Clients/1598/00283791.DOCX/11 } EXECUTION VERSION AGREEMENT AND PLAN OF MERGER by and between FIRST INTERSTATE BANCSYSTEM, INC. and CASCADE BANCORP _____________________ Dated as of November 17, 2016 75014.000017 EMF_US 62741345v15
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EXECUTION VERSION
AGREEMENT AND PLAN OF MERGER
by and between
FIRST INTERSTATE BANCSYSTEM, INC.
and
CASCADE BANCORP
_____________________
Dated as of November 17, 2016
75014.000017 EMF_US 62741345v15
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INDEX OF DEFINED TERMS
Page
Acquisition Proposal ..................................................................................................................... 62
Affiliate ......................................................................................................................................... 72
Agreement ....................................................................................................................................... 1
Articles Amendment ....................................................................................................................... 4
Articles of Merger ........................................................................................................................... 2
Bank Merger ................................................................................................................................... 5
Bank Merger Agreement................................................................................................................. 5
Bank Merger Articles ...................................................................................................................... 5
BHC Act.......................................................................................................................................... 9
business day .................................................................................................................................. 72
Cancelled Shares ............................................................................................................................. 3
Closing ............................................................................................................................................ 2
Closing Date.................................................................................................................................... 2
Code ................................................................................................................................................ 1
Company ......................................................................................................................................... 1
Company Articles ......................................................................................................................... 10
Company Bank................................................................................................................................ 5
Company Benefit Plan .................................................................................................................. 17
Company Board Recommendation ............................................................................................... 54
Company Bylaws .......................................................................................................................... 10
Company Common Stock ............................................................................................................... 2
Company Contract ........................................................................................................................ 23
Company Disclosure Schedules ...................................................................................................... 8
Company Equity Awards .............................................................................................................. 11
Company ERISA Affiliate ............................................................................................................ 18
Company Indemnified Parties....................................................................................................... 59
Company Insiders ......................................................................................................................... 64
Company Leased Properties ......................................................................................................... 26
Company Meeting ......................................................................................................................... 54
Company Option ............................................................................................................................. 4
Company Owned Properties ......................................................................................................... 26
Company Qualified Plan ............................................................................................................... 18
Company Real Property ................................................................................................................ 26
Company Regulatory Agreement ................................................................................................. 24
Company Reports.......................................................................................................................... 21
Company Restricted Stock Award .................................................................................................. 4
Company RSU Award .................................................................................................................... 4
Company Subsidiary ..................................................................................................................... 10
Confidentiality Agreement............................................................................................................ 53
Continuation Period ...................................................................................................................... 56
Continuing Employees .................................................................................................................. 56
Effective Time ................................................................................................................................ 2
Enforceability Exceptions ............................................................................................................. 12
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 17, 2016 (this
“Agreement”), by and between Cascade Bancorp, an Oregon corporation (the “Company”), and
First Interstate BancSystem, Inc., a Montana corporation (“Parent”).
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Parent and the Company have determined that it
is in the best interests of their respective companies and their shareholders to consummate the
strategic business combination transaction provided for herein, pursuant to which the Company
will, subject to the terms and conditions set forth herein, merge with and into Parent (the
“Merger”), so that Parent is the surviving corporation (hereinafter sometimes referred to in such
capacity as the “Surviving Corporation”) in the Merger;
WHEREAS, the Boards of Directors of Parent and the Company have adopted and
approved this Agreement and the transactions contemplated hereby, including the Merger, and
the Boards of Directors of Parent and the Company have resolved to recommend that the
shareholders of each of Parent and the Company, respectively, approve and adopt this
Agreement and the transactions contemplated hereby, including the Merger;
WHEREAS, for federal income tax purposes, it is intended that the Merger shall qualify
as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of
1986, as amended (the “Code”), and this Agreement is intended to be and is adopted as a “plan
of reorganization” for purposes of Sections 354, 356 and 361 of the Code;
WHEREAS, this Agreement constitutes a “plan of merger” within the meaning of the
MBCA and OBCA;
WHEREAS, as a condition and inducement for each party to enter into this Agreement,
certain shareholders of the Company and Parent have simultaneously herewith entered into
voting agreements substantially in the form attached hereto as Exhibit A (each, a “Voting
Agreement,” and collectively, the “Voting Agreements”) in connection with the Merger; and
WHEREAS, the parties desire to make certain representations, warranties and agreements
specified in this Agreement in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound hereby, the
parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this
Agreement, in accordance with the Montana Business Corporation Act (the “MBCA”) and the
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Montana state-chartered commercial bank and a wholly owned Subsidiary of Parent. Parent
Bank shall be the surviving entity in the Bank Merger (the “Surviving Bank”) and, following the
Bank Merger, the separate corporate existence of Company Bank shall cease. The parties agree
that the Bank Merger shall become effective immediately after the Effective Time. Promptly
after the date of this Agreement, Parent Bank and Company Bank will enter into an agreement
and plan of merger in form and substance agreed to by Parent and the Company, which shall be
customary for mergers similar to the Bank Merger (the “Bank Merger Agreement”). The
Company shall cause Company Bank, and Parent shall cause Parent Bank, to execute such
articles of merger and such other documents and certificates as are necessary to make the Bank
Merger effective (“Bank Merger Articles”) immediately following the Effective Time.
