EXHIBIT 2
CONFIDENTIAL
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PLAN AND AGREEMENT OF MERGER
AMONG
INTERMOUNTAIN COMMUNITY BANCORP, PANHANDLE STATE BANK,
SNAKE RIVER BANCORP, INC. AND MAGIC VALLEY BANK
DATED AS OF JULY 23, 2004
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PLAN AND AGREEMENT OF MERGER
AMONG
INTERMOUNTAIN COMMUNITY BANCORP, PANHANDLE STATE BANK,
SNAKE RIVER BANCORP, INC. AND MAGIC VALLEY BANK
This Plan and Agreement of Merger (the "Agreement"), dated as of July 23,
2004, is made by and among INTERMOUNTAIN COMMUNITY BANCORP ("Intermountain"),
PANHANDLE STATE BANK ("Panhandle"), SNAKE RIVER BANCORP, INC. ("Snake River")
and MAGIC VALLEY BANK ("Magic Valley").
PREAMBLE
The management and boards of directors of Intermountain, Panhandle, Snake
River and Magic Valley, respectively, believe that the proposed Transaction, to
be accomplished in the manner set forth in this Agreement, is in the best
interests of the respective corporations and their shareholders.
RECITALS
A. THE PARTIES. The parties to the Merger are as follows:
(1) Intermountain is a corporation duly organized and validly
existing under Idaho law and is a registered bank holding
company under the Bank Holding Company Act of 1956, as amended
("BHC Act"). Intermountain's principal office is located in
Sandpoint, Idaho. Intermountain owns all of the outstanding
common stock of Panhandle.
(2) Panhandle is a state-chartered banking corporation duly
organized and validly existing under Idaho law with its
principal office located in Sandpoint, Idaho.
(3) Snake River is a corporation duly organized and validly
existing under Idaho law and is a registered bank holding
company under the BHC Act. Snake River's principal office is
located in Twin Falls, Idaho. Snake River owns all of the
outstanding common stock of Magic Valley.
(4) Magic Valley is a state-chartered banking corporation duly
organized and validly existing under Idaho law with its
principal office located in Twin Falls, Idaho.
B. THE MERGERS. On the Effective Date, (i) Snake River will merge with and
into Intermountain, with Intermountain as the surviving entity; (ii)
Magic Valley will merge with and into Panhandle, with Panhandle
surviving as a wholly owned subsidiary of Intermountain; and (iii)
Magic Valley will operate as "Magic Valley Bank, a division of
Panhandle State Bank."
C. BOARD APPROVALS. The respective boards of directors of Intermountain,
Panhandle, Snake River and Magic Valley have approved this Agreement
and authorized its execution and delivery.
D. OTHER APPROVALS. The Mergers are subject to:
(1) Satisfaction of the conditions described in this Agreement;
(2) Approval by Snake River's shareholders; and
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(3) Approval or acquiescence, as appropriate, by (a) the Board of
Governors of the Federal Reserve System ("Federal Reserve"),
(b) the Federal Deposit Insurance Corporation ("FDIC"), (c)
the State of Idaho Department of Finance, and (d) any other
agencies having jurisdiction over the Mergers (collectively,
"Regulatory Approvals").
E. EMPLOYMENT AGREEMENTS. Panhandle has entered into employment
agreements, each of which will take effect as of the Effective Date,
with ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Magic Valley's President and Chief Executive
Officer; ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Magic Valley's Senior Vice President and
Chief Financial Officer; and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Magic Valley's Senior
Vice President and Chief Credit Officer.
F. DIRECTOR AGREEMENTS. In connection with the parties' execution of this
Agreement, the directors of Snake River and Magic Valley have entered
into agreements, pursuant to which, among other things, each director
has agreed to vote his or her shares of Snake River common stock in
favor of the actions contemplated by this Agreement. In addition,
certain of the Snake River and Magic Valley directors have entered into
non-competition agreements.
G. FAIRNESS OPINION. Snake River has received from ▇▇▇▇▇ Financial LLC
("▇▇▇▇▇") and delivered to Intermountain an opinion to the effect that
the financial terms of the Transaction are financially fair to Snake
River's shareholders.
H. BANK MERGER AGREEMENT. Concurrent with the parties' execution of this
Agreement, Magic Valley and Panhandle have entered into a merger
agreement, providing for the Bank Merger (the "Bank Merger Agreement").
I. OPTION TO PURCHASE. Concurrent with the parties' execution of this
Agreement, the lease for Magic Valley's main office has been amended to
grant Intermountain or its assignee, at Intermountain's discretion, an
option to purchase the property.
J. INTENTION OF THE PARTIES -- TAX TREATMENT. The parties intend the
Transaction to qualify, for federal income tax purposes, as a tax-free
reorganization under IRC Section 368(a), and the parties hereto hereby
adopt this Agreement as a plan of reorganization within the meaning of
Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury
Regulations.
AGREEMENT
In consideration of the mutual agreements set forth in this Agreement,
Intermountain, Panhandle, Snake River and Magic Valley agree as follows:
DEFINITIONS
The following capitalized terms used in this Agreement will have the
following meanings:
"Acquisition Event" means any of the following: (i) a merger,
consolidation or similar transaction involving Snake River or any successor,
(ii) a purchase, lease or other acquisition in one or a series of related
transactions of assets of Snake River or any of its Subsidiaries representing 25
percent or more of the consolidated assets of Snake River and its Subsidiaries,
or (iii) a purchase or other acquisition (including by way of merger,
consolidation, share exchange or any similar transaction) in one or a series of
related transactions of beneficial ownership of securities representing 50
percent or more of the voting power of Snake River or its Subsidiaries, in each
case with or by a person or entity other than Intermountain or one of its
Subsidiaries.
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"Acquisition Proposal" has the meaning assigned to such term in Section
4.1.11 of this Agreement.
"Adjustment Trigger" has the meaning assigned to such term in Section
7.2 of this Agreement.
"Advisory Board" has the meaning assigned to such term in Section 6.4
of this Agreement.
"Agreement" means this Plan and Agreement of Merger.
"Asset Classification" has the meaning assigned to such term in Section
3.1.16 of this Agreement.
"Bank Merger" means the merger of Magic Valley with and into Panhandle.
"Bank Merger Agreement" means the merger agreement described in Recital
H.
"Banking Act" means the Idaho Bank Act, Title 26 of the Idaho Code.
"BHC Act" has the meaning assigned to such term in Recital A of this
Agreement.
"Break-Up Fee" has the meaning specified in Section 7.7 of this
Agreement.
"Business Day" means any day other than a Saturday, Sunday, legal
holiday or a day on which banking institutions located in the State of Idaho are
required by law to remain closed.
"Capital" means Snake River's capital stock, surplus and undivided
profits determined in accordance with GAAP, applied on a consistent basis,
without giving any effect to any impact from gains or losses on available for
sale securities between the date of this Agreement and Closing.
"CCR Agreement" has the meaning assigned to such term in Section 4.1.13
of this Agreement.
"Certificate" has the meaning assigned to such term in Section 1.8.1 of
this Agreement.
"Closing" means the closing of the Transaction contemplated by this
Agreement, which will occur on the Effective Date, as more fully specified in
Section 2.1 of this Agreement.
"Compensation Plans" has the meaning assigned to such term in Section
3.1.20 of this Agreement.
"Contracts" has the meaning assigned to such term in Section 3.1.11 of
this Agreement.
"Converted Option" has the meaning assigned to such term in Section
1.4.1 of this Agreement.
"Daily Sales Price" for any Trading Day means the daily closing price
per share of Intermountain Common Stock on the OTC Bulletin Board reporting
system, as reported on the website ▇▇▇.▇▇▇▇▇.▇▇▇.
"Determination Date" means the fifth (5th) business day immediately
prior to the Effective Date.
"Determination Period" means the fifteen (15) Trading Days prior to the
Determination Date.
"Director" means the Director of the Department of Finance for the
State of Idaho.
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"Effective Date" means the date on which all conditions to Closing have
occurred and on which the Transaction takes place, as more fully specified in
Section 2.1 of this Agreement.
"Employees" has the meaning assigned to such term in Section 3.1.20 of
this Agreement.
"Environmental Laws" has the meaning assigned to such term in Section
3.1.7 of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" has the meaning assigned to such term in Section
3.1.20 of this Agreement.
"Exchange Act" has the meaning assigned to such term in Section 3.1.5
of this Agreement.
"Exchange Agent" means American Stock Transfer and Trust.
"Exchange Fund" has the meaning assigned to such term in Section 1.7 of
this Agreement.
"Execution Date" means the date of this Agreement.
"Executive Officers," with respect to Intermountain and/or Panhandle,
means ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇ ▇▇▇▇▇▇.
"Executive Officers," with respect to Snake River and/or Magic Valley,
means ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
"FDIC" means the Federal Deposit Insurance Corporation.
"Federal Reserve" means the Board of Governors of the Federal Reserve
System.
"GAAP" means generally accepted accounting principles.
"Hazardous Substances" has the meaning assigned to such term in Section
3.1.7 of this Agreement.
"Holding Company Merger" means the merger of Snake River with and into
Intermountain.
"IBCA" means the Idaho Business Corporations Act, as amended.
"Intermountain" is Intermountain Community Bancorp, an Idaho
corporation that has its principal place of business in Sandpoint, Idaho, and
that is a bank holding company registered pursuant to the BHC Act.
"Intermountain Average Closing Price" means the average Daily Sales
Price of Intermountain Common Stock for the Determination Period.
"Intermountain Common Stock" means the shares of Intermountain common
stock, no par value per share, issued and outstanding from time to time.
"Intermountain Financial Statements" means Intermountain's (i) audited
consolidated balance sheet as of December 31, 2003, 2002 and 2001 and the
related audited consolidated statements of income, cashflows and changes in
stockholders' equity for each of the years ended December 31, 2003, 2002 and
2001; (ii) unaudited consolidated balance sheet as of the end of each fiscal
quarter following
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December 31, 2003 but preceding the Execution Date, and the related unaudited
consolidated statements of income, cashflows and changes in stockholders' equity
for each such quarter; and (iii) unaudited consolidated balance sheets and
related consolidated statements of income and stockholders' equity for each of
the fiscal quarters ending after the Execution Date and before Closing or the
Termination Date, as the case may be.
"Intermountain Shares" means the shares of Intermountain Common Stock
to be issued to the holders of Snake River Common Stock in accordance with
Section 1.3.2 of this Agreement.
"IRC" means the Internal Revenue Code of 1986, as amended.
"Leased Real Property" means the real Properties subject to Leases as
identified in Schedule 5 to this Agreement.
"Leases" means the terms and conditions governing the leasehold
interests in the Leased Real Property as identified in Schedule 5 to this
Agreement.
"Liens" means, collectively, liens, pledges, security interests,
claims, proxies, preemptive or subscriptive rights or other encumbrances or
restrictions of any kind.
"Magic Valley" is Magic Valley Bank, an Idaho state chartered bank,
that has its head office in Twin Falls, Idaho, and that is wholly owned by Snake
River.
"Magic Valley Financial Statements" means Magic Valley's audited
statements of financial condition as of December 31, 2003, 2002 and 2001, and
the related statements of income, cash flows and shareholders' equity for each
of the years ended December 31, 2003, 2002 and 2001.
"Material Adverse Effect" with respect to a Person means an effect
that: (1) is materially adverse to the business, financial condition, results of
operations or prospects of the Person and its Subsidiaries taken as a whole; (2)
significantly and adversely affects the ability of the Person to consummate the
Transaction on or by January 31, 2005 or to perform its material obligations
under this Agreement; or (3) enables any persons to prevent the consummation on
or by January 31, 2005 of the Transaction.
"Merger Consideration" means the aggregate consideration contemplated
by Section 1.3.2 of this Agreement.
"Mergers" means the Holding Company Merger and the Bank Merger.
"Panhandle" means Panhandle State Bank, an Idaho state chartered
banking association, that has its head office in Sandpoint, Idaho, and that is
wholly owned by Intermountain.
"Pension Plan" has the meaning assigned to such term in Section 3.1.20
of this Agreement.
"Per Share Cash Consideration" has the meaning assigned in Section
1.3.2 of this Agreement.
"Per Share Consideration" has the meaning assigned in Section 1.3.2 of
this Agreement.
"Per Share Stock Consideration" has the meaning assigned in Section
1.3.2 of this Agreement.
"Person" includes an individual, corporation, partnership, association,
limited liability company, trust or unincorporated organization.
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"Plan" has the meaning assigned to such term in Section 3.1.20 of this
Agreement.
"Properties" with respect to any party to this Agreement means
properties or other assets owned or leased by such party or any of its
Subsidiaries.
"Proposed Dissenting Shares" means those shares of Snake River Common
Stock as to which shareholders have given notice of their intent to assert
appraisal rights pursuant to Section 30-1-1321 of the IBCA.
"Prospectus/Proxy Statement" means the Prospectus/Proxy Statement
referred to in Section 4.2.1 of this Agreement, to be provided to each
shareholder of Snake River in connection with their consideration and approval
of the Transaction.
"Registration Statement" has the meaning assigned in Section 4.2.1 of
this Agreement.
"Reports" has the meaning assigned to such term in Section 3.1.5 of
this Agreement.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" has the meaning assigned to such term in Section 3.1.5
of this Agreement.
"Securities Laws" has the meaning assigned to such term in Section
3.1.5 of this Agreement.
"Snake River" is Snake River Bancorp, Inc., an Idaho corporation that
has its principal place of business in Twin Falls, Idaho, and that is a bank
holding company registered pursuant to the BHC Act.
"Snake River Common Stock" means the shares of Snake River common
stock, $5 par value per share, issued and outstanding from time to time.
"Snake River Financial Statements" means (i) the Magic Valley Financial
Statements; (ii) as of the Effective Date, Snake River unaudited consolidated
balance sheet as of December 31, 2003 and the related unaudited consolidated
statements of income, cashflows and changes in stockholders' equity for the year
ended December 31, 2003; (iii) Snake River audited consolidated balance sheet as
of December 31, 2003 and the related audited consolidated statements of income,
cashflows and changes in stockholders' equity for the year ended December 31,
2003 to be prepared in accordance with Section 4.1.9, if necessary; (iv)
unaudited consolidated balance sheet as of the end of each fiscal quarter
following December 31, 2003 but preceding the Execution Date, and the related
unaudited consolidated statements of income, cashflows and changes in
stockholders' equity for each such quarter; and (v) unaudited consolidated
balance sheets and related consolidated statements of income and stockholders'
equity for each of the fiscal quarters ending after the Execution Date and
before Closing or the Termination Date, as the case may be.
"Snake River Meeting" has the meaning assigned in Section 4.2.2 of this
Agreement.
"Snake River Option Plans" means the 1997 Non-Qualified Stock Option
Plan, the 1998 Stock Option Plan for Non-Employee Directors, and the 1998
Incentive Stock Option Plan for the benefit of directors and employees of Snake
River and Magic Valley.
"Snake River Options" means the stock options issued and outstanding on
the date of this Agreement pursuant to the Snake River Option Plans.
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"Snake River Preferred Stock" means the shares of Snake River preferred
stock, $5 par value per share, issued and outstanding from time to time.
"Snake River Transaction Fees" has the meaning assigned to such term in
Section 5.2.3 of this Agreement.
"Subject Property" has the meaning assigned to such term in Section
3.1.7 of this Agreement.
"Subsequent Intermountain Financial Statements" means Intermountain
Financial Statements for each fiscal quarter ending after the Execution Date and
prior to Closing.
"Subsequent Snake River Financial Statements" means Snake River
Financial Statements for each fiscal quarter ending after the Execution Date and
prior to Closing.
"Subsidiary" with respect to any party to this Agreement means any
Person in which such party owns the majority of outstanding capital stock or
voting power.
