Clients/1598/00283791.DOCX/11 } EXECUTION VERSION AGREEMENT AND PLAN OF MERGER by and between FIRST INTERSTATE BANCSYSTEM, INC. and CASCADE BANCORP _____________________ Dated as of November 17, 2016 75014.000017 EMF_US 62741345v15
{Clients/1598/00283791.DOCX/11 }
EXECUTION VERSION
AGREEMENT AND PLAN OF MERGER
by and between
FIRST INTERSTATE BANCSYSTEM, INC.
and
CASCADE BANCORP
_____________________
Dated as of November 17, 2016
75014.000017 EMF_US 62741345v15
{Clients/1598/00283791.DOCX/11 } -i-
TABLE OF CONTENTS
ARTICLE I
THE MERGER
1.1 The Merger.......................................................................................................................... 1
1.2 Closing ................................................................................................................................ 2
1.3 Effective Time .................................................................................................................... 2
1.4 Effects of the Merger .......................................................................................................... 2
1.5 Conversion of Company Common Stock ........................................................................... 2
1.6 Parent Common Stock ........................................................................................................ 3
1.7 Treatment of Company Equity Awards .............................................................................. 3
1.8 Articles of Incorporation of the Surviving Corporation ..................................................... 4
1.9 Bylaws of the Surviving Corporation ................................................................................. 4
1.10 Tax Consequences .............................................................................................................. 4
1.11 Bank Merger ....................................................................................................................... 4
ARTICLE II
EXCHANGE OF SHARES
2.1 Parent to Make Merger Consideration Available ............................................................... 5
2.2 Exchange of Shares ............................................................................................................. 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 Corporate Organization ....................................................................................................... 8
3.2 Capitalization .................................................................................................................... 10
3.3 Authority; No Violation .................................................................................................... 11
3.4 Consents and Approvals ................................................................................................... 12
3.5 Reports .............................................................................................................................. 13
3.6 Financial Statements ......................................................................................................... 13
3.7 Broker’s Fees .................................................................................................................... 15
3.8 Absence of Certain Changes or Events ............................................................................. 15
3.9 Legal Proceedings ............................................................................................................. 15
3.10 Taxes and Tax Returns...................................................................................................... 16
3.11 Employees ......................................................................................................................... 17
3.12 SEC Reports ...................................................................................................................... 21
3.13 Compliance with Applicable Law .................................................................................... 21
3.14 Certain Contracts .............................................................................................................. 22
3.15 Agreements with Regulatory Agencies ............................................................................ 23
3.16 Risk Management Instruments ......................................................................................... 24
3.17 Environmental Matters...................................................................................................... 24
{Clients/1598/00283791.DOCX/11 } -ii-
3.18 Investment Securities and Commodities ........................................................................... 25
3.19 Real Property .................................................................................................................... 25
3.20 Intellectual Property .......................................................................................................... 26
3.21 Related Party Transactions ............................................................................................... 26
3.22 State Takeover Laws ......................................................................................................... 27
3.23 Reorganization .................................................................................................................. 27
3.24 Opinion ............................................................................................................................. 27
3.25 Company Information ....................................................................................................... 27
3.26 Loan Portfolio ................................................................................................................... 27
3.27 Insurance ........................................................................................................................... 28
3.28 Broker-Dealer, Investment Advisory and Insurance Matters ........................................... 29
3.29 Customer Relationships. ................................................................................................... 29
3.30 No Other Representations or Warranties .......................................................................... 30
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
4.1 Corporate Organization ..................................................................................................... 31
4.2 Capitalization .................................................................................................................... 31
4.3 Authority; No Violation .................................................................................................... 32
4.4 Consents and Approvals ................................................................................................... 33
4.5 Reports .............................................................................................................................. 34
4.6 Financial Statements ......................................................................................................... 34
4.7 Broker’s Fees .................................................................................................................... 36
4.8 Absence of Certain Changes or Events ............................................................................. 36
4.9 Legal Proceedings ............................................................................................................. 36
4.10 Taxes and Tax Returns...................................................................................................... 36
4.11 SEC Reports ...................................................................................................................... 37
4.12 Compliance with Applicable Law .................................................................................... 38
4.13 Certain Contracts .............................................................................................................. 39
4.14 Agreements with Regulatory Agencies ............................................................................ 39
4.15 Employees ......................................................................................................................... 39
4.16 Risk Management Instruments ......................................................................................... 42
4.17 Environmental Matters...................................................................................................... 42
4.18 State Takeover Laws ......................................................................................................... 43
4.19 Reorganization .................................................................................................................. 43
4.20 Opinion ............................................................................................................................. 43
4.21 Financing........................................................................................................................... 43
4.22 Loan Portfolio ................................................................................................................... 43
4.23 Broker-Dealer, Investment Advisory and Insurance Matters ........................................... 44
4.24 Parent Information ............................................................................................................ 44
4.25 Related Party Transactions. . ........................................................................................... 45
4.26 Customer Relationships. ................................................................................................... 45
4.27 No Other Representations or Warranties .......................................................................... 46
{Clients/1598/00283791.DOCX/11 } -iii-
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Business of the Company Prior to the Effective Time ................................... 46
5.2 Company Forbearances ..................................................................................................... 46
5.3 Parent Forbearances .......................................................................................................... 50
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters............................................................................................................ 50
6.2 Access to Information ....................................................................................................... 52
6.3 Shareholder Approvals...................................................................................................... 53
6.4 Legal Conditions to Merger .............................................................................................. 55
6.5 Stock Exchange Listing .................................................................................................... 56
6.6 Employee Benefit Plans .................................................................................................... 56
6.7 Indemnification; Directors’ and Officers’ Insurance ........................................................ 58
6.8 Additional Agreements ..................................................................................................... 60
6.9 Advice of Changes ............................................................................................................ 60
6.10 Shareholder Litigation ...................................................................................................... 60
6.11 Governance Matters .......................................................................................................... 61
6.12 Acquisition Proposals ....................................................................................................... 61
6.13 Public Announcements ..................................................................................................... 63
6.14 Change of Method............................................................................................................. 63
6.15 Takeover Statutes .............................................................................................................. 63
6.16 Exemption from Liability Under Section 16(b) ................................................................ 63
6.17 Termination of Securities Purchase Agreements .............................................................. 64
6.18 Stockholder Litigation ...................................................................................................... 64
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party’s Obligation To Effect the Merger........................................... 64
7.2 Conditions to Obligations of Parent .................................................................................. 65
7.3 Conditions to Obligations of the Company ...................................................................... 66
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination ....................................................................................................................... 67
8.2 Effect of Termination ........................................................................................................ 68
{Clients/1598/00283791.DOCX/11 } -iv-
ARTICLE IX
GENERAL PROVISIONS
9.1 Nonsurvival of Representations, Warranties and Agreements ......................................... 70
9.2 Amendment ....................................................................................................................... 70
9.3 Extension; Waiver ............................................................................................................. 70
9.4 Expenses ........................................................................................................................... 71
9.5 Notices .............................................................................................................................. 71
9.6 Interpretation ..................................................................................................................... 72
9.7 Counterparts ...................................................................................................................... 72
9.8 Entire Agreement .............................................................................................................. 72
9.9 Governing Law ................................................................................................................. 72
9.10 Waiver of Jury Trial .......................................................................................................... 73
9.11 Assignment; Third Party Beneficiaries ............................................................................. 73
9.12 Specific Performance ........................................................................................................ 73
9.13 Severability ....................................................................................................................... 74
9.14 Delivery by Facsimile or Electronic Transmission ........................................................... 74
EXHIBITS
Exhibit A Form of Voting Agreement
Exhibit B Amended and Restated Parent Articles
Exhibit C Amended and Restated Company Bylaws
{Clients/1598/00283791.DOCX/11 } -v-
INDEX OF DEFINED TERMS
Page
Acquisition Proposal ..................................................................................................................... 62
Affiliate ......................................................................................................................................... 72
Agreement ....................................................................................................................................... 1
Articles Amendment ....................................................................................................................... 4
Articles of Merger ........................................................................................................................... 2
Bank Merger ................................................................................................................................... 5
Bank Merger Agreement................................................................................................................. 5
Bank Merger Articles ...................................................................................................................... 5
BHC Act.......................................................................................................................................... 9
business day .................................................................................................................................. 72
Cancelled Shares ............................................................................................................................. 3
Closing ............................................................................................................................................ 2
Closing Date.................................................................................................................................... 2
Code ................................................................................................................................................ 1
Company ......................................................................................................................................... 1
Company Articles ......................................................................................................................... 10
Company Bank................................................................................................................................ 5
Company Benefit Plan .................................................................................................................. 17
Company Board Recommendation ............................................................................................... 54
Company Bylaws .......................................................................................................................... 10
Company Common Stock ............................................................................................................... 2
Company Contract ........................................................................................................................ 23
Company Disclosure Schedules ...................................................................................................... 8
Company Equity Awards .............................................................................................................. 11
Company ERISA Affiliate ............................................................................................................ 18
Company Indemnified Parties....................................................................................................... 59
Company Insiders ......................................................................................................................... 64
Company Leased Properties ......................................................................................................... 26
Company Meeting ......................................................................................................................... 54
Company Option ............................................................................................................................. 4
Company Owned Properties ......................................................................................................... 26
Company Qualified Plan ............................................................................................................... 18
Company Real Property ................................................................................................................ 26
Company Regulatory Agreement ................................................................................................. 24
Company Reports.......................................................................................................................... 21
Company Restricted Stock Award .................................................................................................. 4
Company RSU Award .................................................................................................................... 4
Company Subsidiary ..................................................................................................................... 10
Confidentiality Agreement............................................................................................................ 53
Continuation Period ...................................................................................................................... 56
Continuing Employees .................................................................................................................. 56
Effective Time ................................................................................................................................ 2
Enforceability Exceptions ............................................................................................................. 12
{Clients/1598/00283791.DOCX/11 } -vi-
Environmental Laws ..................................................................................................................... 25
ERISA ........................................................................................................................................... 17
Exchange Act ................................................................................................................................ 15
Exchange Agent .............................................................................................................................. 5
Exchange Fund................................................................................................................................ 5
Exchange Ratio ............................................................................................................................... 2
FDIC ............................................................................................................................................. 10
Federal Reserve Board .................................................................................................................. 13
GAAP .............................................................................................................................................. 9
Governmental Entity ..................................................................................................................... 13
HSR Act ........................................................................................................................................ 13
Intellectual Property ...................................................................................................................... 26
IRS ................................................................................................................................................ 16
Joint Proxy Statement ................................................................................................................... 13
Knowledge .................................................................................................................................... 72
Letter of Transmittal ....................................................................................................................... 6
Liens .............................................................................................................................................. 11
Loans ............................................................................................................................................. 28
Loss Share Agreement .................................................................................................................. 23
Loss Share Agreement Condition ................................................................................................. 65
LTI Awards ................................................................................................................................... 11
Material Adverse Effect .................................................................................................................. 9
Materially Burdensome Regulatory Condition ............................................................................. 52
MBCA ............................................................................................................................................. 2
MDOB........................................................................................................................................... 13
Merger ............................................................................................................................................. 1
Merger Consideration ..................................................................................................................... 3
Merger Consideration Value ........................................................................................................... 4
Montana Secretary .......................................................................................................................... 2
Multiemployer Plan ...................................................................................................................... 19
Multiple Employer Plan ................................................................................................................ 19
New Certificates.............................................................................................................................. 5
OBCA ............................................................................................................................................. 2
Old Certificate ................................................................................................................................. 3
Oregon Division ............................................................................................................................ 13
Oregon Secretary ............................................................................................................................ 2
Parent .............................................................................................................................................. 1
Parent Articles ................................................................................................................................. 4
Parent Bank ..................................................................................................................................... 5
Parent Benefit Plan ....................................................................................................................... 40
Parent Board Recommendation .................................................................................................... 54
Parent Bylaws ................................................................................................................................. 5
Parent Common Stock .................................................................................................................... 2
Parent Contract.............................................................................................................................. 39
Parent Disclosure Schedules ......................................................................................................... 31
Parent Equity Awards ................................................................................................................... 32
{Clients/1598/00283791.DOCX/11 } -vii-
Parent Meeting .............................................................................................................................. 54
Parent Options ............................................................................................................................... 32
Parent Plans ................................................................................................................................... 57
Parent Qualified Plan .................................................................................................................... 41
Parent Regulatory Agreement ....................................................................................................... 40
Parent Reports ............................................................................................................................... 38
Parent Restricted Stock Awards.................................................................................................... 32
Parent Share Closing Price.............................................................................................................. 7
Parent Subsidiary .......................................................................................................................... 31
Per Share Cash Consideration ......................................................................................................... 3
Permitted Encumbrances .............................................................................................................. 26
person ............................................................................................................................................ 72
Plan Termination Date .................................................................................................................. 58
Premium Cap ................................................................................................................................ 60
Recommendation Change ............................................................................................................. 55
Regulatory Agencies ..................................................................................................................... 14
Representatives ............................................................................................................................. 61
Requisite Amendment Vote .......................................................................................................... 33
Requisite Company Vote .............................................................................................................. 12
Requisite Parent Vote ................................................................................................................... 33
Requisite Regulatory Approvals ................................................................................................... 65
S-4 ................................................................................................................................................. 13
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act ...................................................................................................................... 15
SEC ............................................................................................................................................... 13
Securities Act ................................................................................................................................ 21
SRO ............................................................................................................................................... 14
Stock Consideration ........................................................................................................................ 2
Subsidiary ....................................................................................................................................... 9
Surviving Bank ............................................................................................................................... 5
Surviving Corporation .................................................................................................................... 1
Takeover Statutes .......................................................................................................................... 27
Tax ................................................................................................................................................ 17
Tax Return .................................................................................................................................... 17
Taxes ............................................................................................................................................. 17
Termination Date .......................................................................................................................... 68
Termination Fee ............................................................................................................................ 69
Voting Agreement ........................................................................................................................... 1
Voting Agreements ......................................................................................................................... 1
{Clients/1598/00283791.DOCX/11 } -1-
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 17, 2016 (this
“Agreement”), by and between Cascade Bancorp, an Oregon corporation (the “Company”), and
First Interstate BancSystem, Inc., a Montana corporation (“Parent”).
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Parent and the Company have determined that it
is in the best interests of their respective companies and their shareholders to consummate the
strategic business combination transaction provided for herein, pursuant to which the Company
will, subject to the terms and conditions set forth herein, merge with and into Parent (the
“Merger”), so that Parent is the surviving corporation (hereinafter sometimes referred to in such
capacity as the “Surviving Corporation”) in the Merger;
WHEREAS, the Boards of Directors of Parent and the Company have adopted and
approved this Agreement and the transactions contemplated hereby, including the Merger, and
the Boards of Directors of Parent and the Company have resolved to recommend that the
shareholders of each of Parent and the Company, respectively, approve and adopt this
Agreement and the transactions contemplated hereby, including the Merger;
WHEREAS, for federal income tax purposes, it is intended that the Merger shall qualify
as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of
1986, as amended (the “Code”), and this Agreement is intended to be and is adopted as a “plan
of reorganization” for purposes of Sections 354, 356 and 361 of the Code;
WHEREAS, this Agreement constitutes a “plan of merger” within the meaning of the
MBCA and OBCA;
WHEREAS, as a condition and inducement for each party to enter into this Agreement,
certain shareholders of the Company and Parent have simultaneously herewith entered into
voting agreements substantially in the form attached hereto as Exhibit A (each, a “Voting
Agreement,” and collectively, the “Voting Agreements”) in connection with the Merger; and
WHEREAS, the parties desire to make certain representations, warranties and agreements
specified in this Agreement in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound hereby, the
parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this
Agreement, in accordance with the Montana Business Corporation Act (the “MBCA”) and the
{Clients/1598/00283791.DOCX/11 } -2-
Oregon Business Corporation Act (the “OBCA”), at the Effective Time, the Company shall
merge with and into Parent. Parent shall be the Surviving Corporation in the Merger, and shall
continue its corporate existence under the laws of the State of Montana. Upon consummation of
the Merger, the separate corporate existence of the Company shall terminate.
1.2 Closing. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the “Closing”) will take place by mail or electronic delivery, or by
mutual agreement of the parties, at the offices of ▇▇▇▇ ▇▇▇▇▇▇, PC, at 10:00 a.m., Eastern Time,
on a date which shall be no later than three (3) business days after the satisfaction or waiver
(subject to applicable law) of the conditions set forth in Article VII hereof (other than those
conditions that by their nature can only be satisfied at the Closing, but subject to the satisfaction
or waiver thereof), unless another date, time or place is agreed to in writing by Parent and the
Company. The date on which the Closing occurs is referred to in this Agreement as the “Closing
Date.”
1.3 Effective Time. Subject to the terms and conditions of this
Agreement, at the Closing, the parties shall execute, and Parent shall cause to be filed articles of
merger with the Secretary of State of the State of Montana (the “Montana Secretary”) and the
Secretary of State of the State of Oregon (the “Oregon Secretary”) and, as applicable, plans of
merger, to the extent required by the relevant provisions of the MBCA and of the OBCA,
respectively (collectively, the “Articles of Merger”). The Merger shall become effective at such
time as designated in the Articles of Merger, or as otherwise agreed by the parties. The term
“Effective Time” shall be the date and time when the Merger becomes effective, as set forth in
the Articles of Merger.
1.4 Effects of the Merger. At and after the Effective Time, the Merger
shall have the effects set forth in the applicable provisions of the MBCA and the OBCA.
1.5 Conversion of Company Common Stock. At the Effective Time,
by virtue of the Merger and without any action on the part of Parent, the Company or the holder
of any of the following securities:
(a) Subject to Section 2.2(e) and as noted below, each share of the common
stock, no par value, of the Company issued and outstanding immediately prior to the Effective
Time (the “Company Common Stock”), except for the Cancelled Shares, shall be converted into
the right to receive, without interest, (i) 0.14864 shares (the “Exchange Ratio,” and such shares,
the “Stock Consideration”) of the Class A common stock, no par value per share, of Parent (the
“Parent Common Stock”) and (ii) $1.91 in cash (the “Cash Consideration,” together with the
Stock Consideration, the “Merger Consideration”); it being understood that upon the Effective
Time, pursuant to Section 1.6, the Parent Common Stock, including the shares issued to former
holders of Company Common Stock, shall be the common stock of the Surviving Corporation.
(b) All of the shares of Company Common Stock converted into the right to
receive the Merger Consideration pursuant to this Article I shall no longer be outstanding and
shall automatically be cancelled and shall cease to exist as of the Effective Time, and each
certificate (each, an “Old Certificate,” it being understood that any reference herein to “Old
Certificate” shall be deemed to include reference to book-entry account statements relating to the
{Clients/1598/00283791.DOCX/11 } -3-
ownership of shares of Company Common Stock) previously representing any such shares of
Company Common Stock shall thereafter represent only the right to receive (i) the Merger
Consideration, including without duplication, cash in lieu of fractional shares which the shares of
Company Common Stock represented by such Old Certificate have been converted into the right
to receive pursuant to this Section 1.5 and Section 2.2(e), and (ii) any dividends or distributions
which the holder thereof has the right to receive pursuant to Section 2.2(b), in each case, upon
the surrender of such Old Certificates in accordance with Section 2.2 and without any interest
thereon. If, prior to the Effective Time, the outstanding shares of Parent Common Stock or
Company Common Stock shall have been increased, decreased, changed into or exchanged for a
different number or kind of shares or securities as a result of a reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other similar change in
capitalization, or there shall be any extraordinary dividend or distribution, an appropriate and
proportionate adjustment shall be made to the Exchange Ratio and the Merger Consideration to
give holders of Company Common Stock and Parent the same economic effect as contemplated
by this Agreement prior to such event; provided, that nothing contained herein shall be construed
to permit Parent or the Company to take any action with respect to its securities or otherwise that
is prohibited by the terms of this Agreement.
(c) At the Effective Time, all shares of Company Common Stock that are
directly owned by the Company or Parent (in each case, other than shares of Company Common
Stock held, directly or indirectly, by Parent or the Company in respect of debt previously
contracted or held in a fiduciary capacity) shall be cancelled and shall cease to exist and no
Merger Consideration or other consideration shall be delivered in exchange therefor (such
cancelled shares, the “Cancelled Shares”).
(d) In accordance with Section 60.554 of the OBCA, no dissenters’ rights
shall be available to the holders of Company Common Stock in connection with the Merger or
the other transactions contemplated by this Agreement.
1.6 Parent Common Stock. At and after the Effective Time, each
share of Parent Common Stock issued and outstanding immediately prior to the Effective Time
shall remain an issued and outstanding share of common stock of the Surviving Corporation and
shall not be affected by the Merger.
1.7 Treatment of Company Equity Awards.
(a) Company Stock Options. At the Effective Time, each option to purchase
Company Common Stock granted by the Company (a “Company Option”) that is outstanding
immediately prior to the Effective Time shall be cancelled and, subject to Parent’s receipt of an
option surrender agreement in the form set forth in Section 1.7(a) of the Company Disclosure
Schedules, the holder shall be entitled to receive, on the Closing Date, a cash payment, without
interest and less applicable withholding taxes, with respect thereto equal to the product of (i) the
number of shares of Company Common Stock subject to the Company Option as of immediately
prior to the Effective Time and (ii) the excess, if any, of the Merger Consideration Value over
the exercise price per share of Company Common Stock subject to such Company Option as of
the Effective Time. “Merger Consideration Value” means the sum of (A) the Cash
Consideration and (B) the product of (1) the Exchange Ratio times (2) the Parent Share Closing
{Clients/1598/00283791.DOCX/11 } -4-
Price. If the per share exercise price of a Company Option that is outstanding as of immediately
prior to the Effective Time is equal to or greater than the Merger Consideration Value, such
Company Option shall be cancelled at the Effective Time for no consideration.
(b) Company Restricted Stock Awards. At the Effective Time, each award of
shares of Company Common Stock subject to vesting or repurchase granted by the Company that
is outstanding immediately prior to the Effective Time (each, a “Company Restricted Stock
Award”) shall be cancelled and converted automatically into the right to receive the Merger
Consideration in respect of each share of Company Common Stock underlying such Company
Restricted Stock Award, without interest.
(c) Company Restricted Stock Unit Awards. At the Effective Time, each
restricted stock unit award in respect of shares of Company Common Stock granted by the
Company (a “Company RSU Award”) that is outstanding immediately prior to the Effective
Time shall be cancelled and, subject to Parent’s receipt of an RSU surrender agreement in the
form set forth in Section 1.7(c) of the Company Disclosure Schedules, the holder shall be
entitled to receive on the Closing Date, a cash payment, without interest and less applicable
withholding taxes, with respect thereto equal to the product of (i) the number of shares of
Company Common Stock subject to the Company RSU Award as of immediately prior to the
Effective Time and (ii) the Merger Consideration Value. “Merger Consideration Value” has the
same meaning as provided in Section 1.7(a) of this Agreement.
(d) At or prior to the Effective Time, the Company, the Board of Directors of
the Company and its Compensation Committee, as applicable, shall adopt any resolutions and
take any actions that are necessary to effectuate the provisions of this Section 1.7.
1.8 Articles of Incorporation of the Surviving Corporation. At the
Effective Time, the Articles of Incorporation of Parent (the “Parent Articles”), as in effect
immediately prior to the Effective Time shall, subject to the approval by the shareholders of
Parent by the Requisite Amendment Vote, be amended and restated as set forth in the form
attached as Exhibit B hereto (the “Articles Amendment”), and as so amended and restated shall
be the Articles of Incorporation of the Surviving Corporation, until thereafter duly amended in
accordance with the terms thereof and applicable law.
1.9 Bylaws of the Surviving Corporation. At the Effective Time, the
Bylaws of Parent (the “Parent Bylaws”), as in effect immediately prior to the Effective Time,
shall be the Bylaws of the Surviving Corporation, until thereafter duly amended in accordance
with the terms thereof and applicable law.
1.10 Tax Consequences. It is intended that the Merger shall qualify as a
“reorganization” within the meaning of Section 368(a) of the Code, and that this Agreement is
intended to be and is adopted as a “plan of reorganization” for the purposes of Sections 354, 356
and 361 of the Code.
1.11 Bank Merger. Immediately following the Merger, Bank of the
Cascades (“Company Bank”), an Oregon stock bank and a wholly owned Subsidiary of the
Company, will merge (the “Bank Merger”) with and into First Interstate Bank (“Parent Bank”), a
{Clients/1598/00283791.DOCX/11 } -5-
Montana state-chartered commercial bank and a wholly owned Subsidiary of Parent. Parent
Bank shall be the surviving entity in the Bank Merger (the “Surviving Bank”) and, following the
Bank Merger, the separate corporate existence of Company Bank shall cease. The parties agree
that the Bank Merger shall become effective immediately after the Effective Time. Promptly
after the date of this Agreement, Parent Bank and Company Bank will enter into an agreement
and plan of merger in form and substance agreed to by Parent and the Company, which shall be
customary for mergers similar to the Bank Merger (the “Bank Merger Agreement”). The
Company shall cause Company Bank, and Parent shall cause Parent Bank, to execute such
articles of merger and such other documents and certificates as are necessary to make the Bank
Merger effective (“Bank Merger Articles”) immediately following the Effective Time.
ARTICLE II
EXCHANGE OF SHARES
2.1 Parent to Make Merger Consideration Available. At or prior to the
Effective Time, Parent shall deposit, or shall cause to be deposited, with an exchange agent
designated by Parent and reasonably acceptable to the Company (the “Exchange Agent”), for the
benefit of the holders of Old Certificates, for exchange in accordance with this Article II, (a)
certificates or, at Parent’s option, evidence of shares in book-entry form, representing the shares
of Parent Common Stock (collectively, referred to herein as “New Certificates”), to be delivered
to the holders of Company Common Stock pursuant to Section 1.5, and (b) cash in an amount
equal to the aggregate Cash Consideration and any cash in lieu of fractional shares required to be
paid to holders of Company Common Stock pursuant to this Article II (such New Certificates
and cash, together with any dividends or distributions with respect thereto, being hereinafter
referred to as the “Exchange Fund”).
2.2 Exchange of Shares.
(a) As promptly as practicable after the Effective Time, but in no event later
than ten (10) days thereafter, Parent shall cause the Exchange Agent to mail to each holder of
record of one or more Old Certificates representing shares of Company Common Stock
immediately prior to the Effective Time that have been converted at the Effective Time into the
right to receive the Merger Consideration pursuant to Article I, (i) a letter of transmittal, which
shall specify that delivery shall be effected, and risk of loss and title to the Old Certificates shall
pass, only upon proper delivery of the Old Certificates to the Exchange Agent (the “Letter of
Transmittal”) and (ii) instructions for use in effecting the surrender of the Old Certificates in
exchange for New Certificates representing the number of whole shares of Parent Common
Stock, any cash in lieu of fractional shares, and the Cash Consideration which the shares of
Company Common Stock represented by such Old Certificates shall have been converted into
the right to receive pursuant to this Agreement, as well as any dividends or distributions to be
paid in respect thereof pursuant to Section 2.2(b). Upon proper surrender of an Old Certificate or
Old Certificates for exchange and cancellation to the Exchange Agent, accompanied by a
properly completed Letter of Transmittal, duly executed, the holder of such Old Certificate or
Old Certificates shall be entitled to receive in exchange therefor, as applicable, (i) a New
Certificate representing that number of whole shares of Parent Common Stock to which such
holder of Company Common Stock shall have become entitled pursuant to the provisions of
{Clients/1598/00283791.DOCX/11 } -6-
Article I and (ii) a check representing the amount of (A) the Cash Consideration which such
holder has the right to receive in respect of the Old Certificate or Old Certificates surrendered
pursuant to the provisions of this Article II, (B) any cash in lieu of fractional shares which such
holder has the right to receive in respect of the Old Certificate or Old Certificates surrendered
pursuant to the provisions of this Article II and (C) any dividends or distributions which the
holder presenting such Old Certificate or Old Certificates has the right to receive pursuant to this
Section 2.2, and the Old Certificate or Old Certificates so surrendered shall forthwith be
cancelled. No interest will be paid or accrued on any Merger Consideration, dividends or
distributions or cash in lieu of fractional shares payable to holders of Old Certificates. Until
surrendered as contemplated by this Section 2.2, each Old Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive, upon surrender, the Merger
Consideration and any cash in lieu of fractional shares or in respect of dividends or distributions
as contemplated by this Section 2.2.
