EXHIBIT 2.1
AGREEMENT FOR MERGER
This AGREEMENT FOR MERGER, dated as of April 25, 2000 (as hereinafter
amended, supplemented or otherwise modified from time to time, this
"AGREEMENT"), is entered into by and among COWLITZ BANCORPORATION, a Washington
corporation ("COWLITZ"), COWLITZ BANK, a corporation chartered under the banking
laws of the State of Washington ("COWLITZ BANK"), and NORTHERN BANK OF COMMERCE,
a corporation chartered under the banking laws of the State of Oregon
("NORTHERN").
The parties hereto previously entered into an Agreement and Plan of Merger
dated as of September 14, 1999 (the "Prior Agreement"), which provided for
Northern to be acquired by Cowlitz and its wholly-owned subsidiary Cowlitz Bank
on the basis of a merger of Northern with and into Cowlitz Bank, which was to be
the surviving bank. At an adjourned meeting of the shareholders of Northern held
on March 9, 2000, the requisite approval of the Northern shareholders was not
obtained and on March 9, 2000, Northern delivered a letter to Cowlitz
terminating the Prior Agreement. The parties now desire that Cowlitz and Cowlitz
Bank acquire Northern on the basis of a merger (described more particularly in
Section 2.1) of a to-be-formed, wholly-owned interim bank subsidiary of Cowlitz
Bank (the "INTERIM BANK") with and into Northern, which shall be the surviving
bank, and to make certain other modifications.
The respective Boards of Directors of each of Cowlitz, Cowlitz Bank and
Northern have determined that it is in the best interests of their respective
companies and the stockholders to consummate the business combination
transaction provided for herein and have approved and adopted this Agreement.
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:
1. DEFINITIONS
1.1 DEFINED TERMS. The following terms shall have the meanings defined for
such terms in the Sections set forth below:
TERM SECTION
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Additional Nondissenting Shares 3.2(b)
Agreement Preamble
Aggregate Merger Consideration 3.1
Articles of Merger 2.2
Base Value 2.6(h)
BIF 4.1
Business Day 2.4
Cash Consideration 2.6(a)
Capital Addition Amount 2.6(g)
Capital Addition Event 2.6(g)
TERM SECTION
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Capital Addition Adjustment Amount 2.6(i)
Capitalization Adjustment Fraction 2.6(c)
Change of Control 9.1(h)
Closing 2.4
Closing Date 2.4
Closing Escrow Amount 3.2(b)
Code 4.10(a)
Committee 3.2(b)
Common Certificates 2.5(b)
Confidentiality Agreement 7.2(b)
Covered Loans 3.2(b)
Cowlitz Preamble
Cowlitz Bank Preamble
Cowlitz Common Stock 2.5(c)
Cowlitz Disclosure Schedule 5.2
Cowlitz Bank Members 3.2(b)
Cowlitz Preferred Stock 5.2
Cowlitz Reports 5.10
CRA 4.27
Dissenting Shares 2.5(d)
DPC Shares 2.5(c)
Effective Date 2.2
Effective Time 2.2
Environmental Laws 4.21
Equity Adjustment Amount 2.6(b)
ERISA 4.11(a)
ERISA Affiliate 4.11(a)
Escrow 3.2(b)
Escrow Agent 3.2(b)
Escrow Agreement 3.2(b)
Escrow Expiration Date 3.2(b)
Escrowed Funds 3.2(b)
Exchange Act 4.6
Exchange Agent 3.1
Federal Reserve 4.4
FDIC 4.1
GAAP 2.6(d)
Governmental Entity 4.4
Identified Loans 2.6(d)
Injunction 8.1(e)
Interim Bank Preamble
Level 6 Loans 2.6(e)
Liens 4.3(b)
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TERM SECTION
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Loan Adjustment Factor 3.2(b)
Loan File 4.24(d)
Loans 4.24(a)
Material Adverse Effect (Northern) 4.1
Material Adverse Effect (Cowlitz) 5.1(a)
Merger 2.1
Merger Consideration 2.6(a)
Nasdaq 4.4
Northern Preamble
Northern Automated Systems 4.28
Northern Common Stock 2.5(a)
Northern Contract 4.14(a)
Northern Disclosure Schedule 4.2(a)
Northern Members 3.2(b)
Northern Reports 4.12
Northern Stock Option Plan 2.8
Orders 6.2(o)
Oregon Director 2.2
Per Share Amount of Escrowed Funds 3.2(a)
Plan of Merger 2.1
PBGC 4.11(c)
Plans 4.11(a)
Prior Agreement Preamble
Proxy Statement 4.4
Regulatory Agreement 4.15
Reimbursable Losses 3.2(b)
REO 4.19(a)
Representatives 6.2(f)
Requisite Regulatory Approvals 8.1(c)
S-4 4.4
SEC 4.4
Securities Act 4.12
Stock Exchange Fund 3.1
Stock Option Agreement 2.14
Subsidiary 2.5(a)
Subsequent Merger 2.15
Superior Proposal 9.1(h)
Surviving Bank 2.1
Takeover Proposal 6.2(f)
Tax Returns 4.10(c)
Taxes 4.10(b)
Threshold Amount 3.2(d)
Title 30 2.1
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TERM SECTION
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Title 53 2.1
Total Stockholders' Equity 2.6(b)
Trust Account Shares 2.5(c)
Washington Director 2.4
Washington Secretary 2.4
Year 2000 Problem 4.28
1.2 OTHER DEFINITIONAL PROVISIONS. The meanings given to terms defined
herein shall be equally applicable to both the singular and plural forms of such
terms.
2. THE MERGER
2.1 THE MERGER. Subject to the terms and conditions of this Agreement and a
Plan of Merger by and between Cowlitz Bank, Interim Bank and Northern
substantially in the form attached hereto as Exhibit 2.1 (the "PLAN OF MERGER"),
in accordance with Title 30 of the Revised Code of Washington ("TITLE 30") and
Title 53 of the Oregon Revised Statutes ("TITLE 53") at the Effective Time (as
defined in Section 2.2 hereof), Interim Bank shall merge (the "MERGER") with and
into Northern Bank. Northern shall be the surviving bank (hereinafter sometimes
called the "SURVIVING BANK") in the Merger, and shall continue its corporate
existence under the laws of the State of Oregon. The name of the Surviving Bank
shall be "Northern Bank of Commerce." Upon consummation of the Merger, the
separate corporate existence of Interim Bank shall terminate. The Plan of Merger
provides for the terms of the Merger and the manner of carrying it into effect.
The terms and conditions of the Plan of Merger are incorporated herein and made
a part hereof. Interim Bank shall be chartered under, at the option of Cowlitz
and Cowlitz Bank, either the laws of Oregon or the laws of Washington.
2.2 EFFECTIVE TIME. The Merger shall become effective as set forth in the
articles of merger (the "ARTICLES OF MERGER") which shall be filed with the
Director of the Department of Consumer and Business Services of the State of
Oregon (the "OREGON DIRECTOR"), on the Closing Date (as defined in Section
2.4(b) hereof). The term "EFFECTIVE TIME" shall mean the date (the "EFFECTIVE
DATE") and time when the Merger becomes effective, as set forth in the Articles
of Merger. The filed Articles of Merger shall include the Plan of Merger.
2.3 EFFECTS OF THE MERGER. At and after the Effective Time, the Merger
shall have the effects set forth in Chapter 49 of Title 30 and Chapter 711 of
Title 53.
2.4 CLOSING OF THE MERGER. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "CLOSING") will take place at 10:00
a.m. Pacific time, on a date to be specified by the parties, which shall be the
first Business Day following the later of (i) the date which is at least five
Business Days after the satisfaction or waiver (subject to applicable law) of
the latest to occur of the conditions set forth in Section 8 hereof, other than
conditions which by their terms are to be satisfied at Closing or (ii) in the
case that holders of more than 5% of the outstanding shares of Northern Common
Stock have sent or delivered a notice of dissent or
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voted against the Merger, 35 days following the meeting of the Northern
Stockholders to be held pursuant to Section 7.3, or such other date or time as
the parties may mutually agree (the "CLOSING DATE"). For purposes of this
Agreement, a "BUSINESS DAY" shall mean any day that is not a Saturday, a Sunday
or other day on which the office of the Director of Financial Institutions of
the State of Washington (the "WASHINGTON DIRECTOR"), the Secretary of State of
the State of Washington (the "WASHINGTON SECRETARY") or the Oregon Director is
closed.
2.5 CONVERSION OF NORTHERN COMMON STOCK. At the Effective Time, without any
action on the part of Cowlitz, Cowlitz Bank, Interim Bank, Northern or the
holder of any of the shares of common stock of Northern, the Merger shall be
effected in accordance with the following terms:
(a) Subject to Section 2.5(d), each share of the common stock, par
value $1.00 per share, of Northern (the "NORTHERN COMMON STOCK") issued and
outstanding immediately prior to the Effective Time (other than shares of
Northern Common Stock held (x) in Northern's treasury or (y) directly or
indirectly by Cowlitz or any of its Subsidiaries (as defined below) (except for
Trust Account Shares and DPC Shares, as such terms are defined below)), shall be
converted into the right to receive the Merger Consideration as provided below,
without interest thereon. For purposes of this Agreement, "Subsidiary" means,
with respect to any person, any corporation, partnership, joint venture, limited
liability company or other entity controlled by such person directly or
indirectly through one or more intermediaries.
(b) All of the shares of Northern Common Stock converted into the
right to receive the Merger Consideration pursuant to this Section 2 shall no
longer be outstanding and shall automatically be canceled and shall cease to
exist as of the Effective Time, and each certificate (each a "COMMON
CERTIFICATE") previously representing any such shares shall thereafter represent
solely the right to receive the Merger Consideration. Common Certificates
previously representing shares of Northern Common Stock shall be exchanged for
the Merger Consideration upon the surrender of such Common Certificates in
accordance with Section 3.2 hereof, without any interest thereon.
(c) At the Effective Time, all shares of Northern Common Stock that
are owned by Northern as treasury stock and all shares of Northern Common Stock
that are owned directly or indirectly by Cowlitz, Northern or a Subsidiary of
Cowlitz (other than shares of Northern Common Stock held directly or indirectly
in trust accounts, managed accounts and the like or otherwise held in a
fiduciary or nominee capacity that are beneficially owned by third parties (any
such shares, and shares of common stock, no par value per share, of Cowlitz
("COWLITZ COMMON STOCK") which are similarly held, whether held directly or
indirectly by Cowlitz, Northern or a Subsidiary of Cowlitz, as the case may be,
being referred to herein as "TRUST ACCOUNT SHARES") and other than any shares of
Northern Common Stock held by Cowlitz, Northern or any a Subsidiary of Cowlitz
in respect of a debt previously contracted (any such shares of Northern Common
Stock, and shares of Cowlitz Common Stock which are similarly held, whether held
directly or indirectly by Cowlitz, Northern or any a Subsidiary of Cowlitz,
being referred to herein as "DPC SHARES")) shall be canceled and shall cease to
exist and no Merger Consideration shall be delivered in exchange therefor.
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(d) Notwithstanding anything in this Agreement to the contrary, shares
of Northern Common Stock issued and outstanding immediately prior to the
Effective Time held by holders (if any) who have voted against the Merger or
sent or delivered notices of dissent and who are eligible to and who have
demanded appraisal rights with respect thereto in accordance with Sections
711.175-.185 of Title 53 and, as of the Effective Time, shall not have failed to
perfect or shall not have effectively withdrawn or lost their rights to
appraisal and payment under Sections 711.175-.185 of Title 53 (the "DISSENTING
SHARES") shall not be converted into the right to receive the Merger
Consideration as described in Section 2.5(a), but holders of such shares shall
instead be entitled to receive payment of the fair value of such Dissenting
Shares in accordance with the provisions of Sections 711.175-.185 of Title 53,
except that any Dissenting Shares held by a holder which shall have failed to
perfect or shall have effectively withdrawn or lost its right to appraisal and
payment under Sections 711.175-.185 of Title 53 shall thereupon be deemed to
have been converted into the right to receive the Merger Consideration as
described in Section 2.5(a), without interest thereon. Northern shall give
Cowlitz (i) prompt notice of any written demands for appraisal of any shares,
attempted withdrawals of such demands, and any other instruments served pursuant
to Sections 711.175-.185 of Title 53 received by Northern relating to
stockholders' rights of appraisal and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under
Sections 711.175-.185 of Title 53. Northern shall not, except with the prior
written consent of Cowlitz, voluntarily make any payment with respect to any
demands for appraisals of capital stock of Northern, offer to settle or settle
any such demands or approve any withdrawal of any such demands.
2.6 MERGER CONSIDERATION.
(a) For purposes of this Agreement and subject to the provisions
hereof and the Plan of Merger, the "MERGER CONSIDERATION" shall be $3.35 per
share of Northern Common Stock, and shall be paid in cash, but shall be subject
to certain loss indemnification provisions described in Section 3.2(b). In
addition, the Merger Consideration is subject to possible adjustment at the
Effective Time pursuant to this Section 2.6.
(b) If the Base Value (as defined below) of Northern, as calculated in
accordance with Section 2.6(h) is less than $2,348,199 but at least $1,150,000,
then the Merger Consideration (after making any adjustment under Section 2.6(i)
below) shall be reduced as of the Effective Time by an amount (the "EQUITY
ADJUSTMENT AMOUNT") equal to the product of (A) 1.75 and (B) a fraction the
numerator of which is the difference between $2,348,199 and the Base Value and
the denominator of which is the number of issued and outstanding shares of
Northern Common Stock as of the date of this Agreement.
(c) If the total number of issued and outstanding shares of Northern
Common Stock as of the Effective Time is greater than the total number of issued
and outstanding shares of Northern Common Stock as of the date of this
Agreement, then the Merger Consideration, (after making any adjustments required
under Section 2.6(b) above and Section 2.6(i) below, if applicable) shall be
adjusted as of the Effective Time so that the Merger Consideration shall be the
amount per share equal to the amount calculated pursuant to Sections 2.6(a),
2.6(b) and 2.6(i) multiplied by a fraction (the "CAPITALIZATION ADJUSTMENT
FRACTION"), the
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numerator of which is equal to the total number of issued and outstanding shares
of Northern Common Stock as of the date of this Agreement and the denominator of
which is equal to the total number of issued and outstanding shares of Northern
Common Stock as of the Effective Time.
(d) Schedule 2.6(d) contains a list of loans of Northern which
Northern, Cowlitz and Cowlitz Bank agree should under standard commercial
banking practice be classified as Special Mention, Substandard, Doubtful or Loss
(each as defined on Annex 2.6(d) hereto). The loans established as classified
loans pursuant to this Section 2.6(d) and as may be updated pursuant to Section
2.6(f) are sometimes herein referred to as the "IDENTIFIED LOANS." The list of
Identified Loans, as may be updated pursuant to Section 2.6(f) shall be attached
as an exhibit to the Escrow Agreement. To the extent permitted by United States
generally accepted accounting principles ("GAAP"), Northern agrees that it will
have provided on its books prior to the Effective Time a reserve for each
Identified Loan at least equal to (A) 5% of the principal amount of each
Identified Loan classified as Special Mention, (B) 15% of the principal amount
of each Identified Loan classified as Substandard, (C) 50% of the principal
amount of each Identified Loan classified as Doubtful and (D) 100% of each
Identified Loan classified as Loss, as well as a general reserve equal to 1 1/2%
of the aggregate principal amounts of all outstanding loans (including without
limitation all Identified Loans). Nothing in the immediately preceding sentence
shall be deemed to preclude Northern from establishing, to the extent permitted
by GAAP, reserves allocated to specific loans in amounts greater than set forth
in such preceding sentence.
(e) Schedule 2.6(e) contains a list of loans of Northern which
Northern acknowledges should under standard commercial banking practice be
classified as "Management Attention"(as defined on Annex 2.6(e) hereto). The
loans established as classified loans pursuant to this Section 2.6(e) are
sometimes herein referred to as the "LEVEL 6 LOANS." Using its good faith
judgment and the standard commercial banking practices consistently applied by
Northern, Northern shall update the list of Level 6 Loans no more than five and
no fewer than two days prior to the Effective Time. Such updated list of Level 6
Loans shall be attached as an exhibit to the Escrow Agreement
(f) No later than the date which Cowlitz, Cowlitz Bank and Northern in
good faith estimate to be fifteen (15) days prior to the Effective Time, Cowlitz
and Cowlitz Bank shall, at their sole option and expense, engage a Loan Examiner
to revise, according to such Loan Examiner's good-faith judgment and using the
standards described in Section 2.6(d), the list of Identified Loans. The revised
list of Identified Loans shall be delivered by such Loan Examiner to Cowlitz,
Cowlitz Bank and Northern no later than three (3) business days after his
engagement. Such revision and classification shall be deemed final and binding
on the parties. As used herein, Loan Examiner shall mean ▇▇▇▇ ▇▇▇▇▇▇ or any loan
examiner, loan reviewer or loan auditor (other than a current employee, officer
or director of Cowlitz, Cowlitz Bank or Northern) with at least ten (10) years
experience in commercial lending, banking and/or bank examining, including at
least two (2) years as a loan examiner, loan reviewer or loan auditor. Northern
agrees to provide access for the Loan Examiners as provided in Section 7.2(a)
hereof.