"Superior Proposal" means a bona fide proposal or offer made by a
person to acquire Snake River pursuant to a tender or exchange offer for all of
the outstanding Snake River Common Stock, a merger, consolidation or other
business combination, or an acquisition of all or substantially all of the
assets of Snake River and its Subsidiaries, on terms which the board of
directors of Snake River has determined in good faith, after taking into account
the advice of counsel, to be more favorable to Snake River and its shareholders
than the Transaction.
"Takeover Proposal" means a bona fide proposal or offer by a person to
make a tender or exchange offer to acquire 50% or more of Snake River's
outstanding common stock, or to engage in a merger, consolidation or other
business combination involving Snake River or to acquire in any manner a
substantial equity interest in, or all or substantially all of the assets of,
Snake River.
"Tangible Equity Capital" means common stock, paid in capital, retained
earnings, and minus goodwill and any other intangible assets, without giving
effect to any impact from gains or losses on available for sale securities.
"Termination Date" has the meaning assigned to such term in Section 7.1
of this Agreement.
"Termination Fee" has the meaning assigned to such term in Section 7.5
of this Agreement.
"Trading Day" means a day on which Intermountain Common Stock is traded
on the OTC Bulletin Board.
"Transaction" means the consummation of the Mergers in accordance with
this Agreement.
SECTION 1.
TERMS OF TRANSACTION
1.1 TRANSACTION. Subject to the terms and conditions set forth in this
Agreement and in the Schedules and Exhibits, Snake River will merge
with and into Intermountain in the Holding Company Merger pursuant to
this Agreement, and Magic Valley will merge with and into Panhandle in
the Bank Merger pursuant to the Bank Merger Agreement.
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1.2 MERGERS.
1.2.1 HOLDING COMPANY MERGER. Upon Closing of the Holding Company
Merger, pursuant to the provisions of the IBCA, all shares of
Snake River Common Stock issued and outstanding immediately
prior to Closing, except for treasury shares and Proposed
Dissenting Shares, will, by virtue of the Holding Company
Merger and without any action on the part of any holder of
shares of Snake River Common Stock, be converted into the
right to receive the Merger Consideration described in Section
1.3 of this Agreement.
1.2.2 BANK MERGER. Pursuant to the terms and conditions of the Bank
Merger Agreement, Magic Valley will be merged into Panhandle,
with Panhandle as the resulting bank.
1.3 MERGER CONSIDERATION. Subject to the provisions of this Agreement, on
the Effective Date:
1.3.1 OUTSTANDING INTERMOUNTAIN COMMON STOCK. The shares of
Intermountain Common Stock issued and outstanding immediately
prior to the Effective Date will, on and after the Effective
Date, remain as issued and outstanding shares of Intermountain
Common Stock.
1.3.2 OUTSTANDING SNAKE RIVER COMMON STOCK. Each share of Snake
River Common Stock issued and outstanding immediately prior to
the Execution Date will automatically and without any action
on the part of the holder of such share, be converted into and
represent the right to receive from Intermountain:
(a) 0.93 Intermountain Shares (the "Per Share Stock
Consideration"); and
(b) $8.22 in cash (the "Per Share Cash Consideration").
The Per Share Stock Consideration and the Per Share Cash
Consideration are collectively referred to as the "Per Share
Consideration." The aggregate of the Per Share Stock
Consideration and the Per Share Cash Consideration payable or
issuable pursuant to the Transaction is referred to as the
"Merger Consideration."
1.3.3 CHANGE IN EQUITY CAPITAL. If, after the date of this Agreement
but before the Effective Date, the number of shares of
Intermountain Common Stock or Snake River Common Stock issued
and outstanding increases or decreases in number or is changed
into or exchanged for a different kind or number of
securities, through a recapitalization, reclassification,
stock dividend, stock split, reverse stock split or other
similar change in capitalization (not including increases in
number due to issuances of shares upon exercise of any
outstanding options) of Intermountain or Snake River, as the
case may be, then, as appropriate, a proportionate adjustment
will be made to the Merger Consideration.
1.4 OUTSTANDING SNAKE RIVER OPTIONS.
1.4.1 CONVERSION ON THE EFFECTIVE DATE. On the Effective Date, by
virtue of the Transaction, and without any action on the part
of any holder of a Snake River Option, each Snake River Option
that is then outstanding and unexercised will be converted
into and become an option (a "Converted Option") to purchase
Intermountain Common Stock on the same terms and conditions as
are in effect with respect to the Snake River Option
immediately prior to the Effective Date, except that (A) each
such Converted Option may be exercised
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solely for shares of Intermountain Common Stock, (B) the
number of shares of Intermountain Common Stock subject to such
Converted Option will be equal to the number of shares of
Snake River Common Stock subject to such Snake River Option
immediately prior to the Effective Date multiplied by 1.265,
the product being rounded, if necessary, up or down to the
nearest whole share, and (C) the per-share exercise price for
each such Converted Option will be adjusted by dividing the
per share exercise price of the Snake River Option by 1.265,
and rounding up or down to the nearest cent.
1.4.2 FORM S-8. Following the Effective Date, Intermountain will
promptly prepare and file with the SEC a Registration
Statement on Form S-8 or other appropriate form covering
shares of Intermountain Common Stock to be issued upon the
exercise of the Converted Options.
1.5 NO FRACTIONAL SHARES. No fractional shares of Intermountain Common
Stock will be issued. In lieu of fractional shares, if any, each holder
of Snake River Common Stock who is otherwise entitled to receive a
fractional share of Intermountain Common Stock will receive an amount
of cash equal to the product of such fractional share times $31.00.
Such fractional share interests will not include the right to vote or
receive dividends or any interest on dividends.
1.6 PAYMENT TO DISSENTING SHAREHOLDERS. Proposed Dissenting Shares will
have the rights provided by Title 30, Chapter 1, Part 13 of the IBCA.
1.7 DEPOSIT OF CASH AND SHARES. On or before the Effective Date,
Intermountain will deposit, or will cause to be deposited, with the
Exchange Agent, for the benefit of the holders of certificates
representing Snake River Common Stock, for exchange in accordance with
this Section 1.7, (i) certificates representing the Intermountain
Shares; (ii) such cash as will be necessary to pay the Per Share Cash
Consideration; and (iii) the cash in lieu of fractional shares to be
paid in accordance with Section 1.5. Such cash and certificates for
Intermountain Shares, together with any dividends or distributions with
respect thereto, are referred to in this Agreement as the "Exchange
Fund."
1.8 CERTIFICATES.
1.8.1 LETTER OF TRANSMITTAL. As soon as practicable after the
Effective Date, Intermountain will cause the Exchange Agent to
mail to each holder of record of a certificate evidencing
Snake River Common Stock shares (a "Certificate") a form
letter of transmittal (which will specify that delivery will
be effected, and risk of loss and title to the Certificates
will pass, only upon delivery of the Certificates to the
Exchange Agent) and instructions for use in effecting the
surrender of the Certificates in accordance with Section 1.8.2
of this Agreement.
1.8.2 SURRENDER OF CERTIFICATES. Subject to Section 1.6, each
Certificate will, from and after the Effective Date, be deemed
for all corporate purposes to represent and evidence only the
right to receive the Merger Consideration (or to receive the
cash for fractional shares) to which the Snake River Common
Stock shares converted in accordance with the provisions of
this Section 1.8.2. Following the Effective Date, holders of
Certificates will exchange their Certificates in accordance
with instructions provided by the Exchange Agent pursuant to
Section 1.8.1 of this Agreement and together with a properly
completed and executed form of transmittal letter in order to
effect their exchange for, as applicable, (i) certificates
representing Intermountain Common Stock; (ii) a check
representing the Per Share Cash Consideration; and/or (iii) a
check representing the
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amount of cash in lieu of fractional shares, if any. Until a
Certificate is so surrendered, the holder will not be entitled
to receive any certificates evidencing Intermountain Shares or
the Per Share Cash Consideration or cash in lieu of fractional
shares.
1.8.3 ISSUANCE OF CERTIFICATES IN OTHER NAMES. Any person requesting
that any certificate evidencing Intermountain Shares be issued
in a name other than the name in which the surrendered
Certificate is registered, must: (1) establish to the Exchange
Agent's satisfaction the right to receive the certificate
evidencing Intermountain Shares and (2) either pay to the
Exchange Agent any applicable transfer or other taxes or
establish to the Exchange Agent's satisfaction that all
applicable taxes have been paid or are not required.
1.8.4 LOST, STOLEN, AND DESTROYED CERTIFICATES. With respect to a
Certificate that has been lost, stolen or destroyed, the
Exchange Agent will be authorized to issue a certificate
representing Intermountain Shares in exchange thereof, and/or
pay cash for the Per Share Cash Consideration or fractional
share in exchange thereof, if the holder provides the Exchange
Agent with: (1) satisfactory evidence that the holder owns
Snake River Common Stock and that the certificate representing
this ownership is lost, stolen, or destroyed, (2) any
appropriate affidavit the Exchange Agent may require, and (3)
any reasonable assurances that the Exchange Agent or
Intermountain may require.
1.8.5 RIGHTS TO DIVIDENDS AND DISTRIBUTIONS. After the Effective
Date, no holder of any Certificate will be entitled to receive
any dividends or other distributions otherwise payable to
holders of record of Intermountain Common Stock on any date
after the Effective Date, unless the holder (1) is entitled by
this Agreement to receive a certificate representing
Intermountain Common Stock and (2) has surrendered in
accordance with this Agreement his or her Certificates (or has
met the requirements of Section 1.8.4 above) in exchange for
certificates representing Intermountain Shares. Surrender of
Certificates will not deprive the holder of any dividends or
distributions that the holder is entitled to receive as a
record holder of Snake River Common Stock on a date before the
Effective Date. When the holder surrenders his or her
Certificates in exchange for Intermountain Shares, the holder
will receive the amount, without interest, of any cash
dividends and any other distributions distributed after the
Effective Date on the whole number of Intermountain Shares
into which the holder's Snake River Common Stock was converted
at the Effective Date.
1.8.6 CHECKS IN OTHER NAMES. Any person requesting that a check for
the aggregate Per Share Cash Consideration or cash in lieu of
fractional shares be issued in a name other than the name in
which the Certificate surrendered in exchange for the cash is
registered, must establish to the Exchange Agent's
satisfaction the right to receive this cash.
1.8.7 AFFILIATES. Certificates that are surrendered for exchange by
any person constituting an "affiliate" of Snake River for
purposes of Rule 145 of the Securities Act will not be
exchanged for certificates representing Intermountain Shares
until Intermountain has received a written agreement from such
person as specified in Section 4.3.1.
1.8.8 UNDELIVERED CERTIFICATES. Any portion of the Exchange Fund
that remains unclaimed by shareholders of Snake River for six
months after the Effective Date may be paid to Intermountain.
To the extent so paid, holders of Snake River Common Stock who
have not, prior to such time, complied with the provisions of
this Section 1.8 will, from such
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time forward, look only to Intermountain for payment of the
Merger Consideration, the cash in lieu of fractional shares,
and/or unpaid dividends and distributions on the Intermountain
Shares deliverable with respect to each share of Snake River
Common Stock held by such holder as determined pursuant to
this Agreement, in each case, without any interest. Neither
Intermountain nor Snake River will be liable to any holder of
Snake River Common Stock for any amount properly delivered to
a public official pursuant to applicable abandoned property,
escheat or similar laws.
SECTION 2.
CLOSING OF TRANSACTION
2.1 CLOSING. The Closing will occur on the Effective Date. The Holding
Company Merger shall be consummated by the filing by the Idaho
Secretary of State of Articles of Merger, in the form required by and
executed in accordance with the relevant provisions of the IBCA, and by
the issuance of a Certificate of Merger by the Secretary of State of
Idaho. Unless Intermountain and Snake River agree upon a later date,
the Effective Date will be no later than the date ten (10) Business
Days after the fulfillment or waiver of each condition precedent set
forth in, and the granting of each approval (and expiration of any
waiting period) required by Section 5 of this Agreement. If Closing
does not occur on or prior to January 31, 2005 and the parties do not
mutually agree in writing to extend the Closing, either party may
terminate this Agreement in accordance with Section 7.1 of this
Agreement.
2.2 EVENTS OF CLOSING. On the Effective Date, all properly executed
documents required by this Agreement will be delivered to the proper
party, in form consistent with this Agreement. If any party fails to
deliver a required document on the Effective Date or otherwise defaults
under this Agreement on or prior to the Effective Date, then no
Transaction will occur unless the adversely affected party waives the
default.
2.3 PLACE OF CLOSING. The Closing will take place at the office of
Panhandle State Bank, 1000 Northwest Blvd., Coeur d'Alene, Idaho, or
such other place as the parties agree, at 10:00 a.m. Pacific Time on
the Effective Date.
2.4 PROCEDURE. Panhandle will notify the Director and the FDIC of the
proposed Effective Date for the Bank Merger. On or before the Business
Day immediately preceding the Closing, appropriately prepared and
executed articles of merger with respect to the Holding Company Merger
will be deposited in the office of the Idaho Secretary of State, and
appropriately prepared and executed articles of merger with respect to
the Bank Merger and related documents will have been deposited in the
offices of the Director. On the Effective Date, the articles of merger
with respect to the Holding Company Merger will be filed with the
office of the Idaho Secretary of State, and the articles of merger with
respect to the Bank Merger will be filed with the Director.
SECTION 3.
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES. Snake River and Magic Valley each
represent and warrant to Intermountain and Panhandle that, except as
disclosed in a Schedule to this Agreement:
3.1.1 ORGANIZATION AND GOOD STANDING. Snake River is a corporation
duly organized, validly existing and in good standing under
the laws of the State of Idaho, is a registered bank holding
company pursuant to the BHC Act, and has all requisite power
and authority to own and operate its properties and to carry
on its businesses as now conducted. Each of
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its Subsidiaries is either a commercial bank or a corporation
duly organized, validly existing and in good standing under
the laws of its state of incorporation, and has all requisite
power and authority to own and operate its Properties and to
carry on its businesses as now conducted. The locations of all
offices, including approved and unopened offices of its
Subsidiaries, are listed in Schedule 1.
3.1.2 CORPORATE AUTHORITY. The execution, delivery and performance
of this Agreement does not and will not, and the consummation
by Snake River and/or Magic Valley of the Transaction will
not, constitute or result in: (1) a breach or violation of, or
a default under, either of their articles of incorporation or
bylaws; (2) a breach or violation of, or a default under, or
the acceleration of or the creation of a Lien (with or without
the giving of notice, the lapse of time or both) under, any
provision of any agreement, lease, contract, note, mortgage,
indenture, arrangement or other obligation ("Contracts") by
which either of them is bound or to which either of them is a
party; or (3) a material violation of any law, rule, ordinance
or regulation or judgment, decree, order, award, or
governmental or non-governmental permit or license to which
either of them is subject; or (4) any change in the rights or
obligations of any party under any of the Contracts. Schedule
2 contains a list of all consents Snake River and/or Magic
Valley must obtain from third parties under any Contracts
before consummation of the Transaction.
3.1.3 CAPITAL STOCK.
(i) The authorized capital stock of Snake River consists
of 5,000,000 shares of Snake River Common Stock, par
value $5 per share, and 1,000,000 shares of Snake
River Preferred Stock, par value $5 per share. A
total of 542,263 shares of Snake River Common Stock
are issued and outstanding as of the date of this
Agreement, all of which were validly issued and are
fully paid and nonassessable. No shares of Snake
River Preferred Stock are issued and outstanding. As
of the date of this Agreement, Snake River Options
with respect to 21,176 shares of Snake River Common
Stock have been granted and are outstanding.
(ii) Magic Valley's authorized capital stock consists of
1,000,000 shares of common stock, par value $5.00 per
share, of which 523,232 shares currently are issued
and outstanding, all of which are validly issued to
Snake River, fully paid and nonassessable, except to
the extent of any assessment required under Section
26-1113 of the Banking Act.