(b) No dividends or other distributions declared with respect to Parent
Common Stock shall be paid to the holder of any unsurrendered Old Certificate until such holder
shall surrender such Old Certificate in accordance with this Article II. After the surrender of an
Old Certificate in accordance with this Article II, the record holder thereof shall be entitled to
receive any such dividends or other distributions, without any interest thereon, which theretofore
had become payable with respect to the whole shares of Parent Common Stock that the shares of
Company Common Stock represented by such Old Certificate have been converted into the right
to receive.
(c) If any New Certificate representing shares of Parent Common Stock is to
be issued in a name other than that in which the Old Certificate or Old Certificates surrendered in
exchange therefor is or are registered, it shall be a condition of the issuance thereof that the Old
Certificate or Old Certificates so surrendered shall be properly endorsed (or accompanied by an
appropriate instrument of transfer) and otherwise in proper form for transfer, and that the person
requesting such exchange shall pay to the Exchange Agent in advance any transfer or other
similar Taxes required by reason of the issuance of a New Certificate representing shares of
Parent Common Stock in any name other than that of the registered holder of the Old Certificate
or Old Certificates surrendered, or required for any other reason, or shall establish to the
satisfaction of the Exchange Agent that such Tax has been paid or is not payable.
(d) After the Effective Time, there shall be no transfers on the stock transfer
books of the Company of the shares of Company Common Stock that were issued and
outstanding immediately prior to the Effective Time, other than to settle transfers of such
Company Common Stock that occurred prior to the Effective Time. If, after the Effective Time,
Old Certificates representing such shares are presented for transfer to the Exchange Agent, they
shall be cancelled and exchanged for the Merger Consideration as provided in this Article II.
(e) Notwithstanding anything to the contrary contained herein, no New
Certificates or scrip representing fractional shares of Parent Common Stock shall be issued upon
the surrender for exchange of Old Certificates, no dividend or distribution with respect to Parent
Common Stock shall be payable on or with respect to any fractional share, and such fractional
share interests shall not entitle the owner thereof to vote or to any other rights of a shareholder of
Parent. In lieu of the issuance of any such fractional share, Parent shall pay in accordance with
{Clients/1598/00283791.DOCX/11 } -7-
Section 2.2(a) to each former holder of Company Common Stock who otherwise would be
entitled to receive such fractional share an amount in cash (rounded to the nearest cent)
determined by multiplying (i) the average of the closing price per share of Parent Common Stock
on the NASDAQ as reported by The Wall Street Journal for the consecutive period of twenty
(20) full trading days ending on the fifth day immediately preceding the Closing Date (or, if not
reported therein, in another authoritative source mutually agreed upon by Parent and the
Company) (the “Parent Share Closing Price”) by (ii) the fraction of a share (after taking into
account all shares of Company Common Stock held by such holder immediately prior to the
Effective Time and rounded to the nearest one-thousandth when expressed in decimal form) of
Parent Common Stock to which such holder would otherwise be entitled to receive pursuant to
Section 1.5. The parties acknowledge that payment of such cash consideration in lieu of issuing
fractional shares is not separately bargained-for consideration, but merely represents a
mechanical rounding off for purposes of avoiding the expense and inconvenience that would
otherwise be caused by the issuance of fractional shares.
(f) Any portion of the Exchange Fund that remains unclaimed by the holders
of Company Common Stock for six (6) months after the Effective Time shall be delivered to the
Surviving Corporation. Any former holders of Company Common Stock who have not
theretofore exchanged their Old Certificates in compliance with this Article II shall thereafter
look only to the Surviving Corporation for payment of the Merger Consideration, cash in lieu of
any fractional shares and any unpaid dividends and distributions on the Parent Common Stock
deliverable in respect of each former share of Company Common Stock such shareholder holds
as determined pursuant to this Agreement, in each case, without any interest thereon.
Notwithstanding the foregoing, none of Parent, the Company, the Surviving Corporation, the
Exchange Agent or any other person shall be liable to any former holder of Company Common
Stock for any amount delivered in good faith to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(g) Parent shall be entitled to deduct and withhold, or cause the Exchange
Agent to deduct and withhold, from any Merger Consideration, cash in lieu of fractional shares
of Parent Common Stock, cash dividends or distributions payable pursuant to Section 2.2(b) or
any other amounts otherwise payable pursuant to this Agreement to any holder of Company
Common Stock or Company Equity Awards such amounts as it is required to deduct and
withhold with respect to the making of such payment under the Code or any provision of state,
local or foreign Tax law. To the extent that amounts are so withheld by Parent or the Exchange
Agent, as the case may be, and paid over to the appropriate governmental authority, the withheld
amounts shall be treated for all purposes of this Agreement as having been paid to the holder of
Company Common Stock in respect of which the deduction and withholding was made by Parent
or the Exchange Agent, as the case may be.
(h) In the event any Old Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such Old Certificate to be
lost, stolen or destroyed and, if required by Parent, the posting by such person of a bond in such
amount as Parent may determine is reasonably necessary as indemnity against any claim that
may be made against it with respect to such Old Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Old Certificate the Merger Consideration and any
{Clients/1598/00283791.DOCX/11 } -8-
cash in lieu of fractional shares, deliverable in respect thereof pursuant to this Agreement, and
any dividends or distributions to which such holder is entitled pursuant to Section 2.2(b).
(i) Subject to the terms of this Agreement, Parent, in the exercise of its
reasonable discretion, shall have the right to make all determinations, not inconsistent with the
terms of this Agreement, governing (i) the validity of any Letter of Transmittal and compliance
by any holder of Company Common Stock with the procedures and instructions set forth herein
and therein, (ii) the issuance and delivery of the whole number of shares of Parent Common
Stock into which shares of Company Common Stock are converted in the Merger and (iii) the
method of payment of the Cash Consideration and the cash in lieu of fractional shares of Parent
Common Stock.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the disclosure schedule delivered by the Company to Parent
concurrently herewith (the “Company Disclosure Schedules”); provided that (i) no such item is
required to be set forth as an exception to a representation or warranty if its absence would not
result in the related representation or warranty being deemed untrue or incorrect, (ii) the mere
inclusion of an item in the Company Disclosure Schedules as an exception to a representation or
warranty shall not be deemed an admission by the Company that such item represents a material
exception or fact, event or circumstance or that such item is reasonably likely to result in a
Material Adverse Effect and (iii) any disclosures made with respect to a section of Article III
shall be deemed to qualify (a) any other section of Article III specifically referenced or cross-
referenced and (b) other sections of Article III to the extent it is reasonably apparent on its face
(notwithstanding the absence of a specific reference or cross-reference) from a reading of the
disclosure that such disclosure applies to such other sections the Company hereby represents and
warrants to Parent as follows:
3.1 Corporate Organization.
(a) The Company is a corporation duly organized and validly existing under
the laws of the State of Oregon, and is a bank holding company duly registered under the Bank
Holding Company Act of 1956, as amended (“BHC Act”). The Company has the corporate
power and authority to own or lease all of its properties and assets and to carry on its business as
it is now being conducted. The Company is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the Company. As used
in this Agreement, the term “Material Adverse Effect” means, with respect to Parent, the
Company or the Surviving Corporation, as the case may be, any effect, change, event,
circumstance, condition, occurrence or development that, either individually or in the aggregate,
has had a material adverse effect on (i) the business, properties, assets, liabilities, results of
operations or condition (financial or otherwise) of such party and its Subsidiaries taken as a
whole (provided, however, that, with respect to this clause (i), Material Adverse Effect shall not
{Clients/1598/00283791.DOCX/11 } -9-
be deemed to include the impact of (A) changes, after the date hereof, in U.S. generally accepted
accounting principles (“GAAP”) or applicable regulatory accounting requirements, (B) changes,
after the date hereof, in laws, rules or regulations of general applicability to companies in the
industries in which such party and its Subsidiaries operate, or interpretations thereof by courts or
Governmental Entities, including changes in Federal or state tax laws, (C) changes, after the date
hereof, in global, national or regional political conditions (including the outbreak of war or acts
of terrorism) or in economic or market conditions affecting the financial services industry
generally and not specifically relating to such party or its Subsidiaries, (D) changes, after the
date hereof, in prevailing interest rates, currency exchange rates, credit or United States capital
markets conditions, or other financial, economic or monetary conditions in the United States or
elsewhere, in each case affecting the financial services industry generally and not specifically
relating to such party or its Subsidiaries, (E) changes proximately caused by the public disclosure
or consummation of the transactions contemplated hereby (provided that this exception shall not
apply for purposes of the representations and warranties in Section 3.3(b) or Section 4.3(b)) or
actions or omissions expressly required by this Agreement or that are taken or omitted to be
taken with the express prior written consent of the other party in contemplation of the
transactions contemplated hereby, or (F) any failure by a party to meet internal or published
projections, forecasts, performance measures, operating statistics or revenue or earnings
predictions for any period (it being understood that the underlying facts and circumstances
giving rise to such failure may be deemed to constitute, and may be taken into account in
determining whether there has been or would reasonably be expected to be, a Material Adverse
Effect if such facts and circumstances are not otherwise excluded pursuant to clauses (A)-(E) of
this definition); except, with respect to subclauses (A), (B), (C) or (D), to the extent that the
effects of such change are disproportionately adverse to such party and its Subsidiaries, taken as
a whole, as compared to other companies similarly situated in the industry in which such party
and its Subsidiaries operate) or (ii) the ability of such party to consummate the transactions
contemplated hereby. As used in this Agreement, the word “Subsidiary” when used with respect
to any person, means any corporation, partnership, limited liability company, bank or other
organization, whether incorporated or unincorporated, or person of which (i) such first person
directly or indirectly owns or controls at least a majority of the securities or other interests
having by their terms ordinary voting power to elect a majority of the board of directors or others
performing similar functions or (ii) such first person is or directly or indirectly has the power to
appoint a general partner, manager or managing member or others performing similar functions.
True and complete copies of the Articles of Incorporation of the Company (the “Company
Articles”) and the Amended and Restated Bylaws of the Company (the “Company Bylaws”), as
in effect as of the date of this Agreement, have previously been made available by the Company
to Parent.
(b) Each Subsidiary of the Company (a “Company Subsidiary”) (i) is duly
organized and validly existing under the laws of its jurisdiction of organization, (ii) is duly
qualified to do business and, where such concept is recognized under applicable law, in good
standing in all jurisdictions (whether federal, state, local or foreign) where its ownership or
leasing of property or the conduct of its business requires it to be so qualified and in which the
failure to be so qualified would reasonably be expected, either individually or in the aggregate, to
have a Material Adverse Effect on the Company and (iii) has all requisite corporate power and
authority to own or lease its properties and assets and to carry on its business as now conducted.
There are no restrictions on the ability of any Subsidiary of the Company to pay dividends or
{Clients/1598/00283791.DOCX/11 } -10-
distributions except, in the case of a Subsidiary that is a regulated entity, for restrictions on
dividends or distributions generally applicable to all such regulated entities. The deposit
accounts of each Subsidiary of the Company that is an insured depository institution are insured
by the Federal Deposit Insurance Corporation (the “FDIC”) through the Deposit Insurance Fund
(as defined in Section 3(y) of the Federal Deposit Insurance Act of 1950) to the fullest extent
permitted by law, all premiums and assessments required to be paid in connection therewith have
been paid when due, and no proceedings for the termination of such insurance are pending or
threatened. Section 3.1(b) of the Company Disclosure Schedules sets forth a true and complete
list of all Subsidiaries of the Company. There is no person whose results of operations, cash
flows, changes in shareholders’ equity or financial position are consolidated in the financial
statements of the Company other than the Company Subsidiaries.
3.2 Capitalization.
(a) The authorized capital stock of the Company consists of 100,000,000
shares of Company Common Stock and 5,000,000 shares of preferred stock, without par value,
of which no shares of preferred stock are issued or outstanding. As of the date of this
Agreement, there are (i) 76,263,275 shares of Company Common Stock issued and outstanding,
which number includes 1,154,164 shares of Company Common Stock granted in respect of
outstanding Company Restricted Stock Awards, (ii) 44,199 shares of Company Common Stock
held in treasury, and (iii) 57,292 shares of Company Common Stock subject to outstanding
Company RSU Awards. As of the date of this Agreement, there are 3,386,751 shares of
Company Common Stock subject to and reserved for issuance upon the exercise of outstanding
Company Options, that are not included in the number of issued and outstanding shares of
Company Common Stock indicated above. No other shares of capital stock or other voting
securities or equity interests of the Company are issued, reserved for issuance or outstanding.
All of the issued and outstanding shares of Company Common Stock have been duly authorized
and validly issued and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. There are no bonds, debentures, notes or
other indebtedness that have the right to vote on any matters on which shareholders of the
Company may vote, and no trust preferred or subordinated debt securities of the Company are
issued or outstanding. Other than the Company Options, Company RSU Awards and Company
Restricted Stock Awards (collectively, the “Company Equity Awards”) issued prior to the date of
this Agreement and set forth in this Section 3.2(a), and the stock-settled dollar-denominated
performance-based awards described in Section 3.2(a) of the Company Disclosure Schedules
(the “LTI Awards”), there are no outstanding subscriptions, options, warrants, puts, calls, rights,
exchangeable or convertible securities or other commitments or agreements obligating the
Company to issue, transfer, sell, purchase, redeem or otherwise acquire, any shares of capital
stock or other voting securities or equity interests. Section 3.2(a) of the Company Disclosure
Schedules sets forth a true, correct and complete list of all Company Equity Awards and LTI
Awards outstanding as of the date hereof specifying, on a holder-by-holder basis, as applicable,
(A) the name of each holder, (B) the number of shares subject to each such Company Equity
Award (or, in the case of an LTI Award, the dollar value of the award that would be earned at
threshold, target and maximum levels of performance), (C) the grant date of each such Company
Equity Award or LTI Award, (D) the vesting schedule for each Equity Award, (E) the Company
Benefit Plan under which such Company Equity Award or LTI Award was granted, (F) the
exercise price for each such Company Equity Award that is a Company Option, and (G) the
{Clients/1598/00283791.DOCX/11 } -11-
expiration date for each such Company Equity Award that is a Company Option. Other than the
Company Equity Awards and the LTI Awards, no equity-based awards (including any cash
awards where the amount of payment is determined in whole or in part based on the price of any
capital stock of the Company or any of its Subsidiaries) are outstanding. No Subsidiary of the
Company owns any capital stock of the Company.
(b) Other than the Voting Agreements and as set forth on Section 3.2(b) of the
Company Disclosure Schedules, there are no voting trusts, shareholder agreements, proxies or
similar agreements to which the Company or any of its Subsidiaries is a party in effect with
respect to the voting or transfer of the Company Common Stock or other voting securities or
equity interests of the Company or granting any shareholder or other person any registration
rights. The Company does not have in effect a “poison pill” or similar shareholder rights plan.
(c) The Company owns, directly or indirectly, all of the issued and
outstanding shares of capital stock or other equity ownership interests of each of the Company
Subsidiaries, free and clear of any liens, pledges, charges, encumbrances and security interests
whatsoever (“Liens”), and all of such shares or equity ownership interests are duly authorized
and validly issued and are fully paid, nonassessable (except, with respect to bank Subsidiaries, as
provided under 12 U.S.C. §55 or any comparable provision of applicable state law) and free of
preemptive rights, with no personal liability attaching to the ownership thereof. No Company
Subsidiary has or is bound by any outstanding subscriptions, options, warrants, calls, rights,
commitments or agreements of any character calling for the purchase or issuance of any shares
of capital stock or any other voting security or equity interest of such Subsidiary or any securities
representing the right to purchase or otherwise receive any shares of capital stock or any other
voting security or equity interest of such Subsidiary.
3.3 Authority; No Violation.
(a) The Company has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the Merger have been duly and validly
approved by the Board of Directors of the Company. The Board of Directors of the Company
has determined that the Merger, on the terms and conditions set forth in this Agreement, is in the
best interests of the Company and its shareholders and has directed that this Agreement and the
transactions contemplated hereby be submitted to the shareholders of the Company for
consideration and approval at a meeting of such shareholders and has adopted a resolution to the
foregoing effect and recommending that the shareholders of the Company approve this
Agreement and the transactions contemplated hereby. Except for the adoption and approval of
this Agreement by the affirmative vote of the holders of a majority of the outstanding shares of
Company Common Stock (the “Requisite Company Vote”), the adoption and approval of the
Bank Merger Agreement and the transactions contemplated thereby (including the Bank Merger)
by the Board of Directors of Company Bank and the Company as its sole shareholder, and the
adoption of resolutions to give effect to the provisions of Section 6.11 in connection with the
Closing, no other corporate proceedings on the part of the Company are necessary to approve
this Agreement or to consummate the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by the Company and (assuming due authorization,
execution and delivery by Parent) constitutes a valid and binding obligation of the Company,
{Clients/1598/00283791.DOCX/11 } -12-
enforceable against the Company in accordance with its terms (except in all cases as such
enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, moratorium,
reorganization or similar laws of general applicability relating to or affecting insured depository
institutions or the rights of creditors generally and the availability of equitable remedies (the
“Enforceability Exceptions”). Immediately prior to the execution of this Agreement, the Board
of Directors of the Company has amended and restated the Company Bylaws in the form
attached as Exhibit C hereto.1
(b) Neither the execution and delivery of this Agreement by the Company nor
the consummation by the Company of the transactions contemplated hereby, nor compliance by
the Company with any of the terms or provisions hereof, will (i) violate any provision of the
Company Articles or the Company Bylaws or (ii) assuming that the consents, approvals and
filings referred to in Section 3.4 are duly obtained and/or made, as applicable, (x) violate any
law, statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to the Company or any of its Subsidiaries or any of their respective properties or
assets or (y) violate, conflict with, result in a breach of any provision of or the loss of any benefit
under, constitute a default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of termination or cancellation
under, accelerate the performance required by, or result in the creation of any Lien upon any of
the respective properties or assets of the Company or any of its Subsidiaries under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which the Company or any of its
Subsidiaries is a party, or by which they or any of their respective properties or assets may be
bound, except (in the case of clause (y) above) for such violations, conflicts, breaches or defaults
that, either individually or in the aggregate, would not reasonably be expected to have a Material
Adverse Effect on the Company.
3.4 Consents and Approvals. Except for (a) the filing of applications,
filings and notices, as applicable, with the Board of Governors of the Federal Reserve System
(the “Federal Reserve Board”) under the BHC Act and approval of such applications, filings and
notices, (b) the filing of any required applications, filings or notices, as applicable, with the
FDIC, the Montana Division of Banking and Financial Institutions (the “MDOB”) and the
Director of the Oregon Department of Consumer and Business Services acting by and through
the Administration of the Division of Financial Regulation (the “Oregon Division”) and any state
banking authorities listed on Section 3.4 of the Company Disclosure Schedules or Section 4.4 of
the Parent Disclosure Schedules, and approval of such applications, filings and notices,
including, with respect to Parent, the consent of the FDIC under the Loss Share Agreements, (c)
the filing with the Securities and Exchange Commission (the “SEC”) of (i) a joint proxy
statement in definitive form relating to the Company Meeting and Parent Meeting to be held in
connection with this Agreement and the transactions contemplated hereby (including any
amendments or supplements thereto, the “Joint Proxy Statement”), and (ii) a registration
statement on Form S-4 in which the Joint Proxy Statement will be included as a prospectus, to be
1 NTD: The Company would adopt a bylaw amendment, effective immediately prior to the execution of this
Agreement, (1) opting out of Oregon’s control share statute, to ensure that the voting agreements do not accidentally
trigger that statute, and (2) adopting an exclusive forum bylaw amendment, which would require any shareholder
litigation related to the transaction to be brought in Oregon.
{Clients/1598/00283791.DOCX/11 } -13-
filed with the SEC by Parent in connection with the transactions contemplated by this Agreement
(the “S-4”) and declaration of effectiveness of the S-4, (d) the filing of the Articles of Merger
with the Montana Secretary and the Oregon Secretary pursuant to the MBCA and the OBCA,
respectively, and the filing of the Bank Merger Articles, (e) if required by the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the “HSR Act”), the filing of any notices or
other filings under the HSR Act, (f) such filings and approvals as are required to be made or
obtained under the securities or “Blue Sky” laws of various states in connection with the
issuance of shares of Parent Common Stock pursuant to this Agreement and (g) the approval of
the listing of such Parent Common Stock on the NASDAQ, no consents or approvals of or filings
or registrations with any court, administrative agency or commission or other governmental
authority or instrumentality or SRO (each, a “Governmental Entity”) are necessary in connection
with (A) the execution and delivery by the Company of this Agreement or (B) the consummation
by the Company of the Merger and the other transactions contemplated hereby (including the
Bank Merger), the failure of which to make or obtain would have a Material Adverse Effect on
the Company or the Surviving Corporation. As of the date hereof, the Company is not aware of
any reason why the necessary regulatory approvals and consents will not be received to permit
consummation of the Merger, the Bank Merger and the other transactions contemplated by this
Agreement on a timely basis.
3.5 Reports. Except as set forth on Section 3.5 of the Company
Disclosure Schedules, the Company and each of its Subsidiaries have timely filed all reports,
registrations and statements, together with any amendments required to be made with respect
thereto, that they were required to file (or furnish, as applicable) since January 1, 2013 with (i)
any state regulatory authority, including the MDOB and the Oregon Division, (ii) the SEC, (iii)
the Federal Reserve Board, (iv) the FDIC, (v) any foreign regulatory authority and (vi) any self-
regulatory organization (an “SRO”) ((i) through (vi), collectively, “Regulatory Agencies”),
including, without limitation, any report, registration or statement required to be filed pursuant to
the laws, rules or regulations of the United States, any state, any foreign entity, or any
Regulatory Agency, and have paid all fees and assessments due and payable in connection
therewith, except where the failure to file such report, registration or statement or to pay such
fees and assessments, either individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect on the Company. Except for normal examinations conducted
by a Regulatory Agency in the ordinary course of business of the Company and its Subsidiaries,
and except as, either individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on the Company, no Regulatory Agency has pending any proceeding or,
to the knowledge of the Company, investigation into the business or operations of the Company
or any of its Subsidiaries since December 31, 2013 and there (i) is no unresolved violation,
criticism, or exception by any Regulatory Agency with respect to any report or statement relating
to any examinations or inspections of the Company or any of its Subsidiaries and (ii) has been no
formal or informal inquiries by, or disagreements or disputes with, any Regulatory Agency with
respect to the business, operations, policies or procedures of the Company or any of its
Subsidiaries since December 31, 2013.
3.6 Financial Statements.
(a) The financial statements of the Company and its Subsidiaries included (or
incorporated by reference) in the Company Reports (including the related notes, where
{Clients/1598/00283791.DOCX/11 } -14-
applicable) (i) have been prepared from, and are in accordance with, the books and records of the
Company and its Subsidiaries, (ii) fairly present in all material respects the consolidated results
of operations, cash flows, changes in shareholders’ equity and consolidated financial position of
the Company and its Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth (subject in the case of unaudited statements to year-end audit adjustments
normal and not material in nature and amount), (iii) complied, as of their respective dates of
filing with the SEC, in all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, and (iv) have been prepared in
accordance with GAAP consistently applied during the periods involved, except, in each case, as
indicated in such statements or in the notes thereto. The books and records of the Company and
its Subsidiaries have been, and are being, maintained in all material respects in accordance with
GAAP and any other applicable legal and accounting requirements and reflect only actual
transactions. Since December 31, 2013, no independent public accounting firm of the Company
has resigned (or informed the Company that it intends to resign) or been dismissed as
independent public accountants of the Company as a result of or in connection with any
disagreements with the Company on a matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure.
(b) Neither the Company nor any of its Subsidiaries has any liability of any
nature whatsoever (whether absolute, accrued, contingent or otherwise and whether due or to
become due), except for liabilities (i) that are reflected or reserved against on the consolidated
balance sheet of the Company included in its Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 2016 (including any notes thereto) (ii) incurred in the ordinary course of
business consistent with past practice since June 30, 2016, or (iii) incurred in connection with or
expressly contemplated by this Agreement, in each case, which would not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse Effect on the
Company.
(c) The records, systems, controls, data and information of the Company and
its Subsidiaries are recorded, stored, maintained and operated under means (including any
electronic, mechanical or photographic process, whether computerized or not) that are under the
exclusive ownership and direct control of the Company or its Subsidiaries or accountants
(including all means of access thereto and therefrom), except for any non-exclusive ownership
and non-direct control that would not reasonably be expected to have, either individually or in
the aggregate, a Material Adverse Effect on the Company. The Company (x) has implemented
and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) to ensure that material information
relating to the Company, including its Subsidiaries, is made known to the chief executive officer
and the chief financial officer of the Company by others within those entities as appropriate to
allow timely decisions regarding required disclosures and to make the certifications required by
the Exchange Act and Sections 302 and 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the “▇▇▇▇▇▇▇▇-
▇▇▇▇▇ Act”), and (y) has disclosed, based on its most recent evaluation prior to the date hereof,
to the Company’s outside auditors and the audit committee of the Board of Directors of the
Company (i) any significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act)
which are reasonably likely to adversely affect the Company’s ability to record, process,
summarize and report financial information, and (ii) any fraud, whether or not material, that
{Clients/1598/00283791.DOCX/11 } -15-
involves management or other employees who have a significant role in the Company’s internal
controls over financial reporting. These disclosures were made in writing by management to the
Company’s auditors and audit committee. There is no reason to believe that the Company’s
outside auditors and its chief executive officer and chief financial officer will not be able to give
the certifications and attestations required pursuant to the rules and regulations adopted pursuant
to Section 404 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, without qualification, when next due.
(d) Since January 1, 2013, (i) neither the Company nor any of its Subsidiaries,
nor, to the Knowledge of the Company, any director, officer, auditor, accountant or
representative of the Company or any of its Subsidiaries, has received or otherwise has had or
obtained knowledge of any material complaint, allegation, assertion or claim, whether written or
oral, regarding the accounting or auditing practices, procedures, methodologies or methods
(including with respect to loan loss reserves, write-downs, charge-offs and accruals) of the
Company or any of its Subsidiaries or their respective internal accounting controls, including any
material complaint, allegation, assertion or claim that the Company or any of its Subsidiaries has
engaged in questionable accounting or auditing practices, and (ii) no attorney representing the
Company or any of its Subsidiaries, whether or not employed by the Company or any of its
Subsidiaries, has reported evidence of a material violation of securities laws, breach of fiduciary
duty or similar violation by the Company or any of its officers, directors, employees or agents to
the Board of Directors of the Company or any committee thereof or to the Knowledge of the
Company, to any director or officer of the Company.