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(g) As used in this Agreement, "CAPITAL ADDITION AMOUNT" shall mean
the amount of money received by Northern between the date of this Agreement and
the Effective Time through any exercise of options to acquire Northern stock or
as a result of any capital contribution to Northern (each a "CAPITAL ADDITION
EVENT").
(h) As used in this Agreement, "BASE VALUE" shall mean difference
between (i) total stockholders' equity of Northern immediately prior to the
Effective Time as calculated in accordance with GAAP applied on a consistent
basis and (ii) the sum of (x) the Capital Addition Amount, (y) the reserves
established pursuant to Section 6.1(e) (to the extent such reserves are not
already taken into account in calculating the total stockholders' equity of
Northern immediately prior to the Effective Time) and (z) an amount equal to the
after-tax reduction in such equity that would be necessary to reflect additional
losses or reserves (to the extent not taken by Northern prior to the Effective
Time) so that, for each Identified Loan, Northern would have a reserve at the
Effective Time equal to (A) 5% of the principal amount of each Identified Loan
classified as Special Mention, (B) 15% of the principal amount of each
Identified Loan classified as Substandard, (C) 50% of the principal amount of
each Identified Loan classified as Doubtful and (D) 100% of the principal amount
of each Identified Loan classified as Loss, as well as a general reserve of
1 1/2% equal to the aggregate principal amounts of all outstanding loans
(including without limitation all Identified Loans).
(i) If a Capital Addition Event occurs, then the Merger Consideration
shall be adjusted as of the Effective Time first by increasing the Merger
Consideration by an amount (the "CAPITAL ADDITION ADJUSTMENT AMOUNT") equal to
the quotient of the Capital Addition Amount divided by the number of issued and
outstanding shares of Northern Common Stock as of the date of this Agreement,
then by making any further adjustments provided in Sections 2.6(b) and 2.6(c)
above, and finally by making any other adjustment required by this Agreement.
(j) If prior to the Effective Time the outstanding shares of Northern
Common Stock shall, with the prior written consent of Cowlitz required by
Section 6.2, 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 Northern Common Stock's
capitalization (but not as a result of any Capital Addition Event except as
explicitly provided in this Section 2.6), then an appropriate and proportionate
adjustment shall be made to the Merger Consideration.
2.7 COWLITZ STOCK; COWLITZ BANK STOCK; INTERIM BANK STOCK. At and after the
Effective Time, each share of Cowlitz Common Stock and each share of any
preferred stock of Cowlitz issued and outstanding immediately prior to the
Effective Time shall remain an issued and outstanding share of common stock or
preferred stock, as the case may be, of Cowlitz and shall not be affected by the
Merger. Each of the issued and outstanding shares of common stock of Cowlitz
Bank immediately prior to the Effective Time shall remain issued and outstanding
after the Merger. No capital stock of Cowlitz, Cowlitz Bank or Interim Bank will
be issued or used (except to the extent that the Interim Bank's stock is
converted as provided by the Plan of Merger) in the Merger. Each share of
capital stock of Interim Bank issued and outstanding immediately prior to the
Effective Time shall at the Effective Time be converted into one share
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of the stock of Northern. The amount of capital of the Surviving Bank, the
number of shares of the Surviving Bank's capital stock and the par value thereof
are set forth on Annex 2.7.
2.8 OPTIONS. The parties acknowledge and agree that Section 7.1.1 of the
Northern 1994 Stock Option Plan (the "NORTHERN STOCK OPTION PLAN") governs with
respect to the effect of the Merger on each option granted thereunder by
Northern to purchase shares of Northern Common Stock. In accordance with the
Northern Stock Option Plan, holders of such options shall have the right
immediately prior to the Effective Time to exercise such option to the extent
the vesting requirements set forth in the option agreement with respect to such
option have been satisfied. At the Effective Time, each option (vested or
unvested) granted by Northern to purchase shares of Northern Common Stock,
whether under the Northern Stock Option Plan or otherwise, which is outstanding
and unexercised immediately prior thereto shall cease to represent a right to
acquire shares of Northern Common Stock, shall automatically terminate and no
Merger Consideration or any other consideration shall be delivered in exchange
therefor.
2.9 CHARTER. At the Effective Time, the Charter of Northern, as in effect
at the Effective Time, shall be the Charter of the Surviving Bank, until
thereafter amended in accordance with applicable law.
2.10 BYLAWS. At the Effective Time, the Bylaws of Northern, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Bank until thereafter amended in accordance with applicable law.
2.11 BOARD OF DIRECTORS. Subject to regulatory approval, the persons listed
on Annex 2.11 shall be the directors of the Surviving Bank, each to hold office
in accordance with the Charter and Bylaws of the Surviving Bank, until their
respective successors are duly elected or appointed (as the case may be) and
qualified. The names and addresses of the directors are set forth on Annex 2.11.
2.12 OFFICERS. Subject to regulatory approval, the officers of Cowlitz Bank
immediately prior to the Effective Time shall become officers of the Surviving
Bank, each to hold office in accordance with the Charter and Bylaws of the
Surviving Bank and the terms of their appointment by the Board of Directors. The
names and addresses of the senior officers of Cowlitz Bank are set forth on
Annex 2.12.
2.13 OFFICES. The name and location of each office of Cowlitz Bank and
Northern are set forth on Annex 2.13. The Northern offices will become offices
of the Surviving Bank at the Effective Time.
2.14 STOCK OPTION AGREEMENT. As an inducement to Cowlitz to continue to
pursue the transactions contemplated by this Agreement, Northern will grant to
Cowlitz an option pursuant to the Stock Option Agreement, substantially in the
form of Exhibit 2.14 hereto (the "STOCK OPTION AGREEMENT").
2.15 SUBSEQUENT MERGER. Cowlitz and Cowlitz Bank may at their option elect
to effect a merger of Surviving Bank with and into Cowlitz Bank following the
Effective Time (the
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"SUBSEQUENT MERGER"). Northern agrees to take no steps that would hinder Cowlitz
Bank in effecting a Subsequent Merger.
2.16 VOTING AGREEMENTS. As a condition of the execution of this Agreement,
Cowlitz and Cowlitz Bank have required the delivery by the shareholders listed
on Annex 2.16 of a voting agreement substantially in the form attached hereto as
Exhibit 2.16 obligating such holders of Northern Common Stock to vote their
shares in favor of the Merger.
3. EXCHANGE OF SHARES
3.1 COWLITZ BANK TO MAKE MERGER CONSIDERATION AVAILABLE. At or prior to the
Effective Time, Cowlitz Bank shall deposit, or shall cause to be deposited, with
a bank or trust company of recognized standing, or Cowlitz' transfer agent (the
"EXCHANGE AGENT"), for the benefit of the holders of Common Certificates, for
exchange in accordance with this Section 3, cash in an amount (the "AGGREGATE
MERGER CONSIDERATION") equal to the product of the Merger Consideration and the
number of shares of Northern Common Stock outstanding at the Effective Time to
be paid pursuant to and in the manner set forth in Section 3.2(b) in exchange
for outstanding shares of Northern Common Stock.
3.2 EXCHANGE OF CERTIFICATES.
(a) As soon as practicable after the Effective Time, the Exchange
Agent shall mail to each holder of record of a Common Certificate or
Certificates a form of letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Common Certificates shall
pass, only upon delivery of the Common Certificates to the Exchange Agent) and
instructions for use in effecting the surrender of the Common Certificates in
exchange for the Merger Consideration, into which the shares of Northern Common
Stock represented by such Common Certificate or Certificates shall have been
converted pursuant to this Agreement. Subject to Section 2.5(d), upon proper
surrender of a Common Certificate for exchange and cancellation to the Exchange
Agent, together with such properly completed letter of transmittal, duly
executed, the holder of such Common Certificate shall be entitled to receive in
exchange therefor, a check equal to the product of (i) the number of shares
represented by such Common Certificate and (ii) the difference between the
Merger Consideration and the Per Share Amount of the Escrowed Funds. The "PER
SHARE AMOUNT OF ESCROWED FUNDS" shall equal the amount determined by dividing
(i) $1,000,000 by (ii) the total number of issued and outstanding shares of
Northern Common Stock immediately prior to the Effective Time (excluding all
Dissenting Shares). No interest will be paid or accrued on the Merger
Consideration except as expressly stated in Section 3.2(b) with respect to the
Escrowed Funds.
(b) ESCROW.
(i) In order to ensure that the Surviving Bank and its successors
(including without limitation Cowlitz Bank in the event of a
Subsequent Merger) shall be properly reimbursed for certain losses,
the Exchange Agent shall, promptly upon receipt of the Aggregate
Merger Consideration, deliver an amount (the "ESCROWED FUNDS") equal
to One Million Dollars ($1,000,000), to an escrow agent (the "ESCROW
AGENT") to be held
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in escrow (the "ESCROW") pursuant to an escrow agreement in
substantially the form attached hereto as Exhibit 3.2, with such
changes as may be reasonably requested by the Escrow Agent and subject
to the addition of Schedule 2 to the Escrow Agreement in accordance
with this Section 3.2(b) (the "ESCROW AGREEMENT"). The Escrow Agent
shall be a bank, trust company or other entity mutually agreed upon by
Cowlitz Bank and Northern. In the event that any shares of Northern
Common Stock which were Dissenting Shares immediately prior to the
Effective Time are held by a holder that prior to the Escrow
Expiration Date shall have failed to perfect or shall have effectively
withdrawn or lost its right to appraisal and payment under Sections
711.175--.185 of Title 53 ("ADDITIONAL NONDISSENTING SHARES"), then
Cowlitz Bank shall thereupon cause additional funds to be placed in
the Escrow equal to the product of the Per Share Amount of Escrowed
Funds and the number of such Additional Nondissenting Shares. Such
additional funds shall become part of the Escrowed Funds.
(ii) A committee (the "COMMITTEE") shall be appointed by Northern
and Cowlitz Bank to deliver instructions to the Escrow Agent with
respect to the disbursement of the Escrowed Funds. Northern hereby
appoints ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ to serve on the Committee as
representatives of the holders of Northern Common Stock immediately
prior to the Effective Time (the "NORTHERN MEMBERS") and Cowlitz Bank
hereby appoints ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇ to serve on the
Committee as representatives of Cowlitz Bank and the Surviving Bank
(the "COWLITZ BANK MEMBERS"). Cowlitz Bank shall have the right, from
time to time and in its sole discretion, to appoint a substitute
Cowlitz Bank Member upon written notice to the Escrow Agent and the
Northern Members. If a Northern Member should prior to the Effective
Time become unable or unwilling to serve on the Committee, such
Northern Member shall give Northern and Cowlitz Bank prompt prior
written notice thereof, and Northern shall have the right, in its sole
discretion, to appoint a substitute Northern Member no later than the
earlier of (A) the Effective Time or (B) five (5) business days after
delivery of such notice. If a Northern Member should after the
Effective Time become unable or unwilling to continue to serve on the
Committee after the Effective Time, such Northern Member shall give
Cowlitz Bank prior written notice thereof, and within five (5)
business days after delivery of such notice, the remaining Northern
Member shall have the right, in his or her sole discretion, to appoint
a substitute Northern Member; PROVIDED, that such Substitute Northern
Member (x) must have been a stockholder of Northern immediately prior
to the Effective Time, (y) (1) must have been a director or officer of
Northern at the Effective Time or (2) in the remaining Northern
Member's reasonable judgment, must be a sophisticated financial
investor and (z) is not a director, officer or employee of Cowlitz or
Cowlitz Bank. The parties agree that no Northern Member or Cowlitz
Bank Member shall have any liability to any party hereto or any holder
of Northern Common Stock with respect to acts or omissions in his or
her capacity as a member of the Committee, unless it is established in
a final judicial determination by clear and convincing evidence that
any decision or action was undertaken with deliberate intent to injure
the holders of Northern Common Stock or with reckless disregard for
the best interest of such holders, and in any event, the liability
shall be limited to actual, proximate, quantifiable damages.
11
(iii) The purpose of the Escrow shall be to ensure that the
Surviving Bank and its successors are reimbursed for losses relating
to the Identified Loans as well as the Level 6 Loans as of the
Effective Time (collectively "COVERED LOANS"). Schedule 2.a to the
Escrow Agreement shall be completed prior to the Effective Time by
listing thereon each Identified Loan listed on Schedule 2.6(d)
(subject to revision pursuant to Section 2.6(f)) and the Threshold
Amount for each Identified Loan. Schedule 2.b to the Escrow Agreement
shall be completed prior to the Effective Time by listing thereon each
Level 6 Loan listed on Schedule 2.6(e) (subject to revision pursuant
to Section 2.6(e)). Except as provided in the immediately succeeding
sentence, the "THRESHOLD AMOUNT" shall mean for each Identified Loan
the lesser of (A) the difference between (i) the reserve for such
Identified Loan on the books of Northern immediately prior to the
Effective Time (excluding any portion of the general reserve for all
outstanding loans) and (ii) the Loan Adjustment Factor and (B) (i) 5%
of the outstanding principal amount if the Identified Loan is
classified as Special Mention pursuant to the procedure set forth in
Section 2.6(d), less the Loan Adjustment Factor, (ii) 15% of the
principal amount if the Identified Loan is classified as Substandard,
less the Loan Adjustment Factor, (iii) 50% of the principal amount if
the Identified Loan is classified as Doubtful, less the Loan
Adjustment Factor, and (iv) 100% of the principal amount if the
Identified Loan is classified as Loss, less the Loan Adjustment
Factor. Notwithstanding the preceding sentence, if the Base Value
exceeds $2,348,199 and the amount determined pursuant to clause (A) of
the preceding sentence for an Identified Loan exceeds the amount
determined pursuant to clause (B) for such Identified Loan, then the
Threshold Amount for such Identified Loan shall equal the amount
determined pursuant to clause (A) above. "LOAN ADJUSTMENT FACTOR" will
be $0 if Northern has on its books immediately prior to the Effective
Time a general reserve equal to at least 1 1/2% of the aggregate
principal amounts of all outstanding loans (including without
limitation all Identified Loans). If such general reserve is less than
1 1/2%, then the Loan Adjustment Factor will equal the different
between (i) 1 1/2% and (ii) the percentage of the remaining general
reserve that would be applicable to the Identified Loans after moving
sufficient general reserves to the non-Identified Loans so that all
non-Identified Loans would have a general reserve of 1 1/2%.
(iv) Reimbursements shall be made only for such losses identified
during the period from the Effective Date to the date (the "ESCROW
EXPIRATION DATE") which is 12 months after the Effective Date. The
Surviving Bank or its successor shall be entitled to be reimbursed for
any loss on an Identified Loan to the extent that such loss exceeds
the Threshold Amount for such Identified Loan and for any loss on
other Covered Loans ("REIMBURSABLE LOSSES"); PROVIDED, HOWEVER, that
the aggregate of all of such reimbursements shall not exceed the
Escrowed Funds. The amount of Reimbursable Losses shall be calculated
in the manner set forth in the Escrow Agreement. Interest earned on
the Escrowed Funds while held in the Escrow shall remain in the Escrow
and shall not be available to reimburse the Surviving Bank or its
successor for Reimbursable Losses. Fees and any other amounts owed to
the Escrow Agent shall be paid, first, out of the interest earned on
the Escrowed Funds and, second, out of the Escrowed Funds.
12
(v) The Escrow shall terminate upon the later to occur of (x) the
Escrow Expiration Date and (y) the proper reimbursement to Cowlitz
Bank of the Reimbursable Losses. Upon termination of the Escrow, the
Escrow Agent shall deliver all amounts then in Escrow (after deduction
for expenses and costs) to the Exchange Agent (the "CLOSING ESCROW
AMOUNT"). Subject to Section 2.5(d), the Exchange Agent shall promptly
pay, to each holder of record of a Common Certificate who has properly
surrendered such Common Certificate as provided in Section 3.2(a), an
amount for each share of Northern Common Stock represented by such
Common Certificate equal to (A) the Closing Escrow Amount divided by
(B) the number of shares of Northern Common Stock outstanding
immediately prior to the Effective Time.
(vi) The Cowlitz Members shall not have any duty to represent the
interests of persons who are shareholders of Northern and shall have
no liability whatsoever to such shareholders immediately prior to the
Effective Time. The Northern Members will represent the interests of
such shareholders of Northern, but no Northern Member shall have any
liability to any holder of Northern Common Stock with respect to his
or her capacity as a member of the Committee, unless it is established
in a final judicial determination by clear and convincing evidence
that any decision or action was undertaken with deliberate intent to
injure the holders of Northern Common Stock or with reckless disregard
for the best interests of such holders, and in any event, the
liability shall be limited to actual, proximate, quantifiable damages.