ARTICLE II
EXCHANGE OF SHARES
2.1 Parent to Make Merger Consideration Available. At or prior to the
Effective Time, Parent shall deposit, or shall cause to be deposited, with an exchange agent
designated by Parent and reasonably acceptable to the Company (the “Exchange Agent”), for the
benefit of the holders of Old Certificates, for exchange in accordance with this Article II, (a)
certificates or, at Parent’s option, evidence of shares in book-entry form, representing the shares
of Parent Common Stock (collectively, referred to herein as “New Certificates”), to be delivered
to the holders of Company Common Stock pursuant to Section 1.5, and (b) cash in an amount
equal to the aggregate Cash Consideration and any cash in lieu of fractional shares required to be
paid to holders of Company Common Stock pursuant to this Article II (such New Certificates
and cash, together with any dividends or distributions with respect thereto, being hereinafter
referred to as the “Exchange Fund”).
2.2 Exchange of Shares.
(a) As promptly as practicable after the Effective Time, but in no event later
than ten (10) days thereafter, Parent shall cause the Exchange Agent to mail to each holder of
record of one or more Old Certificates representing shares of Company Common Stock
immediately prior to the Effective Time that have been converted at the Effective Time into the
right to receive the Merger Consideration pursuant to Article I, (i) a letter of transmittal, which
shall specify that delivery shall be effected, and risk of loss and title to the Old Certificates shall
pass, only upon proper delivery of the Old Certificates to the Exchange Agent (the “Letter of
Transmittal”) and (ii) instructions for use in effecting the surrender of the Old Certificates in
exchange for New Certificates representing the number of whole shares of Parent Common
Stock, any cash in lieu of fractional shares, and the Cash Consideration which the shares of
Company Common Stock represented by such Old Certificates shall have been converted into
the right to receive pursuant to this Agreement, as well as any dividends or distributions to be
paid in respect thereof pursuant to Section 2.2(b). Upon proper surrender of an Old Certificate or
Old Certificates for exchange and cancellation to the Exchange Agent, accompanied by a
properly completed Letter of Transmittal, duly executed, the holder of such Old Certificate or
Old Certificates shall be entitled to receive in exchange therefor, as applicable, (i) a New
Certificate representing that number of whole shares of Parent Common Stock to which such
holder of Company Common Stock shall have become entitled pursuant to the provisions of
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Article I and (ii) a check representing the amount of (A) the Cash Consideration which such
holder has the right to receive in respect of the Old Certificate or Old Certificates surrendered
pursuant to the provisions of this Article II, (B) any cash in lieu of fractional shares which such
holder has the right to receive in respect of the Old Certificate or Old Certificates surrendered
pursuant to the provisions of this Article II and (C) any dividends or distributions which the
holder presenting such Old Certificate or Old Certificates has the right to receive pursuant to this
Section 2.2, and the Old Certificate or Old Certificates so surrendered shall forthwith be
cancelled. No interest will be paid or accrued on any Merger Consideration, dividends or
distributions or cash in lieu of fractional shares payable to holders of Old Certificates. Until
surrendered as contemplated by this Section 2.2, each Old Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive, upon surrender, the Merger
Consideration and any cash in lieu of fractional shares or in respect of dividends or distributions
as contemplated by this Section 2.2.