3.7 Broker’s Fees. Except as disclosed on Section 3.7 of the Company
Disclosure Schedules, neither the Company nor any Company Subsidiary nor any of their
respective officers or directors has employed any broker, finder or financial advisor or incurred
any liability for any broker’s fees, commissions or finder’s fees in connection with the Merger or
related transactions contemplated by this Agreement.
3.8 Absence of Certain Changes or Events.
(a) Since December 31, 2015, no event or events have occurred that have had,
either individually or in the aggregate, a Material Adverse Effect on the Company.
(b) Since December 31, 2015, the Company and its Subsidiaries have carried
on their respective businesses in all material respects in the ordinary course consistent with past
practice.
3.9 Legal Proceedings.
(a) Except as set forth in Section 3.9 of Company Disclosure Schedule, there
is no suit, action, investigation or proceeding pending or, to its Knowledge, threatened against or
affecting the Company or any Company Subsidiary (1) that involves a Governmental Entity or
Regulatory Agency, or (2) that, individually or in the aggregate, if determined adversely to the
Company, could (A) have a Material Adverse Effect on the Company, or (B) be reasonably
likely to prevent or delay it from performing its obligations under, or consummating the
transactions contemplated by, this Agreement.
{Clients/1598/00283791.DOCX/11 } -16-
(b) Except as could not reasonably be expected, either individually or in the
aggregate, to have a Material Adverse Effect on the Company, there is no injunction, order,
judgment, decree, or regulatory restriction imposed upon the Company, any of its Subsidiaries or
the assets of the Company or any of its Subsidiaries (or that, upon consummation of the Merger,
would apply to the Surviving Corporation or any of its Affiliates).
3.10 Taxes and Tax Returns.
(a) Each of the Company and its Subsidiaries has duly and timely filed
(including all applicable extensions) all material Tax Returns in all jurisdictions in which Tax
Returns are required to be filed by it, and all such Tax Returns are true, correct, and complete in
all material respects. Neither the Company nor any of its Subsidiaries is the beneficiary of any
extension of time within which to file any material Tax Return (other than extensions to file Tax
Returns obtained in the ordinary course). All material Taxes of the Company and its
Subsidiaries (whether or not shown on any Tax Returns) that are due have been fully and timely
paid. Each of the Company and its Subsidiaries has withheld and paid all material Taxes
required to have been withheld and paid in connection with amounts paid or owing to any
employee, creditor, shareholder, independent contractor or other third party. Neither the
Company nor any of its Subsidiaries has granted any extension or waiver of the limitation period
applicable to any material Tax, which waiver or extension remains in effect. The federal income
Tax Returns of the Company and its Subsidiaries for all years to and including 2012 have been
examined by the Internal Revenue Service (the “IRS”) or are Tax Returns with respect to which
the applicable period for assessment under applicable law, after giving effect to extensions or
waivers, has expired. Neither the Company nor any of its Subsidiaries has received written
notice of assessment or proposed assessment in connection with any material amount of Taxes,
and there are no pending or, to the Knowledge of the Company, threatened disputes, claims,
audits, examinations or other proceedings regarding any material Tax of the Company and its
Subsidiaries or the assets of the Company and its Subsidiaries. The Company has made
available to Parent true, correct and complete copies of any private letter ruling requests, closing
agreements or gain recognition agreements with respect to Taxes requested or executed in the
last six (6) years. Neither the Company nor any of its Subsidiaries is a party to or is bound by
any Tax sharing, allocation or indemnification agreement or arrangement (other than such an
agreement or arrangement exclusively between or among the Company and its Subsidiaries or an
agreement entered into in the ordinary course of business, the principal purpose of which is not
related to Tax). Neither the Company nor any of its Subsidiaries (A) has been a member of an
affiliated group filing a consolidated federal income Tax Return (other than a group the common
parent of which was the Company) or (B) has any liability for the Taxes of any person (other
than the Company or any of its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or
any similar provision of state, local or foreign law), as a transferee or successor, by contract or
otherwise. Neither the Company nor any of its Subsidiaries has been, within the past two (2)
years as part of a “plan (or series of related transactions)” within the meaning of Section 355(e)
of the Code of which the Merger is also a part, a “distributing corporation” or a “controlled
corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock
intended to qualify for tax-free treatment under Section 355 of the Code. Neither the Company
nor any of its Subsidiaries has participated in a “listed transaction” within the meaning of
Treasury Regulation section 1.6011-4(b)(2). At no time during the past five (5) years has the
{Clients/1598/00283791.DOCX/11 } -17-
Company been a United States real property holding corporation within the meaning of Section
897(c)(2) of the Code.
(b) As used in this Agreement, the term “Tax” or “Taxes” means all federal,
state, local, and foreign income, excise, gross receipts, ad valorem, profits, gains, property,
capital, sales, transfer, use, license, payroll, employment, social security, severance,
unemployment, withholding, duties, excise, windfall profits, intangibles, franchise, backup
withholding, value added, alternative or add-on minimum, estimated and other taxes, charges,
fees, levies or like assessments together with all penalties and additions to tax and interest
thereon.
(c) As used in this Agreement, the term “Tax Return” means any return,
declaration, report, claim for refund, estimate or information return or statement relating to
Taxes, including any schedule or attachment thereto, and including any amendment thereof,
supplied or required to be filed with a Governmental Entity.
3.11 Employees.
(a) Section 3.11(a) of the Company Disclosure Schedules sets forth a true and
correct list of each material Company Benefit Plan. For purposes of this Agreement, “Company
Benefit Plan” means each employee benefit plan (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”)), whether or not subject to
ERISA, and each bonus, stock option, stock purchase, restricted stock, equity or equity-based,
incentive, deferred compensation, retiree medical or life insurance, welfare benefit plans
(including vacation and time off policies and other material benefit policies and practices),
supplemental retirement, severance or other benefit plan, program or arrangement, and each
retention, bonus, employment, change in control, termination, severance plan, program or
arrangement or other contract or agreement (i) to or with respect to which the Company or any
Subsidiary or any trade or business of the Company or any of its Subsidiaries, whether or not
incorporated, all of which together with the Company would be deemed a “single employer”
within the meaning of Section 4001 of ERISA (a “Company ERISA Affiliate”), is a party or has
or, would reasonably be expected to have, any current or future obligation or (ii) that is
maintained, contributed to or sponsored, or is required to be contributed to, by the Company or
any of its Subsidiaries or any Company ERISA Affiliate for the benefit of any current or former
employee, officer, director or independent contractor of the Company or any of its Subsidiaries
or any Company ERISA Affiliate.
(b) The Company has heretofore made available to Parent a true and complete
copy of each Company Benefit Plan and, with respect to each such Company Benefit Plan, the
following related documents: (i) all summary plan descriptions, amendments, modifications or
material supplements, (ii) the annual reports (Form 5500), if any, filed with the IRS for the last
two plan years, (iii) the most recently received IRS advisory opinion or determination letter, if
any, relating to such Company Benefit Plan(iv) the most recently prepared actuarial report (if
applicable), (v) benefit schedules, (vi) trust instruments and insurance contracts, and (vii) any
Form 5300, Form 5310 or Form 5330 filed with the IRS within the last two years as of the date
hereof.
{Clients/1598/00283791.DOCX/11 } -18-
(c) Each Company Benefit Plan has been established, operated and
administered in all material respects in accordance with its terms and the requirements of all
applicable laws, including ERISA and the Code, the Health Insurance Portability and
Accountability Act (“HIPAA”) and the Patient Protection and Affordable Care Act (“ACA”) and
all material filings, disclosures and notices required by applicable laws, including ERISA, the
Code, HIPAA and ACA, have been timely made or any interest, fines, penalties or other
impositions for late filings have been paid in full, if due. Neither the Company nor any
Company Subsidiary has engaged in a transaction, or omitted to take action, with respect to any
Company Benefit Plan that would reasonably be expected to subject the Company to a material
unpaid tax or penalty imposed by either Chapter 43 of the Code or Sections 409 or 502 of
ERISA. Neither the Company nor any of its Subsidiaries has taken any action to take corrective
action or make a filing under any voluntary correction program of the IRS, Department of Labor
or any other Governmental Entity with respect to any Company Benefit Plan, and neither the
Company nor any of its Subsidiaries has any Knowledge of any plan defect that would qualify
for correction under any such program.
(d) Section 3.11(d) of the Company Disclosure Schedules identifies each
Company Benefit Plan that is intended to be qualified under Section 401(a) of the Code (each, a
“Company Qualified Plan”). The IRS has issued a favorable determination letter or advisory
opinion with respect to each Company Qualified Plan and the related trust, which letter has not
been revoked (nor has revocation been threatened) or such Company Qualified Plan is a volume
submitter or prototype plan covered by an IRS advisory or opinion letter affording reliance
equivalent to a determination letter, and, to the Knowledge of the Company, there are no existing
circumstances and no events have occurred or are reasonably expected to occur that could
adversely affect the qualified status of any Company Qualified Plan or the related trust or the
reliance by the Company on any such IRS advisory or opinion letter or increase the costs relating
thereto. Section 3.11(d) of the Company Disclosure Schedules identifies each trust funding any
Company Benefit Plan and whether that purports to be a voluntary employee benefit association
(each, a “VEBA”). Each such VEBA has received an exemption letter from the IRS that the form
of such VEBA satisfies the requirements of Code Section 501(c)(9), which letter has not been
revoked (nor has revocation been threatened), and, to the Knowledge of Parent, there are no
existing circumstances and no events have occurred or are reasonably expected to occur that
could adversely affect the continued exemption of such VEBA or increase the costs relating
thereto.
(e) Each Company Benefit Plan that is a “nonqualified deferred compensation
plan” (as defined in Section 409A(d)(1) of the Code) and any award thereunder, in each case that
is subject to Section 409A of the Code, has (i) since January 1, 2005, been maintained and
operated, in all material respects, in good faith compliance with Section 409A of the Code and
IRS Notice 2005-1 and (ii) since January 1, 2009, been, in all material respects, in documentary
and operational compliance with Section 409A of the Code. All Company Stock Options have
been granted with a per share exercise price or reference price at least equal to the fair market
value (as defined pursuant to Section 409A of the Code) of the underlying stock on the date of
grant.
(f) None of the Company or any of its Subsidiaries nor any Company ERISA
Affiliate has sponsored, maintained or contributed to or been obligated to contribute to (i) any
{Clients/1598/00283791.DOCX/11 } -19-
plan that is subject to Title IV or Section 302 of ERISA or Section 412, 430 or 4971 of the Code,
(ii) any plan that is a “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA
(a “Multiemployer Plan”) or (iii) any plan that has two (2) or more contributing sponsors at least
two (2) of whom are not under common control, within the meaning of Section 4063 of ERISA
(a “Multiple Employer Plan”), and none of the Company or any of its Subsidiaries nor any
Company ERISA Affiliate has incurred any liability to a Multiemployer Plan or Multiple
Employer Plan as a result of a complete or partial withdrawal (as those terms are defined in Part I
of Subtitle E of Title IV of ERISA) from a Multiemployer Plan or Multiple Employer Plan.
(g) Except as provided in Company Disclosure Schedule 3.11(g), neither the
Company nor any of its Subsidiaries sponsors, has sponsored or has any obligation with respect
to, any employee benefit plan, program, agreement or arrangement that provides for any post-
employment or post-retirement health, medical, disability or life insurance benefits for retired,
former or current employees or beneficiaries or dependents thereof, except as required by
Section 4980B of the Code. There has been no communication to employees by the Company or
any of its Subsidiaries that would reasonably be expected to promise or guarantee such
employees’ retiree health, life or disability insurance, or any retiree death benefits.
(h) All contributions required to be made to any Company Benefit Plan by
applicable law or by any plan document or other contractual undertaking, and all premiums due
or payable with respect to insurance policies funding any Company Benefit Plan, for any period
through the date hereof, have been timely made or paid in full or, to the extent not required to be
made or paid on or before the date hereof, have been fully reflected on the books and records of
the Company, including the Company’s financial statements, as applicable, to the extent required
by GAAP.
(i) There are no pending or, to the Knowledge of the Company, threatened
claims (other than claims for benefits in the ordinary course), lawsuits or arbitrations that have
been asserted or instituted, and, to the Company’s Knowledge, no set of circumstances exists that
may reasonably give rise to a claim or lawsuit, against the Company Benefit Plans, any
fiduciaries thereof with respect to their duties to the Company Benefit Plans or the assets of any
of the trusts under any of the Company Benefit Plans that could reasonably be expected to result
in any material liability of the Company or any of its Subsidiaries to the PBGC, the IRS, the
Department of Labor, any Multiemployer Plan, a Multiple Employer Plan, any participant in a
Company Benefit Plan, or any other party.
(j) None of the Company or any of its Subsidiaries nor any Company ERISA
Affiliate nor any other person, including any fiduciary, has engaged in any “prohibited
transaction” (as defined in Section 4975 of the Code or Section 406 of ERISA), which could
subject any of the Company Benefit Plans or their related trusts, the Company, any of its
Subsidiaries, any Company ERISA Affiliate or any person that the Company or any of its
Subsidiaries has an obligation to indemnify, to any material tax or penalty imposed under
Section 4975 of the Code or Section 502 of ERISA.
(k) Except as disclosed in Company Disclosure Schedule 3.11(k), neither the
execution and delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (either alone or in conjunction with any other event) result in, cause the vesting,
{Clients/1598/00283791.DOCX/11 } -20-
exercisability or delivery of, or increase the amount or value of, any payment, right or other
benefit to any employee, officer, director or other service provider of the Company or any of its
Subsidiaries, or result in any limitation on the right of the Company or any of its Subsidiaries to
amend, merge, terminate or receive a reversion of assets from any Company Benefit Plan or
related trust, except as provided in this Agreement. Without limiting the generality of the
foregoing, no amount paid or payable (whether in cash, in property, or in the form of benefits) by
the Company or any of its Subsidiaries in connection with the transactions contemplated hereby
(either solely as a result thereof or as a result of such transactions in conjunction with any other
event) will be an “excess parachute payment” within the meaning of Section 280G of the Code.
Neither the Company nor any of its Subsidiaries maintains or contributes to a rabbi trust or
similar funding vehicle, and the transactions contemplated by this Agreement will not cause or
require the Company or any of its Affiliates to establish or make any contribution to a rabbi trust
or similar funding vehicle.
(l) No Company Benefit Plan provides for the gross-up or reimbursement of
Taxes under Section 409A or 4999 of the Code, or otherwise. Company Disclosure Schedule
3.11(l) set forth true, correct and complete copies of Section 280G calculations (whether or not
final) with respect to any disqualified individual in connection with the transactions
contemplated hereby, and has also made available a schedule of all termination benefits that
would be payable to the individuals identified thereon, under all employment, change in control
agreements, severance arrangements or policies, supplemental executive retirement plans,
deferred bonus plans, deferred compensation plans, salary contribution plans or any other
material non-qualified compensation arrangement maintained by the Company or any of its
Subsidiaries for the benefit of officers, employee or directors of the Company or any Company
Subsidiary, assuming their employment or service is involuntarily terminated without cause on
July 1, 2017 and the Closing Date occurs on such date and based on other assumptions specified
in the schedule.
(m) There are no pending or, to the Company’s Knowledge, threatened
material labor grievances or material unfair labor practice claims or charges against the
Company or any of its Subsidiaries, or any strikes or other material labor disputes against the
Company or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries are party to
or bound by any collective bargaining or similar agreement with any labor organization, or work
rules or practices agreed to with any labor organization or employee association applicable to
employees of the Company or any of its Subsidiaries and, to the Knowledge of the Company,
there are no organizing efforts by any union or other group seeking to represent any employees
of the Company or any of its Subsidiaries. The Company and its Subsidiaries have complied, in
all material respects, with all laws regarding employment and employment practices (including
anti-discrimination) and terms and conditions of employment and wages and hours (including
classification of employees and equitable pay practices), and no claims relating to non-
compliance with the foregoing are pending or, to the Company’s Knowledge, threatened.
(n) The Company (or its Subsidiary, as applicable) has obtained written
consent for each employee on whose behalf bank-owned life insurance (“BOLI”) has been
purchased to the extent required by Section 101(j) of the Code.
{Clients/1598/00283791.DOCX/11 } -21-
3.12 SEC Reports. The Company has previously made available to
Parent an accurate and complete copy of each (a) registration statement, prospectus, report,
schedule and proxy statement filed with or furnished to the SEC since December 31, 2013 by the
Company pursuant to the Securities Act of 1933, as amended (the “Securities Act”), or the
Exchange Act (the “Company Reports”) and (b) communication mailed by the Company to its
shareholders since December 31, 2013 and prior to the date hereof, and no such Company Report
or communication, as of the date thereof (and, in the case of registration statements and proxy
statements, on the dates of effectiveness and the dates of the relevant meetings, respectively),
contained any untrue statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, except that information filed or furnished as of a later
date (but before the date of this Agreement) shall be deemed to modify information as of an
earlier date. Since December 31, 2013, as of their respective dates, all Company Reports filed
under the Securities Act and the Exchange Act complied in all material respects with the
published rules and regulations of the SEC with respect thereto. No executive officer of the
Company has failed in any respect to make the certifications required of him or her under
Section 302 or 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. As of the date of this Agreement, there are no
outstanding comments from or unresolved issues raised by the SEC with respect to any of the
Company Reports.
3.13 Compliance with Applicable Law. The Company and each of its
Subsidiaries hold, and have at all times since January 1, 2013, held, all licenses, franchises,
permits and authorizations necessary for the lawful conduct of their respective businesses and
ownership of their respective properties, rights and assets under and pursuant to each (and have
paid all fees and assessments due and payable in connection therewith), except where neither the
cost of failure to hold nor the cost of obtaining and holding such license, franchise, permit or
authorization (nor the failure to pay any fees or assessments) would, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the Company, and to the
Knowledge of the Company, no suspension or cancellation of any such necessary license,
franchise, permit or authorization is threatened. The Company and each of its Subsidiaries have
complied with and are not in default or violation under any applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity relating to the Company or any
of its Subsidiaries, including, without limitation, all laws related to data protection or privacy, the
USA PATRIOT Act, the Bank Secrecy Act, the Equal Credit Opportunity Act and Regulation B,
the Fair Housing Act, the Community Reinvestment Act, the Fair Credit Reporting Act, the
Truth in Lending Act and Regulation Z, the Home Mortgage Disclosure Act, the Fair Debt
Collection Practices Act, the Electronic Fund Transfer Act, the ▇▇▇▇-▇▇▇▇▇ ▇▇▇▇ Street Reform
and Consumer Protection Act, the False Claims Act, the Servicemembers Civil Relief Act, any
regulations promulgated by the Consumer Financial Protection Bureau, the Interagency Policy
Statement on Retail Sales of Nondeposit Investment Products, the SAFE Mortgage Licensing
Act of 2008, the Real Estate Settlement Procedures Act and Regulation X, and any other law
relating to bank secrecy, discriminatory lending, financing or leasing practices, money
laundering prevention, Sections 23A and 23B of the Federal Reserve Act, the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act, and all agency requirements relating to the origination, sale and servicing of mortgage and
consumer loans, except for noncompliance, defaults or violations that would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company.
Company Bank has a Community Reinvestment Act rating of “satisfactory” or better. Without
{Clients/1598/00283791.DOCX/11 } -▇▇-
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ of the Company, or any of its Subsidiaries, or to the Knowledge of the
Company, any director, officer, employee, agent or other person acting on behalf of the
Company or any of its Subsidiaries has, directly or indirectly, (i) used any funds of the Company
or any of its Subsidiaries for unlawful contributions, unlawful gifts, unlawful entertainment or
other expenses relating to political activity, (ii) made any unlawful payment to foreign or
domestic governmental officials or employees or to foreign or domestic political parties or
campaigns from funds of the Company or any of its Subsidiaries, (iii) violated any provision that
would result in the violation of the Foreign Corrupt Practices Act of 1977, as amended, or any
similar law, (iv) established or maintained any unlawful fund of monies or other assets of the
Company or any of its Subsidiaries, (v) made any fraudulent entry on the books or records of the
Company or any of its Subsidiaries, or (vi) made any unlawful bribe, unlawful rebate, unlawful
payoff, unlawful influence payment, unlawful kickback or other unlawful payment to any
person, private or public, regardless of form, whether in money, property or services, to obtain
favorable treatment in securing business to obtain special concessions for the Company or any of
its Subsidiaries, to pay for favorable treatment for business secured or to pay for special
concessions already obtained for the Company or any of its Subsidiaries, or is currently subject
to any United States sanctions administered by the Office of Foreign Assets Control of the
United States Treasury Department.
3.14 Certain Contracts.
(a) Section 3.14(a) of the Company Disclosure Schedules lists, as of the date
hereof, any contract, arrangement, commitment or understanding (whether written or oral) to
which the Company or any of its Subsidiaries is a party:
(i) which is a “material contract” (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC, excluding any Company Benefit Plan listed in
Company Disclosure Schedule 3.11(a));
(ii) which contains a non-compete or client or customer non-solicit
requirement or any other provision that restricts the conduct of any line of business by the
Company or any of its Affiliates or upon consummation of the Merger will restrict the
ability of the Surviving Corporation or any of its Affiliates to engage in any line of
business or in any geographic region;
(iii) any of the benefits or obligations of or under which will arise or be
increased or accelerated by the occurrence of the execution and delivery of this
Agreement, shareholder approval of this Agreement or the consummation of any of the
transactions contemplated by this Agreement, or under which a right of cancellation or
termination will arise as a result thereof, or the value of any of the benefits of which will
be calculated on the basis of any of the transactions contemplated by this Agreement;
(iv) which relates to the incurrence of indebtedness by the Company or
any of its Subsidiaries (other than deposit liabilities, trade payables, federal funds
purchased, advances and loans from the Federal Home Loan Bank and securities sold
under agreements to repurchase, in each case incurred in the ordinary course of business
consistent with past practice) in the principal amount of $100,000 or more including any
{Clients/1598/00283791.DOCX/11 } -23-
sale and leaseback transactions, capitalized leases and other similar financing
transactions;
(v) which grants any right of first refusal, right of first offer or similar
right with respect to any material assets, rights or properties of the Company or its
Subsidiaries;
(vi) which is an alliance, cooperation, limited liability company, joint
venture, shareholders, partnership or similar agreement or any agreement involving a
sharing of profits or losses relating to the Company or any of its Subsidiaries;
(vii) which involves the payment of more than $100,000 per annum;
(viii) any agreement relating to the acquisition or disposition of any
person, business or asset under which the Company or any of its Subsidiaries has or may
have a material obligation, including with respect to an earn-out, contingent purchase
price, or similar payment obligation, or any other material liability; or
(ix) which is a shared loss or loss sharing contract (including any
related or ancillary contract) with the FDIC (each such contract or related ancillary
contract, a “Loss Share Agreement”).
Each contract, arrangement, commitment or understanding of the type described in this Section
3.14(a), is referred to herein as a “Company Contract.” The Company has made available to
Parent true, correct and complete copies of each Company Contract in effect as of the date
hereof.
(b) (i) Each Company Contract is valid and binding on the Company or one
of its Subsidiaries, as applicable, and in full force and effect, except as, either individually or in
the aggregate, would not reasonably be expected to have a Material Adverse Effect on the
Company, (ii) the Company and each of its Subsidiaries has performed all obligations required to
be performed by it under each Company Contract, except where such noncompliance, either
individually or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect on the Company, (iii) to the Company’s Knowledge, each third-party counterparty to each
Company Contract has performed all obligations required to be performed by it under such
Company Contract, except where such noncompliance, either individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on the Company, (iv)
neither the Company nor any of its Subsidiaries knows of, or has received notice of, any
violation of any Company Contract by any of the parties thereto which would reasonably be
expected to have, either individually or in the aggregate, a Material Adverse Effect on the
Company, and (v) no event or condition exists which constitutes or, after notice or lapse of time
or both, will constitute, a default on the part of the Company or any of its Subsidiaries under any
such Company Contract, except where such default, either individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on the Company.
3.15 Agreements with Regulatory Agencies. Neither the Company nor
any of its Subsidiaries is subject to any cease-and-desist or other order or enforcement action
issued by, or is a party to any written agreement, consent agreement or memorandum of
{Clients/1598/00283791.DOCX/11 } -24-
understanding with, or is a party to any commitment letter or similar undertaking to, or is subject
to any order or directive by, or has been ordered to pay any civil money penalty by, or has been
since December 31, 2013, a recipient of any supervisory letter from, or since December 31,
2013, has adopted any policies, procedures or board resolutions at the request or suggestion of
any Regulatory Agency or other Governmental Entity that currently restricts in any material
respect the conduct of its business, imposes any material requirements or procedures, relates to
its compliance management systems (“CMS”) or activities pursuant to such CMS, including
Anti-money Laundering, Bank Secrecy Act or Know Your Customer Requirements or in any
material manner relates to its capital adequacy, its ability to pay dividends, its credit or risk
management policies or its management (each, whether or not set forth in the Company
Disclosure Schedules, a “Company Regulatory Agreement”), nor has the Company or any of its
Subsidiaries been advised since December 31, 2013, by any Regulatory Agency or other
Governmental Entity that it is considering issuing, initiating, ordering, or requesting any such
Company Regulatory Agreement.
3.16 Risk Management Instruments. All interest rate swaps, caps,
floors, option agreements, futures and forward contracts and other similar derivative transactions
and risk management arrangements, whether entered into for the account of the Company, any of
its Subsidiaries or for the account of a customer of the Company or one of its Subsidiaries, were
entered into in the ordinary course of business and in accordance with applicable rules,
regulations and policies of any Regulatory Agency and with counterparties reasonably believed
to be financially responsible at the time and are legal, valid and binding obligations of the
Company or one of its Subsidiaries enforceable in accordance with their terms (except as may be
limited by the Enforceability Exceptions), and are in full force and effect. The Company and
each of its Subsidiaries have duly performed in all material respects all of their obligations
thereunder to the extent that such obligations to perform have accrued, and, to the Company’s
Knowledge, there are no material breaches, violations or defaults or allegations or assertions of
such by any party thereunder.
3.17 Environmental Matters. Except as would not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse Effect on the
Company, the Company and its Subsidiaries are in compliance, and have complied, with all
federal, state or local laws, regulations, orders, decrees, permits, authorizations, common law and
agency requirements relating to: (i) the protection or restoration of the environment, health and
safety with respect to hazardous substance exposure or natural resource damages, (ii) the
handling, use, presence, disposal, release or threatened release of, or exposure to, any hazardous
substance, or (iii) noise, odor, wetlands, indoor air quality, pollution, contamination or any injury
to persons or property from exposure to any hazardous substance (collectively, “Environmental
Laws”). There are no legal, administrative, arbitral or other proceedings, claims or actions, or to
the Knowledge of the Company, any private environmental investigations or remediation
activities or governmental investigations of any nature pending or threatened against the
Company seeking to impose, or that could reasonably be expected to result in the imposition, on
the Company or any of its Subsidiaries of any liability or obligation arising under any
Environmental Law, which liability or obligation would reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect on the Company. To the Knowledge
of the Company, there is no reasonable basis for any such proceeding, claim, action or
governmental investigation that would impose any liability or obligation that would reasonably
{Clients/1598/00283791.DOCX/11 } -25-
be expected to have, either individually or in the aggregate, a Material Adverse Effect on the
Company. The Company is not subject to any agreement, order, judgment, decree, letter
agreement or memorandum of agreement by or with any court, Governmental Entity, regulatory
agency or third party imposing any liability or obligation with respect to the foregoing
environmental matters that would reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect on the Company.