(c) If any Merger Consideration is to be paid to a person other than
the registered holder of the Common Certificate surrendered in exchange
therefor, it shall be a condition of the payment thereof that the Common
Certificate 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 taxes required by reason of the payment of cash to
any person other than the registered holder of the Common Certificate
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) At or after the Effective Time, there shall be no transfers on the
stock transfer books of Northern of the shares of Northern Common Stock which
were issued and outstanding immediately prior to the Effective Time. If, after
the Effective Time, Common Certificates representing such shares are presented
for transfer to the Exchange Agent, they shall be canceled and exchanged Merger
Consideration as provided in this Section 3.
(e) Any portion of the Aggregate Merger Consideration (other than the
Escrowed Funds) that remains unclaimed by the stockholders of Northern for
twelve months after the Effective Time shall be paid, at the request of Cowlitz
Bank, to Cowlitz Bank. Any stockholders of Northern who have not theretofore
complied with this Section 3 shall thereafter look only to Cowlitz Bank for
payment in respect of each share of Northern Common Stock held by such
stockholder at the Effective Time as determined pursuant to this Agreement, in
each case, without any interest thereon. After the Exchange Agent has received
the Closing Escrow
13
Amount and made the payments to former holders of Northern Common Stock as
required by Section 3(b), any unpaid amounts shall promptly be delivered by the
Exchange Agent to Cowlitz. Any holders of Northern Common Stock who have not
theretofore complied with this Section 3 shall thereafter look only to Cowlitz
Bank for payment of the portion of the Closing Escrow Amount to which they are
entitled pursuant to this Agreement, without any additional interest thereon.
Notwithstanding anything to the contrary contained herein, none of Cowlitz Bank
, Northern, the Exchange Agent or any other person shall be liable to any former
holder of shares of Northern Common Stock for any amount properly delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
(f) In the event any Common Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Common Certificate to be lost, stolen or destroyed and, if
required by Cowlitz Bank, the posting by such person of a bond in such amount as
Cowlitz Bank may determine is reasonably necessary as indemnity against any
claim that may be made against it with respect to such Common Stock Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Common Certificate deliverable in respect thereof pursuant to this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF NORTHERN
Northern hereby represents and warrants to Cowlitz and Cowlitz Bank as
follows:
4.1 CORPORATE ORGANIZATION. Northern is a banking corporation duly
organized and validly existing under the laws of the State of Oregon. Northern
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, and 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 have nor
reasonably be expected to have a Material Adverse Effect (as defined below) on
Northern. As used in this Agreement, the term "MATERIAL ADVERSE EFFECT" means,
with respect to Northern, a material adverse effect on the business, results of
operations, financial condition or prospects of Northern or a material adverse
effect on Northern's ability to consummate the transactions contemplated hereby
on a timely basis; PROVIDED, HOWEVER, that a Material Adverse Effect on Northern
shall not be deemed to have occurred as a result of (i) any changes in laws,
regulations or GAAP or (ii) any changes in general economic conditions affecting
commercial banking businesses generally. The deposits of Northern are insured by
the Federal Deposit Insurance Corporation (the "FDIC") through the Bank
Insurance Fund (the "BIF") to the fullest extent permitted by law. The copies of
the Charter and Bylaws of Northern which have previously been made available to
Cowlitz are true, complete and correct copies of such documents as in effect as
of the date of this Agreement. Northern has no Subsidiaries.
4.2 CAPITALIZATION.
(a) The authorized capital stock of Northern consists of 10,000,000
shares of Northern Common Stock and no shares of preferred stock. As of the date
hereof, there were
14
1,225,597 shares of Northern Common Stock outstanding and no shares of Northern
Common Stock held in Northern's treasury. As of the date hereof, no shares of
Northern Common Stock were reserved for issuance, except for 868,032 shares of
Northern Common Stock reserved for issuance upon the exercise of stock options
pursuant to the Northern Stock Option Plan, 637,138 shares of Northern Common
Stock reserved for issuance upon exercise of the stock options set forth in
Section 4.2(a) of the disclosure schedule of Northern delivered to Cowlitz
concurrently herewith (the "NORTHERN DISCLOSURE SCHEDULE"), and 243,893 shares
of Northern Common Stock reserved for issuance upon exercise of the Option (as
defined in the Stock Option Agreement). All of the issued and outstanding shares
of Northern 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. As of the date of this Agreement,
except (i) as set forth in Section 4.2(a) of the Northern Disclosure Schedule,
(ii) the Option and (iii) as set forth elsewhere in this Section 4.2(a),
Northern does not have and is not bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling for
the purchase or issuance of any shares of Northern Common Stock or Northern
Preferred Stock or any other equity securities of Northern or any securities
representing the right to purchase or otherwise receive any shares of Northern
Common Stock or Northern Preferred Stock. Except as set forth in Section 4.2(a)
of the Northern Disclosure Schedule, since August 31, 1999, Northern has not
issued any shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock, other than the exercise of
employee stock options granted prior to such date and as disclosed in Section
4.2(a) of the Northern Disclosure Schedule. Northern has no stockholder rights
plan, anti-takeover plan, "poison pill" or other similar plan.
(b) Except as disclosed in Section 4.2(b) of the Northern Disclosure
Schedule, Northern does not beneficially own or control, directly or indirectly,
any shares of stock or other equity interest in any depository institution (as
defined in 12 U.S.C. Section 1813(c)), corporation, firm, partnership, joint
venture or other entity.
4.3 AUTHORITY; NO VIOLATION.
(a) Northern has full corporate power and authority to execute and
deliver this Agreement, the Plan of Merger and the Stock Option Agreement and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement, the Plan of Merger and the Stock Option Agreement
and the consummation of the transactions contemplated hereby and thereby have
been duly and validly approved by the Board of Directors of Northern. The Board
of Directors of Northern has directed that this Agreement and the Merger be
submitted to Northern's stockholders for approval at a meeting of such
stockholders and, except for the approval of this Agreement, the Plan of Merger
and the Merger by the affirmative vote of the holders of two-thirds of the
voting power represented by the outstanding shares of Northern Common Stock, no
other corporate proceedings on the part of Northern are necessary to approve
this Agreement or the Stock Option Agreement, the Plan of Merger or to
consummate the transactions contemplated hereby and thereby. This Agreement and
the Stock Option Agreement have been duly and validly executed and delivered by
Northern and (assuming due authorization, execution and delivery by Cowlitz and
Cowlitz Bank) each
15
constitutes a valid and binding obligation of Northern, enforceable against
Northern in accordance with its terms, except as enforcement may be limited by
general principles of equity whether applied in a court of law or a court of
equity and by bankruptcy, insolvency, fraudulent transfer, receivership, or
conservatorship and similar laws affecting creditors' rights and remedies
generally.
(b) Except as set forth in Section 4.3(b) of the Northern Disclosure
Schedule, neither the execution and delivery of this Agreement, the Plan of
Merger or the Stock Option Agreement by Northern nor the consummation by
Northern of the transactions contemplated hereby or thereby, nor compliance by
Northern with any of the terms or provisions hereof or thereof will (i) violate
any provision of the Charter or Bylaws of Northern or (ii) assuming that the
consents and approvals referred to in Section 4.4 are duly obtained, (x) violate
any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Northern or any of its 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 liens, charges, pledges,
encumbrances, mortgages, adverse rights or claims, or security interests
whatsoever ("LIENS") upon any of the properties or assets of Northern 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 Northern is a party, or by which Northern or any of its properties or
assets may be bound or affected, except (in the case of clause (y) above) for
such violations, conflicts, breaches or defaults which, either individually or
in the aggregate, will not have and would not reasonably be expected to have a
Material Adverse Effect on Northern.
4.4 CONSENTS AND APPROVALS. Except for (i) approvals and consents by the
FDIC, the Board of Governors of the Federal Reserve System (the "FEDERAL
RESERVE"), the Washington Director and the Oregon Director, (ii) the filing with
the FDIC of a proxy statement in definitive form relating to the meetings of
Northern's stockholders to be held to vote on approval of this Agreement, the
Plan of Merger and the Merger (the "PROXY STATEMENT") (iii) the filing of the
Articles of Merger the Oregon Director, (iv) the approval of this Agreement, the
Plan of Merger and the Merger by the requisite votes of the stockholders of
Northern, and the approval of this Agreement, the Plan of Merger and the Merger
by the sole shareholder of Interim Bank, (v) the consents and approvals set
forth in Section 4.4 of the Northern Disclosure Schedule, and (vi) the consents
and approvals of third parties which are not Governmental Entities (as defined
below), the failure of which to obtain will not have and would not be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect,
no consents or approvals of, or filings or registrations with, any court,
administrative agency or commission or other governmental authority or
instrumentality or self-regulatory organization (each a "GOVERNMENTAL ENTITY")
or with any third party are necessary in connection with (A) the execution and
delivery by Northern of this Agreement and (B) the consummation by Northern of
the Merger and the other transactions contemplated hereby.
16
4.5 REPORTS. Northern has timely filed all material reports, registrations
and statements, together with any amendments required to be made with respect
thereto, that they were required to file since January 1, 1996 with any
Governmental Entity and have paid all fees and assessments due and payable in
connection therewith. Except for normal examinations conducted by a Governmental
Entity in the regular course of the business of Northern or as set forth in
Section 4.5 of the Northern Disclosure Schedule, no Governmental Entity has
initiated any proceeding or, to the best knowledge of Northern, threatened an
investigation into the business or operations of Northern since January 1, 1996.
Except as set forth in Section 4.5 of the Northern Disclosure Schedule, there is
no material unresolved violation, criticism or exception by any Governmental
Entity with respect to any report or statement relating to any examinations of
Northern.
4.6 FINANCIAL STATEMENTS. Northern has previously made available to Cowlitz
copies of (a) the balance sheets of Northern, as of December 31, for the fiscal
years 1997 and 1998, and the related statements of operations, stockholders'
equity and cash flows for the fiscal years 1996 through 1998, inclusive, as
reported in Northern's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1998 filed with the FDIC under the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT"), in each case accompanied by the audit report of
▇▇▇▇ ▇▇▇▇▇ LLP, independent auditors with respect to Northern and (b) the
unaudited balance sheets of Northern as of September 30, 1998 and September 30,
1999 and the related unaudited statements of operations, stockholders, equity
and cash flows for the three-month periods then ended, as reported in Northern's
Quarterly Report on Form 10-QSB for the period ended September 30, 1999 filed
with the FDIC under the Exchange Act. Each of the financial statements referred
to in this Section 4.6 (including the related notes, where applicable) fairly
present, and the financial statements referred to in Section 7.9 hereof
(including the related notes, where applicable) will fairly present (subject, in
the case of the unaudited statements, to normal recurring adjustments, none of
which are expected to be material in nature or amount), the results of the
operations and changes in stockholders' equity and financial position of
Northern for the respective fiscal periods or as of the respective dates therein
set forth. Each of such financial statements (including the related notes, where
applicable) complies, and the financial statements referred to in Section 7.9
hereof (including the related notes, where applicable) will comply in all
material respects with applicable accounting requirements and with the published
rules and regulations of the FDIC with respect thereto and each of such
financial statements (including the related notes, where applicable) has been,
and the financial statements referred to in Section 7.9 (including the related
notes, where applicable) will be, 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 or, in the case of unaudited statements, as
permitted by Form 10-QSB. The books and records of Northern 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.
4.7 BROKER'S FEES. Except as set forth in Section 4.7 of the Northern
Disclosure Schedule, neither Northern nor any of its officers or directors has
employed any broker or finder or incurred any liability for any broker's fees,
commissions or finder's fees in connection with any of the transactions
contemplated by this Agreement. Copies of all agreements with each
17
broker or finder listed in Section 4.7 of the Northern Disclosure Schedule have
previously been furnished to Cowlitz.
4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as publicly disclosed in the Northern Reports (as defined
in Section 4.12) filed prior to the date hereof, or as set forth in Section
4.8(a) of the Northern Disclosure Schedule, since December 31, 1998, no event
has occurred which has had or would reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on Northern.
(b) Except as publicly disclosed in the Northern Reports filed prior
to the date hereof, or as set forth in Section 4.8(b) of the Northern Disclosure
Schedule, since December 31, 1998, Northern has carried on its business in all
material respects in the ordinary course of business, and Northern has not (i)
except for normal increases in the ordinary course of business consistent with
past practice and except as required by applicable law, increased the wages,
salaries, compensation, pension or other fringe benefits or perquisites payable
to any officer or director, other than persons newly hired for or promoted to
such position, from the amount thereof in effect as of December 31, 1998, or
granted any severance or termination pay, entered into any contract to make or
grant any severance or termination pay, or paid any bonus, in each case to any
such officer or director, other than pursuant to preexisting agreements,
arrangements or bonus plans, or (ii) suffered any strike, work stoppage,
slow-down or other labor disturbance.
4.9 LEGAL PROCEEDINGS.
(a) Except as set forth in Section 4.9(a) of the Northern Disclosure
Schedule, Northern is not a party to any, and there are no pending or, to the
best of Northern's knowledge, threatened legal, administrative, arbitral or
other proceedings, claims, actions or governmental or regulatory investigations
of any nature against Northern or challenging the validity or propriety of the
transactions contemplated by this Agreement as to which there is a significant
possibility of an adverse determination and which, if adversely determined,
would, individually or in the aggregate, have or reasonably be expected to have
a Material Adverse Effect on Northern.
(b) Except as set forth in Section 4.9(b) of the Northern Disclosure
Schedule, there is no injunction, order, judgment, decree or regulatory
restriction specifically imposed upon Northern or its assets which has had, or
would reasonably be expected to have, a Material Adverse Effect on Northern or
the Surviving Bank.
4.10 TAXES.
(a) Except as set forth in Section 4.10(a) of the Northern Disclosure
Schedule: (i) Northern has (A) duly and timely filed (including pursuant to
applicable extensions granted without penalty) all Tax Returns (as hereinafter
defined) required to be filed at or prior to the Effective Time, and such Tax
Returns are true, correct and complete, and (B) paid in full on a
18
timely basis, or established an adequate reserve (excluding reserves for
deferred taxes) in the financial statements of Northern (in accordance with
GAAP) for all Taxes (as hereinafter defined) with respect to items or periods
covered by such Tax Returns (whether or not shown or reportable on such Tax
Returns or subsequently assessed); (ii) no deficiencies for any Taxes (as
hereinafter defined) have been proposed, asserted or assessed against or with
respect to Northern and no audit by any taxing authority is in process, pending
or threatened ; (iii) there are no liens for Taxes upon the assets of Northern
except for statutory liens for current Taxes not yet due; (iv) Northern is not
and has never been a party to any tax sharing agreement and has not assumed the
liability of any other person under contract; (v) Northern has not waived any
statute of limitations with respect to any Taxes or Tax Returns or agreed to any
extension of time with respect to the assessment or payment of Taxes or
deficiencies; (vi) Northern has withheld and paid over all Taxes required to
have been withheld and paid over and complied with all information reporting and
backup withholding requirements, including maintenance of required records with
respect thereto, in connection with amounts paid or owing to any employee,
creditor, independent contractor or other third party; and (vii) Northern has
never been a member of an "affiliated group" within the meaning of Section 1504
of the Internal Revenue Code of 1986, as amended (the "Code") filing a
consolidated federal income Tax Return (other than a group the common parent of
which was Northern) or has any liability for the Taxes of any other person
(other than Northern) under Treasury Regulations Section 1.1502-6 (or any
similar provision of state, local or foreign law) as a transferee or successor,
by contract or otherwise.
(b) For purposes of this Agreement, "TAXES" shall mean all taxes,
charges, fees, levies, penalties or other assessments imposed by any federal,
state, local or foreign taxing authority, including, but not limited to income,
excise, property, sales, transfer, franchise, payroll, withholding, social
security or other similar taxes, including any interest or penalties, additions
to tax or additional amounts attributable thereto.
(c) For purposes of this Agreement, "TAX RETURN" shall mean any
return, report, estimate, declaration of estimated tax, information statement or
return or other document (including any related or supporting information)
relating to or required to be filed in connection with any Taxes, including
without limitation all information returns or reports with respect to backup
withholding and other payments to third parties.
(d) Northern has not filed a consent to the application of Section
341(f) of the Code or any corresponding provision of state, local or foreign
income tax law.
(e) Northern has made available to Cowlitz true and complete copies of
all income tax audit reports and closing or other agreements related to Taxes
and all federal and state income or franchise tax returns Northern has filed
since its inception.
(f) Northern does not do business in or derive income from any state,
local, territorial or foreign taxing jurisdiction other than those for which all
Tax Returns have been furnished.
(g) Northern is not and has never been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code and
Cowlitz Bank is
19
not required to withhold tax on the purchase of Northern's stock by reason of
Section 1445 of the Code.