(b) No dividends or other distributions declared with respect to Parent
Common Stock shall be paid to the holder of any unsurrendered Old Certificate until such holder
shall surrender such Old Certificate in accordance with this Article II. After the surrender of an
Old Certificate in accordance with this Article II, the record holder thereof shall be entitled to
receive any such dividends or other distributions, without any interest thereon, which theretofore
had become payable with respect to the whole shares of Parent Common Stock that the shares of
Company Common Stock represented by such Old Certificate have been converted into the right
to receive.
(c) If any New Certificate representing shares of Parent Common Stock is to
be issued in a name other than that in which the Old Certificate or Old Certificates surrendered in
exchange therefor is or are registered, it shall be a condition of the issuance thereof that the Old
Certificate or Old Certificates so surrendered shall be properly endorsed (or accompanied by an
appropriate instrument of transfer) and otherwise in proper form for transfer, and that the person
requesting such exchange shall pay to the Exchange Agent in advance any transfer or other
similar Taxes required by reason of the issuance of a New Certificate representing shares of
Parent Common Stock in any name other than that of the registered holder of the Old Certificate
or Old Certificates surrendered, or required for any other reason, or shall establish to the
satisfaction of the Exchange Agent that such Tax has been paid or is not payable.
(d) After the Effective Time, there shall be no transfers on the stock transfer
books of the Company of the shares of Company Common Stock that were issued and
outstanding immediately prior to the Effective Time, other than to settle transfers of such
Company Common Stock that occurred prior to the Effective Time. If, after the Effective Time,
Old Certificates representing such shares are presented for transfer to the Exchange Agent, they
shall be cancelled and exchanged for the Merger Consideration as provided in this Article II.
(e) Notwithstanding anything to the contrary contained herein, no New
Certificates or scrip representing fractional shares of Parent Common Stock shall be issued upon
the surrender for exchange of Old Certificates, no dividend or distribution with respect to Parent
Common Stock shall be payable on or with respect to any fractional share, and such fractional
share interests shall not entitle the owner thereof to vote or to any other rights of a shareholder of
Parent. In lieu of the issuance of any such fractional share, Parent shall pay in accordance with
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Section 2.2(a) to each former holder of Company Common Stock who otherwise would be
entitled to receive such fractional share an amount in cash (rounded to the nearest cent)
determined by multiplying (i) the average of the closing price per share of Parent Common Stock
on the NASDAQ as reported by The Wall Street Journal for the consecutive period of twenty
(20) full trading days ending on the fifth day immediately preceding the Closing Date (or, if not
reported therein, in another authoritative source mutually agreed upon by Parent and the
Company) (the “Parent Share Closing Price”) by (ii) the fraction of a share (after taking into
account all shares of Company Common Stock held by such holder immediately prior to the
Effective Time and rounded to the nearest one-thousandth when expressed in decimal form) of
Parent Common Stock to which such holder would otherwise be entitled to receive pursuant to
Section 1.5. The parties acknowledge that payment of such cash consideration in lieu of issuing
fractional shares is not separately bargained-for consideration, but merely represents a
mechanical rounding off for purposes of avoiding the expense and inconvenience that would
otherwise be caused by the issuance of fractional shares.
(f) Any portion of the Exchange Fund that remains unclaimed by the holders
of Company Common Stock for six (6) months after the Effective Time shall be delivered to the
Surviving Corporation. Any former holders of Company Common Stock who have not
theretofore exchanged their Old Certificates in compliance with this Article II shall thereafter
look only to the Surviving Corporation for payment of the Merger Consideration, cash in lieu of
any fractional shares and any unpaid dividends and distributions on the Parent Common Stock
deliverable in respect of each former share of Company Common Stock such shareholder holds
as determined pursuant to this Agreement, in each case, without any interest thereon.