3.18 Investment Securities and Commodities.
(a) Each of the Company and its Subsidiaries has good title to all securities
and commodities owned by it (except those sold under repurchase agreements), free and clear of
any Lien, except to the extent such securities or commodities are pledged in the ordinary course
of business to secure obligations of the Company or its Subsidiaries. Such securities and
commodities are valued on the books of the Company in accordance with GAAP in all material
respects.
(b) The Company and its Subsidiaries and their respective businesses employ
investment, securities, commodities, risk management and other policies, practices and
procedures that are prudent and reasonable in the context of such businesses. Prior to the date of
this Agreement, the Company has made available to Parent the material terms of such policies,
practices and procedures.
3.19 Real Property. The Company or a Company Subsidiary (x) has
good and marketable fee simple title to all the real property reflected in the latest audited balance
sheet included in the Company Reports as being owned by the Company or a Company
Subsidiary or acquired after the date thereof (except properties sold or otherwise disposed of
since the date thereof in the ordinary course of business) (the “Company Owned Properties”),
free and clear of all Liens, except (i) statutory Liens securing payments not yet due, (ii) Liens for
real property Taxes not yet due and payable, (iii) easements, rights of way, and other similar
encumbrances that do not materially affect the value or use of the properties or assets subject
thereto or affected thereby or otherwise materially impair business operations at such properties
and (iv) such imperfections or irregularities of title or Liens as do not materially affect the value
or use of the properties or assets subject thereto or affected thereby or otherwise materially
impair business operations at such properties (collectively, “Permitted Encumbrances”), and (y)
is the lessee of and has a valid leasehold interest all leasehold estates reflected in the latest
audited financial statements included in such Company Reports or acquired after the date thereof
(except for leases that have expired by their terms since the date thereof) (the “Company Leased
Properties” and, collectively with the Company Owned Properties, the “Company Real
Property”), free and clear of all Liens of any nature whatsoever, except for Permitted
Encumbrances, and is in possession of the properties purported to be leased thereunder, and each
such lease is valid, binding and enforceable in accordance with its terms and in full force and
effect, the Company and each of its Subsidiaries and, to the Knowledge of the Company, each
lessor, has performed all obligations required to be performed by it under each such lease, and no
event or condition exists which constitutes or, after notice or lapse of time or both, will
constitute, a default on the part of the Company or any of its Subsidiaries or, to the Knowledge
of the Company, any lessor, under any such lease. There are no pending or, to the Knowledge of
the Company, threatened condemnation proceedings against the Company Real Property.
{Clients/1598/00283791.DOCX/11 } -26-
Section 3.19 of the Company Disclosure Schedules lists all Company Real Property by address
as of the date hereof. Other than the Company Real Property, neither the Company nor any of its
Subsidiaries has any other direct or indirect interest in real property, whether owned, leased,
optioned or otherwise, and the Company Real Property comprise all real property associated with
the operation of the Company’s business.
3.20 Intellectual Property. To the Company’s Knowledge, the
Company and each of its Subsidiaries owns, or is licensed to use (in each case, free and clear of
any Liens), all Intellectual Property necessary for the conduct of its business as currently
conducted. The business or operations of the Company and any of its Subsidiaries does not
infringe, misappropriate or otherwise violate the Intellectual Property rights of any person and is
in accordance in all respects with any applicable license pursuant to which the Company or any
of its Subsidiaries acquired the right to use any Intellectual Property and the Company is not a
party to any litigation that involves a claim that the Company or any of its Subsidiaries has
infringed, misappropriated or otherwise violated the Intellectual Property rights of a third person
and the Company has not received written notice or threat of such a claim. To the Company’s
Knowledge, no person is challenging, infringing on or otherwise violating any right of the
Company or any of its Subsidiaries with respect to any Intellectual Property owned by and/or
licensed to the Company or any of its Subsidiaries, and the Company and each of its Subsidiaries
have taken commercially reasonable actions to avoid the abandonment, cancellation or
unenforceability of all Intellectual Property owned or licensed, respectively, by the Company and
its Subsidiaries. For purposes of this Agreement, “Intellectual Property” means trademarks,
service marks, brand names, internet domain names, logos, symbols, certification marks, trade
dress and other indications of origin, the goodwill associated with the foregoing and registrations
in any jurisdiction of, and applications in any jurisdiction to register, the foregoing, including
any extension, modification or renewal of any such registration or application; inventions,
discoveries and ideas, whether patentable or not, in any jurisdiction; patents, applications for
patents (including divisions, continuations, continuations in part and renewal applications), all
improvements thereto, and any renewals, extensions or reissues thereof, in any jurisdiction;
nonpublic information, trade secrets and know-how, including processes, technologies,
protocols, formulae, prototypes and confidential information and rights in any jurisdiction to
limit the use or disclosure thereof by any person; writings and other works, whether
copyrightable or not and whether in published or unpublished works, in any jurisdiction; and
registrations or applications for registration of copyrights in any jurisdiction, and any renewals or
extensions thereof; and any similar intellectual property or proprietary rights.
3.21 Related Party Transactions. Except as set forth in Section 3.21 of
the Company Disclosure Schedules, there are no transactions or series of related transactions,
agreements, arrangements or understandings, nor are there any currently proposed transactions or
series of related transactions, between the Company or any of its Subsidiaries, on the one hand,
and any current or former director or “executive officer” (as defined in Rule 3b-7 under the
Exchange Act) of the Company or any of its Subsidiaries or any person who beneficially owns
(as defined in Rules 13d-3 and 13d-5 of the Exchange Act) five percent (5%) or more of the
outstanding Company Common Stock (or any of such person’s immediate family members or
Affiliates) (other than Subsidiaries of the Company) on the other hand, except those of a type
available to employees of the Company or its Subsidiaries generally.
{Clients/1598/00283791.DOCX/11 } -27-
3.22 State Takeover Laws. Assuming the accuracy of the
representations and warranties in Section 4.19(b), the Board of Directors of the Company has
approved this Agreement and the transactions contemplated hereby and has taken all such other
necessary actions as required to render inapplicable to such agreements and transactions, the
provisions of any potentially applicable takeover laws of any state, including any “moratorium,”
“control share,” “fair price,” “takeover” or “interested shareholder” law (any such laws,
“Takeover Statutes”).
3.23 Reorganization. The Company has not taken any action and is not
aware of any fact or circumstance that could reasonably be expected to prevent the Merger from
qualifying as a “reorganization” within the meaning of Section 368(a) of the Code.
3.24 Opinion. Prior to the execution of this Agreement, the Company
has received an opinion from ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., to the effect that, as of the date thereof and
based upon and subject to the matters set forth therein, the Merger Consideration is fair, from a
financial point of view, to the holders of Company Common Stock. Such opinion has not been
amended or rescinded as of the date of this Agreement.
3.25 Company Information. The information relating to the Company
and its Subsidiaries which is provided by the Company or its representatives for inclusion in the
Joint Proxy Statement and the S-4, or in any other document filed with any other Regulatory
Agency in connection herewith, will not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in light of the circumstances in
which they are made, not misleading. The Joint Proxy Statement (except for such portions
thereof that relate only to Parent or any of its Subsidiaries) will comply in all material respects
with the provisions of the Exchange Act and the rules and regulations thereunder.
3.26 Loan Portfolio.
(a) As of the date hereof, except as set forth in Section 3.26(a) of the
Company Disclosure Schedules, neither the Company nor any of its Subsidiaries is a party to any
written or oral (i) loan, loan agreement, note or borrowing arrangement (including leases, credit
enhancements, commitments, guarantees and interest-bearing assets) (collectively, “Loans”) in
which the Company or any Subsidiary of the Company is a creditor which as of September 30,
2016, had an outstanding balance of $500,000 or more and under the terms of which the obligor
was, as of September 30, 2016, over 90 days or more delinquent in payment of principal or
interest, or (ii) Loans with any director, executive officer or five percent (5%) or greater
shareholder of the Company or any of its Subsidiaries, or to the Knowledge of the Company, any
Affiliate of any of the foregoing. Set forth in Section 3.26(a) of the Company Disclosure
Schedules is a true, correct and complete list of (A) all of the Loans of the Company and its
Subsidiaries that, as of September 30, 2016, had an outstanding balance of $500,000 or more and
were classified by the Company as “Other Loans Specially Mentioned,” “Special Mention,”
“Substandard,” “Doubtful,” “Loss,” “Classified,” “Criticized,” “Credit Risk Assets,” “Concerned
Loans,” “Watch List” or words of similar import, together with the principal amount of and
accrued and unpaid interest on each such Loan and the identity of the borrower thereunder, by
category of Loan (e.g., commercial, consumer, etc.), together with the aggregate principal
amount of such Loans by category and (B) each asset of the Company or any of its Subsidiaries
{Clients/1598/00283791.DOCX/11 } -28-
that, as of September 30, 2016, is classified as “Other Real Estate Owned” and the book value
thereof.
(b) Except as would not reasonably be expected to have, either individually or
in the aggregate, a Material Adverse Effect on the Company, each Loan of the Company and its
Subsidiaries (i) is evidenced by notes, agreements or other evidences of indebtedness that are
true, genuine and what they purport to be, (ii) to the extent carried on the books and records of
the Company and its Subsidiaries as secured Loans, has been secured by valid charges,
mortgages, pledges, security interests, restrictions, claims, liens or encumbrances, as applicable,
which have been perfected and (iii) is the legal, valid and binding obligation of the obligor
named therein, enforceable in accordance with its terms, subject to the Enforceability
Exceptions.
(c) Except as would not reasonably be expected to have, either individually or
in the aggregate, a Material Adverse Effect on the Company, each outstanding Loan of the
Company and its Subsidiaries (including Loans held for resale to investors) was solicited and
originated, and is and has been administered and, where applicable, serviced, and the relevant
Loan files are being maintained, in all material respects in accordance with the relevant notes or
other credit or security documents, the written underwriting standards of the Company and its
Subsidiaries (and, in the case of Loans held for resale to investors, the underwriting standards, if
any, of the applicable investors) and with all applicable federal, state and local laws, regulations
and rules.
(d) Except as set forth in Section 3.26(d) of the Company Disclosure
Schedules, none of the agreements pursuant to which the Company or any of its Subsidiaries has
sold Loans or pools of Loans or participations in Loans or pools of Loans contains any obligation
to repurchase such Loans or interests therein solely on account of a payment default by the
obligor on any such Loan.
(e) There are no outstanding Loans made by the Company or any of its
Subsidiaries to any “executive officer” or other “insider” (as each such term is defined in
Regulation O promulgated by the Federal Reserve Board) of the Company or its Subsidiaries,
other than Loans that are subject to and that were made and continue to be in compliance with
Regulation O or that are exempt therefrom.
(f) Neither the Company nor any of its Subsidiaries is now nor has it ever
been since January 1, 2013, subject to any fine, suspension, settlement or other contract or other
administrative agreement or sanction by, or any reduction in any loan purchase commitment
from, any Governmental Entity or Regulatory Agency relating to the origination, sale or
servicing of mortgage or consumer Loans.
3.27 Insurance. Except as would not reasonably be expected, either
individually or in the aggregate, to have a Material Adverse Effect on the Company, (a) the
Company and its Subsidiaries are insured with reputable insurers against such risks and in such
amounts as the management of the Company reasonably has determined to be prudent and
consistent with industry practice, and the Company and its Subsidiaries are in compliance with
their insurance policies and are not in default under any of the terms thereof, (b) each such policy
{Clients/1598/00283791.DOCX/11 } -29-
is outstanding and in full force and effect and, except for policies insuring against potential
liabilities of officers, directors and employees of the Company and its Subsidiaries, the Company
or the relevant Subsidiary thereof is the sole beneficiary of such policies, and (c) all premiums
and other payments due under any such policy have been paid, and all claims thereunder have
been filed in due and timely fashion.
3.28 Broker-Dealer, Investment Advisory and Insurance Matters.
(a) None of the Company, its Subsidiaries or, to the Knowledge of the
Company, any of their respective officers and employees are required to be registered,
licensed or qualified with the SEC or any securities or insurance commission or other
Governmental Entity as a broker-dealer, investment adviser, futures commission merchant,
municipal securities dealer, registered principal, registered representative, agent, salesperson
or investment adviser representative. Neither the Company nor any of its Subsidiaries has
received any notice of proceedings relating to any obligation to be so registered, licensed or
qualified.
(b) Neither the Company nor any Subsidiary of the Company serves in a
capacity described in Section 9(a) or 9(b) of the Investment Company Act of 1940, as amended,
nor acts as an “investment adviser” required to register as such under the Investment Advisers
Act of 1940, as amended.
(c) Neither the Company nor any Subsidiary of the Company is required to be
registered, licensed or qualified as an insurance agency or broker.
3.29 Customer Relationships.
(a) Except as would not reasonably be expected to have, either individually or
in the aggregate, a Material Adverse Effect on the Company, each trust customer of the
Company or any of its Subsidiaries has been originated and serviced (i) in conformity with the
applicable policies of the Company and its Subsidiaries, (ii) in accordance with the terms of any
applicable contract governing the relationship with such customer, (iii) in accordance with any
instructions received from such customers and their authorized representatives and authorized
signers, (iv) consistent with each customer’s risk profile and (v) in compliance with all
applicable laws and the Company’s and its Subsidiaries’ constituent documents, including any
policies and procedures adopted thereunder. Except as would not reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect on the Company, each
contract governing a relationship with a trust customer of the Company or any of its Subsidiaries
has been duly and validly executed and delivered by the Company and each of its Subsidiaries
and, to the Knowledge of the Company, the other contracting parties, each such contract
constitutes a valid and binding obligation of the parties thereto, except as such enforceability
may be limited by the Enforceability Exceptions, and the Company and its Subsidiaries and the
other contracting parties thereto have duly performed their obligations thereunder, and the
Company and its Subsidiaries and, to the Knowledge of the Company, such other contracting
parties are in compliance with each of the terms thereof.
{Clients/1598/00283791.DOCX/11 } -30-
(b) No material contract governing a relationship with a trust customer of the
Company or any of its Subsidiaries provides for any material reduction of fees charged (or in
compensation payable to the Company or any of its Subsidiaries thereunder) by reason of this
Agreement or the consummation of the Merger or the other transactions contemplated hereby.
(c) None of the Company or any of its Subsidiaries or any of their respective
directors, officers or employees is the beneficial owner of any interest in any of the accounts
maintained on behalf of any trust customer of the Company or any of its Subsidiaries and none
of the directors, officers and employees of the Company or any of its Subsidiaries is a party to
any contract pursuant to which it is obligated to provide service to, or receive compensation or
benefits from, any of the trust customers of the Company or any of its Subsidiaries after the
Closing.
(d) Each account opening document, margin account agreement, any advisory
contract and customer disclosure statement with respect to any trust customer of the Company or
any of its Subsidiaries conforms to the forms made available to Parent prior to the date hereof,
except where such inconsistences would not reasonably be expected to have, either individually
or in the aggregate, a Material Adverse Effect on the Company.
(e) All other books and records primarily related to the trust business of each
of the Company and each of its Subsidiaries include documented risk profiles signed by each
such customer, except where such failures to include such a profile would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on the Company.
3.30 No Other Representations or Warranties.
(a) Except for the representations and warranties made by the Company in
this Article III, neither the Company nor any other person makes any express or implied
representation or warranty with respect to the Company, its Subsidiaries or their respective
businesses, operations, assets, liabilities, conditions (financial or otherwise) or prospects, and the
Company hereby disclaims any such other representations or warranties.
(b) The Company acknowledges and agrees that neither Parent nor any other
person has made or is making any express or implied representation or warranty other than those
contained in Article IV.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Except as disclosed in the disclosure schedule delivered by Parent to the Company
concurrently herewith (the “Parent Disclosure Schedules”); provided that (i) no such item is
required to be set forth as an exception to a representation or warranty if its absence would not
result in the related representation or warranty being deemed untrue or incorrect, (ii) the mere
inclusion of an item in the Parent Disclosure Schedules as an exception to a representation or
warranty shall not be deemed an admission by Parent that such item represents a material
exception or fact, event or circumstance or that such item is reasonably likely to result in a
Material Adverse Effect, and (iii) any disclosures made with respect to a section of this Article
{Clients/1598/00283791.DOCX/11 } -31-
IV shall be deemed to qualify (a) any other section of this Article IV specifically referenced or
cross-referenced and (b) other sections of this Article IV to the extent it is reasonably apparent
on its face (notwithstanding the absence of a specific reference or cross-reference) from a
reading of the disclosure that such disclosure applies to such other sections. Parent hereby
represents and warrants to the Company as follows:
4.1 Corporate Organization.
(a) Parent is a corporation duly organized, validly existing and in good
standing under the laws of the State of Montana and is a bank holding company duly registered
under the BHC Act. Parent has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted. Parent is duly
licensed or qualified to do business in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and assets owned or leased by it
makes such licensing or qualification necessary, except where the failure to be so licensed or
qualified would not, either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Parent. True and complete copies of the Parent Articles and Parent
Bylaws, as in effect as of the date of this Agreement, have previously been made available by
Parent to the Company.
(b) Each Subsidiary of Parent (a “Parent Subsidiary”) (i) is duly organized
and validly existing under the laws of its jurisdiction of organization, (ii) is duly qualified to do
business and, where such concept is recognized under applicable law, in good standing in all
jurisdictions (whether federal, state, local or foreign) where its ownership or leasing of property
or the conduct of its business requires it to be so qualified and in which the failure to be so
qualified would reasonably be expected, either individually or in the aggregate, to have a
Material Adverse Effect on Parent, and (iii) has all requisite corporate power and authority to
own or lease its properties and assets and to carry on its business as now conducted. There are
no restrictions on the ability of any Subsidiary of Parent to pay dividends or distributions except,
in the case of a Subsidiary that is a regulated entity, for restrictions on dividends or distributions
generally applicable to all such regulated entities. The deposit accounts of each Subsidiary of
Parent that is an insured depository institution are insured by the FDIC through the Deposit
Insurance Fund (as defined in Section 3(y) of the Federal Deposit Insurance Act of 1950) to the
fullest extent permitted by law, all premiums and assessments required to be paid in connection
therewith have been paid when due, and no proceedings for the termination of such insurance are
pending or threatened. Section 4.1(b) of the Parent Disclosure Schedules sets forth a true and
complete list of all Subsidiaries of Parent. There is no person whose results of operations, cash
flows, changes in shareholders’ equity or financial position are consolidated in the financial
statements of Parent other than the Parent Subsidiaries.
4.2 Capitalization.
(a) The authorized capital stock of Parent consists of 100,000,000 shares of
Parent Common Stock, 100,000,000 shares of Class B common stock, no par value per share,
and 100,000 shares of serial preferred stock, no par value per share, of which no shares of
preferred stock are issued or outstanding. As of the date of this Agreement, there are (i)
44,899,033 shares of Parent Common Stock outstanding (which number includes 379,684 shares
{Clients/1598/00283791.DOCX/11 } -32-
of Parent Common Stock subject to outstanding awards of restricted Parent Common Stock
granted by Parent (“Parent Restricted Stock Awards”), (ii) 23,375,631 shares of Parent Class B
common stock outstanding, (iii) no shares of Parent Common Stock held in treasury,
(iv) 984,189 shares of Parent Common Stock subject to and reserved for issuance upon the
exercise of outstanding compensatory stock options to purchase shares of Parent Common Stock
granted by Parent (“Parent Options”) and (v) no other shares of capital stock or other voting
securities or equity interests of Parent are issued, reserved for issuance or outstanding. All of the
issued and outstanding shares of Parent Common Stock have been duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. There are no bonds, debentures, notes or other indebtedness
that have the right to vote on any matters on which shareholders of Parent may vote. Other than
Parent Options and Parent Restricted Stock Awards (collectively, the “Parent Equity Awards”)
issued prior to the date of this Agreement, there are no outstanding subscriptions, options,
warrants, puts, calls, rights, exchangeable or convertible securities or other commitments or
agreements obligating Parent to issue, transfer, sell, purchase, redeem or otherwise acquire, any
shares of capital stock or other voting securities or equity interests. Other than the Voting
Agreements, there are no voting trusts, shareholder agreements, proxies or other agreements in
effect with respect to the voting or transfer of the Parent Common Stock or other voting
securities or equity interests of Parent.
(b) Parent owns, directly or indirectly, all of the issued and outstanding shares
of capital stock or other equity ownership interests of each of the Parent Subsidiaries, free and
clear of any Liens, and all of such shares or equity ownership interests are duly authorized and
validly issued and are fully paid, nonassessable (except, with respect to bank Subsidiaries, as
provided under 12 U.S.C. § 55 or any comparable provision of applicable state law) and free of
preemptive rights, with no personal liability attaching to the ownership thereof. No Parent
Subsidiary has or is bound by any outstanding subscriptions, options, warrants, calls, rights,
commitments or agreements of any character calling for the purchase or issuance of any shares
of capital stock or any other voting security or equity interest of such Subsidiary or any securities
representing the right to purchase or otherwise receive any shares of capital stock or any other
voting security or equity interest of such Subsidiary.
4.3 Authority; No Violation.
(a) Parent has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the Merger have been duly and validly
approved by the Board of Directors of Parent. The Board of Directors of Parent has determined
that the Merger, on the terms and conditions set forth in this Agreement, is in the best interests of
Parent and its shareholders and has directed that this Agreement be submitted to the shareholders
of Parent for approval at a meeting of such shareholders and has adopted resolutions to the
foregoing effect and recommending that the shareholders of Parent approve this Agreement and
the transactions contemplated hereby. Except for: (i) the approval of this Agreement and the
transactions contemplated hereby, including the issuance of the Stock Consideration, by the
affirmative vote of the holders of two-thirds of the outstanding shares of Parent Common Stock
(the “Requisite Parent Vote”); (ii) the approval of the Articles Amendment by the affirmative
vote of (A) the greater of a majority of the voting power of the issued and outstanding shares of
{Clients/1598/00283791.DOCX/11 } -▇▇-
▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock then entitled to vote thereon, or sixty-six and two-thirds percent (66
2/3%) of the voting power of the shares of Parent Common Stock present in person or
represented by proxy at the stockholder meeting and entitled to vote thereon and (B) the majority
vote of the holders of the Class A Common Stock and Class B Common Stock, each voting
separately as a class (the “Requisite Amendment Vote”); (iii) the adoption and approval of the
Bank Merger Agreement by the Board of Directors of Parent Bank and Parent as its sole
shareholder; and (iv) the adoption of resolutions to give effect to the provisions of Section 6.11
in connection with the Closing, no other corporate proceedings on the part of Parent are
necessary to approve this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Parent and (assuming due
authorization, execution and delivery by the Company) constitutes a valid and binding obligation
of Parent, enforceable against Parent in accordance with its terms (except in all cases as such
enforceability may be limited by the Enforceability Exceptions). The shares of Parent Common
Stock to be issued in connection with the Merger have been validly authorized (subject to the
approval of this Agreement and the transactions contemplated hereby by the holders of Parent
Common Stock), when issued, will be validly issued, fully paid and nonassessable, and no
current or past shareholder of Parent will have any preemptive right or similar rights in respect
thereof.
(b) Neither the execution and delivery of this Agreement by Parent, nor the
consummation by Parent of the transactions contemplated hereby, nor compliance by Parent with
any of the terms or provisions hereof, will (i) violate any provision of the Parent Articles or the
Parent Bylaws, or (ii) assuming that the consents, approvals and filings referred to in Section 4.4
are duly obtained and/or made, as applicable, (x) violate any law, statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to Parent, any of its
Subsidiaries or any of their respective properties or assets or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under, result in the
termination of or a right of termination or cancellation under, accelerate the performance
required by, or result in the creation of any Lien upon any of the respective properties or assets
of Parent or any of its Subsidiaries under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which Parent or any of its Subsidiaries is a party, or by which they or any of their
respective properties or assets may be bound, except (in the case of clause (y) above) for such
violations, conflicts, breaches or defaults that, either individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Parent.
4.4 Consents and Approvals. Except for (a) the filing of applications,
filings and notices, as applicable, with the Federal Reserve Board under the BHC Act and
approval of such applications, filings and notices, (b) the filing of any required applications,
filings or notices, as applicable, with the FDIC, the MDOB, the Oregon Division and any state
banking authorities listed on Section 3.4 of the Company Disclosure Schedules or Section 4.4 of
the Parent Disclosure Schedules, and approval of such applications, filings and notices including,
with respect to Parent, the consent of the FDIC under the Loss Share Agreements, (c) the filing
with the SEC of the Joint Proxy Statement and the S-4 in which the Joint Proxy Statement will
be included as a prospectus, and declaration of effectiveness of the S-4, (d) the filing of the
Articles of Merger with the Montana Secretary and the Oregon Secretary pursuant to the MBCA
{Clients/1598/00283791.DOCX/11 } -34-
and the OBCA, respectively, and the filing of the Bank Merger Articles, (e) if required by the
HSR Act, the filing of any notices or other filings under the HSR Act, (f) such filings and
approvals as are required to be made or obtained under the securities or “Blue Sky” laws of
various states in connection with the issuance of shares of Parent Common Stock pursuant to this
Agreement and (g) the approval of the listing of such Parent Common Stock on the NASDAQ,
no consents or approvals of or filings or registrations with any Governmental Entity are
necessary in connection with (A) the execution and delivery by Parent of this Agreement or (B)
the consummation by Parent of the Merger and the other transactions contemplated hereby
(including the Bank Merger), the failure of which to make or obtain would have a Material
Adverse Effect on Parent or the Surviving Corporation. As of the date hereof, Parent is not
aware of any reason why the necessary regulatory approvals and consents will not be received to
permit consummation of the Merger, the Bank Merger and the other transactions contemplated
by this Agreement on a timely basis.
4.5 Reports. Parent and each of its Subsidiaries have timely filed all
reports, registrations and statements, together with any amendments required to be made with
respect thereto, that they were required to file (or furnish, as applicable) since December 31,
2013 with any Regulatory Agencies, including, without limitation, any report, registration or
statement required to be filed pursuant to the laws, rules or regulations of the United States, any
state, any foreign entity, or any Regulatory Agency, and have paid all fees and assessments due
and payable in connection therewith, except where the failure to file such report, registration or
statement or to pay such fees and assessments, either individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Parent. Except for normal
examinations conducted by a Regulatory Agency in the ordinary course of business of Parent and
its Subsidiaries, and except as, either individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on Parent, no Regulatory Agency has pending any
proceeding or, to the Knowledge of Parent, investigation into the business or operations of Parent
or any of its Subsidiaries since December 31, 2013 and there (i) is no unresolved violation,
criticism, or exception by any Regulatory Agency with respect to any report or statement relating
to any examinations or inspections of Parent or any of its Subsidiaries, and (ii) has been no
formal or informal inquiries by, or disagreements or disputes with, any Regulatory Agency with
respect to the business, operations, policies or procedures of Parent or any of its Subsidiaries
since December 31, 2013.