(h) Northern has not entered into any agreement that would require it
to make any payment that is not deductible pursuant to Section 280G, 404 or 162
of the Code.
(i) Northern has not executed a power of attorney with respect to
Taxes.
(j) Northern has not agreed, and is not required to make, any
adjustment under Section 481 of the Code by reason of a change in accounting
method.
(k) Northern has non net operating loss or other tax attribute
presently subject to limitation under Code Sections 382, 383 or 384 or the
federal consolidated return regulations.
4.11 EMPLOYEES; EMPLOYEE BENEFIT PLANS.
(a) Section 4.11(a) of the Northern Disclosure Schedule sets forth a
true and complete list of each material employee benefit plan, arrangement or
agreement and any amendments or modifications thereof (including, without
limitation, all stock purchase, stock option, severance, employment,
change-in-control, health/welfare and Code Section 125 plans, fringe benefit,
bonus, incentive, deferred compensation and other agreements, programs, policies
and arrangements, whether or not subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) that is maintained as of the date of
this Agreement (the "PLANS") by Northern or by any trade or business, whether or
not incorporated (an "ERISA AFFILIATE"), all of which together with Northern
would be deemed a "single employer' within the meaning of Section 4001 of ERISA.
(b) Northern has previously made available to Cowlitz true and
complete copies of each of the Plans and all related documents, including but
not limited to (i) the actuarial reports for each Plan (if applicable) for each
of the last two years, and (ii) the most recent determination letter from the
Internal Revenue Service (if applicable) for each Plan.
(c) Except as set forth in Section 4.11(c) of the Northern Disclosure
Schedule, (i) each of the Plans has been operated and administered in all
material respects in accordance with applicable laws, including but not limited
to ERISA and the Code, (ii) each of the Plans intended to be "qualified" within
the meaning of Section 401(a) of the Code has been determined to be so qualified
by the Internal Revenue Service or will be submitted for such determination
within the applicable remedial amendment period, (iii) with respect to each Plan
which is subject to Title IV of ERISA, the present value of accrued benefits
under such Plan, based upon the actuarial assumptions used for funding purposes
in the most recent actuarial report prepared by such Plan's actuary with respect
to such Plan, did not, as of its latest valuation date, exceed the then current
value of the assets of such Plan allocable to such accrued benefits, (iv) no
Plan provides benefits, including without limitation death or medical benefits
(whether or not insured), with respect to current or former employees of
Northern or any ERISA Affiliate beyond their retirement or other termination of
service, other than (w) coverage mandated by
20
applicable law, (x) death benefits or retirement benefits under any "employee
pension plan," as that term is defined in Section 3(2) of ERISA, (y) deferred
compensation benefits accrued as liabilities on the books of Northern or any
ERISA Affiliates or (z) benefits the full cost of which is borne by the current
or former employee (or his beneficiary), (v) to the best knowledge of Northern
no liability under Title IV of ERISA has been incurred by Northern or any ERISA
Affiliate that has not been satisfied in full (other than payment of premiums
not yet due to the Pension Benefit Guaranty Corporation (the "PBGC")), and no
condition exists that presents a material risk to Northern or any ERISA
Affiliate of incurring a material liability thereunder, (vi) no Plan is a
"multi-employer pension plan," as such term is defined in Section 3(37) of
ERISA, (vii) to the best knowledge of Northern all contributions or other
amounts payable by Northern as of the Effective Time with respect to each Plan
in respect of current or prior plan years have been paid or accrued in
accordance with GAAP and Section 412 of the Code, (viii) to the best knowledge
of Northern neither Northern nor any ERISA Affiliate has engaged in a
transaction in connection with which Northern or any ERISA Affiliate could be
subject to either a material civil penalty assessed pursuant to Section 409 or
502(i) of ERISA or a material tax imposed pursuant to Section 4975 or 4976 of
the Code, and (ix) to the best knowledge of Northern there are no pending,
threatened or anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the Plans or any trusts related thereto which would,
individually or in the aggregate, have or be reasonably expected to have a
Material Adverse Effect on Northern.
(d) Except as set forth in Section 4.11(d) of the Northern Disclosure
Schedule, no Plan exists which provides for or could result in the payment to
any Northern employee of any money or other property or rights or accelerate the
vesting or payment of such amounts or rights to any Northern employee as a
result of the transactions contemplated by this Agreement, including the Merger,
whether or not such payment or acceleration would constitute a parachute payment
within the meaning of Code Section 280G. Except as set forth in Section 4.11(d)
of the Northern Disclosure Schedule, since December 31, 1998, Northern has not
taken any action that would result in the payment of any amounts, or the
accelerated vesting of any rights or benefits, under any Plan set forth in
Section 4.11(d) of the Northern Disclosure Schedule.
(e) To the best knowledge of Northern, except as set forth in Section
4.11(e) of the Northern Disclosure Schedule, Northern is not a party to and is
not bound by any contract, arrangement or understanding (whether written or
oral) (i) with any consultants receiving in excess of $50,000 annually or (ii)
with respect to the term of employment or compensation of any employees. To the
best knowledge of Northern, except as provided under the Plans set forth in
Sections 4.11(d) and (e) of the Northern Disclosure Schedule and other
agreements or arrangements set forth in Sections 4.11(d) and (e) of the Northern
Disclosure Schedule, consummation of the transactions contemplated by this
Agreement will not (either alone or upon the occurrence of any additional acts
or events) result in any payment (whether of severance pay or otherwise)
becoming due from Northern to any officer or employee thereof. Northern has
previously delivered or made available to Cowlitz true and complete copies of
all consulting agreements calling for payments in excess of $50,000 annually and
employment and
21
deferred compensation agreements (or forms thereof) that are in writing to which
Northern is a party.
(f) Except as set forth in Section 4.11(f) of the Northern Disclosure
Schedule, no current employee of Northern received aggregate remuneration
(bonus, salary and commission) in excess of $100,000 for 1998 or 1999 or would
reasonably be expected to receive aggregate remuneration (excluding severance or
other payments which, pursuant to an agreement or arrangement set forth in
Section 4.11(e) of the Northern Disclosure Schedule, are made as a result of
consummation of the transactions contemplated by this Agreement, either alone or
upon the occurrence of any additional acts or events) in excess of $100,000 in
2000.
4.12 FDIC REPORTS. Northern has previously made available to Cowlitz an
accurate and complete copy of each final registration statement, prospectus,
report, schedule and definitive proxy statement filed since January 1, 1996 and
prior to the date hereof by Northern or any of its Subsidiaries with the FDIC
pursuant to the Securities Act of 1933, as amended (the "SECURITIES ACT"), or
the Exchange Act (the "NORTHERN REPORTS"), and no such registration statement,
offer circular, prospectus, report, schedule or proxy statement contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made, not misleading.
Except as set forth in Section 4.12 of the Northern Disclosure Schedule,
Northern has timely filed all Northern Reports and other documents required to
be filed by them under the Securities Act and the Exchange Act, and, as of their
respective dates, all Northern Reports complied in all material respects with
the published rules and regulations of the FDIC with respect thereto.
4.13 COMPLIANCE WITH APPLICABLE LAW. Except as disclosed in Section 4.13 of
the Northern Disclosure Schedule, Northern holds, and has at all times held, all
licenses, franchises, permits and authorizations necessary for the lawful
conduct of its business under and pursuant to all, and has complied with and is
not in violation in any material respect under any, applicable law, statute,
order, rule, regulation, policy and/or guideline of any Governmental Entity
relating to Northern, except where the failure to hold such license, franchise,
permit or authorization or such noncompliance or violation would not,
individually or in the aggregate, have or reasonably be expected to have a
Material Adverse Effect on Northern, and Northern does not know of, and has not
received notice of, any violations of any of the above which, individually or in
the aggregate, would have or would reasonably be expected to have a Material
Adverse Effect on Northern.
4.14 CERTAIN CONTRACTS.
(a) Except as publicly disclosed in the Northern Reports filed prior
to the date hereof or as set forth in Section 4.14(a) of the Northern Disclosure
Schedule, Northern is not a party to or bound by any contract, arrangement,
commitment or understanding (whether written or oral) (i) which is a material
contract (as defined in Item 601(b)(10) of Regulation S-K of the SEC) to be
performed after the date of the Prior Agreement, (ii) which limits the freedom
of Northern to compete in any line of business, in any geographic area or with
any person, or
22
(iii) with or to a labor union or guild (including any collective bargaining
agreement). Each contract, arrangement, commitment or understanding of the type
described in this Section 4.14(a), whether or not publicly disclosed in the
Northern Reports filed prior to the date hereof or set forth in Section 4.14(a)
of the Northern Disclosure Schedule, is referred to herein as a "NORTHERN
CONTRACT," and Northern does not know of, and has not received notice of, any
violation of the above by any of the other parties thereto which, individually
or in the aggregate, would have or would reasonably be expected to have a
Material Adverse Effect on Northern. Northern has made available all contracts
which involved payments by Northern in fiscal year 1998 or 1999 of more than
$100,000 or which could reasonably be expected to involve payments during fiscal
year 2000 of more than $100,000.
(b) Except as set forth in Section 4.14(b) of the Northern Disclosure
Schedule, each Northern Contract is valid and binding and in full force and
effect, (ii) Northern has in all material respects performed all obligations
required to be performed by it to date under each Northern Contract, and (iii)
no event or condition exists which constitutes or, after notice or lapse of time
or both, would constitute a material default on the part of Northern under any
such Northern Contract, except, in each case, where such invalidity, failure to
be binding, failure to so perform or default, individually or in the aggregate,
would not have or reasonably be expected to have a Material Adverse Effect on
Northern.
4.15 AGREEMENTS WITH REGULATORY AGENCIES. Except as set forth in Section
4.15 of the Northern Disclosure Schedule, Northern is not subject to any
cease-and-desist or other order issued by, nor is it 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, nor is it subject to, any
order or directive by, or has adopted any board resolutions at the request of
(each, whether or not set forth in Section 4.15 of the Northern Disclosure
Schedule, a "REGULATORY AGREEMENT"), any Governmental Entity that restricts the
conduct of its business or that in any manner relates to its capital adequacy,
its credit policies, its management or its business, nor has Northern been
advised by any Governmental Entity that it is considering issuing or requesting
any Regulatory Agreement.
4.16 UNDISCLOSED LIABILITIES. Except (i) for those liabilities that are
fully reflected or reserved against on the balance sheet of Northern included in
the Northern Form 10-KSB for the year ended December 31, 1999, (ii) for
liabilities incurred in the ordinary course of business consistent with past
practice since December 31, 1999, or (iii) for those liabilities set forth in
Section 4.16 of the Northern Disclosure Schedule, Northern has not incurred any
liability of any nature whatsoever (whether absolute, accrued or contingent or
otherwise and whether due or to become due) that, either alone or when combined
with all the liabilities not described in clause (i), (ii) or (iii), has had, or
would be reasonably expected to have, a Material Adverse Effect on Northern.
4.17 ANTI-TAKEOVER PROVISIONS. The Board of Directors of Northern has taken
all necessary action so that any applicable provisions of the takeover laws of
any state do not and will not apply to this Agreement, the Plan of Merger, the
Merger or the transactions contemplated hereby, the Stock Option Agreement or
the exercise of the Option, including
23
without limitation, the adoption by the Board of Directors of Northern of
resolutions specifically approving this Agreement, the Plan of Merger, the
Merger and the transactions contemplated hereby, the Stock Option Agreement and
the exercise of the Option.
4.18 NORTHERN INFORMATION. The information relating to Northern to be
provided by Northern for inclusion in the Proxy Statement, or in any other
document filed with any other Governmental Entity 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 Proxy Statement (except for such
portions thereof as relate only to Cowlitz or any of its Subsidiaries) will
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations thereunder.
4.19 TITLE TO PROPERTY.
(a) REAL PROPERTY. Section 4.19(a) of the Northern Disclosure Schedule
contains a description of all interests in real property (other than real
property security interests received in the ordinary course of business or real
property acquired through foreclosure or deed in lieu thereof or other
realization proceedings ("REO")), whether owned, leased or otherwise claimed,
including a list of all leases of real property, in which Northern thereof has
or claims in interest as of the date of the Prior Agreement or as of the date of
this Agreement and any guarantees of any such leases by any of such parties.
True and complete copies of such leases have previously been delivered or made
available to Cowlitz, together with all amendments, modifications, agreements or
other writings related thereto which are in the possession of Northern. Except
as disclosed on Section 4.19(a) of the Northern Disclosure Schedule, to the best
knowledge of Northern, each such lease is valid and binding as between Northern
and the other party or parties thereto, and the occupant is a tenant or
possessor in good standing thereunder, free of any default or breach whatsoever
(except as otherwise disclosed on Section 4.19(a) of the Northern Disclosure
Schedule) and quietly enjoys the premises provided for therein. Except as
disclosed on Section 4.19(a) of the Northern Disclosure Schedule, Northern has
owner's policies of title insurance insuring it to be the owner of all real
property owned by it on the date of this Agreement, free and clear of all Liens,
except Liens for current taxes not yet due and payable and other standard
exceptions commonly found in title policies in the jurisdiction where such real
property is located, and such encumbrances and imperfections of title, if any,
as do not materially detract from the value of the properties and do not
materially interfere with the present or proposed use of such properties or
otherwise materially impair such operations. All real property and fixtures
material to the business, operations of financial condition of Northern are in
substantially good condition and repair.
(b) PERSONAL PROPERTY. Northern has good, valid and marketable title
to all tangible personal property owned by it on the date hereof, free and clear
of all Liens, except as publicly disclosed in the Northern Reports filed prior
to the date hereof or as disclosed on Section 4.19(b) of the Northern Disclosure
Schedule. With respect to personal property used in the business of Northern
which is leased rather than owned, Northern is not in default under the terms of
any such lease the loss of which would have a Material Adverse Effect on
Northern.
24
4.20 INSURANCE. Section 4.20 of the Northern Disclosure Schedule contains a
true and complete list and a brief description (including name of insurer,
agent, coverage, premium and expiration date) of all insurance policies in force
on the date hereof with respect to the business and assets of the Northern
(other than insurance policies under which Northern thereof is named as a loss
payee, insured or additional insured as a result of its position as a secured
lender on specific Loans and mortgage insurance policies on specific Loans).
Northern is in compliance with all of the material provisions of their insurance
policies and are not in default under any of the material terms thereof. Each
such policy is outstanding and in full force and effect and, except as set forth
on Section 4.20 of the Northern Disclosure Schedule, Northern is the sole
beneficiary of such policies. All premiums and other payments due under any such
policy have been paid.
4.21 ENVIRONMENTAL LIABILITY. Except as set forth in Section 4.21 of the
Northern Disclosure Schedule, there are no legal, administrative, arbitral or
other proceedings, claims, actions, causes of action, private environmental
investigations or remediation activities or governmental investigations of any
nature seeking to impose, or that reasonably could be expected to result in the
imposition of, on Northern any liability or obligation arising under common law
standards relating to environmental protection, human health or safety, or
arising under any local, state or federal environmental statute, regulation or
ordinance, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (collectively, the
"ENVIRONMENTAL LAWS"), pending or, to the knowledge of Northern, threatened
against Northern, which liability or obligation would have or would reasonably
be expected to have a Material Adverse Effect on Northern. To the knowledge of
Northern, there is no reasonable basis for any such proceeding, claim, action or
governmental investigation that would impose any liability or obligation that
would have or would reasonably be expected to have a Material Adverse Effect on
Northern. To the knowledge of Northern, during or prior to the period of (i) its
ownership or operation of any of their respective current properties, (ii) its
participation in the management of any property, or (iii) its holding of a
security interest or other interest in any property, there were no releases or
threatened releases of hazardous, toxic, radioactive or dangerous materials or
other materials regulated under Environmental Laws in, on, under or affecting
any such property which would reasonably be expected to have a Material Adverse
Effect on Northern. Northern is not subject to any agreement, order, judgment,
decree, letter or memorandum by or with any court, governmental authority,
regulatory agency or third party imposing any material liability or obligation
pursuant to or under any Environmental Law that would have or would reasonably
be expected to have a Material Adverse Effect on Northern.
4.22 RESERVED.
4.23 PATENTS, TRADEMARKS, ETC. Northern owns or possesses all legal rights
to use all proprietary rights, including without limitation all trademarks,
trade names, service marks and copyrights, that are material to the conduct of
its existing business. Except for the agreements listed on Section 4.23 of the
Northern Disclosure Schedule, Northern is not bound by or a party to any
options, licenses or agreements of any kind with respect to any trademarks,
service marks or trade names which it claims to own. Northern has not received
any communications alleging
25
that it has violated or would violate any of the patents, trademarks, service
marks, trade names, copyrights or trade secrets or other proprietary rights of
any other person or entity.