Notwithstanding the foregoing, none of Parent, the Company, the Surviving Corporation, the
Exchange Agent or any other person shall be liable to any former holder of Company Common
Stock for any amount delivered in good faith to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(g) Parent shall be entitled to deduct and withhold, or cause the Exchange
Agent to deduct and withhold, from any Merger Consideration, cash in lieu of fractional shares
of Parent Common Stock, cash dividends or distributions payable pursuant to Section 2.2(b) or
any other amounts otherwise payable pursuant to this Agreement to any holder of Company
Common Stock or Company Equity Awards such amounts as it is required to deduct and
withhold with respect to the making of such payment under the Code or any provision of state,
local or foreign Tax law. To the extent that amounts are so withheld by Parent or the Exchange
Agent, as the case may be, and paid over to the appropriate governmental authority, the withheld
amounts shall be treated for all purposes of this Agreement as having been paid to the holder of
Company Common Stock in respect of which the deduction and withholding was made by Parent
or the Exchange Agent, as the case may be.
(h) In the event any Old Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such Old Certificate to be
lost, stolen or destroyed and, if required by Parent, the posting by such person of a bond in such
amount as Parent may determine is reasonably necessary as indemnity against any claim that
may be made against it with respect to such Old Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Old Certificate the Merger Consideration and any
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be deemed to include the impact of (A) changes, after the date hereof, in U.S. generally accepted
accounting principles (“GAAP”) or applicable regulatory accounting requirements, (B) changes,
after the date hereof, in laws, rules or regulations of general applicability to companies in the
industries in which such party and its Subsidiaries operate, or interpretations thereof by courts or
Governmental Entities, including changes in Federal or state tax laws, (C) changes, after the date
hereof, in global, national or regional political conditions (including the outbreak of war or acts
of terrorism) or in economic or market conditions affecting the financial services industry
generally and not specifically relating to such party or its Subsidiaries, (D) changes, after the
date hereof, in prevailing interest rates, currency exchange rates, credit or United States capital
markets conditions, or other financial, economic or monetary conditions in the United States or
elsewhere, in each case affecting the financial services industry generally and not specifically
relating to such party or its Subsidiaries, (E) changes proximately caused by the public disclosure
or consummation of the transactions contemplated hereby (provided that this exception shall not
apply for purposes of the representations and warranties in Section 3.3(b) or Section 4.3(b)) or
actions or omissions expressly required by this Agreement or that are taken or omitted to be
taken with the express prior written consent of the other party in contemplation of the
transactions contemplated hereby, or (F) any failure by a party to meet internal or published
projections, forecasts, performance measures, operating statistics or revenue or earnings
predictions for any period (it being understood that the underlying facts and circumstances
giving rise to such failure may be deemed to constitute, and may be taken into account in
determining whether there has been or would reasonably be expected to be, a Material Adverse
Effect if such facts and circumstances are not otherwise excluded pursuant to clauses (A)-(E) of
this definition); except, with respect to subclauses (A), (B), (C) or (D), to the extent that the
effects of such change are disproportionately adverse to such party and its Subsidiaries, taken as
a whole, as compared to other companies similarly situated in the industry in which such party
and its Subsidiaries operate) or (ii) the ability of such party to consummate the transactions
contemplated hereby. As used in this Agreement, the word “Subsidiary” when used with respect
to any person, means any corporation, partnership, limited liability company, bank or other
organization, whether incorporated or unincorporated, or person of which (i) such first person
directly or indirectly owns or controls at least a majority of the securities or other interests
having by their terms ordinary voting power to elect a majority of the board of directors or others
performing similar functions or (ii) such first person is or directly or indirectly has the power to
appoint a general partner, manager or managing member or others performing similar functions.
True and complete copies of the Articles of Incorporation of the Company (the “Company
Articles”) and the Amended and Restated Bylaws of the Company (the “Company Bylaws”), as
in effect as of the date of this Agreement, have previously been made available by the Company
to Parent.
(b) Each Subsidiary of the Company (a “Company Subsidiary”) (i) is duly
organized and validly existing under the laws of its jurisdiction of organization, (ii) is duly
qualified to do business and, where such concept is recognized under applicable law, in good
standing in all jurisdictions (whether federal, state, local or foreign) where its ownership or
leasing of property or the conduct of its business requires it to be so qualified and in which the
failure to be so qualified would reasonably be expected, either individually or in the aggregate, to
have a Material Adverse Effect on the Company and (iii) has all requisite corporate power and
authority to own or lease its properties and assets and to carry on its business as now conducted.