(iii) No unissued shares of common stock or any other
securities of Snake River or Magic Valley, or any of
their Subsidiaries, are subject to any warrants,
options, conversion privileges, rights or commitments
of any character, kind or nature, except as set forth
in Schedule 3, and neither Snake River nor Magic
Valley has issued or is obligated to issue any
additional shares of common stock or any other
security to any other person, except as so disclosed.
3.1.4 SUBSIDIARIES. Except as listed in Schedule 4, Snake River has
no Subsidiaries. The shares of capital stock of each of its
Subsidiaries are owned by it free and clear of all liens,
claims, encumbrances and restrictions on transfer.
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3.1.5 REPORTS AND FINANCIAL STATEMENTS.
(i) Filing of Reports. Since January 1, 2003 (with
respect to Snake River) and since January 1, 2001
(with regard to each of Snake River's Subsidiaries),
Snake River and each of its Subsidiaries has filed
and will file all reports and statements, together
with any required amendments to these reports and
statements, that they were required to file with (1)
the Federal Reserve, (2) the FDIC, and (3) any other
applicable federal or state banking, insurance,
securities, or other regulatory authorities. Each of
these reports and statements, including the related
financial statements and exhibits, complied as to
form in all material respects with all applicable
statutes, rules and regulations as of their
respective dates.
(ii) Delivery to Other Party of Reports. Snake River and
Magic Valley have delivered or otherwise made
available to Intermountain a copy of each
registration statement, offering circular, report,
definitive proxy statement or information statement
(collectively, its "Reports") under the Securities
Act of 1933, as amended, ("Securities Act"), the
Securities Exchange Act of 1934, as amended,
("Exchange Act"), and state securities and "Blue Sky"
laws (collectively, the "Securities Laws") filed,
used or circulated by either of them with respect to
periods since January 1, 2001, through the Execution
Date.
(iii) Compliance with Securities Laws. As of their
respective dates (and without giving effect to any
amendments or modifications filed after the Execution
Date), each of the Reports, including the related
financial statements, exhibits and schedules, filed,
used or circulated before the Execution Date complied
(and each of the Reports filed after the Execution
Date, will comply) in all material respects with
applicable Securities Laws, and did not (or in the
case of reports, statements, or circulars filed after
the Execution Date, will not) contain any untrue
statement of a material fact or omit to state a
material fact required to be stated therein or
necessary to make the statements made therein, in
light of the circumstances under which they were
made, not misleading.
(iv) Financial Statements. Each of Snake River's balance
sheets included in the Snake River Financial
Statements fairly presents (or, in the case of Snake
River Financial Statements for periods ending on a
date following the Execution Date, will fairly
present) the financial position of Snake River and
its Subsidiaries as of the date of the balance sheet.
Each of the statements of income, cash flows and
stockholders' equity included in the Snake River
Financial Statements fairly presents (or, in the case
of Snake River Financial Statements to be prepared in
accordance with Section 4.1.9, if required, or for
periods ending on a date following the Execution
Date, will fairly present) the results of operations,
stockholders' equity and cash flows, as the case may
be, of Snake River and its Subsidiaries for the
periods set forth in these statements (subject, in
the case of unaudited statements, to normal year-end
audit adjustments), in each case in accordance with
GAAP, except as may be noted in these statements.
3.1.6 PROPERTIES.
(i) Snake River and its Subsidiaries are not a party to
any real property lease, whether as landlord, tenant,
guarantor or otherwise, except as disclosed in
Schedule 5. Except as disclosed or reserved against
in the Snake River Financial
13
Statements or in Schedule 5, Snake River and/or one
of its Subsidiaries have good and marketable title,
free and clear of all Liens (other than Liens for
taxes not yet delinquent or pledges to secure
deposits) to all of the properties and assets,
tangible or intangible, reflected in the Snake River
Financial Statements as being owned or leased by any
of them as of the Execution Date. Except as disclosed
in Schedule 5, all buildings and structures on the
Property owned and the equipment located thereon are
in all material respects in good operating condition
and repair and conform in all respects to all
applicable laws, ordinances and regulations.
(ii) To the knowledge of Snake River's Executive Officers,
all buildings and all fixtures, equipment and other
property and assets that are material to Snake
River's business on a consolidated basis are owned by
it or one of its subsidiaries or are held under
leases or subleases by it or one of its subsidiaries,
enforceable in accordance with their respective terms
(except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally or by general
equity principles).
(iii) Schedule 1 lists all of its existing branches and
offices and all new branches or offices that Magic
Valley has applied to establish or purchase, along
with the estimated cost to establish or purchase
those new branches.
(iv) Snake River has provided to Intermountain copies of
existing title policies held in its files relating to
the Property, and to the knowledge of its Executive
Officers, no exceptions, reservations, or
encumbrances have arisen or been created since the
date of issuance of those policies (other than Liens
for taxes not yet delinquent).
3.1.7 ENVIRONMENTAL MATTERS.
(i) For purposes of this Section 3.1.7, the following
definitions apply:
(1) "Subject Property" with respect to a party
means (i) all real property at which its
business has been conducted, and any
property where under any Environmental Law
it is deemed to be the owner or operator of
the property; (ii) any facility in which it
is the owner or operator of the property;
and (iii) all other real property that, for
purposes of any Environmental Law, it
otherwise could be deemed to be an owner or
operator of or as otherwise having control
over.
(2) "Environmental Laws" means any federal,
state, local or foreign law, regulation,
order, decree, judgment, judicial opinion,
or any agreement between Snake River or any
of its Subsidiaries and any Governmental
Entity, presently in effect or subsequently
adopted relating to: (i) the manufacture,
generation, transport, use, treatment,
storage, recycling, disposal, release,
threatened release or presence of Hazardous
Substances, or (ii) the preservation,
restoration or protection of the
environment, natural resources or human
health.
(3) "Hazardous Substances" means any substance,
material or waste that is (a) defined as a
"hazardous substance" in 42 USC Section
9601(14), (b) defined
14
as a "pollutant or contaminant" in 33 USC
Section 1362(6), (c) defined as a "hazardous
waste" in 42 USC Section 6903(5), or (d)
petroleum or a petroleum product or any
other substance defined as "hazardous,"
"dangerous" or "toxic" under any federal or
state law or regulation enacted for the
protection of human health or the
environment; provided, however, that
supplies and materials used by Snake River
and/or Magic Valley for general office
purposes are not Hazardous Substances.
(ii) Except as disclosed in Schedule 6 and to the
knowledge of its Executive Officers, Snake River, its
Subsidiaries and the Subject Property are, and have
been, in compliance with all applicable Environmental
Laws, and no circumstances exist that with the
passage of time or the giving of notice would be
reasonably likely to result in noncompliance with
such Environmental Laws.
(iii) Except as disclosed in Schedule 6 and to the
knowledge of its Executive Officers, none of the
following, and no reasonable basis for any of the
following, exists: pending or threatened claims,
actions, investigations, notices of non-compliance,
information requests or notices of potential
responsibility or proceedings involving Snake River,
any of its Subsidiaries or any Subject Property,
relating to:
(1) an asserted liability of Snake River or any
of its Subsidiaries or any prior owner,
occupier or user of Subject Property under
any applicable Environmental Law or the
terms and conditions of any permit, license,
authority, settlement, agreement, decree or
other obligation arising under any
applicable Environmental Law;
(2) the handling, storage, use, transportation,
removal or disposal of Hazardous Substances;
(3) the actual or threatened discharge, release
or emission of Hazardous Substances from, on
or under or within Subject Property into the
air, water, surface water, ground water,
land surface or subsurface strata; or
(4) personal injuries or damage to property
related to or arising out of exposure to
Hazardous Substances.
(iv) Except as disclosed in Schedule 6, no storage tanks
underground or otherwise are present on the Subject
Property or, if present, none of such tanks are
leaking and each of them is in full compliance with
all applicable Environmental Laws. With respect to
any Subject Property, neither Snake River nor any of
its Subsidiaries owns, possesses or controls any
PCBs, PCB-contaminated fluids, wastes or equipment,
or any material amount of asbestos or
asbestos-containing material. No Hazardous Substances
have been used, handled, stored, discharged, released
or emitted, or are threatened to be discharged,
released or emitted, at or on any Subject Property,
except in compliance with applicable Environmental
Laws.
(v) Except as disclosed in Schedule 6, no part of the
Subject Property has been or is scheduled for
investigation or monitoring under any applicable
Environmental Law.
15
(vi) Except as disclosed in Schedule 6, to the knowledge
of its Executive Officers, no condition from, on or
under the Subject Property exists with respect to the
Subject Property that would require remediation under
applicable Environmental Laws.
3.1.8 TAXES. All tax returns and reports required by law to be filed
by Snake River and its Subsidiaries have been duly filed, and
all taxes, assessments, fees and other government charges upon
Snake River or any of its Subsidiaries or upon any of their
respective properties, assets, income or franchises that are
due and payable have been paid. The federal income portion of
such taxes have been paid in full as indicated in the tax
returns of Snake River and its Subsidiaries for the past five
years or adequate provision has been made for any such taxes
on its balance sheet in accordance with GAAP. No material
objections to returns or claims for additional taxes are being
asserted with respect to federal or state tax returns of Snake
River and its Subsidiaries for any prior years, except for
such audits, objections or claims which are being contested in
good faith, by appropriate proceedings and with establishment
of appropriate reserves, and which have been disclosed in
writing to the other parties to this Agreement. Except as set
forth in Schedule 7 or except as specified in the foregoing
sentence, in the past five years, there has been no past
audit, objection to returns, or claim for additional taxes.
3.1.9 ABSENCE OF REGULATORY ACTION. Neither Snake River nor any of
its Subsidiaries is, to the knowledge of its Executive
Officers, in material violation of any statute, rule or
governmental regulation applicable to them (including, without
limitation, the Community Reinvestment Act, Bank Secrecy Act,
Truth in Lending Act, Equal Credit Opportunity Act, and
statutes, rules and regulations governing the reporting of
taxpayer identification numbers of its customers). Neither
Snake River nor any of its Subsidiaries is a party to any
cease and desist order, written agreement or memorandum of
understanding with, or a party to any commitment letter or
similar undertaking to, or is subject to any order or
directive by, or is a recipient of any extraordinary
supervisory letter from, or has adopted any board resolutions
at the request of, federal or state regulatory authorities,
nor have they been advised by such authorities that they are
contemplating issuing or requesting any such order, agreement,
memorandum or similar document or undertaking.
3.1.10 ALLOWANCE FOR LOAN LOSSES. In the opinion of its management,
the allowance for loan and lease losses shown in the latest
Snake River Financial Statements is, and that which will be
stated in the Subsequent Snake River Financial Statements
prior to Closing will be, adequate to absorb its anticipated
loan losses.
3.1.11 MATERIAL AGREEMENTS.
(i) Except for arrangements made after the date and in
accordance with the terms of this Agreement, Snake
River and its Subsidiaries are not bound by any
material contract (as defined in Item 601(b)(10) of
Regulation S-K under the Securities Act) that: (1) is
to be performed after the date of this Agreement and
(2) has not been set forth in Schedule 8.
(ii) Neither Snake River nor any of its Subsidiaries is in
default under any contract, agreement, commitment,
arrangement, lease, insurance policy, or other
instrument.
16
3.1.12 COMPLIANCE WITH LAWS. Snake River and each of its Subsidiaries
has all material permits, licenses, certificates of authority,
orders, and approvals of, and has made all filings,
applications, and registrations with, federal, state, local,
and foreign governmental or regulatory bodies that are
required in order to permit Snake River or its Subsidiaries to
carry on their respective businesses as they are presently
conducted and the absence of which, individually or in the
aggregate, can reasonably be expected to have a Material
Adverse Effect on them. All such material permits, licenses,
certificates of authority, orders and approvals are in full
force and effect, and, to the best knowledge of its Executive
Officers, no suspension or cancellation of any of them is
threatened.
3.1.13 KNOWLEDGE AS TO CONDITIONS. Snake River knows of no reason why
the approvals, consents and waivers of governmental
authorities referred to in Section 5.1 of this Agreement
should not be obtained.
3.1.14 NO MATERIAL ADVERSE EFFECT. Since December 31, 2003, (i) Snake
River and its Subsidiaries have conducted their respective
businesses only in the ordinary and usual course of business,
and (ii) there has not been any change in the financial
condition (which includes, without limitation, the condition
of assets, franchises, results of operations and prospects)
that has had or may reasonably be expected to have a Material
Adverse Effect on Snake River or any of its Subsidiaries.
3.1.15 COMPLETENESS OF REPRESENTATIONS. No representation or warranty
made by or with respect to Snake River or its Subsidiaries in
this Agreement (or in the Schedules to this Agreement)
contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements
contained in this Agreement (or in such Schedules) or in such
representation or warranty not misleading.
3.1.16 ASSET CLASSIFICATION.
(i) Schedule 9 sets forth a list, accurate and complete
as of June 30, 2004, except as otherwise expressly
noted in Schedule 9, and separated by category of
classification or criticism ("Asset Classification"),
of the aggregate amounts of loans, extensions of
credit and other assets of Snake River and its
Subsidiaries that have been criticized or classified
by any governmental or regulatory authority, by any
outside auditor, or by any internal audit.
(ii) Except as shown in Schedule 9, no amounts of its
loans, extensions of credit or other assets that have
been classified or criticized by any representative
of any governmental entity as "Other Assets
Especially Mentioned," "Substandard," "Doubtful,"
"Loss" or words of similar effect are excluded from
the amounts disclosed in the Asset Classification,
other than amounts of loans, extensions of credit or
other assets that were paid off or charged off by
Snake River or its Subsidiaries before the date of
this Agreement.
3.1.17 LITIGATION. Except as disclosed in Schedule 10, no material
litigation, proceeding or controversy before any court or
governmental agency is pending (other than routine foreclosure
proceedings), and there is no pending claim, action or
proceeding against Snake River or any of its Subsidiaries,
which is reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect on them or to materially
hinder or delay consummation of the Transaction, and, to the
best knowledge of Snake River's Executive
17
Officers after reasonable inquiry, no such litigation,
proceeding, controversy, claim or action has been threatened
or is contemplated.
3.1.18 INSURANCE. Snake River and each of its Subsidiaries have taken
all requisite action (including the making of claims and the
giving of notices) under their respective directors' and
officers' liability insurance policy or policies in order to
preserve all rights under such policies with respect to all
matters known to them (other than matters arising in
connection with, and the transactions contemplated by, this
Agreement). Schedule 11 lists all directors' and officers'
liability insurance policies and other material insurance
policies maintained by Snake River or its Subsidiaries.
3.1.19 LABOR MATTERS. Neither Snake River nor any of its Subsidiaries
is a party to, or is bound by, any collective bargaining
agreement, contract, or other agreement or understanding with
a labor union or labor organization. Neither Snake River nor
any of its Subsidiaries is the subject of any proceeding: (1)
asserting that they have committed an unfair labor practice or
(2) seeking to compel them to bargain with any labor
organization as to wages or conditions of employment. No
strike involving Snake River or its Subsidiaries is pending
or, to the knowledge of its Executive Officers, threatened.
Its Executive Officers are not aware of any activity involving
its employees seeking to certify a collective bargaining unit
or engaging in any other organizational activity.
3.1.20 EMPLOYEE BENEFITS.
(i) For purposes of this Agreement, "Plan" or "Plans",
individually or collectively, means any "employee
benefit plan," as defined in Section 3(3) of ERISA,
maintained by Snake River or Magic Valley, as the
case may be. Snake River and its Subsidiaries are not
now nor have ever been a contributing employer to or
sponsor of a multiemployer plan or a single employer
plan subject to Title IV of ERISA.