4.24 LOAN MATTERS.
(a) All evidences of indebtedness ("LOANS") reflected as assets on the
books and records of Northern were, as of December 31, 1999 and will be as of
the Closing Date, in all respects legal, valid and binding obligations of the
respective obligors named therein and no such indebtedness is subject to any
defenses which have been or may be asserted, except for defenses arising from
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights generally and general principles of equity.
(b) Except as disclosed in Section 4.24(b) of the Northern Disclosure
Schedule, each Loan outstanding at any time since January 1, 1996 and each
commitment to extend credit has been solicited and originated and is
administered and serviced in all material respects in accordance with the
relevant loan documents, Northern's underwriting standards and in material
compliance with all applicable requirements of federal, state and local laws,
regulations and rules.
(c) Except as disclosed in Section 4.24(c) of the Northern Disclosure
Schedule, no loan, all or any part of which is an asset of Northern was, as of
December 31, 1999, more than 30 days delinquent as to principal or interest.
(d) Except as disclosed in Section 4.24(d) of the Northern Disclosure
Schedule, to the knowledge of Northern, the documentation for each loan (the
"LOAN FILE") is correct and complete to the extent that all Loan Files contain
those documents necessary for Northern to enforce the loans and realize upon the
security, if any, therefor, including but not limited to properly executed notes
or credit agreements and security documents. In addition, Except as disclosed in
Section 4.24(d) of the Northern Disclosure Schedule, the Loan Files for all
loans secured primarily by real property also contain evidence of property
casualty insurance (or are covered by a mortgage protection policy) and, where
required by the FDIC or other governmental regulators, appraisals, policies of
title insurance (or, in the case of loans closed within the past three months,
commitments therefor) and policies of flood insurance.
(e) Except as disclosed on Section 4.24(e) of the Northern Disclosure
Schedule, none of the loans Northern has sold or in which Northern has sold
participation interests has any buy-back or guarantee obligations. The
percentage of interest retained by Northern in any sold participation interest
is not subordinated to the percentage of interest sold.
(f) There are no employee, officer, director or other affiliate loans
on which the borrower is paying a rate other than that reflected on the note or
the relevant credit agreement.
(g) With respect to loans secured by commercial real estate, Northern
has a Phase I environmental study in its files in those instances where prudent
lending practice would require a lender to have such a study, and each such
Phase I environmental study shows the
26
property to be free of any underground storage tanks, asbestos,
ureaformaldehyde, uncontained polychlorinated biphenyls, or releases of
hazardous substances as such terms are defined by any applicable federal, state
or local environmental protection laws and regulations, or if such Phase I
environmental study shows the property to contain any underground storage tanks,
asbestos, ureaformaldehyde, uncontained polychlorinated biphenyls, or releases
of hazardous substances, then such Phase I environmental study affirmatively
recommends that no Phase II environmental study or further investigation is
necessary.
(h) To Northern's knowledge, there are no loans outstanding to
individuals who are not residents of the United States except for loans secured
by collateral located in the United States with a current fair market value
equal to 100 percent of the loan amount. There are no loans outstanding to
corporations or other entities headquartered outside of the United States except
for loans that are either (a) guaranteed by individuals who are residents of the
United States, or (b) secured by collateral located in the United Sates with a
current fair market value equal to 100 percent of the loan amount. To Northern's
knowledge, there are no commitments outstanding to nonresident individuals or
entities to make loans or advances which, when made, would not be in compliance
with the preceding two sentences.
4.25 POWERS OF ATTORNEY. Northern has no powers of attorney outstanding
other than those issued pursuant to the requirements of regulatory authority or
in the ordinary course of business with respect to routine matters.
4.26 BENEFIT PLANS INVESTED IN COMMON STOCK. No shares of Northern Common
Stock are available to individuals, directly or indirectly, through any Benefit
Plan, and no Benefit Plan is invested in Northern Common Stock.
4.27 COMMUNITY REINVESTMENT ACT COMPLIANCE. Northern is in substantial
compliance with the applicable provisions of the Community Reinvestment Act of
1977 and the regulations promulgated thereunder (collectively, "CRA"). Northern
has not been advised of the existence of any fact or circumstance or set of
facts or circumstances which, if true, would cause Northern to fail to be in
substantial compliance with such provisions or to have its current rating
lowered. Any change in the current rating which would prohibit the Merger from
being consummated shall be a Material Adverse Effect on Northern.
4.28 YEAR 2000 COMPLIANCE. With respect to Northern's computerized
application programs, files, databases and computer and computer communication
services (collectively, the "NORTHERN AUTOMATED SYSTEMS"), Northern implemented
a plan to resolve issues arising or expected to arise in connection with the
deficient processing by the Northern Automated Systems of date-related
information containing dates on, during and after January 1, 2000 (each such
deficiency, a "YEAR 2000 PROBLEM"). Northern has no reason to believe that any
Year 2000 Problem, individually or in the aggregate, has had, would have or
would reasonably be expected to have a Material Adverse Effect on Northern.
4.29 LABOR MATTERS. Northern is not a party to and is not bound by any
collective bargaining agreement, contract or other agreement or understanding
with a labor union or labor organization, nor is Northern the subject of a
proceeding asserting that it has committed an unfair
27
labor practice (within the meaning of the National Labor Relations Act) or
seeking to compel Northern to bargain with any labor organization as to wages or
conditions of employment, nor is there any strike or other material labor
dispute or disputes involving it pending, or to Northern's knowledge,
threatened, nor is Northern aware of any activity involving its employees
seeking to certify a collective bargaining unit or engaging in other
organizational activity.
4.30 COMPLIANCE WITH PRIOR AGREEMENT. Except as set forth on Northern
Disclosure Schedule 4.30, Northern has from and after the date of the Prior
Agreement fully complied with all of the covenants set forth in Sections 6.1 and
6.2 of the Prior Agreement other than conduct occurring between March 10, 2000
and April 1, 2000 which may not have been in compliance with Section 6.2(f) of
the Prior Agreement.
5. REPRESENTATIONS AND WARRANTIES OF COWLITZ
Cowlitz hereby represents and warrants to Northern as follows:
5.1 CORPORATE ORGANIZATION.
(a) Cowlitz is a corporation duly organized and validly existing under
the laws of the State of Washington. Cowlitz 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, and 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 have or reasonably be expected to have a
Material Adverse Effect (as defined below) on Cowlitz. As used in this
Agreement, the term "MATERIAL ADVERSE EFFECT" means, with respect to Cowlitz a
material adverse effect on Cowlitz' ability to consummate the transactions
contemplated hereby on a timely basis; PROVIDED, HOWEVER, that a Material
Adverse Effect on Cowlitz shall not be deemed to have occurred as a result of
(i) any changes in laws, regulations or GAAP or (ii) any changes in general
economic conditions affecting banks, savings associations or their holding
companies generally. Cowlitz is duly registered as a bank holding company under
the Bank Holding Company Act of 1956, as amended. The copies of the Articles of
Incorporation and Bylaws of Cowlitz which have previously been made available to
Northern are true, complete and correct copies of such documents as in effect as
of the date of this Agreement. As of the date of this Agreement, Cowlitz' only
Subsidiaries are Cowlitz Bank and Business Finance Corporation.
(b) Cowlitz Bank is a bank duly chartered and validly existing under
the laws of the State of Washington. All of the issued and outstanding capital
stock of Cowlitz Bank is owned free and clear of all liens by Cowlitz. Deposits
in Cowlitz Bank are insured by the FDIC through the BIF to the fullest extent
permitted by law. As of the date of this Agreement, Cowlitz Bank has no
Subsidiaries. Prior to the Effective Time, Interim Bank will be a subsidiary of
Cowlitz Bank.
28
(c) At the time of its incorporation, Interim Bank will be a bank
duly chartered and validly existing under the laws of the State of Oregon. All
of the issued and outstanding capital stock of Interim Bank will owned free
and clear of all liens by Cowlitz Bank.
5.2 AUTHORITY; NO VIOLATION.
(a) Cowlitz has full corporate power and authority to execute and
deliver this Agreement and the Stock Option Agreement and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Stock Option Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
approved by the Board of Directors of Cowlitz. No other corporate proceedings
on the part of Cowlitz are necessary to approve this Agreement or the Stock
Option Agreement or to consummate the transactions contemplated hereby and
thereby. This Agreement and the Stock Option Agreement have been duly and
validly executed and delivered by Cowlitz and (assuming due authorization,
execution and delivery by Northern) each constitutes a valid and binding
obligation of Cowlitz, enforceable against Cowlitz in accordance with its
terms, except as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
(b) Cowlitz Bank has full corporate power and authority to execute
and deliver this Agreement and the Plan of Merger and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Plan of Merger and the consummation of the transactions
contemplated hereby has been duly and validly approved by the Board of
Directors of Cowlitz Bank, no other corporate proceeding on the part of
Cowlitz Bank will be necessary to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by the
Cowlitz Bank and (assuming due authorization, execution and delivery by
Northern) constitutes a valid and binding obligation of Cowlitz Bank,
enforceable against Cowlitz Bank in accordance with its terms, except as
enforcement may be limited by general principles of equity whether applied in
a court of law or a court of equity and by bankruptcy, insolvency, fraudulent
transfer, receivership, conservatorship and similar laws affecting creditors'
rights and remedies generally.
(c) Interim Bank will have full corporate power and authority to
execute and deliver the Plan of Merger and to consummate the transactions
contemplated thereby. The execution and delivery of the Plan of Merger and the
consummation of the transactions contemplated thereby will have been duly and
validly approved by the Board of Directors of Interim Bank and no other
corporate proceeding on the part of Interim Bank will be necessary to
consummate the transactions contemplated thereby. The Plan of Merger will be
duly and validly executed and delivered by the Interim Bank and (assuming due
authorization, execution and delivery by Northern) constitutes a valid and
binding obligation of Interim Bank, enforceable against Interim Bank in
accordance with its terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity
and by bankruptcy, insolvency, fraudulent transfer, receivership,
conservatorship and similar laws affecting creditors' rights and remedies
generally.
29
(d) Except as set forth in Section 5.2(d) of the disclosure
schedule of Cowlitz delivered to Northern concurrently herewith (the "Cowlitz
Disclosure Schedule"), neither the execution and delivery of this Agreement,
the Plan of Merger, or the Stock Option Agreement by Cowlitz or Cowlitz Bank,
nor the consummation by Cowlitz or Cowlitz Bank of the transactions
contemplated hereby or thereby, nor compliance by Cowlitz or Cowlitz Bank with
any of the terms or provisions hereof or thereof, will (i) violate any
provision of the Articles of Incorporation or Bylaws of Cowlitz or any of the
similar governing documents of any of its Subsidiaries or (ii) assuming that
the consents and approvals referred to in Section 5.3 are duly obtained, (x)
violate any statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to Cowlitz 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 Cowlitz 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
Cowlitz or any of its Subsidiaries is a party, or by which they or any of
their respective properties or assets may be bound or affected, except (in the
case of clause (y) above) for such violations, conflicts, breaches or defaults
which either individually or in the aggregate will not have and would not
reasonably be expected to have a Material Adverse Effect on Cowlitz.
5.3 CONSENTS AND APPROVALS. Except for (i) approvals and consents by the
FDIC, the Federal Reserve, the Washington Director and the Oregon Director,
(ii) the filing with the FDIC of the Proxy Statement, (iii) the filing of the
Articles of Merger with the Oregon Director, (iv) the approval of this
Agreement, the Plan of Merger, and the Merger by the requisite votes of the
stockholders of Northern, (v) the approval of this Agreement, the Plan of
Merger, and the Merger by the sole shareholder of Interim Bank, (vi) the
consents and approvals set forth in Section 5.3 of the Cowlitz Disclosure
Schedule, and (vii) the consents and approvals of third parties which are not
Governmental Entities, the failure of which to obtain will not have and would
not be reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect, no consents or approvals of, or filings or
registrations with, any Governmental Entity or any third party are necessary
in connection with (A) the execution and delivery by Cowlitz of this Agreement
and (B) the consummation by Cowlitz of the Merger and the other transactions
contemplated hereby.
5.4 REPORTS. Cowlitz and each of its Subsidiaries have timely filed all
material reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file
since January 1, 1997 with any Governmental Entities, and have paid all fees
and assessments due and payable in connection therewith. Except as set forth
in Section 5.4 of the Cowlitz Disclosure Schedule and except for normal
examinations conducted by a Governmental Entity in the regular course of the
business of Cowlitz and its Subsidiaries, no Governmental Entity has initiated
any proceeding or, to the best knowledge of Cowlitz, investigation into the
business or operations of Cowlitz or any of its Subsidiaries since January 1,
1997. There is no material unresolved violation, criticism, or
30
exception by any Government Entity with respect to any report or statement
relating to any examinations of Cowlitz or any of its Subsidiaries.
5.5 FINANCIAL STATEMENTS. Cowlitz has previously made available to
Northern copies of (a) the consolidated balance sheets of Cowlitz and its
Subsidiaries, as of December 31, for the fiscal years 1998 and 1999, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for the fiscal years 1997 through 1999, inclusive, as reported in
Cowlitz' Annual Report on Form 10-K for the fiscal year ended December 31,
1999 filed with the SEC under the Exchange Act, in each case accompanied by
the audit report of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, independent public accountants with
respect to Cowlitz. Each of the financial statements referred to in this
Section 5.5 (including the related notes, where applicable) fairly present,
and the financial statements referred to in Section 7.9 hereof (including the
related notes, where applicable) will fairly present (subject, in the case of
the unaudited statements, to normal recurring adjustments, none of which are
expected to be material in nature and amount), the results of the consolidated
operations and changes in stockholders' equity and consolidated financial
position of Cowlitz and its Subsidiaries for the respective fiscal periods or
as of the respective dates therein set forth. Each of such financial
statements (including the related notes, where applicable) complies, and the
financial statements referred to in Section 7.9 hereof (including the related
notes, where applicable) will comply, in all material respects with applicable
accounting requirements and with the published rules and regulations of the
SEC with respect thereto; and each of such financial statements (including the
related notes, where applicable) has been, and the financial statements
referred to in Section 7.9 (including the related notes, where applicable)
will be, 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 or, in the case of unaudited statements, as permitted by
Form 10-Q. The books and records of Cowlitz 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.
5.6 BROKER'S FEES. Except as set forth in Section 5.6 of the Cowlitz
Disclosure Schedule, neither Cowlitz nor any Subsidiary thereof nor any of
their respective officers or directors has employed any broker or finder or
incurred any liability for any broker's fees, commissions or finder's fees in
connection with any of the transactions contemplated by this Agreement.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as publicly disclosed
in reports filed with the SEC prior to the date hereof or as set forth in
Section 5.7 of the Cowlitz Disclosure Schedule, since December 31, 1999, no
event has occurred which has had or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Cowlitz.
5.8 LEGAL PROCEEDINGS.
(a) Neither Cowlitz nor any of its Subsidiaries is a party to any,
and there are no pending or, to the best of Cowlitz' knowledge, threatened
legal, administrative, arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any nature
31
against Cowlitz or any of its Subsidiaries or challenging the validity or
propriety of the transactions contemplated by this Agreement as to which there
is a significant possibility of an adverse determination and which, if
adversely determined, would, individually or in the aggregate, have or
reasonably be expected to have a Material Adverse Effect on Cowlitz.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction imposed upon Cowlitz, any of its Subsidiaries or the assets of
Cowlitz or any of its Subsidiaries which has had, or would reasonably be
expected to have, a Material Adverse Effect on Cowlitz or the Surviving Bank.
5.9 COMPLIANCE WITH APPLICABLE LAW. Except as disclosed in Section 5.9
of the Cowlitz Disclosure Schedule, Cowlitz and each of its Subsidiaries hold,
and have at all times held, all material licenses, franchises, permits and
authorizations necessary for the lawful conduct of their respective businesses
under and pursuant to all, and have complied with and are not in default in
any material respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity relating to
Cowlitz or any of its Subsidiaries, except where the failure to hold such
license, franchise, permit or authorization or such noncompliance or default
would not, individually or in the aggregate, have or reasonably be expected to
have a Material Adverse Effect on Cowlitz, and neither Cowlitz nor any of its
Subsidiaries knows of, or has received notice of, any material violations of
any of the above which, individually or in the aggregate, would have or
reasonably be expected to have a Material Adverse Effect on Cowlitz.
5.10 AGREEMENTS WITH REGULATORY AGENCIES. Except as set forth in
Section 5.10 of the Cowlitz Disclosure Schedule, neither Cowlitz nor any of
its Subsidiaries is subject to any Regulatory Agreement that restricts the
conduct of its business or that in any manner relates to its capital adequacy,
its credit policies, its management or its business, nor has Cowlitz or any of
its Subsidiaries been advised by any Governmental Entity that it is
considering issuing or requesting any Regulatory Agreement.
5.11 COWLITZ INFORMATION. The information relating to Cowlitz and its
Subsidiaries to be provided by Cowlitz to be contained in the Proxy Statement or
in any other document filed with any other Governmental Entity 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.
6. COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME.
(a) Except as set forth in Section 6.1 or 6.2 of the Northern
Disclosure Schedule, as expressly contemplated or permitted by this Agreement,
or as required by applicable law, rule or regulation, during the period from
the date of this Agreement to the Effective Time, Northern shall (i) conduct
its business in the usual, regular and ordinary course consistent with past
practice, (ii) use reasonable best efforts to maintain and preserve intact its
business organization, employees and advantageous business relationships and
retain the services of its officers and key employees and (iii) take no action
which would reasonably be expected to
32
adversely affect or delay its ability to obtain any approvals of any
Governmental Entity required to consummate the transactions contemplated
hereby or to consummate the transactions contemplated hereby.
(b) Northern shall file (or cause to be filed) at its own expense,
on or before the due date thereof, all Tax Returns required to be filed for
all Tax periods ending on or before the Effective Time provided, however, that
Northern shall not file any such Tax Return, or other returns, elections,
claims for refund or information statements with respect to any liabilities
for Taxes (other than federal, state or local sales, use, property,
withholding or employment Tax Returns) for any Tax period until Cowlitz has
had a reasonable opportunity to review such Tax Returns. Northern shall
provide Cowlitz with a copy of appropriate workpapers, schedules, drafts and
final copies of each federal and state income tax return of Northern
(including returns of all Plans) at least ten (10) days before filing such Tax
Return and shall reasonably cooperate with any request by Cowlitz in
connection therewith.
(c) Northern shall use its reasonable best efforts to sell all or
part of its obligations under its accounts receivable financing program under
the name of Business Manager prior to the Effective Time.
(d) Northern hereby agrees to obtain Cowlitz' prior written
approval with respect to those matters set forth in Sections 6.1 and 6.2 of
the Northern Disclosure Schedule that expressly require Cowlitz' prior written
approval
(e) In the event that Northern's dispute with Fiserv Solutions,
Inc. described in Section 4.9(a) of the Northern Disclosure Schedule has not
been resolved prior to the Effective Time, Northern agrees to establish prior
to the Effective Time a reasonable reserve for such dispute. In the event that
Northern's dispute with ▇▇▇▇▇▇ State Bank described in Section 4.9(a) of the
Northern Disclosure Schedule has not been resolved prior to the Effective
Time, Northern agrees to establish prior to the Effective Time a reasonable
reserve for such dispute. In the event that Northern's dispute with MM&A, Inc.
and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ described in Section 4.9(a) of the Northern Disclosure
Schedule has not been resolved prior to the Effective Time, Northern agrees to
establish prior to the Effective Time a reasonable reserve for such dispute.
6.2 NORTHERN FORBEARANCES. Except as set forth in Section 6.2 of the
Northern Disclosure Schedule, as expressly contemplated or permitted by this
Agreement, or as required by applicable law, rule, regulation or regulatory
order, during the period from the date of this Agreement to the Effective
Time, Northern shall not without the prior written consent of Cowlitz:
(a) adjust, split, combine or reclassify any capital stock; set
any record or payment dates for the payment of any dividends or distributions
on its capital stock except in the ordinary and usual course of business
consistent with past practice; adopt a plan of liquidation, 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 into or exchangeable for any shares of
its capital stock, or except as
33
otherwise permitted by this paragraph (a) grant any stock appreciation rights
or grant any individual, corporation, joint venture or other entity any right
to acquire any shares of its capital stock; or issue any additional shares of
capital stock except pursuant to the exercise of stock options outstanding as
of the date hereof;
(b) incur any indebtedness for borrowed money, other than deposit
liabilities and short-term borrowings pursuant to credit facilities in effect
on the date of this Agreement or any replacement facilities with commercially
reasonable terms as credit facilities existing as of the date hereof, or
sell, transfer, mortgage, encumber or otherwise dispose of any of its assets
or properties to any individual, corporation or other entity, or cancel,
release or assign any indebtedness to any such person or any claims held by
any such person, in each case that is material to such party, except (i) in
the ordinary course of business consistent with past practice or (ii) as
expressly required by the terms of any contracts or agreements in force at
the date of this Agreement and set out in Section 6.2 of the Northern
Disclosure Schedule;
(c) form any Subsidiary, or make any acquisition or investment,
whether by purchase or other acquisition of stock or other equity interests,
by merger, consolidation or other business combination, or by contributions
to capital, or make any property transfers or material purchases of any
property or assets, in or from any other individual, corporation, joint
venture or other entity;
(d) enter into, renew or terminate any contract or agreement,
other than loans made in the ordinary course of business, that calls for
aggregate annual payments of $50,000 and which is not either (i) terminable
at will on 60 days or less notice without payment of a penalty in excess of
$20,000 or (ii) has a term of less than one year; or make any material change
in any of its leases or contracts, other than renewals of contracts or leases
for a term of one year or less without material adverse changes to the terms
thereof;
(e) other than general salary increases consistent with past
practices for employees other than executive officers, increase in any
material respect the compensation or fringe benefits of any of its employees
or pay any pension or retirement allowance not required by any existing plan
or agreement to any such employees or become a party to, amend (other than
amendments required by law) or commit itself to any pension, retirement,
profit-sharing or welfare benefit plan or agreement or employment agreement
with or for the benefit of any employee or accelerate the vesting of any
stock options or other stock-based compensation;
(f) authorize or permit any of its officers, directors, employees,
representatives or agents (collectively, "REPRESENTATIVES") to directly or
indirectly solicit, initiate or encourage any inquiries relating to or that
may reasonably be expected to lead to, or the making of any proposal which
constitutes, a Takeover Proposal (as defined below), or recommend or endorse
any Takeover Proposal, or participate in any discussions or negotiations, or
provide third parties with any nonpublic information, relating to any such
Takeover Proposal or otherwise facilitate any effort or attempt to make or
implement a Takeover Proposal; PROVIDED, HOWEVER, that, at any time prior to
the time its stockholders shall have voted to approve this Agreement and the
Merger, Northern may, and may authorize and permit its Representatives
34
to, provide third parties with nonpublic information and participate in
discussions and negotiations with any third party in response to a Takeover
Proposal which was not solicited subsequent to the date hereof, if Northern's
Board of Directors, based on the advice of its financial advisers and outside
counsel, has determined in its reasonable good faith judgment that the
failure to do so would constitute a breach of its fiduciary duties. Northern
shall (i) advise Cowlitz orally (within one day) and in writing (as promptly
as practicable) of the receipt after the date hereof of any Takeover Proposal
by it or any of its Representatives and (ii) unless its Board of Directors,
based on the advice of its financial advisers and outside counsel, has
determined in its reasonable good faith judgment that such action would
constitute a breach of its fiduciary duties, inform Cowlitz orally and in
writing, as promptly as practicable after the receipt thereof, of the
material terms and conditions of any such Takeover Proposal (including the
identity of the party making such inquiry or proposal) and shall keep Cowlitz
informed of the status (including any changes in the material terms and
conditions) thereof. Northern shall not furnish any nonpublic information to
any other party pursuant to this Section 6.2(f) except pursuant to the terms
of a confidentiality agreement containing terms substantially identical to
the terms contained in the Confidentiality Agreement (as defined in Section
7.2(b) hereof). Northern will immediately cease and cause to be terminated
any activities, discussions or negotiations conducted prior to the date of
this Agreement with any parties other than Cowlitz with respect to any
Takeover Proposal and require the return (or if permitted by the terms of the
applicable confidentiality agreement, the certified destruction) of all
confidential information previously provided to such parties. As used in this
Agreement, "TAKEOVER PROPOSAL" shall mean any inquiry, proposal or offer
relating to any tender or exchange offer, proposal for a merger,
consolidation or other business combination involving Northern or the
acquisition in any manner of 25% or more of the voting stock or equity, or a
substantial portion of the assets, of Northern, other than the transactions
contemplated by this Agreement;
(g) make any capital expenditures in excess of (A) $50,000 per
project or related series of projects or (B) $50,000 in the aggregate, other
than expenditures necessary to maintain existing assets in good repair;
(h) except in the ordinary course of business, make application
for the opening, relocation or closing of any, or open, relocate or close
any, branch, office or loan production or servicing facility;
(i) make or acquire any loan or issue a commitment for any loan
except for loans and commitments that are made in the ordinary course of
business consistent with past practice at rates not less than the prevailing
market rates, or issue or agree to issue any letters of credit or otherwise
guarantee or agree to guarantee the obligations of any other persons except
for letters of credit issued in the ordinary course of business consistent
with past practice;
(j) except as otherwise expressly permitted elsewhere in this
Section 6.2, engage or participate in any material transaction or incur or
sustain any material obligation not in the ordinary course of business;
35
(k) except as otherwise expressly permitted hereby, foreclose upon
or otherwise acquire (whether by deed in lieu of foreclosure or otherwise)
any real property (other than 1-to-4 family residential properties in the
ordinary course of business);
(l) settle any claim, action or proceeding involving monetary
damages, except in the ordinary course of business consistent with past
practice, or agree or consent to the issuance of any injunction, decree,
order or judgment restricting its business or operations;
(m) amend its charter, bylaws or similar governing documents;
(n) except in the ordinary course of business consistent with past
practice, materially change its investment securities portfolio policy, or
the manner in which the portfolio is classified or reported;
(o) except as expressly required to comply with the Consent to
Entry of Order to Cease and Desist and Order to Cease and Desist between the
FDIC and Northern dated July 19, 1999, and the Order to Cease and Desist
between the Oregon Department of Financial Institutions and Northern dated
July 19, 1999 (collectively, the "ORDERS") or otherwise required by order of
the FDIC or the Oregon Department of Financial Institutions, make any
material changes in its policies and practices with respect to (i)
underwriting, pricing, originating, acquiring, selling, servicing, or buying
or selling rights to service loans, (ii) hedging its loan positions or
commitments or (iii) any other material banking policies;
(p) take any action (other than permitted herein) that would
prevent the Merger from qualifying as a "reorganization" within the meaning
of Section 368(a) of the Code, make any changes in its accounting methods,
practices or policies, except as may be required under law, rule, regulation
or GAAP, in each case as concurred in by Northern's independent public
accountants;
(q) except as expressly required to comply with the Orders,
increase the number of full-time equivalent employees of Northern from the
number as of June 30, 1999; or
(r) except as expressly required to comply with the Orders, agree
to, or make any commitment to, take any of the actions prohibited by this
Section 6.2.
6.3 NO FUNDAMENTAL COWLITZ CHANGES. Except as expressly contemplated or
permitted by this Agreement, or as required by applicable law, rule or
regulation, during the period from the date of this Agreement to the
Effective Time, Cowlitz shall not, without the prior written consent of
Northern, amend its articles of incorporation or bylaws in a manner that
would materially and adversely affect the economic benefits of the Merger to
the holders of Northern Common Stock, or agree to, or make any commitment to,
take any such action.
7. ADDITIONAL AGREEMENTS
7.1 REGULATORY MATTERS.
36
(a) Cowlitz and Northern shall promptly prepare and file with the
FDIC the Proxy Statement. Each of Cowlitz and Northern shall use all
reasonable efforts to have the Proxy Statement authorized for mailing as
promptly as practicable after such filing, and Northern shall thereafter mail
the Proxy Statement to its respective stockholders.
(b) Subject to the other provisions of this Agreement, the parties
hereto shall cooperate with each other and use reasonable best efforts to
promptly 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 to comply with the terms and conditions of all
such permits, consents, approvals and authorizations of all such third
parties and Governmental Entities.
(c) Cowlitz and Northern shall, upon request, furnish each other
with all information concerning themselves, their respective Subsidiaries,
directors, officers and stockholders and such other matters as may be
reasonably necessary or advisable in connection with the Proxy Statement or
any other statement, filing, notice or application made by or on behalf of
Cowlitz, Northern or any of their respective Subsidiaries to any Governmental
Entity in connection with the merger and the other transactions contemplated
by this Agreement.
(d) Cowlitz and Northern 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 which causes such party to believe that there is a reasonable
likelihood that any Requisite Regulatory Approval (as defined in Section
8.1(c) below) will not be obtained or that the receipt of any such approval
will be materially delayed.
7.2 ACCESS TO INFORMATION.
(a) Upon reasonable notice and subject to applicable laws relating
to the exchange of information, Northern shall afford access to the officers,
employees, accountants, counsel and other Representatives of Cowlitz and any
Loan Examiners appointed pursuant to Section 2.6(d), during normal business
hours during the period prior to the Effective Time, to all its properties,
books, contracts, commitments and records, and to its officers, employees,
accountants, counsel and other representatives and, during such period,
Northern shall make available to Cowlitz (i) a copy of each report, schedule,
registration statement and other document filed or received by it during such
period pursuant to the requirements of Federal securities laws or Federal or
state banking, mortgage lending, real estate or consumer finance or
protection laws (other than reports or documents which Northern is not
permitted to disclose under applicable law) and (ii) all other information
concerning its business, properties and personnel as such other party may
reasonably request. Northern shall not be required to provide access to or to
disclose information where such access or disclosure would violate or
prejudice the rights of its customers, jeopardize the attorney-client
privilege of the institution in possession or control of such information or
contravene any law, rule, regulation, order, judgment, decree,
37
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) Cowlitz shall hold all information furnished by Northern or
any of its Representatives pursuant to Section 7.2(a) in confidence to the
extent required by, and in accordance with, the provisions of the
Confidentiality Agreement dated May 13, 1999, between Cowlitz and Northern
(the "CONFIDENTIALITY AGREEMENT").
(c) No investigation by Cowlitz or its Representatives shall
affect the representations, warranties, covenants or agreements of Northern
set forth herein.
(d) No investigation by Northern or its Representatives shall
affect the representations, warranties, covenants or agreements of Cowlitz
set forth herein.
7.3 STOCKHOLDER APPROVAL. Northern shall duly call, give notice of,
convene and hold a meeting of its stockholders to be held as soon as
practicable following the date hereof for the purpose of obtaining the
requisite stockholder approval required in connection with this Agreement,
the Plan of Merger and the Merger. Northern shall, through its Board of
Directors, recommend to its stockholders approval of the Plan of Merger and
the Merger; PROVIDED, HOWEVER, that this Section 7.3 shall not prohibit
accurate disclosure by Northern of information that is required in the Proxy
Statement or otherwise required by applicable law or regulation or the rules
of Nasdaq to be publicly disclosed.
7.4 LEGAL CONDITIONS TO MERGER.
(a) Subject to the terms and conditions of this Agreement, each of
Cowlitz and Northern shall, and shall cause its Subsidiaries to, use their
reasonable best efforts (i) to take, or cause to be taken, all actions
necessary, proper or advisable to comply promptly with all legal requirements
which may be imposed on such party or its Subsidiaries with respect to the
Merger and, subject to the conditions set forth in Section 8 hereof, to
consummate the transactions contemplated by this Agreement and (ii) 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 which is required to be obtained by Northern or Cowlitz or
any of their respective Subsidiaries in connection with the Merger and the
other transactions contemplated by this Agreement.
(b) Subject to the terms and conditions of this Agreement, each of
Cowlitz and Northern agrees to use reasonable best efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions contemplated
hereby, including, without limitation, using reasonable best efforts to (i)
modify or amend any contracts, plans or arrangements to which Cowlitz or
Northern is a party (to the extent permitted by the terms thereof) if
necessary in order to satisfy the conditions to closing set forth in Section
8 hereof, (ii) lift or rescind any injunction or restraining order or other
order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby, and
38
(iii) defend any litigation seeking to enjoin, prevent or delay the
consummation of the transactions contemplated hereby or seeking material
damages.
(c) Without limiting the generality of Section 7.4(a) or (b),
Cowlitz agrees to use its reasonable best efforts to cause the chartering of
Interim Bank.
7.5 EMPLOYEES; EMPLOYEE BENEFIT PLANS.
(a) Cowlitz shall, from and after the Effective Time, (i) comply
with the Plans in accordance with their terms, (ii) provide former employees
of Northern who remain as employees of Cowlitz or its Subsidiaries credit for
years of service with Northern prior to the Effective Time for the purpose of
eligibility and vesting and (iii) cause any and all pre-existing condition
limitations (to the extent such limitations did not apply to a pre-existing
condition under comparable Plans) and eligibility waiting periods under group
health plans of Cowlitz to be waived with respect to former employees of
Northern who remain as employees of Cowlitz or its Subsidiaries (and their
eligible dependents) and who become participants in such group health plans.
Nothing in this Section 7.5 shall be interpreted as preventing Cowlitz or its
Subsidiaries from amending, modifying or terminating any Plans or other
contracts, arrangements, commitments or understandings, in a manner
consistent with their terms and applicable law.
(b) Northern agrees to amend its 401(k) plan prior to the
Effective Time so that participant loans are no longer available.