There are no restrictions on the ability of any Subsidiary of the Company to pay dividends or
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distributions except, in the case of a Subsidiary that is a regulated entity, for restrictions on
dividends or distributions generally applicable to all such regulated entities. The deposit
accounts of each Subsidiary of the Company that is an insured depository institution are insured
by the Federal Deposit Insurance Corporation (the “FDIC”) through the Deposit Insurance Fund
(as defined in Section 3(y) of the Federal Deposit Insurance Act of 1950) to the fullest extent
permitted by law, all premiums and assessments required to be paid in connection therewith have
been paid when due, and no proceedings for the termination of such insurance are pending or
threatened. Section 3.1(b) of the Company Disclosure Schedules sets forth a true and complete
list of all Subsidiaries of the Company. There is no person whose results of operations, cash
flows, changes in shareholders’ equity or financial position are consolidated in the financial
statements of the Company other than the Company Subsidiaries.
3.2 Capitalization.
(a) The authorized capital stock of the Company consists of 100,000,000
shares of Company Common Stock and 5,000,000 shares of preferred stock, without par value,
of which no shares of preferred stock are issued or outstanding. As of the date of this
Agreement, there are (i) 76,263,275 shares of Company Common Stock issued and outstanding,
which number includes 1,154,164 shares of Company Common Stock granted in respect of
outstanding Company Restricted Stock Awards, (ii) 44,199 shares of Company Common Stock
held in treasury, and (iii) 57,292 shares of Company Common Stock subject to outstanding
Company RSU Awards. As of the date of this Agreement, there are 3,386,751 shares of
Company Common Stock subject to and reserved for issuance upon the exercise of outstanding
Company Options, that are not included in the number of issued and outstanding shares of
Company Common Stock indicated above. No other shares of capital stock or other voting
securities or equity interests of the Company are issued, reserved for issuance or outstanding.
All of the issued and outstanding shares of Company Common Stock have been duly authorized
and validly issued and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. There are no bonds, debentures, notes or
other indebtedness that have the right to vote on any matters on which shareholders of the
Company may vote, and no trust preferred or subordinated debt securities of the Company are
issued or outstanding. Other than the Company Options, Company RSU Awards and Company
Restricted Stock Awards (collectively, the “Company Equity Awards”) issued prior to the date of
this Agreement and set forth in this Section 3.2(a), and the stock-settled dollar-denominated
performance-based awards described in Section 3.2(a) of the Company Disclosure Schedules
(the “LTI Awards”), there are no outstanding subscriptions, options, warrants, puts, calls, rights,
exchangeable or convertible securities or other commitments or agreements obligating the
Company to issue, transfer, sell, purchase, redeem or otherwise acquire, any shares of capital
stock or other voting securities or equity interests. Section 3.2(a) of the Company Disclosure
Schedules sets forth a true, correct and complete list of all Company Equity Awards and LTI
Awards outstanding as of the date hereof specifying, on a holder-by-holder basis, as applicable,
(A) the name of each holder, (B) the number of shares subject to each such Company Equity
Award (or, in the case of an LTI Award, the dollar value of the award that would be earned at
threshold, target and maximum levels of performance), (C) the grant date of each such Company
Equity Award or LTI Award, (D) the vesting schedule for each Equity Award, (E) the Company
Benefit Plan under which such Company Equity Award or LTI Award was granted, (F) the
exercise price for each such Company Equity Award that is a Company Option, and (G) the
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expiration date for each such Company Equity Award that is a Company Option. Other than the
Company Equity Awards and the LTI Awards, no equity-based awards (including any cash
awards where the amount of payment is determined in whole or in part based on the price of any
capital stock of the Company or any of its Subsidiaries) are outstanding. No Subsidiary of the
Company owns any capital stock of the Company.
(b) Other than the Voting Agreements and as set forth on Section 3.2(b) of the
Company Disclosure Schedules, there are no voting trusts, shareholder agreements, proxies or
similar agreements to which the Company or any of its Subsidiaries is a party in effect with
respect to the voting or transfer of the Company Common Stock or other voting securities or
equity interests of the Company or granting any shareholder or other person any registration
rights. The Company does not have in effect a “poison pill” or similar shareholder rights plan.