(ii) Schedule 12 sets forth a list, as of the Execution
Date, of (a) all Plans, stock purchase plans,
restricted stock and stock option plans, and other
deferred compensation arrangements, and (b) all other
material employee benefit plans that cover employees
or former employees of Snake River and its
Subsidiaries (its "Compensation Plans"). True and
complete copies of the Compensation Plans (and, as
applicable, copies of summary plan descriptions,
governmental filings (on Form 5500 series or
otherwise), actuarial reports and reports under
Financial Accounting Standards Board Statement No.
106 relating to such Compensation Plans) covering its
current employees or those of its Subsidiaries
(collectively, "Employees"), including Plans and
related amendments, have been made available to
Intermountain.
(iii) All of its Plans covering Employees (other than
"multi-employer plans" within the meaning of ERISA
Sections 3(37) or 4001(a)(3)), to the extent subject
to ERISA, are in substantial compliance with ERISA.
Each of its Plans that is an "employee pension
benefit plan" within the meaning of ERISA Section
3(2) ("Pension Plan") and that is intended to be
qualified under IRC Section 401(a), has received a
favorable determination letter from the Internal
Revenue Service, and Snake River is not aware of any
circumstances likely to result in revocation of any
such favorable determination letter. No litigation
relating to its Plans is pending or, to the knowledge
of its Executive Officers, threatened. Neither
18
Snake River nor any of its Subsidiaries has engaged
in a transaction with respect to any Plan that could
subject it or any of its Subsidiaries to a tax or
penalty imposed by either IRC Section 4975 or ERISA
Section 502(i) in an amount that would be material.
(iv) All material contributions Snake River or any of its
Subsidiaries are or were required to make under the
terms of any of its Plans have been timely made or
have been reflected in the Snake River Financial
Statements. Neither any of its Pension Plans nor any
single-employer plan of any of its ERISA Affiliates
has an "accumulated funding deficiency" (whether or
not waived) within the meaning of IRC Section 412 or
ERISA Section 302. Neither Snake River nor any of its
Subsidiaries or its ERISA Affiliates has provided, or
is required to provide, security to any Pension Plan
or to any single-employer plan of an ERISA Affiliate
under IRC Sections 401(a)(29) or 412(f)(3) or ERISA
Sections 306, 307 or 4204.
(v) Except as disclosed in the Snake River Financial
Statements, neither Snake River nor any of its
Subsidiaries has any obligations for retiree health
and life benefits.
(vi) No provision of the documents governing any Plan
contains restrictions on the rights of Snake River or
its Subsidiaries to amend or terminate any Plan
without incurring liability under the Plan other than
normal liabilities for benefits.
(vii) Except as disclosed in the Snake River Financial
Statements or otherwise disclosed in this Agreement
or in Schedule 12, the Transaction will not result in
(a) vesting, acceleration, or increase of any amounts
payable under any Compensation Plan, (b) any material
increase in benefits under any Compensation Plan or
(c) payment of any severance or similar compensation
under any Compensation Plan.
(viii) Neither Snake River nor Magic Valley maintains an
executive supplemental retirement plan.
3.1.21 BROKER'S OR FINDER'S FEES. Except for the fees of ▇▇▇▇▇ deemed
by its board to be required to obtain a fairness opinion and
related advice from ▇▇▇▇▇ to effect the Transaction, no agent,
broker, person or firm acting on behalf of Snake River or
Magic Valley, or under its authority, is or will be entitled
to any commission, broker's, finder's or financial advisory
fee in connection with the Transaction.
3.2 REPRESENTATIONS AND WARRANTIES OF INTERMOUNTAIN. Except as disclosed in
a schedule to this Agreement, Intermountain and Panhandle each
represent and warrant to Snake River:
3.2.1 ORGANIZATION AND GOOD STANDING. Intermountain is a corporation
duly organized, validly existing and in good standing under
the laws of the State of Idaho, is a registered bank holding
company pursuant to the BHC Act, and has all requisite power
and authority to own and operate its properties and to carry
on its businesses as now conducted. Each of its Subsidiaries
is either a commercial bank or a corporation duly organized,
validly existing and in good standing under the laws of its
state of incorporation, and has all requisite power and
authority to own and operate its Properties and to carry on
its businesses as now conducted.
19
3.2.2 CORPORATE AUTHORITY. The execution, delivery and performance
of this Agreement does not and will not, and the consummation
by Intermountain and/or Panhandle of the Transaction will not,
constitute or result in: (1) a breach or violation of, or a
default under, either of their articles of incorporation or
bylaws; (2) a breach or violation of, or a default under, or
the acceleration of or the creation of a Lien (with or without
the giving of notice, the lapse of time or both) under, any
provision of any Contracts by which either of them is bound or
to which either of them is a party; or (3) a material
violation of any law, rule, ordinance or regulation or
judgment, decree, order, award, or governmental or
non-governmental permit or license to which either of them is
subject; or (4) any change in the rights or obligations of any
party under any of the Contracts..
3.2.3 CAPITAL STOCK.
(i) The authorized capital stock of Intermountain
consists of 7,084,000 shares of Intermountain Common
Stock, no par value per share. A total of 3,219,141
shares of Intermountain Common Stock were issued and
outstanding as of June 30, 2004, all of which were
validly issued and are fully paid and nonassessable.
As of June 30, 2004, Intermountain Options with
respect to 562,360 shares of Intermountain Common
Stock have been granted and are outstanding.
(ii) Panhandle's authorized capital stock consists of
680,000 shares of common stock, par value $7.50 per
share, of which 355,677 shares currently are issued
and outstanding, all of which are validly issued to
Intermountain, fully paid and nonassessable, except
to the extent of any assessment required under
Section 26-1113 of the Banking Act.
(iii) No unissued shares of common stock or any other
securities of Intermountain or Panhandle, or any of
their Subsidiaries, are subject to any warrants,
options, conversion privileges, rights or commitments
of any character, kind or nature, except as set forth
in Schedule 14, and neither Intermountain nor
Panhandle has issued or is obligated to issue any
additional shares of common stock or any other
security to any other person, except as so disclosed.
3.2.4 REPORTS AND FINANCIAL STATEMENTS.
(i) Filing of Reports. Since January 1, 2001,
Intermountain and each of its Subsidiaries has filed
and will file all reports and statements, together
with any required amendments to these reports and
statements, that they were and will be required to
file with (1) the SEC, (2) the Federal Reserve, (3)
the FDIC, and (4) any other applicable federal or
state banking, insurance, securities, or other
regulatory authorities. Each of these reports and
statements, including the related financial
statements and exhibits, complied as to form in all
material respects with all applicable statutes, rules
and regulations as of their respective dates.
(ii) Delivery to Other Party of Reports. Intermountain and
Panhandle have delivered to Snake River a copy of
each Report under the Securities Laws filed, used or
circulated by either of them with respect to periods
since January 1, 2001, through the Execution Date.
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(iii) Compliance with Securities Laws. As of their
respective dates (and without giving effect to any
amendments or modifications filed after the Execution
Date), each of the Reports, including the related
financial statements, exhibits and schedules, filed,
used or circulated before the Execution Date complied
(and each of the Reports filed after the Execution
Date, will comply) in all material respects with
applicable Securities Laws, and did not (or in the
case of reports, statements, or circulars filed after
the Execution Date, will not) contain any untrue
statement of a material fact or omit to state a
material fact required to be stated therein or
necessary to make the statements made therein, in
light of the circumstances under which they were
made, not misleading.
(iv) Financial Statements. Each of Intermountain's balance
sheets included in the Intermountain Financial
Statements fairly presents (or, in the case of
Intermountain Financial Statements for periods ending
on a date following the Execution Date, will fairly
present) the financial position of Intermountain and
its Subsidiaries as of the date of the balance sheet.
Each of the statements of income, cash flows and
stockholders' equity included in the Intermountain
Financial Statements fairly presents (or, in the case
of Intermountain Financial Statements to be prepared
in accordance with Section 4.10 of this Agreement for
periods ending on a date following the Execution
Date, will fairly present) the results of operations,
stockholders' equity and cash flows, as the case may
be, of Intermountain and its Subsidiaries for the
periods set forth in these statements, in each case
in accordance with GAAP, except as may be noted in
these statements.
3.2.5 FINANCING AND SHARES AVAILABLE. Intermountain has, and at the
Effective Date will have, (i) sufficient cash and cash
equivalents on hand to pay the Per Share Cash Consideration,
cash in lieu of fractional shares, and any amounts payable to
holders of Proposed Dissenting Shares; and (ii) a sufficient
number of shares of common stock authorized and available to
issue the Intermountain Shares.
3.2.6 ABSENCE OF REGULATORY ACTION. Neither Intermountain nor any of
its Subsidiaries is, to the knowledge of its Executive
Officers, in material violation of any statute, rule or
governmental regulation applicable to them (including, without
limitation, the Community Reinvestment Act, Bank Secrecy Act,
Truth in Lending Act, Equal Credit Opportunity Act, and
statutes, rules and regulations governing the reporting of
taxpayer identification numbers of its customers). Neither
Intermountain nor any of its Subsidiaries is a party to any
cease and desist order, written agreement or memorandum of
understanding with, or a party to any commitment letter or
similar undertaking to, or is subject to any order or
directive by, or is a recipient of any extraordinary
supervisory letter from, or has adopted any board resolutions
at the request of, federal or state regulatory authorities,
nor have they been advised by such authorities that they are
contemplating issuing or requesting any such order, agreement,
memorandum or similar document or undertaking.
3.2.7 COMPLIANCE WITH LAWS. Intermountain and each of its
Subsidiaries has all material permits, licenses, certificates
of authority, orders, and approvals of, and has made all
filings, applications, and registrations with, federal, state,
local, and foreign governmental or regulatory bodies that are
required in order to permit Intermountain or its Subsidiaries
to carry on their respective businesses as they are presently
conducted and the absence of which, individually or in the
aggregate, can reasonably be expected to have a Material
Adverse Effect on them. All such material permits, licenses,
certificates of authority,
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orders and approvals are in full force and effect, and, to the
best knowledge of Intermountain's Executive Officers, no
suspension or cancellation of any of them is threatened.
3.2.8 KNOWLEDGE AS TO CONDITIONS. Intermountain knows of no reason
why the approvals, consents and waivers of governmental
authorities referred to in Section 5.1 of this Agreement
should not be obtained.
3.2.9 LITIGATION. Except as disclosed in Intermountain's Reports, no
material litigation, proceeding or controversy before any
court or governmental agency is pending, and there is no
pending claim, action or proceeding against Intermountain or
any of its Subsidiaries, which is reasonably likely,
individually or in the aggregate, to have a Material Adverse
Effect on them or to materially hinder or delay consummation
of the Transaction and, to the best knowledge of
Intermountain's Executive Officers after reasonable inquiry,
no such litigation, proceeding, controversy, claim or action
has been threatened or is contemplated.
3.2.10 TAXES. All tax returns and reports required by law to be filed
by Intermountain and its Subsidiaries have been duly filed,
and all taxes, assessments, fees and other government charges
upon Intermountain or any of its Subsidiaries or upon any of
their respective properties, assets, income or franchises that
are due and payable have been paid. The federal income portion
of such taxes have been paid in full as indicated in the tax
returns of Intermountain and its Subsidiaries for the past
five years or adequate provision has been made for any such
taxes on its balance sheet in accordance with GAAP. No
material objections to returns or claims for additional taxes
are being asserted with respect to federal or state tax
returns of Intermountain and its Subsidiaries for any prior
years, except for such audits, objections or claims which are
being contested in good faith, by appropriate proceedings and
with establishment of appropriate reserves, and which have
been disclosed in writing to the other parties to this
Agreement. Except as set forth in Schedule 15 or except as
specified in the foregoing sentence, in the past five years,
there has been no past audit, objection to returns, or claim
for additional taxes.
3.2.11 NO MATERIAL ADVERSE EFFECT. Since December 31, 2003, (i)
Intermountain and its Subsidiaries have conducted their
respective businesses only in the ordinary and usual course of
business, and (ii) there has not been any change in the
financial condition (which includes, without limitation, the
condition of assets, franchises, results of operations and
prospects) that has had or may reasonably be expected to have
a Material Adverse Effect on Intermountain or any of its
Subsidiaries.
3.2.12 COMPLETENESS OF REPRESENTATIONS. No representation or warranty
made by or with respect to Intermountain or its Subsidiaries
in this Agreement (or in the Schedules to this Agreement)
contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements
contained in this Agreement (or in such Schedules) or in such
representation or warranty not misleading.
3.2.13 SUBSIDIARIES. Except as listed in Schedule 16, Intermountain
has no Subsidiaries. The shares of capital stock of each of
its Subsidiaries are owned by it free and clear of all liens,
claims, encumbrances and restrictions on transfer.
3.2.14 INSURANCE. Intermountain and each of its Subsidiaries have
taken all requisite action (including the making of claims and
the giving of notices) under their respective
22
directors' and officers' liability insurance policy or
policies in order to preserve all rights under such policies
with respect to all matters known to them (other than matters
arising in connection with, and the transactions contemplated
by, this Agreement).
3.2.15 LABOR MATTERS. Neither Intermountain nor any of its
Subsidiaries is a party to, or is bound by, any collective
bargaining agreement, contract, or other agreement or
understanding with a labor union or labor organization.
Neither Intermountain nor any of its Subsidiaries is the
subject of any proceeding: (1) asserting that they have
committed an unfair labor practice or (2) seeking to compel
them to bargain with any labor organization as to wages or
conditions of employment. No strike involving Intermountain or
its Subsidiaries is pending or, to the knowledge of its
Executive Officers, threatened. Its Executive Officers are not
aware of any activity involving its employees seeking to
certify a collective bargaining unit or engaging in any other
organizational activity.
3.2.16 BROKER'S OR FINDER'S FEES. Except for the fees of Sandler
▇'▇▇▇▇▇ and Partners deemed by management of Intermountain to
be appropriate for advice to Intermountain in connection with
the Transaction, no agent, broker, person or firm acting on
behalf of Intermountain or Panhandle, or under its authority,
is or will be entitled to any commission, broker's, finder's,
or financial advisory fee in connection with the Transaction.
SECTION 4.
CONDUCT AND TRANSACTIONS PRIOR TO CLOSING
4.1 CONDUCT OF SNAKE RIVER'S AND MAGIC VALLEY'S BUSINESS PRIOR TO CLOSING.
The parties each covenant that, prior to Closing:
4.1.1 AVAILABILITY OF BOOKS, RECORDS AND PROPERTIES.
(i) With prior notice to Snake River, the books, records,
properties, contracts and documents of Snake River
and Magic Valley will be available at all reasonable
times to Intermountain, Panhandle and their counsel,
accountants and other representatives. Such items
will be open for inspection, audit and direct
verification of loan or deposit balances, collateral
receipts and such other transactions or documentation
as Intermountain or Panhandle deem reasonably
relevant to the Transaction. Snake River and Magic
Valley will cooperate fully in such inspection and
audit, and will make available all information
reasonably requested by or on behalf of Intermountain
or Panhandle.
(ii) Upon request by Intermountain or Panhandle, Snake
River and Magic Valley will request that any third
parties involved in the preparation or review of the
Snake River Financial Statements or Snake River
Subsequent Financial Statements disclose to
Intermountain and Panhandle the work papers or any
similar materials related to such financial
statements.