4.6 Financial Statements.
(a) The financial statements of Parent and its Subsidiaries included (or
incorporated by reference) in the Parent Reports (including the related notes, where applicable)
(i) have been prepared from, and are in accordance with, the books and records of Parent and its
Subsidiaries, (ii) fairly present in all material respects the consolidated results of operations, cash
flows, changes in shareholders’ equity and consolidated financial position of Parent and its
Subsidiaries for the respective fiscal periods or as of the respective dates therein set forth
(subject in the case of unaudited statements to year-end audit adjustments normal and not
material in nature and amount), (iii) complied, as of their respective dates of filing with the SEC,
in all material respects with applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto, and (iv) have been prepared in accordance with
GAAP consistently applied during the periods involved, except, in each case, as indicated in
{Clients/1598/00283791.DOCX/11 } -35-
such statements or in the notes thereto. The books and records of Parent and its Subsidiaries
have been, and are being, maintained in all material respects in accordance with GAAP and any
other applicable legal and accounting requirements and reflect only actual transactions. Since
December 31, 2013, no independent public accounting firm of Parent has resigned (or informed
Parent that it intends to resign) or been dismissed as independent public accountants of Parent as
a result of or in connection with any disagreements with Parent on a matter of accounting
principles or practices, financial statement disclosure or auditing scope or procedure.
(b) Neither Parent nor any of its Subsidiaries has any liability of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and whether due or to become
due), except for liabilities (i) that are reflected or reserved against on the consolidated balance
sheet of Parent included in its Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 2016 (including any notes thereto), (ii) incurred in the ordinary course of business
consistent with past practice since June 30, 2016, or (iii) incurred in connection with or expressly
contemplated by this Agreement, in each case, which would not reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect on Parent.
(c) The records, systems, controls, data and information of Parent and its
Subsidiaries are recorded, stored, maintained and operated under means (including any
electronic, mechanical or photographic process, whether computerized or not) that are under the
exclusive ownership and direct control of Parent or its Subsidiaries or accountants (including all
means of access thereto and therefrom), except for any non-exclusive ownership and non-direct
control that would not reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect on Parent. Parent (x) has implemented and maintains disclosure
controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) to ensure that
material information relating to Parent, including its Subsidiaries, is made known to the chief
executive officer and the chief financial officer of Parent by others within those entities as
appropriate to allow timely decisions regarding required disclosures and to make the
certifications required by the Exchange Act and Sections 302 and 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act, and (y) has disclosed, based on its most recent evaluation prior to the date hereof, to
Parent’s outside auditors and the audit committee of Parent’s Board of Directors (i) any
significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) which are reasonably
likely to adversely affect Parent’s ability to record, process, summarize and report financial
information, and (ii) any fraud, whether or not material, that involves management or other
employees who have a significant role in Parent’s internal controls over financial reporting.
These disclosures were made in writing by management to Parent’s auditors and audit
committee. There is no reason to believe that Parent’s outside auditors and its chief executive
officer and chief financial officer will not be able to give the certifications and attestations
required pursuant to the rules and regulations adopted pursuant to Section 404 of the ▇▇▇▇▇▇▇▇-
▇▇▇▇▇ Act, without qualification, when next due.
(d) Since January 1, 2013, (i) neither Parent nor any of its Subsidiaries, nor, to
the Knowledge of Parent, any director, officer, auditor, accountant or representative of Parent or
any of its Subsidiaries, has received or otherwise has had or obtained knowledge of any material
complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or
auditing practices, procedures, methodologies or methods (including with respect to loan loss
{Clients/1598/00283791.DOCX/11 } -36-
reserves, write-downs, charge-offs and accruals) of Parent or any of its Subsidiaries or their
respective internal accounting controls, including any material complaint, allegation, assertion or
claim that Parent or any of its Subsidiaries has engaged in questionable accounting or auditing
practices, and (ii) no attorney representing Parent or any of its Subsidiaries, whether or not
employed by Parent or any of its Subsidiaries, has reported evidence of a material violation of
securities laws, breach of fiduciary duty or similar violation by Parent or any of its officers,
directors, employees or agents to the Board of Directors of Parent or any committee thereof or to
the Knowledge of Parent, to any director or officer of Parent.
4.7 Broker’s Fees. With the exception of the engagement of Barclays
Capital, Inc., neither Parent nor any Parent Subsidiary nor any of their respective officers or
directors has employed any broker, finder or financial advisor or incurred any liability for any
broker’s fees, commissions or finder’s fees in connection with the Merger or related transactions
contemplated by this Agreement.
4.8 Absence of Certain Changes or Events.
(a) Since December 31, 2015, no event or events have occurred that have had,
either individually or in the aggregate, a Material Adverse Effect on Parent.
(b) Since December 31, 2015, Parent and its Subsidiaries have carried on their
respective businesses in all material respects in the ordinary course consistent with past practice.
4.9 Legal Proceedings.
(a) Except as set forth in Section 4.9 of Parent Disclosure Schedule, there is
no suit, action, investigation or proceeding pending or, to its Knowledge, threatened against or
affecting Parent or any Parent Subsidiary (1) that involves a Governmental Entity or Regulatory
Agency, or (2) that, individually or in the aggregate, if determined adversely to Parent, could (A)
have a Material Adverse Effect on Parent, or (B) be reasonably likely to prevent or delay it from
performing its obligations under, or consummating the transactions contemplated by, this
Agreement.
(b) Except as could not reasonably be expected, either individually or in the
aggregate, to have a Material Adverse Effect on Parent, there is no injunction, order, judgment,
decree, or regulatory restriction imposed upon Parent, any of its Subsidiaries or the assets of
Parent or any of its Subsidiaries (or that, upon consummation of the Merger, would apply to the
Surviving Corporation or any of its Affiliates).
4.10 Taxes and Tax Returns. Each of Parent and its Subsidiaries has
duly and timely filed (including all applicable extensions) all material Tax Returns in all
jurisdictions in which Tax Returns are required to be filed by it, and all such Tax Returns are
true, correct, and complete in all material respects. Neither Parent nor any of its Subsidiaries is
the beneficiary of any extension of time within which to file any material Tax Return (other than
extensions to file Tax Returns obtained in the ordinary course). All material Taxes of Parent and
its Subsidiaries (whether or not shown on any Tax Returns) that are due have been fully and
timely paid. Each of Parent and its Subsidiaries has withheld and paid all material Taxes
required to have been withheld and paid in connection with amounts paid or owing to any
{Clients/1598/00283791.DOCX/11 } -37-
employee, creditor, shareholder, independent contractor or other third party. Neither Parent nor
any of its Subsidiaries has granted any extension or waiver of the limitation period applicable to
any material Tax that remains in effect. The federal income Tax Returns of Parent and its
Subsidiaries for all years to and including 2012 have been examined by the IRS or are Tax
Returns with respect to which the applicable period for assessment under applicable law, after
giving effect to extensions or waivers, has expired. Neither Parent nor any of its Subsidiaries has
received written notice of assessment or proposed assessment in connection with any material
amount of Taxes, and there are no pending or, to the Knowledge of Parent, threatened, disputes,
claims, audits, examinations or other proceedings regarding any material Tax of Parent and its
Subsidiaries or the assets of Parent and its Subsidiaries. Parent has made available to the
Company true, correct and complete copies of any private letter ruling requests, closing
agreements or gain recognition agreements with respect to Taxes requested or executed in the
last six (6) years. Neither Parent nor any of its Subsidiaries is a party to or is bound by any Tax
sharing, allocation or indemnification agreement or arrangement (other than such an agreement
or arrangement exclusively between or among Parent and its Subsidiaries). Neither Parent nor
any of its Subsidiaries (A) has been a member of an affiliated group filing a consolidated federal
income Tax Return (other than a group the common parent of which was Parent) or (B) has any
liability for the Taxes of any person (other than Parent or any of its Subsidiaries) under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), as a
transferee or successor, by contract or otherwise. Neither Parent nor any of its Subsidiaries has
been, within the past two (2) years or otherwise as part of a “plan (or series of related
transactions)” within the meaning of Section 355(e) of the Code of which the Merger is also a
part, a “distributing corporation” or a “controlled corporation” (within the meaning of Section
355(a)(1)(A) of the Code) in a distribution of stock intended to qualify for tax-free treatment
under Section 355 of the Code. Neither Parent nor any of its Subsidiaries has participated in a
“listed transaction” within the meaning of Treasury Regulation section 1.6011-4(b)(2). At no
time during the past five (5) years has Parent been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code.
4.11 SEC Reports. Parent has previously made available to the
Company an accurate and complete copy of each (a) registration statement, prospectus, report,
schedule and proxy statement filed with or furnished to the SEC since December 31, 2013 by
Parent pursuant to the Securities Act or the Exchange Act (the “Parent Reports”) and (b)
communication mailed by Parent to its shareholders since December 31, 2013 and prior to the
date hereof, and no such Parent Report or communication, as of the date thereof (and, in the case
of registration statements and proxy statements, on the dates of effectiveness and the dates of the
relevant meetings, respectively), contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading, except that information
filed or furnished as of a later date (but before the date of this Agreement) shall be deemed to
modify information as of an earlier date. Since December 31, 2013, as of their respective dates,
all Parent Reports filed under the Securities Act and the Exchange Act complied in all material
respects with the published rules and regulations of the SEC with respect thereto. No executive
officer of Parent has failed in any respect to make the certifications required of him or her under
Section 302 or 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. As of the date of this Agreement, there are no
outstanding comments from or unresolved issues raised by the SEC with respect to any of the
Parent Reports.
{Clients/1598/00283791.DOCX/11 } -38-
4.12 Compliance with Applicable Law. Parent and each of its
Subsidiaries hold, and have at all times since January 1, 2013, held, all licenses, franchises,
permits and authorizations necessary for the lawful conduct of their respective businesses and
ownership of their respective properties, rights and assets under and pursuant to each (and have
paid all fees and assessments due and payable in connection therewith), except where neither the
cost of failure to hold nor the cost of obtaining and holding such license, franchise, permit or
authorization (nor the failure to pay any fees or assessments) would reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect on Parent, and to the
Knowledge of Parent, no suspension or cancellation of any such necessary license, franchise,
permit or authorization is threatened. Parent and each of its Subsidiaries have complied with and
are not in default or violation under any, applicable law, statute, order, rule, regulation, policy
and/or guideline of any Governmental Entity relating to Parent or any of its Subsidiaries,
including without limitation all laws related to data protection or privacy, the USA PATRIOT
Act, the Bank Secrecy Act, the Equal Credit Opportunity Act and Regulation B, the Fair Housing
Act, the Community Reinvestment Act, the Fair Credit Reporting Act, the Truth in Lending Act
and Regulation Z, the Home Mortgage Disclosure Act, the Fair Debt Collection Practices Act,
the Electronic Fund Transfer Act, the ▇▇▇▇-▇▇▇▇▇ ▇▇▇▇ Street Reform and Consumer Protection
Act, the False Claims Act, the Servicemembers Civil Relief Act, any regulations promulgated by
the Consumer Financial Protection Bureau, the Interagency Policy Statement on Retail Sales of
Nondeposit Investment Products, the SAFE Mortgage Licensing Act of 2008, the Real Estate
Settlement Procedures Act and Regulation X, and any other law relating to bank secrecy,
discriminatory lending, financing or leasing practices, money laundering prevention, Sections
23A and 23B of the Federal Reserve Act, the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, and all agency requirements
relating to the origination, sale and servicing of mortgage and consumer loans, except for
noncompliance, defaults or violations that would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on Parent. Parent Bank has a Community
Reinvestment Act rating of “satisfactory” or better. Without limitation, none of Parent, or any of
its Subsidiaries, or to the Knowledge of Parent, any director, officer, employee, agent or other
person acting on behalf of Parent or any of its Subsidiaries has, directly or indirectly, (i) used any
funds of Parent or any of its Subsidiaries for unlawful contributions, unlawful gifts, unlawful
entertainment or other expenses relating to political activity, (ii) made any unlawful payment to
foreign or domestic governmental officials or employees or to foreign or domestic political
parties or campaigns from funds of Parent or any of its Subsidiaries, (iii) violated any provision
that would result in the violation of the Foreign Corrupt Practices Act of 1977, as amended, or
any similar law, (iv) established or maintained any unlawful fund of monies or other assets of
Parent or any of its Subsidiaries, (v) made any fraudulent entry on the books or records of Parent
or any of its Subsidiaries, or (vi) made any unlawful bribe, unlawful rebate, unlawful payoff,
unlawful influence payment, unlawful kickback or other unlawful payment to any person, private
or public, regardless of form, whether in money, property or services, to obtain favorable
treatment in securing business to obtain special concessions for Parent or any of its Subsidiaries,
to pay for favorable treatment for business secured or to pay for special concessions already
obtained for Parent or any of its Subsidiaries, or is currently subject to any United States
sanctions administered by the Office of Foreign Assets Control of the United States Treasury
Department.
{Clients/1598/00283791.DOCX/11 } -39-
4.13 Certain Contracts.
(a) Each contract, arrangement, commitment or understanding (whether
written or oral) which is a “material contract” (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC) to which Parent nor any of its Subsidiaries is a party or by which
Parent or any of its Subsidiaries is bound as of the date hereof has been filed as an exhibit to the
most recent Annual Report on Form 10-K filed by Parent, or a Quarterly Report on Form 10-Q
or Current Report on Form 8-K subsequent thereto (each, a “Parent Contract”).
(b) (i) Each Parent Contract is valid and binding on Parent or one of its
Subsidiaries, as applicable, and in full force and effect, except as, either individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on Parent, (ii)
Parent and each of its Subsidiaries has performed all obligations required to be performed by it
under each Parent Contract, except where such noncompliance, either individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on Parent, (iii) to
Parent’s Knowledge, each third-party counterparty to each Parent Contract has performed all
obligations required to be performed by it under such Parent Contract, except where such
noncompliance, either individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect on Parent, (iv) neither Parent nor any of its Subsidiaries knows of, or
has received notice of, any violation of any Parent Contract by any of the parties thereto which
would reasonably be expected to have, either individually or in the aggregate, a Material Adverse
Effect on the Parent, and (v) no event or condition exists which constitutes or, after notice or
lapse of time or both, will constitute, a default on the part of Parent or any of its Subsidiaries
under any such Parent Contract, except where such default, either individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on Parent.
4.14 Agreements with Regulatory Agencies. Neither Parent nor any of
its Subsidiaries is subject to any cease-and-desist or other order or enforcement action issued by,
or is a party to any written agreement, consent agreement or memorandum of understanding
with, or is a party to any commitment letter or similar undertaking to, or is subject to any order
or directive by, or has been ordered to pay any civil money penalty by, or has been since
December 31, 2013, a recipient of any supervisory letter from, or since December 31, 2013, has
adopted any policies, procedures or board resolutions at the request or suggestion of any
Regulatory Agency or other Governmental Entity that currently restricts in any material respect
the conduct of its business, imposes any material requirements or procedures, relates to its CMS
or activities pursuant to such CMS, including Anti-money Laundering, Bank Secrecy Act or
Know Your Customer Requirements or in any material manner relates to its capital adequacy, its
ability to pay dividends, its credit or risk management policies or its management (each, whether
or not set forth in the Parent Disclosure Schedules, a “Parent Regulatory Agreement”), nor has
Parent or any of its Subsidiaries been advised since December 31, 2013, by any Regulatory
Agency or other Governmental Entity that it is considering issuing, initiating, ordering or
requesting any such Parent Regulatory Agreement.
4.15 Employees.
(a) Section 4.15(a) of the Parent Disclosure Schedules sets forth a true and
correct list of each material Parent Benefit Plan. For purposes of this Agreement, “Parent
{Clients/1598/00283791.DOCX/11 } -40-
Benefit Plan” means each employee benefit plan (as defined in Section 3(3) of ERISA), whether
or not subject to ERISA, and each bonus, stock option, stock purchase, restricted stock, equity or
equity-based, incentive, deferred compensation, retiree medical or life insurance, welfare benefit
plans (including vacation and paid time off policies and other material benefit policies and
procedures), supplemental retirement, severance or other benefit plan, program or arrangement,
and each retention, bonus, employment, change in control, termination, severance plan, program
or arrangement (i) to or with respect to which Parent or any Subsidiary or any trade or business
of Parent or any of its Subsidiaries, whether or not incorporated, all of which together with
Parent would be deemed a “single employer” within the meaning of Section 4001 of ERISA (a
“Parent ERISA Affiliate”), is a party or has or, would reasonably be expected to have, any
current or future obligation or (ii) that is maintained, contributed to or sponsored, or is required
to be contributed to, by Parent or any of its Subsidiaries or any Parent ERISA Affiliate for the
benefit of any current or former employee, officer, director or independent contractor of Parent
or any of its Subsidiaries or any Parent ERISA Affiliate.
(b) Parent has heretofore made available to the Company a true and complete
copy of each material Parent Benefit Plan and, with respect to each such Parent Benefit Plan, the
following related documents: (i) all summary plan descriptions, amendments, modifications or
material supplements, (ii) the most recent annual report (Form 5500), if any, filed with the IRS,
(iii) the most recently received IRS determination letter, if any, and (iv) the most recently
prepared actuarial report (if applicable).
(c) Each Parent Benefit Plan has been established, operated and administered
in all material respects in accordance with its terms and the requirements of all applicable laws,
including ERISA, the Code, the HIPAA and the ACA and all material filings, disclosures and
notices required by applicable laws, including ERISA, the Code, HIPAA and ACA, have been
timely made or any interest, fines, penalties or other impositions for late filings have been paid in
full, if due. Neither Parent nor any Parent Subsidiary has engaged in a transaction, or omitted to
take action, with respect to any Parent Benefit Plan that would reasonably be expected to subject
the Company to a material unpaid tax or penalty imposed by either Chapter 43 of the Code or
Sections 409 or 502 of ERISA. Neither Parent nor any of its Subsidiaries has taken any action to
take corrective action or make a filing under any voluntary correction program of the IRS,
Department of Labor or any other Governmental Entity with respect to any Parent Benefit Plan,
and neither Parent nor any of its Subsidiaries has any Knowledge of any plan defect that would
qualify for correction under any such program.
(d) Section 4.15(d) of the Parent Disclosure Schedules identifies each Parent
Benefit Plan that is intended to be qualified under Section 401(a) of the Code (each, a “Parent
Qualified Plan”). The IRS has issued a favorable determination letter with respect to each Parent
Qualified Plan and the related trust, which letter has not been revoked (nor has revocation been
threatened) or such Parent Qualified Plan is a volume submitter or prototype plan covered by an
IRS advisory or opinion letter affording reliance equivalent to a determination letter, and, to the
Knowledge of Parent, there are no existing circumstances and no events have occurred or are
reasonably expected to occur that could adversely affect the qualified status of any Parent
Qualified Plan or the related trust or increase the costs relating thereto. Section 4.15(d) of the
Parent Disclosure Schedules identifies each trust funding any Parent Benefit Plan and whether
that purports to be a VEBA. Each such VEBA has received an exemption letter from the IRS that
{Clients/1598/00283791.DOCX/11 } -41-
the form of such VEBA satisfies the requirements of Code Section 501(c)(9), which letter has
not been revoked (nor has revocation been threatened), and, to the Knowledge of Parent, there
are no existing circumstances and no events have occurred or are reasonably expected to occur
that could adversely affect the continued exemption of such VEBA or increase the costs relating
thereto.
(e) Each Parent Benefit Plan that is a “nonqualified deferred compensation
plan” (as defined in Section 409A(d)(1) of the Code) and any award thereunder, in each case that
is subject to Section 409A of the Code, has (i) since January 1, 2005, been maintained and
operated, in all material respects, in good faith compliance with Section 409A of the Code and
IRS Notice 2005-1 and (ii) since January 1, 2009, been, in all material respects, in documentary
and operational compliance with Section 409A of the Code. All Parent Stock Options have been
granted with a per share exercise price or reference price at least equal to the fair market value
(as defined pursuant to Section 409A of the Code) of the underlying stock on the date of grant.
(f) None of Parent or any of its Subsidiaries nor any Parent ERISA Affiliate
has sponsored, maintained or contributed to or been obligated to contribute to (i) any plan that is
subject to Title IV or Section 302 of ERISA or Section 412, 430 or 4971 of the Code, (ii) any
Multiemployer Plan or (iii) any Multiple Employer Plan, and none of the Parent or any of its
Subsidiaries nor any Parent ERISA Affiliate has incurred any liability to a Multiemployer Plan
or a Multiple Employer Plan as a result of a complete or partial withdrawal (as those terms are
defined in Part I of subtitle E of Title IV of ERISA) from a Multiemployer Plan or Multiple
Employer Plan.
(g) All contributions required to be made to any Parent Benefit Plan by
applicable law or by any plan document or other contractual undertaking, and all premiums due
or payable with respect to insurance policies funding any Parent Benefit Plan, for any period
through the date hereof, have been timely made or paid in full or, to the extent not required to be
made or paid on or before the date hereof, have been fully reflected on the books and records of
Parent.
(h) Neither the execution and delivery of this Agreement nor the consumma-
tion of the transactions contemplated hereby will (either alone or in conjunction with any other
event) result in, cause the vesting, exercisability or delivery of, or increase the amount or value
of, any payment, right or other benefit to any employee, officer, director or other service provid-
er of Parent or any of its Subsidiaries, or result in any limitation on the right of Parent or any of
its Subsidiaries to amend, merge, terminate or receive a reversion of assets from any Parent Ben-
efit Plan or related trust.
(i) There are no pending, or to the Knowledge of Parent, threatened claims
(other than claims for benefits in the ordinary course), lawsuits or arbitrations that have been
asserted or instituted, and, to Parent’s Knowledge, no set of circumstances exists that may
reasonably give rise to a claim or lawsuit, against the Parent Benefit Plans, any fiduciaries
thereof with respect to their duties to Parent Benefit Plans or the assets of any of the trusts under
any of Parent Benefit Plans that could reasonably be expected to result in any material liability of
Parent or any of its Subsidiaries to the PBGC, the IRS, the Department of Labor, any
{Clients/1598/00283791.DOCX/11 } -42-
Multiemployer Plan, a Multiple Employer Plan, any participant in a Parent Benefit Plan, or any
other party.
(j) None of Parent or any of its Subsidiaries nor any Parent ERISA Affiliate
nor any other person, including any fiduciary, has engaged in any “prohibited transaction” (as
defined in Section 4975 of the Code or Section 406 of ERISA), which could subject any of
Parent Benefit Plans or their related trusts, Parent, any of its Subsidiaries, any Parent ERISA
Affiliate or any person that Parent or any of its Subsidiaries has an obligation to indemnify, to
any material tax or penalty imposed under Section 4975 of the Code or Section 502 of ERISA.
(k) There are no pending or, to Parent’s Knowledge, threatened material labor
grievances or material unfair labor practice claims or charges against Parent or any of its
Subsidiaries, or any strikes or other material labor disputes against Parent or any of its
Subsidiaries. Neither Parent nor any of its Subsidiaries are party to or bound by any collective
bargaining or similar agreement with any labor organization, or work rules or practices agreed to
with any labor organization or employee association applicable to employees of Parent or any of
its Subsidiaries and, to the Knowledge of Parent, there are no organizing efforts by any union or
other group seeking to represent any employees of Parent or any of its Subsidiaries. Parent and
its Subsidiaries have complied, in all material respects, with all laws regarding employment and
employment practices (including anti-discrimination) and terms and conditions of employment
and wages and hours (including classification of employees and equitable pay practices), and no
claims relating to non-compliance with the foregoing are pending or, to Parent’s Knowledge,
threatened.
4.16 Risk Management Instruments. All interest rate swaps, caps,
floors, option agreements, futures and forward contracts and other similar derivative transactions
and risk management arrangements, whether entered into for the account of Parent, any of its
Subsidiaries or for the account of a customer of Parent or one of its Subsidiaries, were entered
into in the ordinary course of business and in accordance with applicable rules, regulations and
policies of any Regulatory Agency and with counterparties reasonably believed to be financially
responsible at the time and are legal, valid and binding obligations of Parent or one of its
Subsidiaries enforceable in accordance with their terms (except as may be limited by an
Enforceability Exception), and are in full force and effect. Parent and each of its Subsidiaries
have duly performed in all material respects all of their obligations thereunder to the extent that
such obligations to perform have accrued, and, to Parent’s Knowledge, there are no material
breaches, violations or defaults or allegations or assertions of such by any party thereunder.
4.17 Environmental Matters. Except as would not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse Effect on Parent,
Parent and its Subsidiaries are in compliance, and have complied, with all Environmental Laws.
There are no legal, administrative, arbitral or other proceedings, claims or actions, or to the
Knowledge of Parent, any private environmental investigations or remediation activities or
governmental investigations of any nature pending or threatened against Parent seeking to
impose, or that could reasonably be expected to result in the imposition, on Parent or any of its
Subsidiaries of any liability or obligation arising under any Environmental Law, which liability
or obligation would reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect on Parent. To the Knowledge of Parent, there is no reasonable basis for
{Clients/1598/00283791.DOCX/11 } -43-
any such proceeding, claim, action or governmental investigation that would impose any liability
or obligation that would reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect on Parent. Parent is not subject to any agreement, order, judgment,
decree, letter agreement or memorandum of agreement by or with any court, Governmental
Entity, regulatory agency or third party imposing any liability or obligation with respect to the
foregoing environmental matters that would reasonably be expected to have, either individually
or in the aggregate, a Material Adverse Effect on Parent.
4.18 State Takeover Laws. The Board of Directors of Parent has
approved this Agreement and the transactions contemplated hereby and has taken all such other
necessary actions as required to render inapplicable to such agreements and transactions, the
provisions of any potentially applicable Takeover Statutes.
4.19 Reorganization; Share Ownership.
(a) Parent has not taken any action and is not aware of any fact or
circumstance that could reasonably be expected to prevent the Merger from qualifying as a
“reorganization” within the meaning of Section 368(a) of the Code.
(b) Neither Parent nor any of its Subsidiaries owns any capital stock or other
security of the Company.
4.20 Opinion. Prior to the execution of this Agreement, Parent has
received an opinion from Barclays Capital, Inc. to the effect that, as of the date thereof and based
upon and subject to the matters set forth therein, the Merger Consideration is fair from a
financial point of view to Parent. Such opinion has not been amended or rescinded as of the date
of this Agreement.
4.21 Financing. Parent has, or will have available to it prior to the
Closing, all funds necessary to satisfy its obligations hereunder.
4.22 Loan Portfolio.
(a) As of the date hereof, except as set forth in Section 4.22 of the Parent
Disclosure Schedules, neither Parent nor any of its Subsidiaries is a party to any written or oral
(i) Loans in which Parent or any Subsidiary of Parent is a creditor which as of September 30,
2016, had an outstanding balance of $500,000 or more and under the terms of which the obligor
was, as of September 30, 2016, over 90 days or more delinquent in payment of principal or
interest, or (ii) Loans with any director, executive officer or five percent (5%) or greater
shareholder of Parent or any of its Subsidiaries, or to the Knowledge of Parent, any Affiliate of
any of the foregoing. Set forth in Section 4.22 of the Parent Disclosure Schedules is a true,
correct and complete list of (A) all of the Loans of Parent and its Subsidiaries that, as of
September 30, 2016, had an outstanding balance of $500,000 or more and were classified by
Parent as “Other Loans Specially Mentioned,” “Special Mention,” “Substandard,” “Doubtful,”
“Loss,” “Classified,” “Criticized,” “Credit Risk Assets,” “Concerned Loans,” “Watch List” or
words of similar import, together with the principal amount of and accrued and unpaid interest
on each such Loan and the identity of the borrower thereunder, by category of Loan (e.g.,
{Clients/1598/00283791.DOCX/11 } -44-
commercial, consumer, etc.), together with the aggregate principal amount of such Loans by
category and (B) each asset of Parent or any of its Subsidiaries that, as of September 30, 2016, is
classified as “Other Real Estate Owned” and the book value thereof.