(c) If in the reasonable opinion of Cowlitz' outside counsel it is
necessary under the SKADDEN, ARPS, SLATE, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, SEC No-Action
Letter, Fed. Sec. L. Rep. (CCH) PARA 77,515 (Jan. 12, 1999), for Cowlitz'
Board of Directors to approve the Merger to permit the acquisition of options
to purchase Cowlitz Common Stock by directors, officers or employees of
Northern who become directors or officers of Cowlitz following the Effective
Time to be exempt from Section 16(b) of the Exchange Act pursuant to Rule
16b-3(d), then Cowlitz' Board of Directors shall adopt appropriate
resolutions prior to the Effective Time.
7.6 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. Cowlitz shall
cooperate with the persons serving as officers and officers and directors of
Northern so that such persons are, to the extent available, covered by the
directors' and officers' liability insurance policy maintained by Northern
(or a replacement policy therefor) that serves to reimburse such officers and
directors with respect to claims against such officers and directors from
facts or events occurring at or prior to the Effective Time, which insurance
shall contain at least substantially the same coverage and amounts, and
contain terms and conditions substantially no less advantageous, as that
coverage currently provided by Northern; PROVIDED, HOWEVER, that in no event
will Cowlitz and its subsidiaries be required to expend in any one year an
amount in excess of 100% of the annual premiums currently paid by Northern
for such insurance as set forth in Section 4.20 of the Northern Disclosure
Schedule (the "INSURANCE AMOUNT") to maintain or procure such coverage or pay
for premiums with respect to any period more than three years after the
Effective Time unless, in either case, a policy providing lifetime coverage
is available for an amount not to exceed $20,000; PROVIDED FURTHER, that if
the parties are unable to maintain or obtain the insurance called for by this
Section 7.6, they shall use its reasonable best efforts to
39
obtain as much comparable insurance as is available for the Insurance Amount;
PROVIDED FURTHER, that such officers and directors of Northern may be
required to make application and provide customary representations and
warranties to Cowlitz' insurance carrier for the purpose of obtaining such
insurance. Neither Cowlitz, Cowlitz Bank nor the Surviving Bank shall have an
obligation to indemnify any of such officers and directors except to the
extent of such insurance coverage.
7.7 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 or to vest the Surviving Bank 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 Cowlitz.
7.8 ADVICE OF CHANGES. Cowlitz and Northern shall promptly advise the
other party of any change or event which, individually or in the aggregate
with other such changes or events, has a Material Adverse Effect on it or
which it believes would or would be reasonably likely to cause or constitute
a material breach of any of its representations, warranties or covenants
contained herein.
7.9 SUBSEQUENT INTERIM AND ANNUAL FINANCIAL STATEMENTS.
(a) As soon as reasonably available, but in no event more than 45
days after the end of each fiscal quarter (other than the fourth quarter of a
fiscal year) or 90 days after the end of each fiscal year ending after the
date of this Agreement, each party will deliver to the other party its
Quarterly Report on Form 10-QSB or Form 10-Q or its Annual Report on Form
10-KSB or Form 10-K, as the case may be, as filed with the FDIC or the SEC
under the Exchange Act.
(b) As soon as reasonably practicable and as soon as they are
available, but in no event more than 30 days, after the end of each calendar
month ending after the date of this Agreement, Northern shall furnish to
Cowlitz (i) financial statements (including balance sheet, statement of
operations and stockholders' equity) of Northern as of and for such month
then ended, (ii) servicing reports regarding cash flows, delinquencies and
foreclosures on asset pools serviced or master serviced by Northern, and
(iii) any internal management reports relating to the foregoing. All
information furnished by Northern to Cowlitz pursuant to this Section 7.09(b)
shall be held in confidence by Cowlitz to the extent required by, and in
accordance with, the provisions of the Confidentiality Agreement.
7.10 DISCLOSURE SUPPLEMENTS.
(a) On the date five (5) business days prior to the Effective
Date, Northern shall supplement or amend the Northern Disclosure Schedule
with respect to any matter existing or known to Northern which (i) if
existing, occurring or known at the date of this Agreement would have been
required to be set forth or described in the Northern Disclosure Schedule or
(ii) is necessary to correct any information therein which has been rendered
inaccurate thereby so
40
that the Northern Disclosure Schedule is accurately supplemented or amended
as of the Effective Date. For the purpose of this Section 7.10(a), each
reference to the date of this Agreement or an earlier date, as the case may
be, in the representations and warranties of Northern contained in this
Agreement shall be deemed to refer to the Effective Date. Notwithstanding
this provision, no supplement or amendment to the Northern Disclosure
Schedule shall be deemed to modify any representation or warranty for the
purpose of determining satisfaction of the conditions set forth in Sections
8.2(a) and (b).
(b) On the date five (5) business days prior to the Effective
Date, Cowlitz shall supplement or amend the Cowlitz Disclosure Schedule with
respect to any matter existing or known to Cowlitz which (i) if existing,
occurring or known at the date of this Agreement would have been required to
be set forth or described in the Cowlitz Disclosure Schedule or (ii) is
necessary to correct any information therein which has been rendered
inaccurate thereby so that the Cowlitz Disclosure Schedule is accurately
supplemented or amended as of the Effective Date. For the purpose of this
Section 7.10(b), each reference to the date of this Agreement or an earlier
date, as the case may be, in the representations and warranties of Cowlitz
contained in this Agreement shall be deemed to refer to the Effective Date.
Notwithstanding this provision, no supplement or amendment to the Cowlitz
Disclosure Schedule shall be deemed to modify any representation or warranty
for the purpose of determining satisfaction of the conditions set forth in
Section 8.3(a).
8. CONDITIONS PRECEDENT
8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following
conditions:
(a) STOCKHOLDER APPROVALS. The Merger, this Agreement and the Plan
of Merger shall have been approved and adopted by the requisite affirmative
vote of the stockholders of Northern entitled to vote thereon. The Merger and
the Plan of Merger shall have been approved by the sole shareholder of
Interim Bank.
(b) OTHER APPROVALS. All regulatory approvals required to
consummate the transactions contemplated hereby shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in
respect thereof, shall have expired or been terminated (all such approvals
and the expiration or termination of all such waiting periods being referred
to herein as the "REQUISITE REGULATORY APPROVALS").
(c) 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 (an "INJUNCTION") preventing the consummation
of the 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 the consummation of the Merger.
41
8.2 CONDITIONS TO OBLIGATIONS OF COWLITZ. The obligations of Cowlitz to
effect the Merger are also subject to the satisfaction or waiver by Cowlitz
at or prior to the Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Northern set forth in this Agreement shall be true and correct
in all respects as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date; PROVIDED, HOWEVER,
that for purposes of determining the satisfaction of this condition, no
effect shall be given to any exception in such representations and warranties
relating to materiality or a Material Adverse Effect, and PROVIDED, FURTHER,
that, for purposes of this condition, such representations and warranties
(other than the representations and warranties contained in Section 4.2(a),
which shall be true and correct in all material respects) shall be deemed to
be true and correct in all respects unless the failure or failures of such
representations and warranties to be so true and correct, individually or in
the aggregate, results or would reasonably be expected to result in a
Material Adverse Effect on Northern. Cowlitz shall have received a
certificate signed on behalf of Northern by the Chief Executive Officer and
Chief Financial Officer of Northern to the foregoing effect.
(b) PERFORMANCE OF OBLIGATIONS OF NORTHERN. Northern shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and Cowlitz shall
have received a certificate signed on behalf of Northern by the Chief
Executive Officer and the Chief Financial Officer of Northern to such effect.
(c) BURDENSOME CONDITION. There shall not be any action taken, or
any statute, rule, regulation, order, directive, memorandum of understanding
or similar restriction enacted, entered, enforced or deemed applicable to
Northern or the transactions contemplated by this Agreement, by any
Governmental Entity, in connection with the grant of a Requisite Regulatory
Approval or otherwise, which imposes any restriction or condition which would
be reasonably likely to have or result in a Material Adverse Effect on the
Surviving Bank, Cowlitz or Cowlitz Bank, prevent the Surviving Bank, Cowlitz
or Cowlitz Bank from realizing substantially all of the contemplated benefits
of the transactions contemplated by this Agreement, or prevent Cowlitz and
Cowlitz Bank from electing to effect the Subsequent Merger.
(d) DIRECTOR AND OFFICER RESIGNATIONS. Cowlitz shall have received
resignations from each director and officer of Northern, except to the extent
otherwise requested by Cowlitz.
(e) EMPLOYMENT AGREEMENTS. The employment agreements entered into
at the date of this Agreement between the Surviving Bank and the Northern
executives set forth on Annex 8.2(e) shall be in full force and effect and
there shall have been no default by either such employee thereunder.
(f) NONCOMPETITION AGREEMENTS; OPTION AGREEMENTS. Each of the
noncompetition agreements and option agreements entered into at the date of
this Agreement
42
between Cowlitz and the Northern directors set forth on Annex 8.2(f) shall be
in full force and effect and there shall have been no default by any director
thereunder.
(g) VOTING AGREEMENT. Each of the voting agreements entered into
at or prior to the date of this Agreement between Cowlitz Bank, Northern and
each of the shareholders set forth on Annex 2.16 shall be in full force and
effect and there shall have been no default by any shareholder thereunder.
(h) DISSENTERS. The number of shares of Northern Common Stock with
respect to which dissenters' rights have been perfected and not withdrawn
shall not exceed 5% of the total outstanding shares of Northern Common Stock.
(i) LEGAL PROCEEDINGS. There shall not be any pending or
threatened legal, administrative, arbitral or other proceedings, claims,
actions or governmental or regulatory investigations of any nature against
Northern, Cowlitz or any Subsidiary of Cowlitz or challenging the validity or
propriety of the transactions contemplated by this Agreement as to which
there is a significant possibility of an adverse determination and which, if
adversely determined, would, individually or in the aggregate, have or
reasonably be expected to have a Material Adverse Effect on Northern, Cowlitz
or the Surviving Bank.
(j) ORDERS. Cowlitz or Cowlitz Bank shall have received oral or
written assurances, in form and substance reasonably satisfactory to Cowlitz,
from the FDIC and/or the Oregon Director that the Orders shall not be
applicable to Cowlitz Bank if a Subsequent Merger is effected.
(k) YEAR 2000 PROBLEMS. No Year 2000 Problem shall have occurred
which, individually or in the aggregate, have or would reasonably be expected
to have a Material Adverse Effect on Northern.
(l) DEPOSITS. At the Effective Time, Northern shall have total
deposits in an amount no less than 80% of the total deposits as of the date
of this Agreement, and such deposits shall bear substantially the same
interest rates and be in substantially the same mix as the deposits as of the
date of this Agreement, other than such changes in the interest rates and/or
mix that reflect changes affecting commercial banking businesses generally.
(m) STOCKHOLDERS' EQUITY. The Total Stockholders' Equity of
Northern as of the Effective Time is at least $1,150,000.
(n) AUDITOR'S OPINION. Cowlitz shall have received an opinion of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, dated as of the Effective Date, in a form and substance
reasonably satisfactory to Cowlitz, to the effect that amounts received by
the Surviving Bank or its successor from the Escrow with respect to
Reimbursable Losses will be treated as income which would offset the relevant
loss applicable to such Reimbursable Losses.
(o) DIRECTORS' AND OFFICERS' INSURANCE. Cowlitz shall have
received, in a form and substance reasonably satisfactory to Cowlitz, the
written agreement of each of the
43
persons serving as officers and directors of Northern immediately prior to
the Effective Time to the terms and conditions set forth in Section 7.8.
(p) Northern shall have received and delivered to Cowlitz a true
and complete copy of an opinion of ▇.▇. ▇▇▇▇▇▇▇▇ & Co., dated between the
date of this Agreement and the Effective Time, to the effect that, as of such
date, the Merger Consideration is fair from a financial point of view to the
holders of Northern Common Stock.
(q) Cowlitz shall have received an opinion of Sage Capital LLC,
dated between the date of this Agreement and the Effective Time, to the
effect that, as of such date, the Merger Consideration is fair from a
financial point of view to the holders of Cowlitz Common Stock.
8.3 CONDITIONS TO OBLIGATIONS OF NORTHERN. The obligation of Northern
to effect the Merger is also subject to the satisfaction or waiver by
Northern at or prior to the Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Cowlitz set forth in this Agreement shall be true and correct
in all respects as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date; PROVIDED, HOWEVER,
that for purposes of determining the satisfaction of this condition, no
effect shall be given to any exception in such representations and warranties
relating to materiality or a Material Adverse Effect, and PROVIDED, FURTHER,
that, for purposes of this condition, such representations and warranties
shall be deemed to be true and correct in all respects unless the failure or
failures of such representations and warranties to be so true and correct,
individually or in the aggregate, results or would reasonably be expected to
result in a Material Adverse Effect on Cowlitz and its Subsidiaries taken as
a whole. Northern shall have received a certificate signed on behalf of
Cowlitz by the Chief Executive Officer and the Chief Financial Officer of
Cowlitz to the foregoing effect.
(b) PERFORMANCE OF OBLIGATIONS OF COWLITZ. Cowlitz shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and Northern
shall have received a certificate signed on behalf of Cowlitz by the Chief
Executive Officer and the Chief Financial Officer of Cowlitz to such effect.
(c) LEGAL PROCEEDINGS. There shall not be any pending or
threatened legal, administrative, arbitral or other proceedings, claims,
actions or governmental or regulatory investigations of any nature against
Cowlitz or any Subsidiary of Cowlitz or challenging the validity or propriety
of the transactions contemplated by this Agreement as to which there is a
significant possibility of an adverse determination and which, if adversely
determined, would, individually or in the aggregate, have or reasonably be
expected to have a Material Adverse Effect on Cowlitz or the Surviving Bank.
44
9. TERMINATION AND AMENDMENT
9.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time:
(a) by mutual consent of Cowlitz and Northern in a written
instrument, if the Board of Directors of each so determines;
(b) by either Cowlitz or Northern if (i) any Governmental Entity
which must grant a Requisite Regulatory Approval has denied approval of the
Merger and such denial has become final and nonappealable or (ii) any
Governmental Entity of competent jurisdiction shall have issued a final
nonappealable order enjoining or otherwise prohibiting the consummation of
the transactions contemplated by this Agreement;
(c) by either Cowlitz or Northern if the Effective Time shall not
have occurred on or before November 30, 2000, unless the failure of the
Effective Time 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
agreements of such party set forth herein; PROVIDED, HOWEVER, if the failure
of the Effective Time to occur by November 30, 2000 is solely due to the
failure to satisfy the condition set forth in Section 8.1(b), then the
termination right set forth in this Section 9.1(c) shall not be exercisable
until February 28, 2001;
(d) by either Cowlitz or Northern (provided that the terminating
party is not then in material breach of any representation, warranty,
covenant or other agreement contained herein) if the other party shall have
breached (i) any of the covenants or agreements made by such other party
herein or (ii) any of the representations or warranties made by such other
party herein, and in either case, such breach (x) is not cured within 30 days
following written notice to the party committing such breach, or which
breach, by its nature, cannot be cured prior to the Closing and (y) would
entitle the non-breaching party not to consummate the transactions
contemplated hereby under Section 8 hereof;
(e) by either Cowlitz or Northern if any approval of the
stockholders of Northern contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a duly held
meeting of stockholders or at any adjournment or postponement thereof;
(f) by the Board of Directors of Cowlitz, if the Board of
Directors of Northern shall have withdrawn, modified or changed in a manner
adverse to Cowlitz its approval or recommendation of this Agreement and the
transactions contemplated hereby or if a Change of Control (as defined below)
of Northern shall have occurred;
(g) by the Board of Directors of Cowlitz if a tender offer or
exchange offer for 25% or more of the outstanding shares of Northern Common
Stock is commenced (other than by Cowlitz or a Subsidiary thereof), and the
Board of Directors of Northern recommends that the stockholders of Northern
tender their shares in such tender or exchange offer or otherwise fails to
recommend that such stockholders reject such tender offer or exchange offer
within 10 Business
45
Days after the commencement thereof (which, in the case of an exchange offer,
shall be the effective date of the registration statement relating to such
exchange offer);
(h) by the Board of Directors of Northern prior to the date on
which the stockholders of Northern shall have voted to approve this Agreement
and the Merger, if (i) any person or entity shall have made (and shall not
have withdrawn) a Takeover Proposal that is determined by the Northern Board
of Directors to constitute a Superior Proposal (as defined below), and (ii)
the Northern Board of Directors determines in its good faith reasonable
judgment, after consultation with outside counsel, that failure to terminate
this Agreement in order to accept the Superior Proposal would constitute a
breach of fiduciary duty; PROVIDED, HOWEVER, that Northern may not terminate
this Agreement pursuant to this Section 9.1(j) unless it has given Cowlitz 10
Business Days prior written notice of its intention to so terminate this
Agreement (which notice must specify all material terms and conditions of
such Superior Proposal and the identity of the person or persons (or entity
or entities, as the case may be) making such Superior Proposal and must be
accompanied by a copy of the agreements setting forth such Superior Proposal)
and has offered Cowlitz the opportunity to amend the terms and conditions of
this Agreement so that the failure of the Northern Board of Directors to
terminate this Agreement, as so amended, in order to accept the Superior
Proposal would not constitute a breach of fiduciary duty; and PROVIDED,
FURTHER, that the Northern Board of Directors may not terminate this
Agreement pursuant to this Section 9.1(j) unless simultaneously with such
termination Northern pays to Cowlitz the amounts specified in Section 9.2(b)
and enters into a definitive acquisition, merger or similar agreement to
effect and consummate such Superior Proposal with the person or entity making
such Superior Proposal.