4.1.2 ORDINARY AND USUAL COURSE. Without prior written consent of
Intermountain or Panhandle and except as required by the
Director, the FDIC or the Federal Reserve (so long as
Intermountain and Panhandle receive prior written notice of
such required action), Snake River and Magic Valley will
conduct their respective business only in the ordinary and
usual course and will not do any of the following:
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(i) effect any stock split or other recapitalization with
respect to Snake River Common Stock or the shares of
Magic Valley; issue (except for issuances upon the
exercise of Snake River Options), pledge or encumber
in any way any shares of such capital stock; or grant
any option for shares of such capital stock;
(ii) other than in the ordinary course of business,
consistent with past practice, and as necessary to
pay Snake River Transaction Fee expenses consistent
with this Agreement, declare or pay any dividend, or
make any other distribution, either directly or
indirectly, with respect to Snake River Common Stock
or the shares of Magic Valley;
(iii) acquire, sell, transfer, assign, encumber or
otherwise dispose of assets or make any commitment
other than in the ordinary and usual course of
business;
(iv) solicit or accept deposit accounts of a different
type from accounts previously accepted by Magic
Valley or at rates materially in excess of prevailing
interest rates, or incur any indebtedness for
borrowed money;
(v) offer or make loans or other extensions of credit of
a different type, or apply different underwriting
standards, from those previously offered or applied
by Magic Valley, or offer or make a loan or extension
of credit in an amount greater than $500,000 without
prior consultation with Panhandle;
(vi) except for the transfer of the Leased Real Property,
cancellation of Leases and satisfaction of
obligations as contemplated by Section 4.1.12,
acquire an ownership interest or a leasehold interest
in any real property, except those disclosed in
Schedule 5, whether by foreclosure or otherwise,
without making an appropriate environmental
evaluation in advance of obtaining such interest and
without providing to Intermountain such evaluation
and at least 30 days' advance notice;
(vii) enter into, renew, or terminate any contracts calling
for a payment by either of them of more than $10,000
(including real property leases and data or item
processing agreements) with or for a term of one-year
or more, except for its contracts of deposit and
agreements to lend money not otherwise restricted
under this Agreement and (1) entered into in the
ordinary course of business, (2) consistent with past
practices, and (3) providing for not less (in the
case of loans) or more (in the case of deposits) than
prevailing market rates of interest;
(viii) enter into or amend any contract (other than
contracts for deposits or agreements to lend money
not otherwise restricted by this Agreement) calling
for a payment by either of them of more than $15,000,
unless the contract may be terminated without cause
or penalty upon 30 days notice or less;
(ix) enter into any personal services contract with any
person or firm outside the ordinary course of
business, except contracts, agreements, or
arrangements for legal, accounting, investment
advisory, or tax services entered into to directly
facilitate the Transaction;
(x) (A) sell any securities, whether held for investment
or sale, other than in the ordinary course of
business or sell any securities, whether held for
investment or
24
sale, even in the ordinary course of business, if the
aggregate gain realized from all sales after the
Execution Date would be more than $100,000 or (B)
transfer any investment securities between portfolios
of securities available for sale and portfolios of
securities to be held to maturity;
(xi) amend its Articles of Incorporation, Bylaws, or other
formation agreements, or convert its charter or form
of entity;
(xii) implement or adopt any material changes in its
operations, policies, or procedures, including loan
loss reserve policies, unless the changes are
requested by Intermountain or are necessary or
advisable, on the advice of legal counsel, to comply
with applicable laws, regulations, or regulatory
policies;
(xiii) implement or adopt any change in its accounting
principles, practices or methods, other than as may
be required (1) by GAAP, (2) for tax purposes, or (3)
to take advantage of any beneficial tax or accounting
methods;
(xiv) other than in accordance with binding commitments
existing on the Execution Date and that have been
disclosed to Intermountain, make any capital
expenditures in excess of $10,000 per project or
related series of projects or $25,000 in the
aggregate, except for Snake River Transaction Fee
expenses, which expenses may not exceed $150,000;
(xv) enter into any other transaction or make any
expenditure other than in the ordinary and usual
course of its business except for expenses reasonably
related to completion of the Transaction; or
(xvi) take any action which would materially and adversely
affect or delay their ability or the ability of
Intermountain and Panhandle to obtain any necessary
approvals, consents or waivers of any governmental
authority required for the Transaction or to perform
their respective covenants and agreements under this
Agreement.
4.1.3 CONTINUING REPRESENTATION AND WARRANTY. They will not do or
cause to be done anything that would cause any representation
or warranty in Section 3.1 of this Agreement to be untrue or
inaccurate if made at Closing, except as otherwise
contemplated or required by this Agreement or consented to in
writing by Intermountain or Panhandle.
4.1.4 MAINTENANCE OF PROPERTIES. Each will maintain its respective
properties and equipment (and related insurance or its
equivalent) in accordance with good business practice.
4.1.5 PRESERVATION OF BUSINESS ORGANIZATION. Each will use its
reasonable efforts to:
(i) Preserve its respective business organization.
(ii) Retain the services of management and employees
consistent with such program for consolidation of
redundant employment positions resulting from the
Transaction as will be developed in cooperation with
Intermountain.
(iii) Preserve the goodwill of suppliers, customers and
others with whom Snake River and Magic Valley have
business relations.
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4.1.6 SENIOR MANAGEMENT. Without prior consultation with
Intermountain or Panhandle, neither Snake River nor Magic
Valley will make any change with respect to present management
personnel having the rank of vice-president or higher.
4.1.7 COMPENSATION. Snake River and Magic Valley will not permit any
increase in the current or deferred compensation payable or to
become payable by Snake River or Magic Valley to any of its
directors, officers, employees, agents or consultants other
than normal increments in compensation in accordance with
Snake River's and Magic Valley's established policies with
respect to the timing and amounts of such increments. Without
the prior written approval of Intermountain and Panhandle,
Snake River and Magic Valley will not commit to, execute or
deliver any employment agreement with any party not terminable
without expense with two weeks notice.
4.1.8 AUDITED FINANCIAL STATEMENTS. If required by the SEC or
otherwise reasonably requested by Intermountain, Snake River
will cause to be conducted an audit of its consolidated
financial statements that satisfies all applicable rules and
regulations promulgated by the SEC in order for such audited
financial statements to be included in the Form S-4
Registration Statement contemplated by Section 4.2 of this
Agreement. All fees and costs associated with such audit will
be paid by Intermountain.
4.1.9 UPDATE OF FINANCIAL STATEMENTS. Snake River will deliver
unaudited balance sheets and related statements of income and
stockholders' equity for each month ending after the Execution
Date and before Closing or the Termination Date, as the case
may be, within 15 days after each such month-end. Snake River
will deliver Subsequent Snake River Financial Statements to
Intermountain by the earlier of: (1) five days after Snake
River has prepared and issued them or (2) 60 days after
year-end for year-end statements, and 45 days after the end of
the quarter for quarterly statements. The Subsequent Snake
River Financial Statements:
(i) will be prepared from the books and records of Snake
River and its subsidiaries;
(ii) will present fairly the financial position and
operating results of Snake River and its subsidiaries
at the times indicated and for the periods covered;
(iii) will be prepared in accordance with GAAP (except for
the absence of notes) and with the regulations
promulgated by applicable regulatory authorities, to
the extent then applicable; and
(iv) will reflect all liabilities, contingent or
otherwise, of Snake River and its Subsidiaries on the
respective dates and for the respective periods
covered, except for liabilities: (1) not required to
be so reflected in accordance with GAAP or (2) not
significant in amount. All contingent liabilities not
recorded on the Subsequent Snake River Financial
Statements will be disclosed in writing to
Intermountain.
4.1.10 UPDATE SCHEDULES. From the date of this Agreement until
Closing, Snake River will promptly revise and supplement the
Schedules to this Agreement prepared by or on behalf of Snake
River or its Subsidiaries to ensure that such Schedules remain
accurate and complete. Notwithstanding anything to the
contrary contained herein, supplementation of such Schedules
following the execution of this Agreement will not be
26
deemed a modification of Snake River's or Magic Valley's
representations or warranties contained in this Agreement.
4.1.11 ACQUISITION PROPOSAL. Snake River agrees that neither it nor
any of its Subsidiaries will, and Snake River will direct and
use its best efforts to cause its directors, officers,
employees, agents and representatives (including, without
limitation, any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) not to, initiate,
solicit, encourage or take any other action to facilitate any
inquiries or the making of any proposal or offer (including,
without limitation, any proposal or offer to shareholders of
Snake River) with respect to a merger, consolidation or
similar transaction involving, or any purchase of all or any
significant portion of the assets or equity securities of,
Snake River or any of its Subsidiaries (any such proposal or
offer being hereinafter referred to as an "Acquisition
Proposal") or, except to the extent legally required for the
discharge by the board of directors of its fiduciary duties as
advised in writing by such board's counsel, engage in any
negotiations concerning, or provide any confidential
information or data to any Person relating to, an Acquisition
Proposal, or otherwise facilitate any effort or attempt to
make or implement an Acquisition Proposal. Snake River and its
Subsidiaries will immediately cease and cause to be terminated
any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the
foregoing. Snake River will take the necessary steps to inform
the appropriate individuals or entities referred to in the
first sentence hereof of the obligations undertaken in this
Section 4.1.11. Snake River will notify Intermountain
immediately if any such inquiries or proposals are received
by, any such information is requested from, or any such
negotiations are sought to be initiated or continued with
Snake River or its Subsidiaries.
4.1.12 STATUS OF TITLE/LEASEHOLD INTERESTS. No later than 15 days
after the Execution Date, Snake River will provide
Intermountain with title reports for the ▇▇▇▇▇▇▇ and Magic
Valley Mall Properties issued by Twin Falls Title, and for the
Main Office Property issued by Title Fact, Inc., or such other
title insurance companies reasonably satisfactory to the
parties. These title reports must show the current status of
title to each such Property. Within 15 days after the date on
which Snake River delivers all of the title reports to
Intermountain for its review, Intermountain will inform Snake
River in writing whether, and in what manner, it objects to
any of the exceptions to title shown on any of the title
reports. Intermountain may not object to any item on the title
reports that was also shown on the title policies delivered
pursuant to Section 3.1.6(iv) unless set forth in Schedule 13.
Snake River will, within 10 days of the date on which it
receives the written notice of objection from Intermountain,
inform Intermountain if there are any objections that it is
unable to remove at or prior to Closing. Snake River will not,
however, be obligated to remove exceptions that are
non-monetary exceptions that do not interfere with the use of
the properties as bank branch locations. At Closing, Snake
River will provide Intermountain with title policies issued
with respect to each of the ▇▇▇▇▇▇▇ and Magic Valley Mall
Properties, in an amount commensurate with the value of each
such Property as agreed upon by Intermountain and Snake River,
dated as of the Effective Date, insuring fee title in
Intermountain or Panhandle, as so designated by Intermountain,
and that each such Property is unencumbered by any Liens,
other than Liens for taxes not yet delinquent and other
exceptions to title as set forth in the title reports as
approved by Intermountain.
4.1.13 MAGIC VALLEY MALL PROPERTY. Magic Valley will use its best
efforts to comply with the provisions of Section 8 of the
Covenants, Conditions and Restrictions Agreement and
27
Right of First Refusal, Lot M, Magic Valley Mall, dated ▇▇▇▇
21, 2004 (the "CCR Agreement") so that the purchase option set
forth in Section 9 of the CCR Agreement is not triggered.
4.1.14 DIRECTORS' AND OFFICERS' LIABILITY. Immediately prior to the
Effective Date, Snake River will notify its directors' and
officers' liability insurers of the Transaction and of all
pending or, to the knowledge of its Executive Officers,
threatened claims, actions, suits, proceedings or
investigations asserted or claimed against any Person entitled
to indemnification pursuant to Section 6.6 of this Agreement
and known to Snake River, or circumstances reasonably deemed
by Intermountain to be likely to give rise thereto, in
accordance with terms and conditions of the applicable
policies.
4.1.15 REVIEW OF LOANS. Snake River and Magic Valley will permit
Intermountain to conduct an examination of Magic Valley's
loans to determine credit quality and the adequacy of Magic
Valley's allowance for loan losses. Intermountain will have
continued access to Magic Valley's loans through Closing to
update the examination. At Intermountain's reasonable request,
Magic Valley will provide Intermountain with current reports
updating the information set forth in Schedule 9.
4.1.16 CONDUCT OF INTERMOUNTAIN'S BUSINESS BEFORE CLOSING.
Intermountain will:
(i) without prior written notice to Snake River and
except as required by the Director, the FDIC or the
Federal Reserve (so long as Snake River receives
prior written notice of such required action),
conduct its business only in the ordinary and usual
course
(ii) provide Snake River with prompt written notice of any
events, individually or in the aggregate, that could
have a Material Adverse Effect with respect to
Intermountain;
(iii) conduct, and cause its Subsidiaries to conduct, their
respective businesses in compliance with all material
obligations and duties imposed on them by applicable
federal and state laws; and
(iv) maintain all books and records of it and its
Subsidiaries, including all financial statements, in
accordance with such accounting principles and
practices consistent with those used for the
Intermountain Financial Statements, except for
changes in such principles and practices required
under GAAP.
4.2 REGISTRATION STATEMENT.
4.2.1 PREPARATION OF REGISTRATION STATEMENT.
(i) A Registration Statement on Form S-4 (together with
any amendments or supplements, the "Registration
Statement") will be filed by Intermountain with the
SEC under the Securities Act for registration of the
Intermountain Shares to be issued in the Holding
Company Merger, and the parties will prepare a
related prospectus/proxy statement ("Prospectus/Proxy
Statement") to be mailed together with any amendments
and supplements to Snake River's stockholders.
28
(ii) The parties will cooperate with each other in
preparing the Registration Statement and
Prospectus/Proxy Statement, and will use their best
efforts to: (1) file the Registration Statement with
the SEC within 45 days following the date on which
this Agreement is executed, and (2) obtain the
clearance of the SEC, any appropriate state
securities regulators and any other required
regulatory approvals, to issue the Prospectus/Proxy
Statement.
(iii) Nothing will be included in the Registration
Statement or the Prospectus/Proxy Statement or any
proxy solicitation materials with respect to any
party to this Agreement unless approved by that
party, which approval will not be unreasonably
withheld. When the Registration Statement becomes
effective, and at all times subsequent to such
effectiveness (up to and including the date of the
Snake River Meeting), all information set forth in
the Registration Statement that is or to be furnished
by or on behalf of Intermountain relating to
Intermountain and by or on behalf of Snake River
relating to Snake River, (1) will comply in all
material respects with the provisions of the
Securities Act and any other applicable statutory or
regulatory requirements, and (2) will not contain any
untrue statement of a material fact or omit to state
a material fact that is required to be stated or
necessary to make the statements in the Registration
Statement not misleading; provided, however, that in
no event will any party be liable for any untrue
statement of a material fact or omission to state a
material fact in the Registration Statement where
such statement or omission, as the case may be, was
made in reliance upon, and in conformity with,
written information concerning another party
furnished by or on behalf of such other party
specifically for use in the Registration Statement.
(iv) Intermountain will pay all fees and costs associated
with the preparation by Intermountain's counsel (and
other professional advisors) and the filing of the
Registration Statement. Snake River will pay all
costs associated with the review and preparation by
Snake River's counsel of the Registration Statement
and the Prospectus/Proxy. Snake River will pay the
costs associated with the printing and mailing of the
Prospectus/Proxy Statement to its stockholders and
any other direct costs incurred by it in connection
with the Prospectus/Proxy Statement.
4.2.2 SUBMISSION TO SHAREHOLDERS.
(i) Intermountain and Snake River will submit the
Prospectus/Proxy Statement to, and will use their
best efforts in good faith to obtain the prompt
approval of the Prospectus/Proxy Statement by, all
applicable regulatory authorities. The parties will
provide each other with copies of such submissions
for review.