(b) Except as would not reasonably be expected to have, either individually or
in the aggregate, a Material Adverse Effect on Parent, each outstanding Loan of Parent and its
Subsidiaries (including Loans held for resale to investors) was solicited and originated, and is
and has been administered and, where applicable, serviced, and the relevant Loan files are being
maintained, in all material respects in accordance with the relevant notes or other credit or
security documents, the written underwriting standards of Parent and its Subsidiaries (and, in the
case of Loans held for resale to investors, the underwriting standards, if any, of the applicable
investors) and with all applicable federal, state and local laws, regulations and rules.
(c) Neither Parent nor any of its Subsidiaries has been notified to exercise its
repurchase obligations under any agreement pursuant to which Parent or any of its Subsidiaries
has sold Loans or pools of Loans or participations in Loans or pools of Loans.
(d) There are no outstanding Loans made by Parent or any of its Subsidiaries
to any “executive officer” or other “insider” (as each such term is defined in Regulation O
promulgated by the Federal Reserve Board) or Parent or its Subsidiaries, other than Loans that
are subject to and that were made and continue to be in compliance with Regulation O or that are
exempt therefrom.
(e) Neither Parent nor any of its Subsidiaries is now nor has it ever been since
January 1, 2013, subject to any fine, suspension, settlement or other contract or other
administrative agreement or sanction by, or any reduction in any loan purchase commitment
from, any Governmental Entity or Regulatory Agency relating to the origination, sale or
servicing of mortgage or consumer Loans.
4.23 Broker-Dealer, Investment Advisory and Insurance Matters.
(b) Neither Parent nor any Subsidiary of Parent serves in a capacity
described in Section 9(a) or 9(b) of the Investment Company Act of 1940, as amended, nor
acts as an “investment adviser” required to register as such under the Investment Advisers
Act of 1940, as amended.
(c) Neither Parent nor any Subsidiary of Parent is required to be registered,
licensed or qualified as an insurance agency or broker.
4.24 Parent Information. The information relating to Parent and its
Subsidiaries to be contained in the Joint Proxy Statement and the S-4, and the information
relating to Parent and its Subsidiaries that is provided by Parent or its representatives for
inclusion in any other document filed with any other Regulatory Agency in connection herewith,
will not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances in which they are made, not
misleading. The Joint Proxy Statement (except for such portions thereof that relate only to the
Company or any of its Subsidiaries) will comply in all material respects with the provisions of
the Exchange Act and the rules and regulations thereunder. The S-4 (except for such portions
{Clients/1598/00283791.DOCX/11 } -45-
thereof that relate only to the Company or any of its Subsidiaries) will comply in all material
respects with the provisions of the Securities Act and the rules and regulations thereunder.
4.25 Related Party Transactions. Except as set forth in Section 4.25 of
the Parent Disclosure Schedules, there are no transactions or series of related transactions,
agreements, arrangements or understandings, nor are there any currently proposed transactions or
series of related transactions, between Parent or any of its Subsidiaries, on the one hand, and any
current or former director or “executive officer” (as defined in Rule 3b-7 under the Exchange
Act) of Parent or any of its Subsidiaries or any person who beneficially owns (as defined in
Rules 13d-3 and 13d-5 of the Exchange Act) five percent (5%) or more of the outstanding Parent
Common Stock (or any of such person’s immediate family members or affiliates) (other than
Subsidiaries of Parent) on the other hand, except those of a type available to employees of Parent
or its Subsidiaries generally.
4.26 Customer Relationships.
(a) Except as would not reasonably be expected to have, either individually or
in the aggregate, a Material Adverse Effect on Parent, each trust customer of Parent or any of its
Subsidiaries has been originated and serviced (i) in conformity with the applicable policies of
Parent and its Subsidiaries, (ii) in accordance with the terms of any applicable contract governing
the relationship with such customer, (iii) in accordance with any instructions received from such
customers and their authorized representatives and authorized signers, (iv) consistent with each
customer’s risk profile and (v) in compliance with all applicable laws and Parent’s and its
Subsidiaries’ constituent documents, including any policies and procedures adopted thereunder.
Except as would not reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect on Parent, each contract governing a relationship with a trust customer
of Parent or any of its Subsidiaries has been duly and validly executed and delivered by Parent
and each of its Subsidiaries and, to the knowledge of Parent, the other contracting parties, each
such contract constitutes a valid and binding obligation of the parties thereto, except as such
enforceability may be limited by the Enforceability Exceptions, and Parent and its Subsidiaries
and the other contracting parties thereto have duly performed in all material respects their
obligations thereunder, and Parent and its Subsidiaries and, to the knowledge of Parent, such
other contracting parties are in compliance with each of the terms thereof.
(b) No material contract governing a relationship with a trust customer of
Parent or any of its Subsidiaries provides for any material reduction of fees charged (or in
compensation payable to Parent or any of its Subsidiaries thereunder) by reason of this
Agreement or the consummation of the Merger or the other transactions contemplated hereby.
(c) None of Parent or any of its Subsidiaries or any of their respective
directors, officers or employees is the beneficial owner of any interest in any of the accounts
maintained on behalf of any trust customer of Parent or any of its Subsidiaries and none of the
directors, officers and employees of Parent or any of its Subsidiaries is a party to any contract
pursuant to which it is obligated to provide service to, or receive compensation or benefits from,
any of the trust customers of Parent or any of its Subsidiaries after the Closing.
{Clients/1598/00283791.DOCX/11 } -46-
4.27 No Other Representations or Warranties.
(a) Except for the representations and warranties made by Parent in this
Article IV, neither Parent nor any other person makes any express or implied representation or
warranty with respect to Parent, its Subsidiaries, or their respective businesses, operations,
assets, liabilities, conditions (financial or otherwise) or prospects, and Parent hereby disclaims
any such other representations or warranties.
(b) Parent acknowledges and agrees that neither the Company nor any other
person has made or is making any express or implied representation or warranty other than those
contained in Article III.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Business of the Company Prior to the Effective Time.
During the period from the date of this Agreement to the Effective Time or earlier termination of
this Agreement, except as expressly contemplated or permitted by this Agreement (including as
set forth in Section 5.1 of the Company Disclosure Schedules), required by law or as consented
to in writing by Parent (such consent not to be unreasonably withheld, conditioned or delayed),
the Company shall, and shall cause its Subsidiaries to, (a) conduct its business in the ordinary
course consistent with past practice in all material respects, (b) use reasonable best efforts to
maintain and preserve intact its business organization, key employees and advantageous business
relationships and (c) take no action that would reasonably be expected to materially and
adversely affect or materially delay the ability to obtain any necessary approvals of any
Regulatory Agency or other Governmental Entity required for the transactions contemplated
hereby or to perform the Company’s covenants and agreements under this Agreement or to
consummate the transactions contemplated hereby on a timely basis.
5.2 Company Forbearances. Without limiting the foregoing, during
the period from the date of this Agreement to the Effective Time or earlier termination of this
Agreement, except as set forth in Section 5.2 of the Company Disclosure Schedules, as expressly
contemplated or permitted by this Agreement or as required by law or regulatory directive, the
Company shall not, and shall not permit any of its Subsidiaries to, without the prior written
consent of Parent (such consent not to be unreasonably withheld, conditioned or delayed):
(a) other than (i) federal funds borrowings and borrowings by Company Bank
from the Federal Home Loan Bank of Seattle, the Federal Home Loan Bank of Des Moines and
the Federal Reserve Bank of San Francisco, in each case with a maturity not in excess of thirty
(30) days, and (ii) deposits, in the case of each of (i) and (ii), in the ordinary course of business
consistent with past practice, incur any indebtedness, or assume, guarantee, endorse or otherwise
as an accommodation become responsible for the obligations of any other individual, corporation
or other entity;
{Clients/1598/00283791.DOCX/11 } -47-
(b) (i) adjust, split, combine or reclassify any capital stock;
(ii) make, declare or pay any dividend, or make any other distribution
on, or directly or indirectly redeem, purchase or otherwise acquire, any shares of its
capital stock or any securities or obligations convertible (whether currently convertible or
convertible only after the passage of time or the occurrence of certain events) into or
exchangeable for any shares of its capital stock (except (A) dividends paid by any of the
Subsidiaries of the Company to the Company or any of its wholly-owned Subsidiaries or
(B) the acceptance of shares of Company Common Stock as payment for the exercise
price of Company Options or for withholding taxes incurred in connection with the
exercise of Company Options or the vesting or settlement of Company Equity Awards, in
each case in accordance with past practice and the terms of the applicable award
agreements and outstanding as of the date hereof in accordance with their terms as in
effect on the date hereof);
(iii) grant any Company Equity Awards or any stock options, stock
appreciation rights, performance shares, restricted stock units, restricted shares or other
equity or equity-based awards or interests, or grant any individual, corporation or other
entity any right to acquire any shares of its capital stock;
(iv) issue, sell or otherwise permit to become outstanding any
additional shares of capital stock, voting securities or equity interests, or securities
convertible or exchangeable into, or exercisable for, any shares of its capital stock, voting
securities or equity interests, or any options, warrants, or other rights of any kind to
acquire any shares of capital stock, voting securities or equity interests, except pursuant
to the exercise, vesting or settlement of Company Equity Awards outstanding as of the
date hereof in accordance with their terms as in effect on the date hereof;
(c) sell, transfer, mortgage, encumber or otherwise dispose of any of its
material properties or assets to any individual, corporation or other entity other than a wholly
owned Subsidiary, or cancel, release or assign any material indebtedness to any such person or
any claims held by any such person, in each case other than in the ordinary course of business
consistent with past practice;
(d) except: (i) for foreclosure or acquisitions of control in a fiduciary or
similar capacity or in satisfaction of debts previously contracted in good faith; (ii) for
transactions in the ordinary course of business consistent with past practice for an amount not in
excess of $250,000 individually or $500,000 in the aggregate; or (iii) as may otherwise be
permitted under Section 5.2(k), (i) acquire (whether by merger or consolidation, acquisition of
stock or assets or by formation of a joint venture or otherwise) any other person or business or
any material assets, deposits or properties of any other person, or (ii) make any material
investment either by purchase of stock or securities, contributions to capital, property transfers,
or purchase of any property or assets of any other individual, corporation or other entity other
than a wholly owned Subsidiary of the Company;
(e) terminate, materially amend, or waive any material provision of, any
Company Contract, or make any change in any instrument or agreement governing the terms of
{Clients/1598/00283791.DOCX/11 } -48-
any of its securities, or material lease, other than renewals of Company Contracts and material
leases on terms with respect to the Company that would not reasonably be expected to have a
Material Adverse Effect on the Company, or enter into any contract that would constitute a
Company Contract if it were in effect on the date of this Agreement; undertake or enter into any
lease, contract or other commitment for its account, other than in the normal course of its
banking business, involving a payment of more than $250,000 annually, or containing any
financial commitment extending beyond 24 months from the date hereof;
(f) except as required under applicable law or the terms of any Company
Benefit Plan existing as of the date hereof or pursuant to this Agreement, (i) enter into, adopt or
terminate any Company Benefit Plan or any employee benefit or compensation plan, program,
policy or arrangement for the benefit or welfare of any current or former employee, officer,
director or consultant that would be a Company Benefit Plan if in effect on the date hereof,
(ii) amend (whether in writing or through the interpretation of) any Company Benefit Plan,
(iii) increase the compensation or benefits payable to any current or former employee, officer,
director or consultant other than in the ordinary course consistent with past practice, (iv) pay or
award, or commit to pay or award, any bonuses or incentive compensation other than in the
ordinary course consistent with past practice, but not to exceed 5.0% of such individual’s base
salary or wage rate as of the date hereof unless such bonus or incentive compensation is
consistent with the terms of any pre-existing arrangement, which pre-existing arrangement is
disclosed in Section 5.2(f) of the Company Disclosure Schedules; provided that such payment or
award would not result in an adverse tax consequence under Section 280G of the Code, (v) grant
or accelerate the vesting of any equity or equity-based awards other than pursuant to the terms of
such awards as in effect on the date hereof, (vi) grant any rights with respect to severance,
change in control, retention, or similar compensation, (vii) enter into any new or amend any
existing employment, severance, change in control, retention or similar agreement of
arrangement, (viii) fund any rabbi trust or similar arrangement, (ix) terminate the employment or
services of any officer or any employee whose annual base salary is greater than $150,000, other
than for cause, or (x) hire any officer, employee, independent contractor or consultant whose
annual base salary would be greater than $150,000;
(g) settle any material claim, suit, action or proceeding, except in the ordinary
course of business in an amount and for consideration not in excess of $250,000 individually or
$500,000 in the aggregate and which would not impose any material restriction on the business
of it or its Subsidiaries or the Surviving Corporation;
(h) take any action or knowingly fail to take any action where such action or
failure to act could reasonably be expected to prevent the Merger from qualifying as a
“reorganization” within the meaning of Section 368(a) of the Code;
(i) amend its articles of incorporation, its bylaws or comparable governing
documents of its Subsidiaries;
(j) merge or consolidate itself or any of its Subsidiaries with any other
person, or restructure, reorganize or completely or partially liquidate or dissolve it or any of its
Subsidiaries;
{Clients/1598/00283791.DOCX/11 } -49-
(k) materially restructure or materially change its investment securities or
derivatives portfolio or its interest rate exposure, through purchases, sales or otherwise, or the
manner in which the portfolio is classified or reported or purchase any security rated below
investment grade;
(l) implement or adopt any change in its accounting principles, practices or
methods, other than as may be required by Law or GAAP;
(m) (i) enter into any new line of business or change in any material respect its
lending, investment, underwriting, risk and asset liability management and other banking and
operating, securitization and servicing policies (including any change in the maximum ratio or
similar limits as a percentage of its capital exposure applicable with respect to its loan portfolio
or any segment thereof), except as required by applicable law, regulation or policies imposed by
any Governmental Entity or (ii) make any Loans or extensions of credit outside of the ordinary
course of business consistent with practice or that exceed the Company’s internal lending limits
such that the Loan or extension of credit would require approval by the Company’s credit policy
committee or any similar body, provided that any consent sought from Parent pursuant to this
clause (ii) shall be given within two (2) business days after the relevant Loan package is
provided to Parent;
(n) make, or commit to make, any capital expenditures that exceed by more
than 10% in the aggregate the capital expenditures budget of the Company in effect on the date
hereof (a copy of which has been previously made available to Parent);
(o) make, change or revoke any material Tax election, change an annual Tax
accounting period, adopt or change any material Tax accounting method, file any amended
material Tax Return, enter into any material closing agreement with respect to Taxes, or settle
any material Tax claim, audit, assessment or dispute or surrender any material right to claim a
refund of Taxes;
(p) take any action that is intended or expected to result in any of the
conditions to the Merger set forth in Sections 7.1 or 7.2 not being satisfied, except as may be
required by applicable Law;
(q) make any change in its policies and practices outside of the types of
changes made in the ordinary course of business consistent with past practice with respect to the
extension of credit, or the establishment of reserves with respect to the possible loss thereon or
the charge off of losses incurred thereon; investments; asset/liability management; deposit
pricing or gathering; underwriting, pricing, originating, acquiring, selling, servicing, or buying or
selling rights to service, loans; its hedging practices and policies, in each case except as may be
required by such policies and practices or by any applicable laws, regulations, guidelines or
policies imposed or recommended in writing by any Governmental Entity or Regulatory Agency;
(r) make application for the opening, relocation or closing of any, or open,
relocate or close any, branch office, loan production office or other significant office or
operations facility of it or its Subsidiaries, except to the extent required to obtain any Requisite
Regulatory Approvals; or
{Clients/1598/00283791.DOCX/11 } -50-
(s) agree to take, make any commitment to take, or adopt any resolutions of
its board of directors or similar governing body in support of, any of the actions prohibited by
this Section 5.2.
5.3 Parent Forbearances. During the period from the date of this
Agreement to the Effective Time or earlier termination of this Agreement, except as set forth in
Section 5.3 of the Parent Disclosure Schedules, as expressly contemplated or permitted by this
Agreement or as required by law, Parent shall not, and shall not permit any of its Subsidiaries to,
without the prior written consent of the Company (such consent not to be unreasonably withheld,
conditioned or delayed):
(a) amend the Parent Articles or Parent Bylaws in a manner that would
adversely affect the economic benefits of the Merger to the holders of Company Common Stock
or materially change the rights, terms or preferences of the Parent Common Stock;
(b) adjust, split, combine or reclassify any capital stock of Parent;
(c) take any action that would reasonably be expected to materially and
adversely affect or materially delay the ability to obtain any necessary approvals of any
Regulatory Agency or other Governmental Entity required for the transactions contemplated
hereby or to perform Parent’s covenants and agreements under this Agreement or to consummate
the transactions contemplated hereby on a timely basis;
(d) make, declare, pay or set aside for payment any dividend on or with
respect to Parent Common Stock or make any other distribution to Parent’s shareholders except
for the payment of regular quarterly dividends in the ordinary course of business consistent with
past practice;
(e) enter into agreements with respect to, or consummate, any mergers or
business combinations, or any acquisition of any other person or business without providing
prior notice of such transaction to the Company;
(f) take any action or knowingly fail to take any action where such action or
failure to act could reasonably be expected to prevent the Merger from qualifying as a
“reorganization” within the meaning of Section 368(a) of the Code; or
(g) agree to take, make any commitment to take, or adopt any resolutions of
its board of directors or similar governing body in support of, any of the actions prohibited by
this Section 5.3.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters.
(a) Parent and the Company shall promptly prepare and file with the SEC the
Joint Proxy Statement, and Parent shall promptly prepare and file with the SEC the S-4, in which
{Clients/1598/00283791.DOCX/11 } -51-
the Joint Proxy Statement will be included as a prospectus. Each of Parent and the Company
shall use their reasonable best efforts to have the S-4 declared effective under the Securities Act
as promptly as practicable after such filing, and Parent and the Company shall thereafter mail or
deliver the Joint Proxy Statement to their respective shareholders. Parent shall also use its
reasonable best efforts to obtain all necessary state securities law or “Blue Sky” permits and
approvals required to carry out the transactions contemplated by this Agreement, and the
Company shall furnish all information concerning the Company and the holders of Company
Common Stock as may be reasonably requested by Parent in connection with any such action.
(b) The parties hereto shall cooperate with each other and use their reasonable
best efforts to promptly (and in the case of the applications, notices, petitions and filings in
respect of the Requisite Regulatory Approvals, within thirty (30) business days of the date of this
Agreement) prepare and file all necessary documentation, to effect all applications, notices,
petitions and filings, to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are necessary or advisable to
consummate the transactions contemplated by this Agreement (including, without limitation, the
Merger and the Bank Merger), and to comply with the terms and conditions of all such permits,
consents, approvals and authorizations of all such Governmental Entities. Parent and the
Company shall have the right to review in advance, and, to the extent practicable, each will
consult the other on, in each case subject to applicable laws relating to the exchange of
information, all the information relating to the Company or Parent, as the case may be, and any
of their respective Subsidiaries, which appears in any filing made with, or written materials
submitted to, any third party or any Governmental Entity in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of the parties hereto
shall act reasonably and as promptly as practicable. The parties hereto agree that they will
consult with each other with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary or advisable to
consummate the transactions contemplated by this Agreement, and each party will keep the other
apprised of the status of matters relating to completion of the transactions contemplated herein.
The parties hereto agree to furnish to the other a final copy of each filing made with a
Governmental Entity in connection with the transactions contemplated by this Agreement,
subject to applicable laws governing the confidentiality of such information. Each party shall
consult with the other in advance of any meeting or conference with any Governmental Entity in
connection with the transactions contemplated by this Agreement and to the extent permitted by
such Governmental Entity, give the other party and/or its counsel the opportunity to attend and
participate in such meetings and conferences.
(c) In furtherance and not in limitation of the foregoing, each of Parent and
the Company shall use its reasonable best efforts to (i) avoid the entry of, or to have vacated,
lifted, reversed or overturned, any decree, judgment, injunction or other order, whether
temporary, preliminary or permanent, that would restrain, prevent or materially delay the
Closing, and (ii) avoid or eliminate each and every impediment so as to enable the Closing to
occur as soon as possible, including proposing, negotiating, committing to and effecting, by
consent decree, hold separate order, or otherwise, the sale, divestiture or disposition of
businesses or assets of Parent, the Company and their respective Subsidiaries.
{Clients/1598/00283791.DOCX/11 } -52-
(d) Notwithstanding the foregoing or anything to the contrary contained in
this Agreement, under no circumstances shall Parent be required, and the Company and its
Subsidiaries shall not be permitted (without Parent’s written consent), to (i) take any action, or
commit to take any action, or agree to any condition, restriction, prohibition, limitation or
requirement in connection with obtaining the foregoing permits, consents, approvals and
authorizations of Governmental Entities that would prohibit or materially limit the ownership or
operation of the business or assets of the Company, materially limit the business conducted by
Parent or any Parent Subsidiary or compel any of them to dispose of or hold separate any
material portion of the business or assets of the Company or would reasonably be expected to
have a material and adverse effect on Parent, the Surviving Corporation and their respective
Subsidiaries, taken as a whole (measured on a scale relative to the Company and its Subsidiaries,
taken as a whole), or the Company and its Subsidiaries, taken as a whole, in each case after
giving effect to the Merger (a “Materially Burdensome Regulatory Condition”) or (ii) agree to
any Loss Share Agreement Condition; provided that, if requested by Parent, then the Company
and its Subsidiaries will take or commit to take any such action, or agree to any such condition or
restriction, prohibition, limitation or requirement, so long as such action, commitment,
agreement, condition or restriction is binding on the Company and its Subsidiaries only in the
event the Closing occurs.
(e) Parent and the Company shall, upon request, promptly furnish each other
with all information concerning themselves, their Subsidiaries, directors, officers and
shareholders and such other matters as may be reasonably necessary or advisable in connection
with the Joint Proxy Statement, the S-4 or any other statement, filing, notice or application made
by or on behalf of Parent, the Company or any of their respective Subsidiaries to any
Governmental Entity in connection with the Merger and the Bank Merger and the other
transactions contemplated by this Agreement.
(f) Parent and the Company shall promptly advise each other upon receiving
any communication from any Governmental Entity whose consent or approval is required for
consummation of the transactions contemplated by this Agreement that causes such party to
believe that there is a reasonable likelihood that any Requisite Regulatory Approval will not be
obtained, or will be obtained subject to a Materially Burdensome Regulatory Condition, or that
the receipt of any such approval will be materially delayed.
6.2 Access to Information.
(a) Upon reasonable notice and subject to applicable laws, each of Parent and
the Company, for the purposes of verifying the representations and warranties of the other and
preparing for the Merger and the other matters contemplated by this Agreement, shall, and shall
cause each of their respective Subsidiaries to, afford to the officers, employees, accountants,
counsel, advisors and other representatives of the other party, access, during normal business
hours during the period prior to the Effective Time, to all its properties, books, contracts,
commitments, personnel, information technology systems, and records, and each shall cooperate
with the other party in preparing to execute after the Effective Time conversion or consolidation
of systems and business operations generally, and, during such period, each of Parent and the
Company shall, and shall cause its respective Subsidiaries to, make available to the other party
(i) a copy of each report, schedule, registration statement and other document filed or received
{Clients/1598/00283791.DOCX/11 } -53-
by it during such period pursuant to the requirements of federal securities laws or federal or state
banking laws (other than reports or documents which Parent or the Company, as the case may be,
is not permitted to disclose under applicable law), and (ii) all other information concerning its
business, properties and personnel as such party may reasonably request. Neither Parent nor the
Company nor any of their respective Subsidiaries shall be required to provide access to or to
disclose information where such access or disclosure would violate or prejudice the rights of
Parent’s or the Company’s, as the case may be, customers, jeopardize the attorney-client
privilege of the institution in possession or control of such information (after giving due
consideration to the existence of any common interest, joint defense or similar agreement
between the parties) or contravene any law, rule, regulation, order, judgment, decree, fiduciary
duty or binding agreement entered into prior to the date of this Agreement. The parties hereto
will make appropriate substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply.
(b) Each of Parent and the Company shall hold all information furnished by or
on behalf of the other party or any of such party’s Subsidiaries or representatives pursuant to
Section 6.2(a) in confidence to the extent required by, and in accordance with, the provisions of
the confidentiality agreement, dated March 18, 2016, between Parent and the Company (the
“Confidentiality Agreement”).
(c) No investigation by either of the parties or their respective representatives
shall affect or be deemed to modify or waive the representations and warranties of the other set
forth herein. Nothing contained in this Agreement shall give either party, directly or indirectly,
the right to control or direct the operations of the other party prior to the Effective Time. Prior to
the Effective Time, each party shall exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision over its and its Subsidiaries’ respective operations.
(d) The Company and Parent shall meet on a regular basis to discuss and plan
for the conversion of the Company’s data processing and related electronic informational
systems to those used by Parent, which planning shall include, but not be limited to, discussion
of the possible termination by the Company of third-party service provider arrangements
effective at the Effective Time or at a date thereafter, non-renewal of personal property leases
and software licenses used by the Company in connection with its systems operations, retention
of outside consultants and additional employees to assist with the conversion, and outsourcing,
as appropriate, of proprietary or self-provided system services, it being understood that the
Company shall not be obligated to take any such action prior to the Effective Time, that any such
action taken will be at no cost to the Company, that any such actions taken by employees of the
Company shall not unreasonably interfere with the job performance of such employees and,
unless the Company otherwise agrees, no conversion shall take place prior to the Effective Time.
6.3 Shareholder Approvals.
(a) Each of Parent and the Company shall call a meeting of its shareholders
(the “Parent Meeting” and the “Company Meeting,” respectively) to be held as soon as
reasonably practicable after the S-4 is declared effective, for the purpose of obtaining, in the
case of the Company, the Requisite Company Vote and, in the case of the Parent, the
Requisite Parent Vote and Requisite Amendment Vote, and, if so desired and mutually
{Clients/1598/00283791.DOCX/11 } -54-
agreed, upon other matters of the type customarily brought before a meeting of shareholders
to approve a merger agreement or the transactions contemplated thereby, and each shall use
its reasonable best efforts to cause such meetings to occur on the same date. Each of Parent
and the Company and its respective Board of Directors shall use its reasonable best efforts to
obtain from the shareholders of Parent and the Company, as the case may be, the Requisite
Parent Vote and Requisite Amendment Vote, in the case of Parent, and the Requisite
Company Vote, in the case of the Company, including (except as provided in Section 6.3(b))
by communicating to its respective shareholders its recommendation (and including such
recommendation in the Joint Proxy Statement) that they consider and approve this
Agreement and the transactions contemplated hereby (in the case of the Company, the
“Company Board Recommendation” and in the case of Parent, the “Parent Board
Recommendation”), and, except as provided in Section 6.3(b), shall not (i) withdraw, modify
or qualify in a manner adverse to the other party or make any public statement inconsistent
with the Company Board Recommendation, in the case of the Company, or the Parent Board
Recommendation, in the case of Parent, (ii) fail to make the Company Board
Recommendation, in the case of the Company, or the Parent Board Recommendation, in the
case of Parent, in the Joint Proxy Statement, (iii) fail to publicly, definitively and without
qualification reaffirm the Company Board Recommendation, in the case of the Company, or
the Parent Board Recommendation, in the case of Parent, within three (3) business days after
the other party’s written request (or such fewer number of days as remains prior to the
Company Meeting or the Parent Meeting, as applicable) or (iv) with respect to the Company
and the Company Board of Directors, adopt, approve, recommend or endorse an Acquisition
Proposal or fail to publicly, definitively and without qualification issue a press release
recommending against an Acquisition Proposal, within ten (10) business days after an
Acquisition Proposal is made public (or such fewer number of days as remains prior to the
Company Meeting), or publicly propose to do any of the foregoing (each of the actions in
clauses (i)–(iii), with respect to the Company or Parent, as the case may be, and clause (iv),
with respect to the Company, a “Recommendation Change”).