For purposes of this Agreement, (A) a "SUPERIOR PROPOSAL" shall mean any BONA
FIDE Takeover Proposal made by an unaffiliated third party that the Northern
Board of Directors determines in its good faith reasonable judgment (based on
the advice of an independent financial advisor) represents superior value to
the holders of Northern Common Stock than the transactions contemplated by
this Agreement and for which any required financing is either committed or
is, in the good faith reasonable judgment of Northern's Board of Directors
(based on the advice of such independent financial advisor), reasonably
capable of being obtained on a timely basis by the person making such
Takeover Proposal; and (B) a "CHANGE OF CONTROL" shall mean the acquisition,
directly or indirectly, by any person or entity, together with its affiliates
(as defined in Rule 12b-2 under the Exchange Act), or any other group (as
defined in Section 13(d) of the Exchange Act), including through the
formation of any such group or the affiliation of any such persons or
entities, of, or of the right to acquire or direct the exercise of, 30% or
more of the voting power of the capital stock of Northern entitled to approve
this Agreement and the Merger or to elect directors of Northern; or
(i) by Cowlitz if a Subsequent Triggering Event (as defined in the
Stock Option Agreement) has occurred.
46
9.2 EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement by either
Cowlitz or Northern as provided in Section 9.1, this Agreement shall
forthwith become void and have no effect, and none of Cowlitz, Northern, 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 7.2(b), 9.2, and 10.2 shall survive any termination of this
Agreement and (ii) notwithstanding anything to the contrary contained in this
Agreement, neither Cowlitz nor Northern shall be relieved or released from
any liabilities or damages arising out of its willful breach of any provision
of this Agreement.
(b) If this Agreement is terminated (i) by Cowlitz pursuant to
Section 9.1(f) or (g), (ii) by Cowlitz or Northern pursuant to Section 9.1(e)
because of a failure to obtain the required approval of the stockholders of
Northern after a Takeover Proposal for Northern shall have been publicly
disclosed, or any person or entity shall have publicly disclosed an intention
(whether or not conditional) to make a Takeover Proposal, (iii) by Northern
pursuant to Section 9.1(h), (iv) by Cowlitz pursuant to Section 9.1(i) or (v)
by Cowlitz pursuant to Section 9.1(d) if the breach giving rise to such
termination was willful and, at or prior to such termination, a Takeover
Proposal shall have been made known to Northern or shall have been publicly
disclosed to Northern's stockholders, or any person or entity shall have made
known to Northern or otherwise publicly disclosed an intention (whether or
not conditional) to make a Takeover Proposal, and regardless of whether such
Takeover Proposal shall have been rejected by Northern or withdrawn prior to
the time of such termination, then in any such case Northern shall (A) pay to
Cowlitz a termination fee of $425,000 and (B) in addition to such termination
fee, reimburse Cowlitz and Cowlitz Bank for their documented and reasonable
out-of-pocket expenses incurred by each of them in connection with this
Agreement and the transactions contemplated hereby (including without
limitation, printing costs, filing fees, and fees and expenses of legal,
accounting and financial advisors). In the event Cowlitz has exercised all or
any part of the Option, then Cowlitz shall not be entitled to the termination
fee set forth in (A) above, but Northern shall nonetheless pay any
reimbursement amounts due to Cowlitz and Cowlitz Bank in accordance with (B)
above.
(c) If this Agreement is terminated by (i) Cowlitz or Northern
pursuant to Section 9.1(e), (ii) by Northern or Cowlitz pursuant to Section
9.1(c) where the failure of the Effective Time to occur by such date shall be
due to the failure of Northern to observe its covenants and agreements
herein, or (iii) by Cowlitz pursuant to Section 9.1(d) and any such
termination described in this Section 9.2(c) is not included in the
terminations described in Section 9.2(b), then Northern shall reimburse
Cowlitz and Cowlitz Bank for their documented and reasonable out-of-pocket
expenses incurred by each of them subsequent to March 9, 2000 in connection
with this Agreement and the transactions contemplated hereby (including
without limitation printing costs, filing fees and fees and expenses of
legal, accounting and financial advisors).
47
(d) Any termination fee and/or reimbursement amount that becomes
payable pursuant to Section 9.2(b) or (c) shall be paid by wire transfer of
immediately available funds to an account designated by Cowlitz within one
Business Day following the termination of this Agreement, except that any
termination fee or reimbursement amount that is payable as a result of the
termination of this Agreement pursuant to Section 9.1(i) or Section 9.1(j)
shall be paid simultaneously with such termination. Notwithstanding the
foregoing, in no event shall Northern be obligated to pay any such fees to
Cowlitz if immediately prior to the termination hereof Northern was entitled
to terminate this Agreement pursuant to Section 9.1(d).
(e) Northern and Cowlitz agree that the agreements contained in
paragraphs (b), (c) and (d) above are an integral part of the transactions
contemplated by this Agreement, that without such agreements Cowlitz would
not have entered into this Agreement, and that such amounts do not constitute
a penalty. If Northern fails to pay Cowlitz the amounts due under paragraph
(b) or (c) above within the time periods specified in paragraph (d) above,
Northern shall pay the costs and expenses (including legal fees and expenses)
incurred by Cowlitz in connection with any action, including the filing of
any lawsuit, taken to collect payment of such amounts, together with interest
on the amount of any such unpaid amounts at the publicly announced prime rate
of The Chase Manhattan Bank from the date such amounts were required to be
paid.
9.3 AMENDMENT. Subject to compliance with applicable law, this
Agreement may be amended by the parties hereto, by action taken or authorized
by their respective Boards of Directors, at any time before or after approval
of the matters presented in connection with the Merger by the stockholders of
Northern; PROVIDED, HOWEVER, that after any approval of the transactions
contemplated by this Agreement by Northern's stockholders, there may not be,
without further approval of such stockholders, any amendment of this
Agreement which reduces the amount or changes the form of the consideration
to be delivered to the Northern stockholders hereunder other than as
contemplated by this Agreement. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties hereto.
9.4 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 conditions contained herein. 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.
10. GENERAL PROVISIONS
10.1 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 shall survive the
Effective Time, except for those covenants
48
and agreements contained herein and therein which by their terms apply in
whole or in part after the Effective Time.
10.2 EXPENSES. Except as provided in Section 9.2 hereof, 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 notwithstanding anything to the contrary contained in
this Agreement, neither Cowlitz nor Northern shall be relieved or released
from any liabilities or damages arising out of its willful breach of any
provision of this Agreement.
10.3 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 Cowlitz or Cowlitz Bank, to:
Cowlitz Bancorporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇▇, Chief Executive Officer
and:
Cowlitz Bank
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇, Executive Vice President
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ White & ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
49
(b) if to Northern, to:
Northern Bank of Commerce
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Chairman
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
Suite 2300
▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇
10.4 INTERPRETATION. The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement,
and Article and Section references are to this Agreement unless otherwise
specified. Whenever the words "include," "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation." 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. No provision of this Agreement shall be
construed to require Northern, Cowlitz or any of their respective
Subsidiaries or affiliates to take any action which would violate or conflict
with any applicable law (whether statutory or common), rule or regulation.
10.5 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.
10.6 ENTIRE AGREEMENT. This Agreement (together with the documents and
the instruments referred to herein) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof, other than the
Confidentiality Agreement.
10.7 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Washington, without regard to any
applicable conflicts of law.
10.8 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such
50
invalidity or unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
10.9 PUBLICITY. Cowlitz and Northern shall consult with each other
before issuing any press release with respect to the Merger or this Agreement
and shall not issue any such press release or make any such public statement
without the prior consent of the other party, which shall not be unreasonably
withheld; PROVIDED, HOWEVER, that a party may, without the prior consent of
the other party (but after prior consultation, to the extent practicable in
the circumstances) issue such press release or make such public statement as
may upon the advice of outside counsel be required by law or the rules and
regulations of Nasdaq. Without limiting the reach of the preceding sentence,
Cowlitz and Northern shall cooperate to develop all public announcement
materials and make appropriate management available at presentations related
to the transactions contemplated by this Agreement as reasonably requested by
the other party. In addition, Northern and its Subsidiaries shall (a) consult
with Cowlitz regarding communications with customers, stockholders,
prospective investors and employees related to the transactions contemplated
hereby, (b) provide Cowlitz with stockholder lists of Northern and (c) allow
and facilitate Cowlitz contact with stockholders of Northern and other
prospective investors.
10.10 ASSIGNMENT; THIRD PARTY BENEFICIARIES. Except as otherwise
provided herein, neither this Agreement nor any of the rights, interests or
obligations of any party hereunder 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. 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 permitted assigns. Except as
otherwise specifically provided in Section 7.6 hereof, 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.
51
IN WITNESS WHEREOF, Cowlitz, Cowlitz Bank and Northern have caused
this Agreement to be executed by their respective officers hereunto duly
authorized as of the date first above written.
COWLITZ BANCORPORATION
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
COWLITZ BANK
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
NORTHERN BANK OF COMMERCE
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
AGREEMENT FOR MERGER
By and Among
COWLITZ BANCORPORATION,
COWLITZ BANK
and
NORTHERN BANK OF COMMERCE
Dated as of April 25, 2000
1. DEFINITIONS................................................................... 1
1.1 DEFINED TERMS.......................................................... 1
1.2 OTHER DEFINITIONAL PROVISIONS.......................................... 4
2. THE MERGER.................................................................... 4
2.1 THE MERGER............................................................. 4
2.2 EFFECTIVE TIME......................................................... 4
2.3 EFFECTS OF THE MERGER.................................................. 4
2.4 CLOSING OF THE MERGER.................................................. 4
2.5 CONVERSION OF NORTHERN COMMON STOCK.................................... 5
2.6 MERGER CONSIDERATION................................................... 6
2.7 COWLITZ STOCK; COWLITZ BANK STOCK; INTERIM BANK STOCK.................. 8
2.8 OPTIONS................................................................ 9
2.9 CHARTER................................................................ 9
2.10 BYLAWS................................................................. 9
2.11 BOARD OF DIRECTORS..................................................... 9
2.12 OFFICERS............................................................... 9
2.13 OFFICES................................................................ 9
2.14 STOCK OPTION AGREEMENT................................................. 9
2.15 SUBSEQUENT MERGER...................................................... 9
2.16 VOTING AGREEMENTS...................................................... 10
3. EXCHANGE OF SHARES............................................................ 10
3.1 COWLITZ BANK TO MAKE MERGER CONSIDERATION AVAILABLE.................... 10
3.2 EXCHANGE OF CERTIFICATES............................................... 10
4. REPRESENTATIONS AND WARRANTIES OF NORTHERN.................................... 14
4.1 CORPORATE ORGANIZATION................................................. 14
4.2 CAPITALIZATION......................................................... 14
4.3 AUTHORITY; NO VIOLATION................................................ 15
4.4 CONSENTS AND APPROVALS................................................. 16
4.5 REPORTS................................................................ 16
4.6 FINANCIAL STATEMENTS................................................... 17
4.7 BROKER'S FEES.......................................................... 17
4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS................................... 17
4.9 LEGAL PROCEEDINGS...................................................... 18
4.10 TAXES.................................................................. 18
4.11 EMPLOYEES; EMPLOYEE BENEFIT PLANS...................................... 20
4.12 FDIC REPORTS........................................................... 22
4.13 COMPLIANCE WITH APPLICABLE LAW......................................... 22
4.14 CERTAIN CONTRACTS...................................................... 22
4.15 AGREEMENTS WITH REGULATORY AGENCIES.................................... 23
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4.16 UNDISCLOSED LIABILITIES................................................ 23
4.17 ANTI-TAKEOVER PROVISIONS............................................... 23
4.18 NORTHERN INFORMATION................................................... 23
4.19 TITLE TO PROPERTY...................................................... 24
4.20 INSURANCE.............................................................. 24
4.21 ENVIRONMENTAL LIABILITY................................................ 25
4.22 RESERVED............................................................... 25
4.23 PATENTS, TRADEMARKS, ETC............................................... 25
4.24 LOAN MATTERS........................................................... 25
4.25 POWERS OF ATTORNEY..................................................... 27
4.26 BENEFIT PLANS INVESTED IN COMMON STOCK................................. 27
4.27 COMMUNITY REINVESTMENT ACT COMPLIANCE.................................. 27
4.28 YEAR 2000 COMPLIANCE................................................... 27
4.29 LABOR MATTERS.......................................................... 27
4.30 COMPLIANCE WITH PRIOR AGREEMENT........................................ 27
5. REPRESENTATIONS AND WARRANTIES OF COWLITZ..................................... 28
5.1 CORPORATE ORGANIZATION................................................. 28
5.2 AUTHORITY; NO VIOLATION................................................ 28
5.3 CONSENTS AND APPROVALS................................................. 30
5.4 REPORTS................................................................ 30
5.5 FINANCIAL STATEMENTS................................................... 30
5.6 BROKER'S FEES.......................................................... 31
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS................................... 31
5.8 LEGAL PROCEEDINGS...................................................... 31
5.9 COMPLIANCE WITH APPLICABLE LAW......................................... 31
5.10 AGREEMENTS WITH REGULATORY AGENCIES.................................... 32
5.11 COWLITZ INFORMATION.................................................... 32
6. COVENANTS RELATING TO CONDUCT OF BUSINESS..................................... 32
6.1 CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME...................... 32
6.2 NORTHERN FORBEARANCES.................................................. 33
6.3 NO FUNDAMENTAL COWLITZ CHANGES......................................... 36
7. ADDITIONAL AGREEMENTS......................................................... 36
7.1 REGULATORY MATTERS..................................................... 36
7.2 ACCESS TO INFORMATION.................................................. 37
7.3 STOCKHOLDER APPROVAL................................................... 37
7.4 LEGAL CONDITIONS TO MERGER............................................. 38
7.5 EMPLOYEES; EMPLOYEE BENEFIT PLANS...................................... 38
7.6 INDEMNIFICATION; DIRECTORS'AND OFFICERS'INSURANCE...................... 39
7.7 ADDITIONAL AGREEMENTS.................................................. 39
7.8 ADVICE OF CHANGES...................................................... 39
7.9 SUBSEQUENT INTERIM AND ANNUAL FINANCIAL STATEMENTS..................... 40
7.10 DISCLOSURE SUPPLEMENTS................................................. 40
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8. CONDITIONS PRECEDENT.......................................................... 41
8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER............. 41
8.2 CONDITIONS TO OBLIGATIONS OF COWLITZ................................... 41
8.3 CONDITIONS TO OBLIGATIONS OF NORTHERN.................................. 43
9. TERMINATION AND AMENDMENT..................................................... 44
9.1 TERMINATION............................................................ 44
9.2 EFFECT OF TERMINATION.................................................. 46
9.3 AMENDMENT.............................................................. 47
9.4 EXTENSION; WAIVER...................................................... 48
10. GENERAL PROVISIONS............................................................ 48
10.1 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.............. 48
10.2 EXPENSES............................................................... 48
10.3 NOTICES................................................................ 48
10.4 INTERPRETATION......................................................... 49
10.5 COUNTERPARTS........................................................... 49
10.6 ENTIRE AGREEMENT....................................................... 49
10.7 GOVERNING LAW.......................................................... 50
10.8 SEVERABILITY........................................................... 50
10.9 PUBLICITY.............................................................. 50
10.10 ASSIGNMENT; THIRD PARTY BENEFICIARIES.................................. 50
EXHIBITS
Exhibit 2.1 - Plan of Merger
Exhibit 2.14 - Stock Option Agreement
Exhibit 2.16 - Voting Agreement
Exhibit 3.2(b) - Escrow Agreement
ANNEXES
Annex 2.6(d) - Loan Classifications: Identified Loans
Annex 2.6(e) - Loan Classifications: Level Six Loans
Annex 2.7 - Surviving Bank's Capital
Annex 2.11 - Surviving Bank's Directors
Annex 2.12 - Surviving Bank's Officers
Annex 2.13 - Surviving Bank's Offices
Annex 2.16 - List of Voting Agreement Shareholders
Annex 8.2(e) - Employment Agreement under Section 8.2(e)
Annex 8.2(f) - Noncompetition and Option Agreements under Section 8.2(f)
SCHEDULES
Schedule 2.6(d) - Identified Loans
Schedule 2.6(e) - Level 6 Loans
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