(ii) Snake River will promptly take the actions necessary
in accordance with applicable law and its Articles of
Incorporation and Bylaws to convene a stockholders'
meeting to consider the approval of this Agreement
and to authorize the transactions contemplated by
this Agreement (such meeting and any adjournment or
postponement thereof, the "Snake River Meeting"). The
Snake River Meeting will be held on the earliest
practical date after the date the Prospectus/Proxy
Statement may first be sent to Snake River's
stockholders without objection by applicable
governmental authorities. Except as otherwise
required to comply with the fiduciary
responsibilities of its board of directors,
29
Snake River's board of directors and officers will
recommend approval of the Holding Company Merger to
Snake River's stockholders.
4.3 AFFILIATE LETTERS.
4.3.1 AFFILIATE LIST. Certain persons may be deemed "affiliates" of
Snake River under Rule 145 of the Securities Act. Within
thirty days after the Execution Date, Snake River will deliver
to Intermountain, after consultation with legal counsel, a
list of names and addresses of Snake River's "affiliates" with
respect to the Mergers within the meaning of Rule 145. By the
Effective Date, Snake River will deliver, or cause to be
delivered, to Intermountain a letter from each of these
"affiliates," and any additional person who becomes an
"affiliate" before the Effective Date and after the date of
the list, dated as of the date of its delivery and in the form
attached as Exhibit A.
4.3.2 RESTRICTIVE LEGENDS. Intermountain will place a restrictive
legend on all certificates representing Intermountain Shares
to be received by an "affiliate," so as to preclude their
transfer or disposition in violation of the affiliate letters.
Intermountain will also instruct its transfer agent not to
permit the transfer of those shares, and to take any other
steps reasonably necessary to ensure compliance with Rule 145.
4.4 SUBMISSION TO REGULATORY AUTHORITIES. Representatives of Intermountain
and Panhandle will prepare and file with applicable regulatory
agencies, applications for approvals, waivers or other actions deemed
necessary or desirable, in the opinion of their counsel, in order to
consummate the Transaction. Intermountain will provide copies of such
applications for review by Snake River prior to their submission to the
applicable regulatory authorities. These applications are expected to
include:
(i) An application (or request for waiver) to the Federal
Reserve and related filings regarding the Holding
Company Merger.
(ii) An application to the FDIC and Director and related
filings regarding the Bank Merger.
(iii) Filings and coordination with the office of the Idaho
Secretary of State with respect to the Holding
Company Merger.
4.5 PUBLIC ANNOUNCEMENTS. Subject to written advice of legal counsel with
respect to legal requirements relating to public disclosure of matters
related to the subject matter of this Agreement, the timing and content
of any announcements, press releases or other public statements
concerning the Transaction will occur upon, and be determined by, the
mutual consent of Snake River and Intermountain.
4.6 CONSENTS. Each party to this Agreement will use its best efforts to
obtain the timely consent or approval of any Person whose consent or
approval is required in order to permit Intermountain, Panhandle, Snake
River and Magic Valley to consummate the Transaction.
4.7 FURTHER ACTIONS. The parties to this Agreement will use their best
efforts in good faith to make all such arrangements, do or cause to be
done all such acts and things, and execute and deliver all such
certificates and other instruments and documents as may be reasonably
necessary or appropriate in order to consummate the Transaction
promptly.
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4.8 NOTICE. The parties will provide each other with prompt written notice
of:
(i) Any events that, individually or in the aggregate,
can reasonably be expected to have a Material Adverse
Effect with respect to them.
(ii) The commencement of any proceeding against any one or
more of them by or before any court or governmental
agency that, individually or in the aggregate, can
reasonably be expected to have a Material Adverse
Effect with respect to any one or more of them.
(iii) In the case of Snake River and Magic Valley only,
acquisition of an ownership or leasehold interest in
any real property (except as disclosed in Schedule
5), as specified in Section 4.1.2 of this Agreement.
4.9 CONFIDENTIALITY. Subject to the requirements of law, each party will
keep confidential, and will exercise its best efforts to cause its
representatives to keep confidential, all information and documents
obtained pursuant to this Agreement unless such information (i) is
required by law to be disclosed, (ii) becomes available to such party
from other sources not bound by a confidentiality obligation, (iii) is
disclosed with prior written approval of the party to which such
information pertains or is disclosed in a legal action between the
parties relating to the Transaction, or (iv) is or becomes public
without fault of the subject party. If this Agreement is terminated or
the Transaction otherwise fails to be consummated, each party to this
Agreement will promptly (i) return to the other all confidential
documents obtained from them; and (ii) not use or disclose any
nonpublic information obtained under this Agreement or in connection
with the Transaction.
4.10 UPDATE OF INTERMOUNTAIN FINANCIAL STATEMENTS. Intermountain will
deliver unaudited balance sheets and related statements of income and
stockholders' equity for each month ending after the Execution Date and
before Closing or the Termination Date, as the case may be, within 15
days after each such month-end. Intermountain will deliver Subsequent
Intermountain Financial Statements to Snake River by the earlier of:
(1) 5 days after Intermountain prepares and issues them or (2) the date
that such financial statements are filed with the SEC pursuant to
Intermountain's reporting obligations under the Exchange Act. The
Subsequent Intermountain Financial Statements will:
(a) be prepared from the books and records of Intermountain and
its Subsidiaries;
(b) present fairly the financial position and operating results of
Intermountain and its Subsidiaries at the times indicated and
for the periods covered;
(c) be prepared in accordance with GAAP (except for the absence of
notes) and with the regulations promulgated by applicable
regulatory authorities, to the extent then applicable, subject
to normal year-end adjustments; and
(d) reflect all liabilities, contingent or otherwise, of
Intermountain on the respective dates and for the respective
periods covered, except for liabilities not required to be so
reflected in accordance with GAAP or not significant in
amount.
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4.11 AVAILABILITY OF INTERMOUNTAIN'S BOOKS, RECORDS AND PROPERTIES.
(a) Intermountain will make its books, records, properties,
contracts and documents available during business hours with
reasonable advance notice to Snake River and its counsel,
accountants and other representatives. These items will be
open for inspection, audit and direct verification of loan or
deposit balances and collateral receipts. Intermountain will
cooperate fully in any such inspection, audit, or direct
verification procedures, and will make available all
information reasonably required by or on behalf of
Intermountain.
(b) At Snake River's request, Intermountain will request any third
parties involved in the preparation or review of (1)
Intermountain Financial Statements or (2) any audits of
Intermountain's operations, loan portfolios or other assets,
to disclose to Snake River the work papers or any similar
materials related to these items.
4.12 BLUE SKY FILINGS. Intermountain will use its best efforts to obtain,
prior to the effective date of the Registration Statement, any
necessary state securities laws or "blue sky" permits and approvals.
4.13 TAX TREATMENT. Neither Intermountain and its Subsidiaries nor Snake
River and its Subsidiaries will take or cause to be taken any action
that would or could reasonably be expected to prevent the Merger from
qualifying as a reorganization under Section 368(a) of the Code.
4.14 BEST EFFORTS. Subject to the terms and conditions of this Agreement
and, in the case of Snake River and Magic Valley, to the exercise by
its Board of Directors of its fiduciary duties, each party will use its
reasonable best efforts in good faith to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary,
proper or desirable, or advisable under applicable laws, so as to
permit consummation of the Mergers by November 30, 2004, and to
otherwise enable consummation of the transactions contemplated by this
Agreement.
SECTION 5.
APPROVALS AND CONDITIONS
5.1 REQUIRED APPROVALS. The obligations of the parties to this Agreement
are subject to the approval of this Agreement, the Bank Merger
Agreement and the Transaction by all appropriate regulatory agencies
having jurisdiction with respect to the Transaction; provided, however,
that no such consent or approval will have imposed any condition or
requirement not normally imposed in such transactions that, in the
opinion of Intermountain, would deprive Intermountain of the material
economic or business benefits of the Transaction.
5.2 CONDITIONS TO OBLIGATIONS OF INTERMOUNTAIN AND PANHANDLE. All
obligations of Intermountain and Panhandle pursuant to this Agreement
are subject to satisfaction of the following conditions at or before
Closing:
5.2.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Snake River and Magic Valley contained in this
Agreement or in any certificate or other instrument delivered
in connection with this Agreement will be true and correct at
Closing, with the same force and effect as though such
representations and warranties had been made on and as of
Closing, except to the extent that such representations and
warranties are by their express provisions made as of a
specified date, in which case such representations and
warranties will be true and correct as of such date. Snake
River and Magic Valley
32
will have delivered to Intermountain and Panhandle their
respective certificates to that effect, executed by a duly
authorized officer of Snake River and dated as of Closing.
5.2.2 COMPLIANCE. Snake River and Magic Valley each will have
performed and complied in all material respects with all
terms, covenants and conditions of this Agreement on or before
Closing. Snake River and Magic Valley will have delivered to
Intermountain and Panhandle their respective certificates to
that effect, executed by a duly authorized officer of Snake
River and dated as of Closing.
5.2.3 TRANSACTION FEES. Snake River Transaction Fees have not
exceeded $150,000. "Snake River Transaction Fees" means all
costs and expenses incurred by Snake River or owed or paid by
Snake River to its investment advisors, legal counsel,
accountants and printers in connection with the preparation,
negotiation and execution of this Agreement and related
documents and the consummation of the Transaction, excluding,
however, fees or costs paid or payable to Snake River's and
Magic Valley's accountants with regard to this Transaction,
including any fees and costs incurred pursuant to Sections
4.1.8 and 4.1.9 of this Agreement.
5.2.4 TRANSACTION FEES STATEMENTS. Snake River has delivered to
Intermountain a statement, in a form reasonably satisfactory
to Intermountain, from each third party to whom Snake River
has paid or owes Snake River Transaction Fees. Each statement
must set forth the total costs and expenses paid or owing to
the third party in connection with the Transaction's
consummation. Snake River has delivered to Intermountain its
certificate, executed by a duly authorized officer of Snake
River and dated as of Closing, stating the total Snake River
Transaction Fees and certifying that Snake River is in
compliance with Section 5.2.3 and this Section 5.2.4.
5.2.5 NO MATERIAL ADVERSE EFFECT. Since December 31, 2003, there
will have been no material damage, destruction or loss
(whether or not covered by insurance) and no other event,
individually or in the aggregate, constituting a Material
Adverse Effect with respect to Snake River or Magic Valley.
5.2.6 FINANCIAL CONDITION. The following will be true and the
certificates of Snake River and Magic Valley referred to in
Section 5.2.2 will so state:
(i) Snake River's Tangible Equity Capital at Closing will
be at least $7.4 million.
(ii) Magic Valley's deposits at Closing, excluding
brokered and internet deposits and jumbo certificates
of deposit, will be at least $56 million.
(iii) Magic Valley's allowance for possible loan and lease
losses will not be less than 1.35% of Magic Valley's
total outstanding loans, and will be adequate to
absorb Magic Valley's anticipated loan losses.
(iv) The reserves set aside for any contingent liabilities
of Snake River and Magic Valley will be adequate to
absorb all reasonably anticipated losses.
5.2.7 NO GOVERNMENTAL PROCEEDINGS. No action or proceeding will have
been commenced or threatened by any governmental agency to
restrain or prohibit or invalidate the Transaction.
33
5.2.8 EXECUTION OF ADDITIONAL AGREEMENT. The Bank Merger Agreement
will have been executed and delivered to Panhandle.
5.2.9 REAL PROPERTY MATTERS.
(i) Intermountain has received all title insurance
policies required under Section 4.1.12 (or
irrevocable commitments by the title insurance
company to issue such policies).
(ii) Snake River or Magic Valley, as the case may be, has
executed, and Intermountain has received, such deeds
or other documents as are necessary to transfer title
from Snake River or Magic Valley, as the case may be,
to Intermountain or Panhandle, as the case may be (or
to indicate, as a matter of record, that the
beneficial ownership of the Property has changed) to
all Property owned by Snake River or Magic Valley.
5.2.10 CORPORATE AND SHAREHOLDER ACTION. Each of the following will
have approved the Transaction:
(i) The Boards of Directors of Snake River and Magic
Valley;
(ii) Snake River, as shareholder of Magic Valley; and
(iii) The shareholders of Snake River.
5.2.11 RESIGNATION OF DIRECTORS. The directors of Snake River and
Magic Valley will have tendered their written resignations
from the Board of Directors of each respective company to be
effective upon consummation of the Transaction.
5.2.12 TAX OPINION. Intermountain has, at Intermountain's expense,
obtained from ▇▇▇▇▇▇ & ▇▇▇▇ PC and delivered to Snake River,
an opinion addressed to Snake River and Intermountain (in form
and substance reasonably satisfactory to Snake River and its
counsel, and subject to reasonable limitations, conditions and
assumptions) substantially to the effect that:
(i) The Merger will qualify as a reorganization within
the meaning of IRC Section 368(a)(1)(A).
(ii) Holders of Snake River Common Stock who receive
solely cash in exchange for their shares of Snake
River Common Stock, and who own those shares as
capital assets and who do not actually or
constructively own shares of Intermountain after the
Merger, will recognize capital gain or loss. The
amount of such gain or loss will be equal to the
difference between the amount of cash received and
the stockholder's aggregate tax basis for such shares
of Snake River Common Stock. The gain or loss will be
long-term capital gain or loss if such shares of
Snake River Common Stock were held for more than one
year.
(iii) A holder of Snake River Common Stock who receives
both Intermountain Shares and cash consideration in
exchange for his or her shares of Snake River Common
Stock will recognize gain, but not loss, to the
extent of the lesser of the gain realized by such
shareholder in the exchange or the amount of cash
received by
34
such shareholder in the exchange. Any gain recognized
by a shareholder who owns his or her shares of Snake
River Common Stock as capital assets will be treated
as capital gain, if the exchange is, with respect to
such shareholder, either "substantially
disproportionate" or "not essentially equivalent to a
dividend," each within the meaning of IRC Section
302(b).
The exchange will be "substantially disproportionate"
with respect to a shareholder if the percentage of
shares of outstanding Intermountain Common Stock
(actually and constructively) owned by the
shareholder immediately after the Transaction is less
than 80% of the percentage of the outstanding shares
of Intermountain Common Stock (actually and
constructively) owned by the shareholder immediately
before the Transaction. For purposes of determining
the percentage of the outstanding shares of
Intermountain Common Stock (actually and
constructively) owned by the shareholder immediately
before the Transaction, the shareholder is treated as
if (1) all such shareholder's shares of Snake River
Common Stock were first exchanged in the Transaction
for shares of Intermountain Common Stock, and (2) a
portion of those shares of Intermountain Common Stock
were then redeemed for the cash actually received in
the Transaction.
The exchange will be "not essentially equivalent to a
dividend" with respect to a shareholder if the
reduction in such shareholder's stock ownership is a
"meaningful reduction," given his or her particular
facts and circumstances. The Internal Revenue Service
has ruled that a reduction in the stock ownership of
a minority shareholder who owns a small number of
shares in a publicly and widely held corporation, and
who exercises no control over the affairs of the
corporation, will meet this test.
5.2.13 OPINION OF COUNSEL. Snake River has obtained from ▇▇▇▇▇ &
▇▇▇▇▇▇, P.C. and delivered to Intermountain an opinion of
counsel, containing the opinions set forth in Exhibit B to
this Agreement.
5.2.14 AFFILIATE LETTERS. Intermountain has received the affiliate
list and letters specified in Section 4.3.1.
5.2.15 REGISTRATION STATEMENT. The Registration Statement, as it may
have been amended, required in connection with the
Intermountain Shares, and as described in Section 4.2, has
become effective, and no stop-order suspending the
effectiveness of such Registration Statement has been issued
or remains in effect, and no proceedings for that purpose have
been initiated or threatened by the SEC the basis for which
still exists.
5.2.16 CASH PAID. The aggregate amount of the cash to be paid for
Proposed Dissenting Shares will not exceed five percent (5%)
of the cash value of the Merger Consideration, as it may be
adjusted under this Agreement. For purposes of this Section
5.2.16, the assumed cash value per Proposed Dissenting Share
will be $31.00.