(c) The Company owns, directly or indirectly, all of the issued and
outstanding shares of capital stock or other equity ownership interests of each of the Company
Subsidiaries, free and clear of any liens, pledges, charges, encumbrances and security interests
whatsoever (“Liens”), and all of such shares or equity ownership interests are duly authorized
and validly issued and are fully paid, nonassessable (except, with respect to bank Subsidiaries, as
provided under 12 U.S.C. §55 or any comparable provision of applicable state law) and free of
preemptive rights, with no personal liability attaching to the ownership thereof. No Company
Subsidiary has or is bound by any outstanding subscriptions, options, warrants, calls, rights,
commitments or agreements of any character calling for the purchase or issuance of any shares
of capital stock or any other voting security or equity interest of such Subsidiary or any securities
representing the right to purchase or otherwise receive any shares of capital stock or any other
voting security or equity interest of such Subsidiary.
3.3 Authority; No Violation.
(a) The Company has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the Merger have been duly and validly
approved by the Board of Directors of the Company. The Board of Directors of the Company
has determined that the Merger, on the terms and conditions set forth in this Agreement, is in the
best interests of the Company and its shareholders and has directed that this Agreement and the
transactions contemplated hereby be submitted to the shareholders of the Company for
consideration and approval at a meeting of such shareholders and has adopted a resolution to the
foregoing effect and recommending that the shareholders of the Company approve this
Agreement and the transactions contemplated hereby. Except for the adoption and approval of
this Agreement by the affirmative vote of the holders of a majority of the outstanding shares of
Company Common Stock (the “Requisite Company Vote”), the adoption and approval of the
Bank Merger Agreement and the transactions contemplated thereby (including the Bank Merger)
by the Board of Directors of Company Bank and the Company as its sole shareholder, and the
adoption of resolutions to give effect to the provisions of Section 6.11 in connection with the
Closing, no other corporate proceedings on the part of the Company are necessary to approve
this Agreement or to consummate the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by the Company and (assuming due authorization,
execution and delivery by Parent) constitutes a valid and binding obligation of the Company,
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enforceable against the Company in accordance with its terms (except in all cases as such
enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, moratorium,
reorganization or similar laws of general applicability relating to or affecting insured depository
institutions or the rights of creditors generally and the availability of equitable remedies (the
“Enforceability Exceptions”). Immediately prior to the execution of this Agreement, the Board
of Directors of the Company has amended and restated the Company Bylaws in the form
attached as Exhibit C hereto.1
(b) Neither the execution and delivery of this Agreement by the Company nor
the consummation by the Company of the transactions contemplated hereby, nor compliance by
the Company with any of the terms or provisions hereof, will (i) violate any provision of the
Company Articles or the Company Bylaws or (ii) assuming that the consents, approvals and
filings referred to in Section 3.4 are duly obtained and/or made, as applicable, (x) violate any
law, statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to the Company or any of its Subsidiaries or any of their respective properties or
assets or (y) violate, conflict with, result in a breach of any provision of or the loss of any benefit
under, constitute a default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of termination or cancellation
under, accelerate the performance required by, or result in the creation of any Lien upon any of
the respective properties or assets of the Company or any of its Subsidiaries under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which the Company or any of its
Subsidiaries is a party, or by which they or any of their respective properties or assets may be
bound, except (in the case of clause (y) above) for such violations, conflicts, breaches or defaults
that, either individually or in the aggregate, would not reasonably be expected to have a Material
Adverse Effect on the Company.
3.4 Consents and Approvals. Except for (a) the filing of applications,
filings and notices, as applicable, with the Board of Governors of the Federal Reserve System
(the “Federal Reserve Board”) under the BHC Act and approval of such applications, filings and
notices, (b) the filing of any required applications, filings or notices, as applicable, with the
FDIC, the Montana Division of Banking and Financial Institutions (the “MDOB”) and the
Director of the Oregon Department of Consumer and Business Services acting by and through
the Administration of the Division of Financial Regulation (the “Oregon Division”) and any state
banking authorities listed on Section 3.4 of the Company Disclosure Schedules or Section 4.4 of
the Parent Disclosure Schedules, and approval of such applications, filings and notices,
including, with respect to Parent, the consent of the FDIC under the Loss Share Agreements, (c)
the filing with the Securities and Exchange Commission (the “SEC”) of (i) a joint proxy
statement in definitive form relating to the Company Meeting and Parent Meeting to be held in
connection with this Agreement and the transactions contemplated hereby (including any
amendments or supplements thereto, the “Joint Proxy Statement”), and (ii) a registration
statement on Form S-4 in which the Joint Proxy Statement will be included as a prospectus, to be
1 NTD: The Company would adopt a bylaw amendment, effective immediately prior to the execution of this
Agreement, (1) opting out of Oregon’s control share statute, to ensure that the voting agreements do not accidentally
trigger that statute, and (2) adopting an exclusive forum bylaw amendment, which would require any shareholder
litigation related to the transaction to be brought in Oregon.
