/James G. Rakes
-------------------------------
James Rakes
President
Bank of Tazewell County
By:/s/R. E. Dodson
-------------------------------
R. E. Dodson
President
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