5.2.17 NO CHANGE IN LOAN REVIEW. Snake River and Magic Valley have
provided to Intermountain the reports reasonably requested by
Intermountain under Section 4.1.15, and neither these reports
nor any examinations conducted by Intermountain under Section
4.1.15 reveal a change in either: (i) the information set
forth in Schedule 9 or
35
(ii) information revealed during Intermountain's previous
examinations of the Magic Valley's loans, which change
constitutes a Material Adverse Effect.
5.2.18 CONSENTS. Snake River has obtained the consents as indicated
in Schedule 2.
5.2.19 FAIRNESS OPINION. Snake River will have received from ▇▇▇▇▇ an
updated fairness opinion, dated on or about the date on which
the Prospectus/Proxy Statement is distributed to Snake River's
shareholders, to the effect that the Merger Consideration to
be received by Snake River shareholders pursuant to Section
1.3 of this Agreement is fair to such shareholders from a
financial point of view.
5.2.20 MAGIC VALLEY MAIN OFFICE. Intermountain or Panhandle will have
assumed Magic Valley's current lease on the property on the
same terms as in effect on the Execution Date, with the
addition of the option to purchase contemplated by Recital I.
5.3 CONDITIONS TO OBLIGATIONS OF SNAKE RIVER AND MAGIC VALLEY. All
obligations of Snake River and Magic Valley pursuant to this Agreement
are subject to satisfaction of the following conditions at or before
Closing:
5.3.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Intermountain and Panhandle contained in this
Agreement or in any certificate or other instrument delivered
in connection with this Agreement will be true and correct at
Closing, with the same force and effect as though such
representations and warranties had been made on and as of
Closing, except to the extent that such representations and
warranties are by their express provisions made as of a
specified date, in which case such representations and
warranties will be true and correct as of such date.
Intermountain and Panhandle will have delivered to Snake River
and Magic Valley their respective certificates to that effect,
executed by a duly authorized officer of Intermountain and
dated as of Closing.
5.3.2 COMPLIANCE. Intermountain and Panhandle each will have
performed and complied with all terms, covenants and
conditions of this Agreement on or before Closing.
Intermountain and Panhandle will have delivered to Snake River
and Magic Valley their respective certificates to that effect,
executed by a duly authorized officer of Intermountain and
dated as of Closing.
5.3.3 NO GOVERNMENTAL PROCEEDINGS. No action or proceeding will have
been commenced or threatened by any governmental agency to
restrain or prohibit or invalidate the Transaction.
5.3.4 NO MATERIAL ADVERSE EFFECT. Since December 31, 2003, there
will have been no material damage, destruction or loss
(whether or not covered by insurance) and no other event,
individually or in the aggregate, constituting a Material
Adverse Effect with respect to Intermountain or Panhandle.
5.3.5 FAIRNESS OPINION. The fairness opinion specified in Section
5.2.19 will have been delivered.
5.3.6 TAX OPINION. The tax opinion specified in Section 5.2.12 has
been delivered to Snake River.
36
5.3.7 OPINION OF COUNSEL. Intermountain has obtained from ▇▇▇▇▇▇ &
▇▇▇▇ PC and Intermountain's Idaho corporate counsel and
delivered to Snake River opinions of counsel containing the
opinions set forth in Exhibit C and Exhibit D, respectively,
to this Agreement.
5.3.8 CORPORATE AND SHAREHOLDER ACTION. Each of the following will
have approved the Transaction:
(i) The Boards of Directors of Intermountain and
Panhandle.
(ii) Intermountain, as shareholder of Panhandle.
5.3.9 REGISTRATION STATEMENT. The Registration Statement will have
become effective as specified in Section 5.2.15.
5.3.10 BLUE SKY FILINGS. Intermountain has received the state
securities laws or "blue sky" permits and approvals specified
in Section 4.12.
5.3.11 EXECUTION OF ADDITIONAL AGREEMENT. Panhandle will have
executed and delivered the Bank Merger Agreement.
5.3.12 PAYMENTS TO THE EXCHANGE AGENT. Intermountain will have
deposited the Merger Consideration with the Exchange Agent.
SECTION 6.
DIRECTORS, OFFICERS AND EMPLOYEES
6.1 DIRECTORS. As a condition to the execution of this Agreement, certain
members of the boards of directors of Snake River have entered into the
written agreements described in Recital F on or before the Execution
Date. Such agreements will take effect at the Effective Date.
6.2 OFFICER'S EMPLOYMENT CONTRACT. At the Effective Date, the Employment
Agreements described in Recital E will take effect.
6.3 INTERMOUNTAIN BOARD OF DIRECTORS. From and after the Effective Date,
the board of directors of Intermountain will include the members of the
board of directors of Intermountain as constituted immediately prior to
the Effective Date, together with ▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇, each of
whom will hold office until his successor is elected and qualified.
Intermountain will place ▇▇. ▇▇▇▇▇▇▇ in Class 1 (term expiring at
Intermountain's 2005 annual meeting) and ▇▇. ▇▇▇▇▇ in Class 2 (term
expiring at Intermountain's 2006 annual meeting).
6.4 ADVISORY BOARD. Intermountain will, effective as of the Effective Date,
cause ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, and each individual who is
currently serving as an outside director of Magic Valley, if such
persons are willing to so serve, to be elected or appointed as members
of an advisory board ("Advisory Board") established by Intermountain,
the function of which will be to advise Intermountain and Panhandle
with respect to deposit and lending activities in Magic Valley's market
area and to maintain and develop customer relationships. The members of
the Advisory Board initially will be elected or appointed for a term of
two years; provided, however, that any Advisory Board member may be
removed by Intermountain if Intermountain makes a good faith
determination that such member has a conflict of interest. The Advisory
Board will meet at least twice per year. Each member of the Advisory
Board will receive a fee of $300 for
37
each meeting of the Advisory Board that he or she attends. Director and
officer liability insurance coverage for each Advisory Board member
will be underwritten through the present insurance carrier for
Intermountain and Panhandle.
6.5 EMPLOYEE BENEFIT ISSUES.
6.5.1 COMPARABILITY OF BENEFITS. Intermountain and Panhandle intend
that their current personnel policies will apply to any
current employees of Snake River and Magic Valley who are
retained in the service of Intermountain and Panhandle after
Closing. Such retained employees will be eligible to
participate in all of the benefit plans of Intermountain and
Panhandle that are generally available to similarly situated
employees of Intermountain and Panhandle in accordance with
and subject to the terms of such plans.
6.5.2 TREATMENT OF PAST SERVICE. For purposes of such participation,
current employees' prior service with Snake River and/or Magic
Valley will constitute prior service with Intermountain and/or
Panhandle for purposes of determining eligibility and vesting
(including but not limited to vacation time).
6.5.3 SEVERANCE PAYMENTS. If individuals who are Magic Valley
employees as of the Execution Date are terminated within six
months of the Effective Date as a result of a consolidation of
staff functions, such employees will be entitled to receive a
severance payment in a lump sum amount equal to three times
such individuals' then current monthly salary.
6.5.4 EMPLOYEE BONUSES. For 2004, individuals who are Magic Valley
employees as of the Execution Date will be eligible to receive
a bonus pursuant to Magic Valley's bonus plan in effect as of
the Execution Date. Commencing in 2005, such employees will be
eligible to participate in certain of Panhandle's incentive
and bonus plans administered by Panhandle's human resource
committee. Nothing in this Section 6.5.4 shall be construed as
guaranteeing specific bonus payments for individual employees.
6.5.5 DIRECTOR BOLI AGREEMENTS. Intermountain and Panhandle agree to
assume and discharge the obligation of Magic Valley under
those certain Life Insurance Endorsement Method Split Dollar
Agreements between Magic Valley and ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
and each individual who is a director of Magic Valley as of
the Execution Date.
6.5.6 NO CONTRACT CREATED. Except as provided in Section 6.2 of this
Agreement, nothing in this Agreement will give any employee a
right to continuing employment.
6.6 INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS. For a period of
six (6) years from and after the Effective Date, Intermountain will
indemnify and defend each present and former director and officer of
Snake River and Magic Valley from and against any and all claims,
losses, liabilities, judgments, fines, damages, costs, and expenses
(including reasonable attorneys' fees) incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative, or investigative, arising out of actions or
omissions accruing at or prior to the Effective Date, including,
without limitation, the Transaction contemplated by this Agreement, to
the fullest extent that Snake River and/or Magic Valley are permitted
to indemnify (and advance expenses to) its directors and officers under
applicable law and under their respective articles of incorporation or
bylaws in effect at the date of this Agreement. Any determination
required to be made with respect to whether an officer's or director's
conduct
38
complies with the standard set forth under Snake River's or Magic
Valley's Articles of Incorporation or bylaws will be made by
independent counsel (which will not be counsel that provides any
services to Intermountain or any of its Subsidiaries) selected by
Intermountain and reasonably acceptable to such officer or director.
For a period of six (6) years after the Effective Date, Intermountain
will use reasonable efforts to cause to be maintained in effect (with
reputable and financially sound insurers) director and officer
liability insurance substantially similar to that maintained by
Intermountain with respect to claims arising from facts or events which
occurred before the Effective Date.
SECTION 7.
TERMINATION OF AGREEMENT AND ABANDONMENT OF TRANSACTION
7.1 TERMINATION BY REASON OF LAPSE OF TIME. If Closing does not occur on or
before January 31, 2005 (the "Termination Date"), either Intermountain
or Snake River may terminate this Agreement and the Transaction if both
of the following conditions are satisfied:
(a) the terminating party's board of directors decides to
terminate by a majority vote of its members; and
(b) the terminating party delivers to the other party written
notice that its board of directors has voted in favor of
termination.
7.2 TERMINATION DUE TO INTERMOUNTAIN AVERAGE CLOSING PRICE. By specific
action of its board of directors, Snake River may terminate this
Agreement and the Transaction by written notice to Intermountain on the
business day immediately following the Determination Date, in the event
that the Intermountain Average Closing Price is less than $20.
The foregoing event is referred to as the "Adjustment Trigger." If
Intermountain declares or effects a stock dividend, reclassification,
recapitalization, split-up, combination, exchange of shares or similar
transaction between the Execution Date and the Determination Date, the
price for the Intermountain Common Stock will be appropriately adjusted
for the purpose of applying this Section 7.2. If Snake River elects to
exercise its termination right as a result of the Adjustment Trigger,
the provisions of Section 7.3 will apply.
7.3 INTERMOUNTAIN'S RIGHT TO ADJUST CONSIDERATION. If Snake River provides
written notice to Intermountain in accordance with Section 7.2, then
within one business day of Intermountain's receipt of such notice,
Intermountain may elect by written notice to Snake River to, in its
sole discretion (provided, however, that Intermountain will use its
best efforts to not adjust the Merger Consideration in a manner that
would change the tax treatment of the Merger Consideration for Snake
River shareholders who own their shares of Snake River Common Stock as
capital assets), adjust the Per Share Consideration through
(a) the payment of additional cash;
(b) the issuance of additional Intermountain Shares; or
(c) any combination of (a) or (b)
in an amount such that the value of the Per Share Consideration
received will equal the Per Share Consideration a holder of Snake River
Common Stock would have received had the Intermountain Average Closing
Price been $20, so that the sum of the value of the Per Share
39
Stock Consideration (valued at the Intermountain Average Closing Price)
and the Per Share Cash Consideration is equal to $26.82.
If Intermountain makes such election to increase the Merger
Consideration, no termination will occur pursuant to Section 7.2 and
this Agreement will remain in effect according to its terms (except as
the Merger Consideration has been supplemented).
7.4 OTHER GROUNDS FOR TERMINATION. This Agreement and the Transaction may
be terminated at any time before Closing (whether before or after
applicable approval of this Agreement by Snake River's stockholders,
unless otherwise provided) as follows:
7.4.1 MUTUAL CONSENT. By mutual consent of Snake River and
Intermountain, if the boards of directors of each party agrees
to terminate by a majority vote of its members.
7.4.2 NO REGULATORY APPROVALS. By either party, if the regulatory
approvals required by Section 5.1 are denied (or if any such
required approval is conditioned on a substantial deviation
from the Transaction); provided, however, that either party
will have fifteen (15) business days following receipt of such
denial to appeal the decision, and if such appeal is timely
made, either party will have sixty (60) days to prosecute
diligently and overturn such denial, and such other party may
not terminate this Agreement pursuant to this Section 7.4.2
during such period of time.
7.4.3 BREACH OF REPRESENTATION. By either party (provided that the
terminating party is not then in material breach of any of its
representations, warranties, covenants or other agreements in
this Agreement) if there has been a material breach of any of
the representations or warranties set forth in this Agreement
on the part of the other party, which breach is not cured
within thirty days following written notice to the party
committing such breach, or which breach, by its nature, cannot
be cured prior to the end of such thirty day period; provided,
however, that neither party will have the right to terminate
this Agreement pursuant to this Section 7.4.3 unless the
breach of such representation or warranty, together with any
other such breaches, would entitle the party receiving such
representation not to consummate the transactions contemplated
hereby under Section 5.2.1 (in the case of a breach of a
representation or warranty by Snake River) or Section 5.3.1
(in the case of a breach of a representation or warranty by
Intermountain). In the event of termination pursuant to this
Section 7.4.3, the terminating party will be entitled to
receive from the other party the Termination Fee.
7.4.4 BREACH OF COVENANT. By either party, (provided that the
terminating party is not then in material breach of any of its
representations, warranties, covenants or other agreements in
this Agreement) if there has been a material breach of any of
the covenants or agreements set forth in this Agreement on the
part of the other party, which breach is not cured within
thirty days following written notice to the party committing
such breach, or which breach, by its nature, cannot be cured
prior to the end of such thirty day period. In the event of
termination pursuant to this Section 7.4.4, the terminating
party will be entitled to receive from the other party the
Termination Fee; provided, however, that Intermountain will
not be entitled to collect the Termination Fee in the event of
a breach of Section 4.1.12 of this Agreement caused by Snake
River's inability (after good faith effort) to remove
exceptions to title as provided for in that section.
7.4.5 SNAKE RIVER FAILS TO RECOMMEND SHAREHOLDER APPROVAL. By
Intermountain (provided that Intermountain is not then in
material breach of any of its representations,
40
warranties, covenants or other agreements in this Agreement),
before Snake River's stockholders approve the Transaction, if
Snake River's Board of Directors: (a) fails to recommend to
its stockholders the approval of the Merger or (b) modifies,
withdraws or changes in a manner adverse to Intermountain its
recommendation to stockholders to approve the Merger. In the
event of termination pursuant to this Section 7.4.5,
Intermountain will be entitled to receive from Snake River the
Break-Up Fee.
7.4.6 IMPRACTICABILITY. By either Intermountain or Snake River, upon
written notice given to the other party, if the board of
directors of the party seeking termination under this Section
7.4.6 has determined in its sole judgment, made in good faith
and after due consideration and consultation with counsel,
that the Transaction has become inadvisable or impracticable
by reason of the institution of litigation by the federal
government or the government of the State of Idaho to restrain
or invalidate the Transaction or this Agreement.
7.4.7 DISSENTING SHARES. By Intermountain, if holders of 5% or more
of the outstanding shares of Snake River Common Stock are
Proposed Dissenting Shares.