(b) Notwithstanding the foregoing, subject to and in compliance with Section
6.12, prior to receipt of the Requisite Company Vote, in the case of the Company, or the
Requisite Parent Vote, in the case of Parent, the Board of Directors of the Company or
Parent, after consultation its outside counsel and, with respect to financial matters, its
financial advisor, determines in good faith that it would more likely than not result in a
violation of its fiduciary duties under applicable law to continue to make the Company Board
Recommendation or the Parent Board Recommendation, as the case may be, to its
shareholders (and, in the event such determination is made by the Board of Directors of the
Company in response to an Acquisition Proposal, the Board of Directors of the Company has
taken into account the expected timing of and regulatory conditions related to such
Acquisition Proposal), the Company or Parent and its respective Board of Directors, as the
case may be, may submit this Agreement and the transactions contemplated hereby to its
respective shareholders without recommendation or otherwise effect a Recommendation
Change (although the resolutions adopting this Agreement as of the date hereof may not be
rescinded or amended), in which event the Company or Parent and its respective Board of
Directors, as the case may be, may communicate the basis for its Recommendation Change to
its shareholders in the Joint Proxy Statement or an appropriate amendment or supplement
thereto to the extent required by law; provided, that neither party nor its Board of Directors
{Clients/1598/00283791.DOCX/11 } -55-
may take any actions under this sentence unless (i) it gives the other party at least five (5)
business days’ prior written notice of its intention to take such action and a reasonable
description of the event or circumstances giving rise to its determination to take such action
(including, in the event such action is taken by the Company or its Board of Directors in
response to an Acquisition Proposal, the latest material terms and conditions and the identity
of the third party in any such Acquisition Proposal, or any amendment or modification
thereof, including unredacted copies of any such Acquisition Proposal or other materials
received in connection with or correspondence relating to, such Acquisition Proposal, or any
amendment or modification thereof, (ii) during such notice period the Company or Parent
and its Board of Directors, as the case may be, and its Representatives negotiate in good faith
with the other party and its Representatives any amendment or modification to this
Agreement proposed by such other party and (iii) at the end of such notice period, the Board
of Directors takes into account any amendment or modification to this Agreement proposed
in writing by the other party prior to the expiration of such notice period, and after receiving
the advice of its outside counsel and, with respect to financial matters, its financial advisors,
determines in good faith that it would nevertheless continue to be more likely than not to
result in a violation of its fiduciary duties under applicable law to continue to make the
Company Board Recommendation or Parent Board Recommendation, as the case may be.
Any change to the financial or other material terms of any Acquisition Proposal, or any
material change to the event or circumstances giving rise to the applicable Board of
Directors’ determination to effect a Recommendation Change during a notice period, will be
deemed to be a new Acquisition Proposal or a new such event or circumstance, as applicable,
for purposes of this Section 6.3 and will require a new notice period as referred to in this
Section 6.3, except that the notice period shall be three (3) business days.
(c) Parent or the Company shall adjourn or postpone the Parent Meeting or
the Company Meeting, as the case may be, if, as of the time for which such meeting is
originally scheduled there are insufficient shares of Parent Common Stock and Parent Class
B Common Stock or Company Common Stock, as the case may be, represented (either in
person or by proxy) to constitute a quorum necessary to conduct the business of such
meeting, or if on the date of such meeting the Company or Parent, as applicable, has not
received proxies representing a sufficient number of shares necessary to obtain the Requisite
Company Vote, in the case of the Company, or the Requisite Parent Vote or Requisite
Amendment Vote, in the case of Parent; provided, that nothing herein shall prevent Parent or
the Company from adjourning or postponing the Parent Meeting or the Company Meeting, as
the case may be, to allow reasonable additional time for the filing and mailing of any
supplemental or amended disclosure which the Board of Directors of Parent or the Company
has determined in good faith after consultation with outside counsel is necessary under
applicable Law and for such supplemental or amended disclosure to be disseminated and
reviewed by such shareholders prior to the Parent Meeting or the Company Meeting, as the
case may be.
6.4 Legal Conditions to Merger. Subject in all respects to Section 6.1
and Section 6.3 of this Agreement, each of Parent and the Company shall, and shall cause its
Subsidiaries to, use their reasonable best efforts (a) to take, or cause to be taken, all actions
necessary, proper or advisable to comply promptly with all legal requirements that may be
imposed on such party or its Subsidiaries with respect to the Merger and the Bank Merger and,
{Clients/1598/00283791.DOCX/11 } -56-
subject to the conditions set forth in Article VII hereof, to consummate the transactions
contemplated by this Agreement, and (b) to obtain (and to cooperate with the other party to
obtain) any consent, authorization, order or approval of, or any exemption by, any Governmental
Entity and any other third party that is advisable or required to be obtained by the Company or
Parent or any of their respective Subsidiaries in connection with the Merger, the Bank Merger
and the other transactions contemplated by this Agreement.
6.5 Stock Exchange Listing. Parent shall file with the NASDAQ a
notification form for the listing of all shares of Parent Common Stock to be delivered as Merger
Consideration prior to the Effective Time.
6.6 Employee Benefit Plans.
(a) During the period commencing at the Effective Time and ending on the
first anniversary thereof (the “Continuation Period”), Parent shall provide, or cause to be
provided, to each employee of Company and its Subsidiaries who continues to be employed by
Parent or its Subsidiaries (including, for the avoidance of doubt, the Surviving Corporation and
its Subsidiaries) immediately following the Effective Time (collectively, the “Continuing
Employees”), while employed by Parent and its Subsidiaries after the Effective Time, with
compensation and employee benefits that are substantially comparable to the compensation and
employee benefits provided to similarly situated employees of Parent and its Subsidiaries;
provided, however, that any cash incentive compensation payable or earned in the calendar year
in which the Closing Date occurs shall be pro-rated to reflect the short year. Each Continuing
Employee whose employment is involuntarily terminated by Parent or its Subsidiary during the
Continuation Period for the reasons listed in the Company’s Severance Policy set forth in Section
6.6(a) of the Company Disclosure Schedules) and who is not subject to an employment, change
in control or other agreement that provides for the payment of severance, shall be entitled to
receive severance payments and benefits determined in accordance with the Company’s
Severance Policy as in effect on the date of this Agreement; provided, however, that such
Continuing Employee enters into a written release of claims against Parent in a form reasonably
satisfactory to Parent. Nothing contained in this Section shall be construed to limit or terminate
the rights of employees, officers or directors of the Company under individual agreements with
the Company or any of its Subsidiaries.
(b) Following the Effective Time, Parent shall, or shall cause the Surviving
Corporation to, cause any employee benefit plans sponsored or maintained by Parent or the
Surviving Corporation or their Subsidiaries in which the Continuing Employees are eligible to
participate following the Effective Time (collectively, the “Parent Plans”) to recognize the
service of each Continuing Employee with the Company and its Subsidiaries (and any
predecessor thereto) prior to the Effective Time for purposes of eligibility, vesting and level of
benefits (for purposes of vacation, paid time off and sick leave policies) under such Parent Plans;
provided that such recognition of service shall not (i) apply for purposes of any Parent Plan that
is a defined benefit retirement plan or any Parent Plan that provides retiree welfare benefits, (ii)
operate to duplicate any benefits of a Continuing Employee with respect to the same period of
service, (iii) apply for purposes of any plan, program or arrangement (x) under which similarly
situated employees of Parent and its Subsidiaries do not receive credit for prior service or (y) that
is grandfathered or frozen, either with respect to level of benefits or participation or (iv) entitle a
{Clients/1598/00283791.DOCX/11 } -57-
Continuing Employee to be credited with more than 120 hours of vacation, paid time off and sick
leave (collectively, “PTO”) on the Closing Date and to rollover more than eighty hours of PTO
from one calendar year to a subsequent calendar year. With respect to any Parent Plan that
provides medical, dental or vision insurance benefits, for the plan year in which such Continuing
Employee is first eligible to participate, Parent shall use commercially reasonable efforts to (A)
cause any preexisting condition limitations or eligibility waiting periods under such plan to be
waived with respect to such Continuing Employee to the extent such limitation would have been
waived or satisfied under the Company Benefit Plan in which such Continuing Employee
participated immediately prior to the Effective Time, (B) credit each Continuing Employee for
any co-payments or deductibles incurred by such Continuing Employee in such plan year for
purposes of any applicable deductible and annual out-of-pocket expense requirements under any
such Parent Plan, and (C) cause such credited expenses to also count toward any annual or
lifetime limits, treatment or visit limits or similar limitations that apply under the terms of the
applicable plan.
(c) Nothing in this Agreement shall confer upon any employee, officer,
director or consultant of the Company or any of its Subsidiaries or Affiliates any right to
continue in the employ or service of the Surviving Corporation, the Company, or any Subsidiary
or Affiliate thereof, or shall interfere with or restrict in any way the rights of the Surviving
Corporation, Company, Parent or any Subsidiary or Affiliate thereof to discharge or terminate
the services of any employee, officer, director or consultant of the Company or any of its
Subsidiaries or Affiliates at any time for any reason whatsoever, with or without cause, except as
provided in written agreements with such employees, directors, or consultants. Nothing in this
Agreement shall be deemed to (i) establish, amend, or modify any Company Benefit Plan, Parent
Plan or any other benefit or employment plan, program, agreement or arrangement, or (ii) alter or
limit the ability of the Surviving Corporation or any of its Subsidiaries or Affiliates to amend,
modify or terminate any particular Company Benefit Plan, Parent Plan or any other benefit or
employment plan, program, agreement or arrangement after the Effective Time except as
provided in Section 6.6(a) and (b) above. Without limiting the generality of the final sentence of
Section 9.11, nothing in this Agreement, express or implied, is intended to or shall confer upon
any person other than the parties hereto, including without limitation any current or former
employee, officer, director or consultant of Company or any of its Subsidiaries or Affiliates, any
right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
(d) Effective as of the day preceding the Effective Time, and subject to the
occurrence of the Effective Time, the Company shall adopt such resolutions and/or amendments
to cause the Company 401(k) Plan to be terminated (the “Plan Termination Date”) and the
accounts of all participants and beneficiaries in the Company 401(k) Plan as of the Plan
Termination Date to become fully vested as of the Plan Termination Date. The Company shall
provide Parent with a copy of the resolutions and/or plan amendments evidencing that the
Company 401(k) Plan has been terminated in accordance with its terms. The form and substance
of such resolutions and any necessary amendments shall be subject to the review and approval of
Parent, which shall not be unreasonably withheld. Company shall deliver to Parent an executed
copy of such resolutions and any necessary amendments as soon as practicable following their
adoption by the Board of Directors of the Company and shall fully comply with such resolutions
and any necessary amendments. The Surviving Corporation shall take all other actions necessary
to complete the termination of the Company 401(k) Plan, including filing a Final Form 5500 that
{Clients/1598/00283791.DOCX/11 } -58-
arise after the Effective Time. Parent agrees, to the extent permitted by applicable law, to permit
401(k) Plan participants who become Continuing Employees to roll over their account balances
in the Company 401(k) Plan to the Parent 401(k) Plan. Notwithstanding anything in this section
to the contrary, employees of the Company who continue employment with the Surviving
Corporation immediately following the Effective Time shall be eligible as of the Effective Time
to participate in the Parent 401(k) Plan; it being agreed that there shall be no gap in participation
in a 401(k) Plan.
(e) The Company shall obtain from each of the individuals named in Section
6.6(e) of the Parent Disclosure Schedules an agreement, as of the date and in the form set forth in
Section 6.6(e) of the Parent Disclosure Schedules, stipulating the estimated amount that each
such individual is to receive as a result of the transactions contemplated by this Agreement under
any employment agreement or change in control agreement, as applicable, (the aggregate
amounts of such payments to be specified in Parent Disclosure Schedule 6.6(e)).
(f) For a period of six months following the Effective Time, Parent shall
provide all employees of the Company and its Subsidiaries whose employment was terminated
other than for cause, disability or retirement at or following the Effective Time, and who so
desires, job counseling and outplacement assistance services, in which it shall assist such
employees in locating new employment and shall notify all such employees who want to be so
notified of opportunities for positions with Parent or any of its Subsidiaries for which Parent
reasonably believes such persons are qualified and shall consider any application for such
positions submitted by such persons, provided, however, that any decision to offer employment
to any such person shall be made in the sole discretion of Parent; provided; further that the total
costs expended for such job counseling and outplacement assistance services shall not exceed
$150,000 in the aggregate.
(g) Parent shall establish a retention bonus pool in an amount as provided in
Parent Disclosure Schedule 6.6(g) for employees of the Company and its Subsidiaries jointly
designated in writing by Parent and the Company (other than employees of the Company who
are subject to employment contracts or other contracts providing for severance) to help retain key
employees. The amount and payment date of the retention bonus for each such employee shall
be jointly determined in writing by Parent and the Company, but in the aggregate shall equal the
amount provided in Parent Disclosure Schedule 6.6(g) assuming all such key employees remain
with the Parent or the Surviving Corporation or an Affiliate to such date or are involuntarily
terminated without cause prior to that date.
(h) The Company shall take all such actions as Parent may reasonably request
to fully and timely comply with any and all requirements of both federal Worker Adjustment and
Retraining Notification Act of 1988 (“WARN Act”) and any state specific WARN Act statutes,
including providing notices to the Company and Company Bank’s employees.
6.7 Indemnification; Directors’ and Officers’ Insurance.
(a) From and after the Effective Time, to the fullest extent permitted by
applicable law, the Surviving Corporation shall indemnify and hold harmless, to the extent such
persons are indemnified as of the date of this Agreement by the Company or any of its
{Clients/1598/00283791.DOCX/11 } -59-
Subsidiaries pursuant to the Company Articles, the Company Bylaws or comparable governing
documents or any indemnification agreement in effect as of the date hereof (and shall also
advance expenses as incurred to the extent provided under the Company Articles, Company
Bylaws or comparable governing documents any such indemnification agreements as in effect as
of the date of this Agreement), each present and former director and officer of the Company and
its Subsidiaries (in each case, in such capacity) (collectively, the “Company Indemnified
Parties”) against any costs or expenses (including reasonable attorneys’ fees), judgments, fines,
losses, amounts paid in settlement, damages or liabilities incurred in connection with any
threatened or actual claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, whether arising before or after the Effective Time, arising out of
the fact that such person is or was a director or officer of the Company or any of its Subsidiaries
and pertaining to any matter existing or occurring at or prior to the Effective Time, including the
transactions contemplated by this Agreement or the enforcement of the Surviving Corporation’s
obligations under this Section 6.7; provided, that the Company Indemnified Party to whom
expenses are advanced provides an undertaking to repay such advances if it is ultimately
determined that such Company Indemnified Party is not entitled to indemnification under
applicable Law.
(b) For a period of six (6) years after the Effective Time, the Surviving
Corporation shall cause to be maintained in effect the current policies of directors’ and officers’
liability insurance maintained by the Company (provided, that the Surviving Corporation may
substitute therefor policies with a substantially comparable insurer of at least the same coverage
and amounts containing terms and conditions which are no less advantageous to the insured)
with respect to claims arising from facts or events which occurred at or before the Effective
Time; provided, however, that in no event shall the Surviving Corporation be obligated to
expend, in the aggregate, an amount in excess of 250% of the current annual premium paid as of
the date hereof by the Company for such insurance (the “Premium Cap”), and if such premiums
for such insurance would at any time exceed the Premium Cap, then the Surviving Corporation
shall cause to be maintained policies of insurance which, in the Surviving Corporation’s good
faith determination, provide the maximum coverage available at an annual premium not
exceeding the Premium Cap. In lieu of the foregoing, the Company, in consultation with, but
only upon the consent of Parent (not to be unreasonably withheld, conditioned or delayed), may
(and at the request of Parent, the Company shall use its reasonable best efforts to) obtain at or
prior to the Effective Time a six-year “tail” policy under the Company’s existing directors’ and
officers’ liability insurance policy providing equivalent coverage to that described in the
preceding sentence, if and to the extent that the same may be obtained for an amount that, in the
aggregate, does not exceed the Premium Cap.
(c) In the event that, after the Effective Time, the Surviving Corporation or
any of its respective successors or assigns (i) consolidates with or merges into any other person
and is not the continuing or surviving entity of such consolidation or merger or (ii) transfers or
conveys all or substantially all of its properties and other assets to any person, then, and in each
case, the Surviving Corporation shall cause proper provision to be made so that such successors
and assigns shall expressly assume the obligations set forth in this Section 6.7.
(d) The provisions of this Section 6.7 are intended for the benefit of, and will
be enforceable by, each Company Indemnified Party and his or her heirs and representatives,
{Clients/1598/00283791.DOCX/11 } -60-
each of whom is expressly made a third-party beneficiary of this Section 6.7, and are in addition
to, and are not in substitution for, any other rights to indemnification or contribution that any
such person may have from Parent, Parent Bank, the Surviving Corporation or any of their
respective Subsidiaries or any other person by contract or otherwise. The obligations of the
Surviving Corporation under this Section 6.7 shall not be terminated or modified in such a
manner as to adversely affect the rights of any Company Indemnified Party unless (x) such
termination or modification is required by applicable Law (in which case such termination or
modification shall only be permitted to the extent required by such Law) or (y) the affected
Company Indemnified Party has consented in writing to such termination or modification.
6.8 Additional Agreements. In case at any time after the Effective
Time, any further action is necessary or desirable to carry out the purposes of this Agreement
(including, any merger between a Subsidiary of Parent, on the one hand, and a Subsidiary of the
Company, on the other) or to vest the Surviving Corporation with full title to all properties,
assets, rights, approvals, immunities and franchises of any of the parties to the Merger, the
proper officers and directors of each party to this Agreement and their respective Subsidiaries
shall take all such necessary action as may be reasonably requested by Parent. Effective as of
and subject to the occurrence of the Effective Time, Parent hereby expressly assumes the due and
punctual performance and observance of each and every covenant and condition in the contracts
set forth on Section 6.8 of the Company Disclosure Schedules to be performed and observed by
the Company.
6.9 Advice of Changes. Parent and the Company shall each promptly
advise the other party of any fact, effect, change, event, circumstance, condition, occurrence or
development that (i) has had or is reasonably likely, either individually or in the aggregate, to
have a Material Adverse Effect on it or (ii) would or would be reasonably likely to cause or
constitute a material breach of any of its representations, warranties or covenants contained
herein or that reasonably could be expected to give rise, individually or in the aggregate, to the
failure of a condition in Article VII; provided, that any failure to give notice in accordance with
the foregoing with respect to any breach shall not be deemed to constitute a violation of this
Section 6.9 or the failure of any condition set forth in Section 7.2 or 7.3 to be satisfied, or
otherwise constitute a breach of this Agreement by the party failing to give such notice, in each
case unless the underlying breach would independently result in a failure of the conditions set
forth in Section 7.2 or 7.3 to be satisfied; and provided, further, that the delivery of any notice
pursuant to this Section 6.9 shall not cure any breach of, or noncompliance with, any other
provision of this Agreement or limit the remedies available to the party receiving such notice.
6.10 Shareholder Litigation. The Company shall give Parent prompt
notice of any shareholder litigation against the Company and/or its directors or officers relating
to the transactions contemplated by this Agreement and shall give Parent an opportunity to
participate in the defense or settlement of any such litigation. The Company shall give Parent
the right to consult on the defense and settlement with respect to such litigation, and the
Company will in good faith take any comments of Parent into account, and no such settlement
that provides for a monetary payment to the shareholders and not covered by an insurance policy
(other than the payment of attorneys’ fees) shall be agreed to without Parent’s prior written
consent (not to be unreasonably withheld, conditioned or delayed).
{Clients/1598/00283791.DOCX/11 } -61-
6.11 Governance Matters.
(a) The directors of Parent at the Effective Time shall be the directors of the
Surviving Corporation from and after the Effective Time until their successors are duly elected
or appointed; provided, that prior to the Effective Time, Parent shall take all actions necessary to
cause two (2) current members of the Board of Directors of the Company, each of whom
qualifies as an independent director with respect to both the Company and Parent under the
applicable requirements of the Exchange Act and the rules and regulations of the SEC and
NASDAQ and each of whom shall be mutually agreeable to Parent and the Company, to be
appointed to the Board of Directors of the Surviving Corporation effective at or immediately
following the Effective Time.
(b) The officers of Parent at the Effective Time shall be the officers of the
Surviving Corporation from and after the Effective Time until their successors are duly elected
or appointed, together with such additional persons as may thereafter be elected or appointed.
6.12 Acquisition Proposals.
(a) Except as expressly permitted by this Section 6.12, the Company agrees
that it will not, and will cause each of its Subsidiaries and its and their respective officers,
directors and employees, and will use its reasonable best efforts to cause its and their respective
agents, advisors, financing sources, investment bankers, attorneys and other representatives
(collectively with officers, directors and employees, “Representatives”), not to, directly or
indirectly, (i) initiate, solicit, knowingly encourage or knowingly facilitate inquiries or proposals
regarding, or the making of any proposal or offer that constitutes, or could reasonably be
expected to lead to, any Acquisition Proposal, (ii) engage or participate in any discussions or
negotiations with any person concerning any Acquisition Proposal, (iii) disclose or provide any
confidential or nonpublic information or data to, or otherwise cooperate in any way with, any
person in connection with any Acquisition Proposal (including by affording access to the
personnel, properties, books, records or assets of the Company or its Subsidiaries) or (iv) unless
this Agreement has been terminated in accordance with its terms, enter into any term sheet, letter
of intent, commitment, memorandum of understanding, agreement in principle, acquisition
agreement, merger agreement, or other agreement (whether written or oral, binding or
nonbinding) (other than a confidentiality agreement referred to and entered into in accordance
with this Section 6.12(a)) relating to any Acquisition Proposal (provided, however, that the
foregoing shall not prevent the Company or its Representatives from contacting any person who
has made an Acquisition Proposal or inquiry or proposal relating thereto solely for the purpose of
seeking clarification of the terms and conditions thereof). Notwithstanding the foregoing, prior
to the receipt of the Requisite Company Vote, in the event the Company receives an unsolicited
bona fide written Acquisition Proposal, it may, and may permit its Subsidiaries and its and its
Subsidiaries’ Representatives to, (x) furnish or cause to be furnished confidential or nonpublic
information or data to, (y) participate in negotiations or discussions with and (z) afford access to
its and their personnel, properties, books, records and assets to the person making the
Acquisition Proposal (and such person’s Representatives) if and only if its Board of Directors
concludes in good faith (after consultation with its outside counsel, and with respect to financial
matters, its financial advisors) that failure to take such actions would be more likely than not to
result in a violation of its fiduciary duties under applicable Law; provided, further, that prior to
{Clients/1598/00283791.DOCX/11 } -62-
providing any confidential or nonpublic information permitted to be provided pursuant to the
foregoing proviso affording such access or participating in such negotiations or discussions, the
Company shall have given Parent at least twenty-four (24) hours’ prior written notice and shall
have entered into a confidentiality agreement with such third party on terms no less favorable to
it than the Confidentiality Agreement, which confidentiality agreement shall not provide such
person with any exclusive right to negotiate with the Company. The Company will, and will
cause its Representatives to, immediately cease and cause to be terminated any activities,
discussions or negotiations conducted before the date of this Agreement with any person other
than Parent with respect to any Acquisition Proposal and will request pursuant to any applicable
confidentiality agreements the return or destruction of any information provided to any such
person in connection therewith. The Company will promptly (and within twenty-four (24)
hours) advise Parent following receipt of any Acquisition Proposal or any inquiry which could
reasonably be expected to lead to an Acquisition Proposal, and the substance thereof (including
the terms and conditions of and the identity of the person making such inquiry or Acquisition
Proposal) and will provide Parent an unredacted copy of such Acquisition Proposal or inquiry
and any draft agreements, proposals or other materials received in connection with such inquiry
or Acquisition Proposal, and will keep Parent apprised of any related material developments,
discussions and negotiations on a reasonably current basis, including any amendments to or
revisions of the terms of such inquiry or Acquisition Proposal (including providing an
unredacted copy of such amended or revised Acquisition Proposal and any further or revised
draft agreements, proposals or other materials received in connection with such inquiry or
Acquisition Proposal). The Company shall use its reasonable best efforts to enforce any existing
confidentiality agreements to which it or any of its Subsidiaries is a party in accordance with the
terms hereof. As used in this Agreement, “Acquisition Proposal” shall mean, other than the
transactions contemplated by this Agreement, any offer, proposal or inquiry relating to, or any
third party indication of interest in, (i) any acquisition or purchase, direct or indirect, of fifteen
percent (15%) or more of the consolidated assets of the Company and its Subsidiaries or fifteen
percent (15%) or more of any class of equity or voting securities of the Company or its
Subsidiaries whose assets, individually or in the aggregate, constitute fifteen percent (15%) or
more of the consolidated assets of the Company, (ii) any tender offer (including a self-tender
offer), exchange offer or other acquisition of equity or voting securities that, if consummated,
would result in such third party beneficially owning fifteen percent (15%) or more of any class of
equity or voting securities of the Company or its Subsidiaries whose assets, individually or in the
aggregate, constitute fifteen percent (15%) or more of the consolidated assets of the Company or
(iii) a merger, consolidation, share exchange, business combination, reorganization,
recapitalization, liquidation, dissolution or other similar transaction involving the Company or its
Subsidiaries whose assets, individually or in the aggregate, constitute fifteen percent (15%) or
more of the consolidated assets of the Company.
(b) Nothing contained in this Agreement shall prevent the Company or its
Board of Directors from complying with Rule 14d-9 and Rule 14e-2 under the Exchange Act
with respect to an Acquisition Proposal or making any other disclosure to the Company’s
shareholders that the Company or its Board of Directors concludes in good faith (after receiving
the advice of its outside counsel) that the failure to make such disclosure would be more likely
than not to result in a violation of applicable Law; provided, that such rules or other Law will in
no way eliminate or modify the effect or consequences that any action pursuant to such rules
would otherwise have under this Agreement, and any public disclosure or statement by the
{Clients/1598/00283791.DOCX/11 } -63-
Company or its Board of Directors in connection with an Acquisition Proposal shall be deemed
to be a Recommendation Change unless the Company and its Board of Directors definitively and
without qualification reaffirm the Company Board Recommendation and recommend against
such Acquisition Proposal in such disclosure or statement.
6.13 Public Announcements. The parties hereto agree that the initial
press release with respect to the execution and delivery of this Agreement shall be a release
mutually agreed to by Parent and the Company. Thereafter, each of the parties agrees that no
public release or announcement or statement concerning this Agreement or the transactions
contemplated hereby shall be issued by any party without the prior written consent of the other
party (which consent shall not be unreasonably withheld, conditioned or delayed), except as
required by applicable law or the rules or regulations of any applicable Governmental Entity or
stock exchange to which the relevant party is subject, in which case the party required to make
the release or announcement shall consult with the other party about, and allow the other party
reasonable time to comment on, such release or announcement in advance of such issuance.