7.4.8 SUPERIOR PROPOSAL - TERMINATION BY SNAKE RIVER. By the board
of directors of Snake River upon written notice to
Intermountain if the board of directors of Snake River has in
good faith determined that a Takeover Proposal constitutes a
Superior Proposal; provided, however, that Snake River will
not be permitted to terminate this Agreement pursuant to this
Section 7.4.7 unless (i) it has not breached Section 4.1.11 of
this Agreement, (ii) subsequent to delivering such notice of
termination it intends to enter into a letter of intent,
acquisition agreement or similar agreement relating to such
Superior Proposal, (iii) it has provided Intermountain at
least five days' prior written notice advising Intermountain
that the board of directors of Snake River is prepared to
accept a Superior Proposal and given Intermountain, if it so
elects, an opportunity to amend the terms of this Agreement
(and negotiated with Intermountain in good faith with respect
to such terms) in such a manner as would enable Snake River's
board of directors to proceed with the Transaction, and (iv)
simultaneously upon entering into such letter of intent,
acquisition agreement or similar agreement relating to such
Superior Proposal referred to in clause (ii), it delivers to
Intermountain the Break-Up Fee.
7.4.9 SUPERIOR PROPOSAL - TERMINATION BY INTERMOUNTAIN. By
Intermountain upon written notice to Snake River if (i) an
Acquisition Event will have occurred; or (ii) after a third
party will have made a proposal to Snake River or its
shareholders to engage in or entered into an agreement with
respect to an Acquisition Event, this Agreement and the
Transaction are not approved at the Snake River Meeting.
7.5 TERMINATION FEE PAYABLE BY SNAKE RIVER. Due to expenses, direct and
indirect, incurred by Intermountain in negotiating and executing this
Agreement and in taking steps to effect the Transaction, Snake River
will pay to Intermountain $200,000 (the "Termination Fee"), if
Intermountain terminates this Agreement pursuant to Sections 7.4.3
(breach of representation) or 7.4.4 (breach of covenant). If the
Termination Fee becomes payable pursuant to this Section 7.5, it will
be payable on Intermountain's demand and must be paid by Snake River
within three business days following the date of Intermountain's
demand.
7.6 TERMINATION FEE PAYABLE BY INTERMOUNTAIN. Due to expenses, direct and
indirect, incurred by Snake River in negotiating and executing this
Agreement and in taking steps to effect the Transaction, Intermountain
will pay to Snake River the Termination Fee if Snake River
41
terminates this Agreement pursuant to Sections 7.4.3 (breach of
representation) or 7.4.4 (breach of covenant). If the Termination Fee
becomes payable pursuant to this Section 7.6, it will be payable on
Snake River's demand and must be paid by Intermountain within three
business days following the date of Snake River's demand.
7.7 BREAK-UP FEE. If (a) this Agreement is terminated pursuant to Section
7.4.5 (Snake River Fails to Recommend Shareholder Approval), Section
7.4.8 (Superior Proposal - Termination by Snake River), or Section
7.4.9(i) (Superior Proposal - Termination by Intermountain - Immediate
Acquisition Event), then Snake River will immediately pay to
Intermountain a fee equal to $750,000 (the "Break-Up Fee"). If this
Agreement is terminated pursuant to Section 7.4.9(ii) (Superior
Proposal - Termination by Intermountain -Subsequent Acquisition Event)
and prior to or within 12 months after such termination, Snake River or
Magic Valley enter into an agreement, or publicly announce an
intention, to engage in an Acquisition Event, or an Acquisition Event
will have occurred, then Snake River will promptly pay to Intermountain
the Break-Up Fee.
7.8 COST ALLOCATION UPON TERMINATION. In connection with the termination of
this Agreement under this Section 7, except as provided in Sections
7.5, 7.6 and 7.7, Intermountain and Snake River will each pay their own
out-of-pocket costs incurred in connection with this Agreement, and
will have no other liability to the other party. The parties agree that
the agreements herein with respect to the Termination Fee and the
Break-Up Fee are integral parts of the transactions contemplated by
this Agreement and constitute liquidated damages and not a penalty.
SECTION 8.
MISCELLANEOUS
8.1 NOTICES. Any notice, request, instruction or other document to be given
under this Agreement will be in writing and will be delivered
personally or sent by registered or certified mail or overnight Federal
Express service, postage prepaid, addressed as follows:
Intermountain/Panhandle Intermountain Community Bancorp
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇, President and CEO
with a copy to: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ & ▇▇▇▇ PC
Pier 70
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Snake River/ Magic Valley Snake River Bancorp, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President and CEO
with a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
42
or to such other address or person as any party may designate by
written notice to the other.
8.2 WAIVERS AND EXTENSIONS. Subject to Section 9 of this Agreement,
Intermountain or Snake River may grant waivers or extensions to the
other party, but only through a written instrument executed by the
President and CEO of the party granting the waiver or extension.
Waivers or extensions that do not comply with the preceding sentence
are not effective. In accordance with this Section 8.2, a party may
extend the time for the performance of any of the obligations or other
acts of any other party, and may waive:
(a) any inaccuracies of any other party in the representations and
warranties contained in this Agreement or in any document
delivered in connection with this Agreement;
(b) compliance with any of the covenants of any other party; and
(c) any other party's performance of any obligations under this
Agreement and any other condition precedent set out in Section
5.
8.3 CONSTRUCTION AND EXECUTION IN COUNTERPARTS. Except as otherwise
expressly provided in this Agreement, this Agreement: (i) covers the
entire understanding of the Parties, and no modification or amendment
of its terms or conditions will be effective unless in writing and
signed by the Parties or their respective duly authorized agents; (ii)
will not be interpreted by reference to any of the titles or headings
to the Sections or Subsections of this Agreement, which have been
inserted for convenience only and are not deemed a substantive part of
this Agreement; (iii) is deemed to include all amendments to this
Agreement, each of which is made a part of this Agreement by this
reference; and (iv) may be executed in one or more counterparts, each
of which will be deemed an original, but all of which taken together
will constitute one and the same document.
8.4 SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS. The
representations and covenants in this Agreement will not survive
Closing or termination of this Agreement, except that (1) Section 4.9
(Confidentiality), Sections 7.5, 7.6 and 7.7 (Termination-Related Fees
& Break-Up Fee), Section 7.8 (expense allocation), and Sections 8.3
through 8.8 will survive termination, and (2) the covenants and other
agreements in this Agreement that impose duties or obligations on the
parties following Closing, including without limitation, Sections 6.4
(Advisory Board) and 6.6 (Indemnification), will survive Closing.
8.5 ATTORNEYS' FEES AND COSTS. In the event of any dispute or litigation
with respect to the terms and conditions or enforcement of rights or
obligations arising by reason of this Agreement or the Transaction, the
substantially prevailing party in any such litigation will be entitled
to reimbursement from the other party of its costs and expenses,
including reasonable attorneys' fees.
8.6 ARBITRATION. At either party's request, the parties must submit any
dispute, controversy or claim arising out of or in connection with, or
relating to, this Agreement or any breach or alleged breach of this
Agreement, to arbitration under the American Arbitration Association's
rules then in effect (or under any other form of arbitration mutually
acceptable to the parties). A single arbitrator agreed on by the
parties will conduct the arbitration. If the parties cannot agree on a
single arbitrator, each party must select one arbitrator and those two
arbitrators will select a third arbitrator. This third arbitrator will
hear the dispute. The arbitrator's decision is final (except as
otherwise specifically provided by law) and binds the parties, and
either party may request any court having jurisdiction to enter a
judgment and to enforce the arbitrator's decision. The
43
arbitrator will provide the parties with a written decision naming the
substantially prevailing party in the action. This prevailing party is
entitled to reimbursement from the other party for its costs and
expenses, including reasonable attorneys' fees. Any arbitration or
related proceedings will take place in Ada County, Idaho.
8.7 GOVERNING LAW AND VENUE. This Agreement will be governed by and
construed in accordance with the laws of the State of Idaho, except to
the extent that federal law may govern certain matters. The parties
must bring any legal proceeding arising out of this Agreement in Ada
County, Idaho. Each party consents to and submits to the jurisdiction
of any local state or federal court located in Ada County, Idaho.
8.8 SEVERABILITY. If a court determines that any term of this Agreement is
invalid or unenforceable under applicable law, the remainder of this
Agreement will not be affected thereby, and each remaining term will
continue to be valid and enforceable to the fullest extent permitted by
law.
8.9 NO ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations under this Agreement may be assigned by any of the
parties (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and
assigns. Except as otherwise expressly provided, this Agreement
(including the documents and instruments referred to in this Agreement)
is not intended to confer upon any person other than the parties any
rights or remedies under this Agreement.
SECTION 9.
AMENDMENTS
Subject to applicable law, this Agreement and the form of any attached
Exhibit or Schedule may be amended upon authorization of the boards of directors
of the parties, whether before a or after the Snake River Meeting; provided,
however, that after approval by Snake River's shareholders, no amendment will be
made changing the form or reducing the amount of consideration to be received by
the shareholders of Snake River without the further approval of such
shareholders. All amendments, modifications, extensions and waivers must be in
writing and signed by the party agreeing to the amendment, modification,
extension or waiver.
[signatures on next page]
44
DATED this 23rd day of July, 2004.
Attest: INTERMOUNTAIN COMMUNITY BANCORP
/s/ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------- -------------------------
Secretary ▇▇▇▇ ▇▇▇▇▇▇
Its: President and Chief Executive Officer
Attest: PANHANDLE STATE BANK
/s/ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------- -------------------------
Secretary ▇▇▇▇ ▇▇▇▇▇▇
Its: Chief Executive Officer
Attest: SNAKE RIVER BANCORP, INC.
/s/ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------- -------------------------
Secretary ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: President and Chief Executive Officer
Attest: MAGIC VALLEY BANK
/s/ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------- -------------------------
Secretary
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: President and Chief Executive Officer
45
STATE OF IDAHO )
) ss.
COUNTY OF ▇▇▇▇▇▇ )
On this 23rd day of July, 2004, before me personally appeared ▇▇▇▇
▇▇▇▇▇▇, to me known to be the President and Chief Executive Officer of
Intermountain Community Bancorp and the Chief Executive Officer of Panhandle
State Bank, both corporations that executed the foregoing instrument, who
acknowledged said instrument to be the free and voluntary act and deed of said
corporation, for the uses and purposes mentioned there, and who stated on oath
that he was authorized to execute said instrument, and that the seal affixed (if
any) was the official seal of said corporation.
IN WITNESS OF THE FOREGOING, I have set my hand and official seal to
this document as of the day and year first written above.
/s/
-------------------------------------------------
NOTARY PUBLIC in and for the State of
___________, residing at _____________
My Commission expires: _______
STATE OF IDAHO )
) ss.
COUNTY OF TWIN FALLS )
On this 23rd day of July, 2004, before me personally appeared ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, to me known to be the President and Chief Executive Officer of Snake
River Bancorp, Inc. and Magic Valley Bank, both corporations that executed the
foregoing instrument, who acknowledged said instrument to be the free and
voluntary act and deed of said corporation, for the uses and purposes mentioned
there, and who stated on oath that he was authorized to execute said instrument,
and that the seal affixed (if any) was the official seal of said corporation.
IN WITNESS OF THE FOREGOING, I have set my hand and official seal to
this document as of the day and year first written above.
/s/
-------------------------------------------------
NOTARY PUBLIC in and for the State of
___________, residing at _____________
My Commission expires: _______
46
TABLE OF CONTENTS
PAGE
----
DEFINITIONS...................................................................................................... 2
SECTION 1. TERMS OF TRANSACTION.................................................................................. 7
1.1 Transaction.................................................................................... 7
1.2 Mergers........................................................................................ 8
1.3 Merger Consideration........................................................................... 8
1.4 Outstanding Snake River Options................................................................ 8
1.5 No Fractional Shares........................................................................... 9
1.6 Payment to Dissenting Shareholders............................................................. 9
1.7 Deposit of Cash and Shares..................................................................... 9
1.8 Certificates................................................................................... 9
SECTION 2. CLOSING OF TRANSACTION................................................................................ 11
2.1 Closing........................................................................................ 11
2.2 Events of Closing.............................................................................. 11
2.3 Place of Closing............................................................................... 11
2.4 Procedure...................................................................................... 11
SECTION 3. REPRESENTATIONS AND WARRANTIES........................................................................ 11
3.1 Representations and Warranties................................................................. 11
3.2 Representations and Warranties of Intermountain................................................ 19
SECTION 4. CONDUCT AND TRANSACTIONS PRIOR TO CLOSING............................................................. 23
4.1 Conduct of Snake River's and Magic Valley's Business Prior to Closing.......................... 23
4.2 Registration Statement......................................................................... 28
4.3 Affiliate Letters.............................................................................. 30
4.4 Submission to Regulatory Authorities........................................................... 30
4.5 Public Announcements........................................................................... 30
4.6 Consents....................................................................................... 30
4.7 Further Actions................................................................................ 30
4.8 Notice......................................................................................... 31
4.9 Confidentiality................................................................................ 31
4.10 Update of Intermountain Financial Statements................................................... 31
4.11 Availability of Intermountain's Books, Records and Properties.................................. 32
4.12 Blue Sky Filings............................................................................... 32
4.13 Tax Treatment.................................................................................. 32
4.14 Best Efforts................................................................................... 32
SECTION 5. APPROVALS AND CONDITIONS.............................................................................. 32
5.1 Required Approvals............................................................................. 32
5.2 Conditions to Obligations of Intermountain and Panhandle....................................... 32
5.3 Conditions to Obligations of Snake River and Magic Valley...................................... 36
i
SECTION 6. DIRECTORS, OFFICERS AND EMPLOYEES .................................................................... 37
6.1 Directors...................................................................................... 37
6.2 Officer's Employment Contract.................................................................. 37
6.3 Intermountain Board of Directors............................................................... 37
6.4 Advisory Board................................................................................. 37
6.5 Employee Benefit Issues........................................................................ 38
6.6 Indemnification of Directors and Executive Officers............................................ 38
SECTION 7. TERMINATION OF AGREEMENT AND ABANDONMENT OF TRANSACTION............................................... 39
7.1 Termination by Reason of Lapse of Time......................................................... 39
7.2 Termination Due To Intermountain Average Closing Price......................................... 39
7.3 Intermountain's Right to Adjust Consideration.................................................. 39
7.4 Other Grounds for Termination.................................................................. 40
7.5 Termination Fee Payable By Snake River......................................................... 41
7.6 Termination Fee Payable By Intermountain....................................................... 41
7.7 Break-Up Fee................................................................................... 42
7.8 Cost Allocation Upon Termination............................................................... 42
SECTION 8. MISCELLANEOUS......................................................................................... 42
8.1 Notices........................................................................................ 42
8.2 Waivers and Extensions......................................................................... 43
8.3 Construction and Execution in Counterparts..................................................... 43
8.4 Survival of Representations, Warranties, and Covenants......................................... 43
8.5 Attorneys' Fees and Costs...................................................................... 43
8.6 Arbitration.................................................................................... 43
8.7 Governing Law and Venue........................................................................ 44
8.8 Severability................................................................................... 44
8.9 No Assignment.................................................................................. 44
SECTION 9. AMENDMENTS............................................................................................ 44
ii
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES:
Schedule 1 Offices of Magic Valley
Schedule 2 Third Party Consents Required by Snake River/Magic Valley
Schedule 3 Obligations to Issue Stock - Snake River/Magic Valley
Schedule 4 Snake River Subsidiaries
Schedule 5 Snake River Properties
Schedule 6 Snake River Environmental Matters
Schedule 7 Taxes - Snake River
Schedule 8 Snake River Material Contracts
Schedule 9 Asset Classification of Magic Valley
Schedule 10 Snake River Litigation
Schedule 11 Snake River Insurance Policies
Schedule 12 Snake River Benefit Plans
Schedule 13 Title Policies
Schedule 14 Obligations to Issue Stock - Intermountain/Panhandle
Schedule 15 Taxes - Intermountain
Schedule 16 Intermountain Subsidiaries
EXHIBITS:
Exhibit A Form of Affiliate Letter
Exhibit B ▇▇▇▇▇ & ▇▇▇▇▇▇ Opinions
Exhibit C ▇▇▇▇▇▇ & ▇▇▇▇ Opinions
Exhibit D Idaho Counsel Opinions
iii