6.14 Change of Method. Parent shall be empowered, at any time prior
to the Effective Time, to change the method or structure of effecting the combination of the
Company and Parent, if and to the extent reasonably requested by Parent, and the Company
agrees to enter into such amendments to this Agreement as Parent may reasonably request to
give effect to such restructuring; provided, however, that no such change or amendment shall (i)
alter or change the amount or kind of the Merger Consideration or payment to or treatment of
any Company Equity Awards provided for in this Agreement, (ii) adversely affect the Tax
treatment of the Merger with respect to the shareholders of the Company or of Parent pursuant to
this Agreement, (iii) adversely affect the Tax treatment of the Merger with respect to the
Company or Parent pursuant to this Agreement or (iv) impede or materially delay the
consummation of the transactions contemplated by this Agreement or the receipt of the Requisite
Regulatory Approvals, the Requisite Company Vote, the Requisite Parent Vote or the Requisite
Amendment Vote.
6.15 Takeover Statutes. None of the Company, Parent or their
respective Boards of Directors shall take any action that would cause any Takeover Statute to
become applicable to this Agreement, the Merger or any of the other transactions contemplated
hereby, and each shall take all necessary steps to exempt (or ensure the continued exemption of)
the Merger and the other transactions contemplated hereby from any applicable Takeover Statute
now or hereafter in effect. If any Takeover Statute may become, or may purport to be, applicable
to the transactions contemplated hereby, each party and their respective Boards of Directors will
grant such approvals and take such actions as are necessary so that the transactions contemplated
by this Agreement may be consummated as promptly as practicable on the terms contemplated
hereby and thereby and otherwise act to eliminate or minimize the effects of any Takeover
Statute on any of the transactions contemplated by this Agreement, including, if necessary,
challenging the validity or applicability of any such Takeover Statute.
6.16 Exemption from Liability Under Section 16(b). The Company and
Parent agree that, to most effectively compensate and retain those officers and directors of the
Company subject to the reporting requirements of Section 16(a) of the Exchange Act (the
“Company Insiders”), both prior to and after the Effective Time, it is desirable that the Company
{Clients/1598/00283791.DOCX/11 } -64-
Insiders not be subject to a risk of liability under Section 16(b) of the Exchange Act to the fullest
extent permitted by applicable law in connection with the conversion of shares of Company
Common Stock and Company Equity Awards in the Merger, and for that compensatory and
retentive purpose agree to the provisions of this Section 6.16. The Company shall deliver to
Parent in a reasonably timely fashion prior to the Effective Time accurate information regarding
the Company Insiders, and the Board of Directors of Parent and of the Company, or a committee
of non-employee directors thereof (as such term is defined for purposes of Rule 16b-3(d) under
the Exchange Act), shall reasonably promptly thereafter, and in any event prior to the Effective
Time, take all such steps as may be required to cause (in the case of Company) any dispositions
of Company Common Stock or Company Equity Awards by the Company Insiders, and (in the
case of Parent) any acquisitions of Parent Common Stock by any Company Insiders who,
immediately following the Merger, will be officers or directors of the Surviving Corporation
subject to the reporting requirements of Section 16(a) of the Exchange Act, in each case,
pursuant to the transactions contemplated by this Agreement, to be exempt from liability
pursuant to Rule 16b-3 under the Exchange Act to the fullest extent permitted by applicable law.
6.17 Termination of Securities Purchase Agreements. The Company
shall negotiate with the parties to the Securities Purchase Agreements disclosed in Company
Disclosure Schedule 6.17 to terminate such Securities Purchase Agreements at the Effective
Time.
6.18 Stockholder Litigation. The Company shall give Parent the
opportunity to participate in the defense or settlement of any stockholder litigation against the
Company and/or its directors relating to the transactions contemplated by this Agreement, and no
such settlement shall be agreed to without Parent’s prior written consent (such consent not to be
unreasonably withheld or delayed).
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party’s Obligation To Effect the Merger. The
respective obligations of the parties to effect the Merger shall be subject to the satisfaction, or
waiver (subject to applicable law) by Parent and the Company, at or prior to the Effective Time,
of the following conditions:
(a) Shareholder Approval. (i) This Agreement shall have been approved by
the shareholders of the Company by the Requisite Company Vote, (ii) this Agreement shall have
been approved by the shareholders of Parent by the Requisite Parent Vote and (iii) the Articles
Amendment shall have been approved by the shareholders of Parent by the Requisite
Amendment Vote.
(b) NASDAQ Listing. Parent shall have filed with the NASDAQ a
notification form for the listing of all shares of Parent Common Stock to be delivered as Merger
Consideration, and the NASDAQ shall have authorized and not have objected to the listing of
such shares of Parent Common Stock.
{Clients/1598/00283791.DOCX/11 } -65-
(c) Regulatory Approvals. (i) All regulatory authorizations, consents, orders
or approvals required to consummate the transactions contemplated by this Agreement
(including the Merger and the Bank Merger) from the Federal Reserve Board, the FDIC
(including the consent of the FDIC under the Loss Share Agreements), the MDOB, the Oregon
Division and, if required by the HSR Act, under the HSR Act, and any other approvals set forth
in Sections 3.4 and 4.4 the failure of which to be obtained would reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect on the Surviving Corporation,
shall have been obtained and shall remain in full force and effect, and all statutory waiting
periods in respect thereof shall have expired (such approvals and the expiration of such waiting
periods being referred to herein as the “Requisite Regulatory Approvals”), (ii) no such Requisite
Regulatory Approval shall have resulted in the imposition of any Materially Burdensome
Regulatory Condition and (iii) in the case of the obligation of Parent to effect the Merger, the
transfer of the Loss Share Agreements shall be without adverse modification or amendment to
any such Loss Share Agreements and shall be without payment by or cost to Parent, the
Company or their respective Affiliates (any such modification, amendment or payment, a “Loss
Share Agreement Condition”).
(d) S-4. The S-4 shall have become effective under the Securities Act and no
stop order suspending the effectiveness of the S-4 shall have been issued and no proceedings for
that purpose shall have been initiated or threatened by the SEC and not withdrawn.
(e) No Injunctions or Restraints; Illegality. No order, injunction or decree
issued by any court or agency of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger, the Bank Merger or any of the other transactions
contemplated by this Agreement shall be in effect. No statute, rule, regulation, order, injunction
or decree shall have been enacted, entered, promulgated or enforced by any Governmental Entity
which prohibits or makes illegal consummation of the Merger, the Bank Merger or any of the
other transactions contemplated by this Agreement.
7.2 Conditions to Obligations of Parent. The obligation of Parent to
effect the Merger is also subject to the satisfaction, or waiver (subject to applicable law) by
Parent, at or prior to the Effective Time, of the following conditions:
(a) Representations and Warranties. The representations and warranties of the
Company set forth in Sections 3.2(a) (other than the third to last sentence), 3.3(a), 3.7, 3.8(a) and
3.24 (in each case after giving effect to the lead in to Article III) shall be true and correct (other
than, in the case of Section 3.2(a), such failures to be true and correct as are de minimis), in each
case as of the date of this Agreement and as of the Closing Date as though made on and as of the
Closing Date (except to the extent such representations and warranties speak as of an earlier date,
in which case as of such earlier date), and the representations and warranties of the Company set
forth in Sections 3.1, the third to last sentence of Section 3.2(a) and 3.2(c) (in each case, after
giving effect to the lead in to Article III) shall be true and correct in all material respects as of the
date of this Agreement and as of the Closing Date as though made on and as of the Closing Date
(except to the extent such representations and warranties speak as of an earlier date, in which
case as of such earlier date). All other representations and warranties of the Company set forth
in this Agreement (read without giving effect to any qualification as to materiality or Material
Adverse Effect set forth in such representations or warranties but, in each case, after giving
{Clients/1598/00283791.DOCX/11 } -66-
effect to the lead in to Article III) shall be true and correct in all respects as of the date of this
Agreement and as of the Closing Date as though made on and as of the Closing Date (except to
the extent such representations and warranties speak as of an earlier date, in which case as of
such earlier date); provided, however, that for purposes of this sentence, such representations and
warranties shall be deemed to be true and correct unless the failure or failures of such
representations and warranties to be so true and correct, either individually or in the aggregate,
and without giving effect to any qualification as to materiality or Material Adverse Effect set
forth in such representations or warranties, has had a Material Adverse Effect on the Company or
the Surviving Corporation. Parent shall have received a certificate dated as of the Closing Date
and signed on behalf of the Company by the Chief Executive Officer or the Chief Financial
Officer of the Company to the foregoing effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects the obligations required to be performed by it under this
Agreement at or prior to the Closing Date (including fulfillment of the obligation contained in
Section 6.6(e) and Section 6.17), and Parent shall have received a certificate dated as of the
Closing Date and signed on behalf of the Company by the Chief Executive Officer or the Chief
Financial Officer of the Company to such effect.
(c) Federal Tax Opinion. Parent shall have received the opinion of ▇▇▇▇
▇▇▇▇▇▇, PC, in form and substance reasonably satisfactory to Parent, dated as of the Closing
Date, to the effect that, on the basis of facts, representations and assumptions set forth or referred
to in such opinion, the Merger shall qualify as a “reorganization” within the meaning of Section
368(a) of the Code. In rendering such opinion, counsel may require and rely upon
representations contained in certificates of officers of Parent and the Company, reasonably
satisfactory in form and substance to such counsel.
7.3 Conditions to Obligations of the Company. The obligation of the
Company to effect the Merger is also subject to the satisfaction or waiver (subject to applicable
law) by the Company at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and warranties of
Parent set forth in Sections 4.2(a), 4.3(a), 4.7, 4.8(a) and 4.19 (in each case, after giving effect to
the lead in to Article IV) shall be true and correct (other than, in the case of Section 4.2(a), such
failures to be true and correct as are de minimis), in each case as of the date of this Agreement
and as of the Closing Date as though made on and as of the Closing Date (except to the extent
such representations and warranties speak as of an earlier date, in which case as of such earlier
date), and the representations and warranties of Parent set forth in Sections 4.1 and 4.2(b) (in
each case, after giving effect to the lead in to Article IV) shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date as though made on and as of
the Closing Date (except to the extent such representations and warranties speak as of an earlier
date, in which case as of such earlier date). All other representations and warranties of Parent set
forth in this Agreement (read without giving effect to any qualification as to materiality or
Material Adverse Effect set forth in such representations or warranties but, in each case, after
giving effect to the lead in to Article IV) shall be true and correct in all respects as of the date of
this Agreement and as of the Closing Date as though made on and as of the Closing Date (except
to the extent such representations and warranties speak as of an earlier date, in which case as of
{Clients/1598/00283791.DOCX/11 } -67-
such earlier date), provided, however, that for purposes of this sentence, such representations and
warranties shall be deemed to be true and correct unless the failure or failures of such
representations and warranties to be so true and correct, either individually or in the aggregate,
and without giving effect to any qualification as to materiality or Material Adverse Effect set
forth in such representations or warranties, has had a Material Adverse Effect on Parent. The
Company shall have received a certificate dated as of the Closing Date and signed on behalf of
Parent by the Chief Executive Officer or the Chief Financial Officer of Parent to the foregoing
effect.
(b) Performance of Obligations of Parent. Parent shall have performed in all
material respects the obligations required to be performed by it under this Agreement at or prior
to the Closing Date, and the Company shall have received a certificate dated as of the Closing
Date and signed on behalf of Parent by the Chief Executive Officer or the Chief Financial
Officer of Parent to such effect.
(c) Federal Tax Opinion. The Company shall have received the opinion of
Hunton & ▇▇▇▇▇▇▇▇ LLP, in form and substance reasonably satisfactory to the Company, dated
as of the Closing Date, to the effect that, on the basis of facts, representations and assumptions
set forth or referred to in such opinion, the Merger shall qualify as a “reorganization” within the
meaning of Section 368(a) of the Code. In rendering such opinion, counsel may require and rely
upon representations contained in certificates of officers of Parent and the Company, reasonably
satisfactory in form and substance to such counsel.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time, whether before or after receipt of the
Company Requisite Vote or Parent Requisite Vote:
(a) by mutual consent of Parent and the Company in a written instrument;
(b) by either Parent or the Company, if any Governmental Entity that must
grant a Requisite Regulatory Approval has denied approval of the Merger or the Bank Merger
and such denial has become final and nonappealable or any Governmental Entity of competent
jurisdiction shall have issued a final nonappealable order, injunction, decree, or other legal
restraint or prohibition permanently enjoining or otherwise prohibiting or making illegal the
consummation of the Merger or the Bank Merger, or any of the other transactions contemplated
by this Agreement, unless the failure to obtain a Requisite Regulatory Approval shall be due to
the failure of the party seeking to terminate this Agreement to perform or observe the covenants
and agreements of such party set forth herein;
(c) by either Parent or the Company, if the Merger shall not have been
consummated on or before the one-year anniversary of the date of this Agreement (the
“Termination Date”), unless the failure of the Closing to occur by such date shall be due to the
failure of the party seeking to terminate this Agreement to perform or observe the covenants and
{Clients/1598/00283791.DOCX/11 } -68-
agreements of such party set forth herein; provided, that, if all other conditions to close have
been satisfied or waived except as set forth in Section 7.1(c), either Parent or the Company shall
have the option, each in its sole discretion, to extend the Termination Date for an additional six-
month period;
(d) by either Parent or the Company (provided, that the terminating party is
not then in material breach of any representation, warranty, covenant or other agreement
contained herein), if there shall have been a breach of any of the covenants or agreements or any
of the representations or warranties (or any such representation or warranty shall cease to be
true) set forth in this Agreement on the part of the Company, in the case of a termination by
Parent, or Parent, in the case of a termination by the Company, which breach or failure to be true,
either individually or in the aggregate with all other breaches by such party (or failures of such
representations or warranties to be true), would constitute, if occurring or continuing on the
Closing Date, the failure of a condition set forth in Section 7.2, in the case of a termination by
Parent, or Section 7.3, in the case of a termination by the Company, and which is not cured
within thirty (30) days following written notice to the Company, in the case of a termination by
Parent, or Parent, in the case of a termination by the Company, or by its nature or timing cannot
be cured during such period (or such fewer days as remain prior to the Termination Date);
(e) by the Company, if Parent or the Board of Directors of Parent shall have
(i) made a Recommendation Change of Parent, or (ii) breached its obligations under Section 6.3
in any material respect;
(f) by Parent, if the Company or the Board of Directors of the Company shall
have (i) made a Recommendation Change of the Company, or (ii) breached its obligations under
Sections 6.3 or 6.12 in any material respect; or
(g) by either Parent or the Company if (i) the Requisite Parent Vote and the
Requisite Amendment Vote are not obtained at the Parent Meeting or at any adjournment or
postponement thereof or (ii) the Requisite Company Vote is not obtained at the Company
Meeting or at any adjournment or postponement thereof.
(h) by the Company at any time prior to obtaining the Requisite Company
Vote to enter into an agreement with respect to an Acquisition Proposal, but only if (i) the
Company’s Board of Directors has determined in good faith (after consultation with its outside
counsel and, with respect to financial matters, its financial advisors) that failure to take such
action would be more likely than not to result in a violation of its fiduciary duties under
applicable Law, and (ii) the Company has not materially breached its obligations under Section
6.12.
8.2 Effect of Termination.
(a) In the event of termination of this Agreement by either Parent or the
Company as provided in Section 8.1, this Agreement shall forthwith become void and have no
effect, and none of Parent, the Company, any of their respective Subsidiaries or any of the
officers or directors of any of them shall have any liability of any nature whatsoever hereunder,
or in connection with the transactions contemplated hereby, except that (i) Sections 6.2(b)
{Clients/1598/00283791.DOCX/11 } -69-
(Access to Information (Confidentiality)), Section 8.1 (Termination), this Section 8.2 (Effect of
Termination) and Article IX (General Provisions) shall survive any termination of this
Agreement, and (ii) notwithstanding anything to the contrary contained in this Agreement,
neither Parent nor the Company shall be relieved or released from any liabilities or damages
arising out of its willful and material breach of any provision of this Agreement.
(b) In the event that, after the date of this Agreement and prior to the
termination of this Agreement, (i) a bona fide Acquisition Proposal shall have been
communicated to or otherwise made known to the Board of Directors or senior management of
the Company or has been made directly to the shareholders of the Company, or any person shall
have publicly announced an Acquisition Proposal with respect to the Company, (ii) thereafter
this Agreement is terminated (A) by either Parent or the Company pursuant to Section 8.1(c) (but
only if (x) such Acquisition Proposal was made directly to the shareholders of the Company or
otherwise publicly announced prior to the Company Meeting and (y) the Company shall have
failed to obtain the Requisite Company Vote at the duly convened Company Meeting or any
adjournment or postponement thereof at which a vote on the approval of this Agreement was
taken), (B) by Parent pursuant to Section 8.1(d) or (C) by Parent or the Company pursuant to
Section 8.1(g)(ii), and (iii) prior to the date that is twelve (12) months after the date of such
termination, the Company enters into a definitive agreement or consummates a transaction with
respect to an Acquisition Proposal (whether or not the same Acquisition Proposal as that referred
to above), then the Company shall, on the earlier of the date it enters into such definitive
agreement or the date of consummation of such transaction, as applicable, pay Parent, by wire
transfer of same-day funds, a fee equal to 3.75% of aggregate merger consideration, or $[●] (the
“Termination Fee”); provided, that for purposes of this Section 8.2(b), all references in the
definition of Acquisition Proposal to “fifteen percent (15%)” shall instead refer to “fifty percent
(50%).”
(c) In the event that this Agreement is terminated by Parent pursuant to
Section 8.1(f) or the Company pursuant to Section 8.1(h), then the Company shall pay Parent, by
wire transfer of same day funds, the Termination Fee on the date of termination.
(d) In the event that this Agreement is terminated by the Company pursuant to
Section 8.1(e), then Parent shall pay the Company, by wire transfer of same day funds, the
Termination Fee on the date of termination.
(e) Notwithstanding anything to the contrary herein, but without limiting the
right of any party to recover liabilities or damages arising out of the other party’s willful and
material breach of any provision of this Agreement, in the event that this Agreement is
terminated as provided in Section 8.1, the maximum aggregate amount of monetary fees,
liabilities or damages payable by a single party under this Agreement shall be equal to the
Termination Fee, and neither the Company nor Parent shall be required to pay the Termination
Fee on more than one occasion.
(f) Each of Parent and the Company acknowledges that the agreements
contained in this Section 8.2 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent and the Company, respectively, would
not enter into this Agreement; accordingly, if either party fails promptly to pay the amount due
{Clients/1598/00283791.DOCX/11 } -70-
pursuant to this Section 8.2, and, in order to obtain such payment, the other party commences a
suit which results in a judgment against the non-paying party for the Termination Fee or any
portion thereof, such non-paying party shall pay the costs and expenses of the other party
(including attorneys’ fees and expenses) in connection with such suit. In addition, if the
Company or Parent, as the case may be, fails to pay the amounts payable pursuant to this Section
8.2, then such party shall pay interest on such overdue amounts at a rate per annum equal to the
“prime rate” (as announced by JPMorgan Chase & Co. or any successor thereto) in effect on the
date on which such payment was required to be made for the period commencing as of the date
that such overdue amount was originally required to be paid and ending on the date that such
overdue amount is actually paid in full.
ARTICLE IX
GENERAL PROVISIONS
9.1 Nonsurvival of Representations, Warranties and Agreements.
None of the representations, warranties, covenants and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement (other than the Confidentiality Agreement,
which shall survive in accordance with its terms) shall survive the Effective Time, except for
Section 6.7 and for those other covenants and agreements contained herein and therein which by
their terms apply in whole or in part after the Effective Time.
9.2 Amendment. Subject to compliance with applicable law, this
Agreement may be amended by the parties hereto, at any time before or after receipt of the
Requisite Company Vote, in the case of the Company, or the Requisite Parent Vote and
Requisite Amendment Vote, in the case of Parent, respectively; provided, however, that after the
receipt of the Requisite Company Vote, in the case of the Company, or the Requisite Parent Vote
and Requisite Amendment Vote, in the case of Parent, respectively, there may not be, without
further approval of such shareholders, any amendment of this Agreement that requires further
approval under applicable law. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
9.3 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto may, to the extent legally allowed, (a) extend the time for the performance of any
of the obligations or other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered pursuant hereto
and (c) waive compliance with any of the agreements or satisfaction of any conditions contained
herein; provided, however, that after the receipt of the Requisite Company Vote, in the case of
the Company, or the Requisite Parent Vote and Requisite Amendment Vote, in the case of
Parent, respectively, there may not be, without further approval of the shareholders of the
Company or Parent, as applicable, any extension or waiver of this Agreement or any portion
thereof that requires further approval under applicable law. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a written instrument
signed on behalf of such party, but such extension or waiver or failure to insist on strict
compliance with an obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
{Clients/1598/00283791.DOCX/11 } -71-
9.4 Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party incurring such
expense; provided, however, that the costs and expenses of printing and mailing the Joint Proxy
Statement and all filing and other fees paid to the SEC in connection with the Merger shall be
borne equally by Parent and the Company.
9.5 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (with confirmation),
mailed by registered or certified mail (return receipt requested) or delivered by an express
courier (with confirmation) to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
(a) if to the Company, to:
Cascade Bancorp
▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy (which shall not constitute notice) to:
Hunton & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
(b) if to Parent, to:
First Interstate BancSystem, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy (which shall not constitute notice) to:
First Interstate BancSystem, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, PC
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇
{Clients/1598/00283791.DOCX/11 } -72-
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ ▇.▇. Spaccasi, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
9.6 Interpretation. The parties have participated jointly in negotiating
and drafting this Agreement. In the event that an ambiguity or a question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provision of this Agreement. When a reference is made in this Agreement to
Articles, Sections, Exhibits or Schedules, such reference shall be to an Article or Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. Whenever the words “include,” “includes”
or “including” are used in this Agreement, they shall be deemed to be followed by the words
“without limitation.” References to “the date hereof” shall mean the date of this Agreement. As
used in this Agreement, the “Knowledge” of the Company means the actual knowledge of any of
the officers of the Company listed on Section 9.6 of the Company Disclosure Schedules, and the
“Knowledge” of Parent means the actual knowledge of any of the officers of Parent listed on
Section 9.6 of the Parent Disclosure Schedules. As used herein, (i) the term “business day”
means any day other than a Saturday, a Sunday or a day on which banks in Billings, Montana are
authorized by law or executive order to be closed, (ii) the term “person” means any individual,
corporation (including not-for-profit), general or limited partnership, limited liability company,
joint venture, estate, trust, association, organization, Governmental Entity or other entity of any
kind or nature, (iii) an “Affiliate” of a specified person is any person that directly or indirectly
controls, is controlled by, or is under common control with, such specified person and (iv) the
term “made available” means any document or other information that was (a) provided by one
party or its representatives to the other party and its representatives at least one business day
prior to the date hereof, (b) included in the virtual data room of a party at least one business day
prior to the date hereof or (c) filed by a party with the SEC and publicly available on ▇▇▇▇▇ at
least one business day prior to the date hereof. The Company Disclosure Schedules and the
Parent Disclosure Schedules, as well as all other schedules and all exhibits hereto, shall be
deemed part of this Agreement and included in any reference to this Agreement.
9.7 Counterparts. This Agreement may be executed in counterparts,
all of which shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
9.8 Entire Agreement. This Agreement (including the documents and
the instruments referred to herein) together with the Confidentiality Agreement constitutes the
entire agreement among the parties and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.
9.9 Governing Law. This Agreement shall be governed by and
strued and enforced in accordance with the laws of the State of New York, including all matters
of construction, validity and performance (but excluding all other choice of law and conflicts of
{Clients/1598/00283791.DOCX/11 } -73-
law rules), but excluding matters relating to the fiduciary duties of the Board of Directors of the
Company which shall be subject to the laws of the State of Oregon.
9.10 Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND
AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT
IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE
EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES,
TO THE EXTENT PERMITTED BY LAW AT THE TIME OF INSTITUTION OF THE
APPLICABLE LITIGATION, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT: (I)
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER,
(II) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF
THIS WAIVER, (III) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV)
EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION
9.10.
9.11 Assignment; Third Party Beneficiaries. Neither this Agreement
nor any of the rights, interests or obligations shall be assigned by any of the parties hereto
(whether by operation of law or otherwise) without the prior written consent of the other party.
Any purported assignment in contravention hereof shall be null and void. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns. Except as otherwise
specifically provided in Section 6.7, this Agreement (including the documents and instruments
referred to herein) is not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder, including the right to rely upon the representations and warranties
set forth herein. The representations and warranties in this Agreement are the product of
negotiations among the parties hereto and are for the sole benefit of the parties. Any
inaccuracies in such representations and warranties are subject to waiver by the parties hereto in
accordance herewith without notice or liability to any other person. In some instances, the
representations and warranties in this Agreement may represent an allocation among the parties
hereto of risks associated with particular matters regardless of the Knowledge of any of the
parties hereto. Consequently, persons other than the parties may not rely upon the
representations and warranties in this Agreement as characterizations of actual facts or
circumstances as of the date of this Agreement or as of any other date.
9.12 Specific Performance. The parties hereto agree that irreparable
damage would occur if any provision of this Agreement were not performed in accordance with
the terms hereof and, accordingly, that the parties shall be entitled to an injunction or injunctions
to prevent breaches of this Agreement or to enforce specifically the performance of the terms and
provisions hereof (including the parties’ obligation to consummate the Merger), in addition to
any other remedy to which they are entitled at law or in equity. Each of the parties hereby
further waives (a) any defense in any action for specific performance that a remedy at law would
{Clients/1598/00283791.DOCX/11 } -74-
be adequate and (b) any requirement under any law to post security or a bond as a prerequisite to
obtaining equitable relief.
9.13 Severability. Whenever possible, each provision or portion of any
provision of this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision or portion of any provision of this Agreement is held
to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or
portion of any provision in such jurisdiction, and this Agreement shall be reformed, construed
and enforced in such jurisdiction such that the invalid, illegal or unenforceable provision or
portion thereof shall be interpreted to be only so broad as is enforceable.
9.14 Delivery by Facsimile or Electronic Transmission. This
Agreement and any signed agreement or instrument entered into in connection with this
Agreement, and any amendments or waivers hereto or thereto, to the extent signed and delivered
by means of a facsimile machine or by e-mail delivery of a “.pdf” format data file, shall be
treated in all manner and respects as an original agreement or instrument and shall be considered
to have the same binding legal effect as if it were the original signed version thereof delivered in
person. No party hereto or to any such agreement or instrument shall raise the use of a facsimile
machine or e-mail delivery of a “.pdf” format data file to deliver a signature to this Agreement or
any amendment hereto or the fact that any signature or agreement or instrument was transmitted
or communicated through the use of a facsimile machine or e-mail delivery of a “.pdf” format
data file as a defense to the formation of a contract and each party hereto forever waives any
such defense.
[Signature Page Follows]
{Clients/1598/00283791.DOCX/11 } [Signature Page to Agreement and Plan of Merger]
IN WITNESS WHEREOF, Parent and the Company have caused this Agreement to be executed
by their respective officers thereunto duly authorized as of the date first above written.
CASCADE BANCORP
By:
Name:
Title:
FIRST INTERSTATE BANCSYSTEM, INC.
By:
Name:
Title:
{Clients/1598/00283791.DOCX/11 } -76-
Exhibit A
Form of Voting Agreement
{Clients/1598/00283791.DOCX/11 } -77-
Exhibit B
Amended and Restated Parent Articles
{Clients/1598/00283791.DOCX/11 } -78-
Exhibit C
Amended and Restated Company Bylaws