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filed with the SEC by Parent in connection with the transactions contemplated by this Agreement
(the “S-4”) and declaration of effectiveness of the S-4, (d) the filing of the Articles of Merger
with the Montana Secretary and the Oregon Secretary pursuant to the MBCA and the OBCA,
respectively, and the filing of the Bank Merger Articles, (e) if required by the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the “HSR Act”), the filing of any notices or
other filings under the HSR Act, (f) such filings and approvals as are required to be made or
obtained under the securities or “Blue Sky” laws of various states in connection with the
issuance of shares of Parent Common Stock pursuant to this Agreement and (g) the approval of
the listing of such Parent Common Stock on the NASDAQ, no consents or approvals of or filings
or registrations with any court, administrative agency or commission or other governmental
authority or instrumentality or SRO (each, a “Governmental Entity”) are necessary in connection
with (A) the execution and delivery by the Company of this Agreement or (B) the consummation
by the Company of the Merger and the other transactions contemplated hereby (including the
Bank Merger), the failure of which to make or obtain would have a Material Adverse Effect on
the Company or the Surviving Corporation. As of the date hereof, the Company is not aware of
any reason why the necessary regulatory approvals and consents will not be received to permit
consummation of the Merger, the Bank Merger and the other transactions contemplated by this
Agreement on a timely basis.
3.5 Reports. Except as set forth on Section 3.5 of the Company
Disclosure Schedules, the Company and each of its Subsidiaries have timely filed all reports,
registrations and statements, together with any amendments required to be made with respect
thereto, that they were required to file (or furnish, as applicable) since January 1, 2013 with (i)
any state regulatory authority, including the MDOB and the Oregon Division, (ii) the SEC, (iii)
the Federal Reserve Board, (iv) the FDIC, (v) any foreign regulatory authority and (vi) any self-
regulatory organization (an “SRO”) ((i) through (vi), collectively, “Regulatory Agencies”),
including, without limitation, any report, registration or statement required to be filed pursuant to
the laws, rules or regulations of the United States, any state, any foreign entity, or any
Regulatory Agency, and have paid all fees and assessments due and payable in connection
therewith, except where the failure to file such report, registration or statement or to pay such
fees and assessments, either individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect on the Company. Except for normal examinations conducted
by a Regulatory Agency in the ordinary course of business of the Company and its Subsidiaries,
and except as, either individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on the Company, no Regulatory Agency has pending any proceeding or,
to the knowledge of the Company, investigation into the business or operations of the Company
or any of its Subsidiaries since December 31, 2013 and there (i) is no unresolved violation,
criticism, or exception by any Regulatory Agency with respect to any report or statement relating
to any examinations or inspections of the Company or any of its Subsidiaries and (ii) has been no
formal or informal inquiries by, or disagreements or disputes with, any Regulatory Agency with
respect to the business, operations, policies or procedures of the Company or any of its
Subsidiaries since December 31, 2013.
3.6 Financial Statements.
(a) The financial statements of the Company and its Subsidiaries included (or
incorporated by reference) in the Company Reports (including the related notes, where
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applicable) (i) have been prepared from, and are in accordance with, the books and records of the
Company and its Subsidiaries, (ii) fairly present in all material respects the consolidated results
of operations, cash flows, changes in shareholders’ equity and consolidated financial position of
the Company and its Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth (subject in the case of unaudited statements to year-end audit adjustments
normal and not material in nature and amount), (iii) complied, as of their respective dates of
filing with the SEC, in all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, and (iv) have been prepared in
accordance with GAAP consistently applied during the periods involved, except, in each case, as
indicated in such statements or in the notes thereto. The books and records of the Company and
its Subsidiaries have been, and are being, maintained in all material respects in accordance with
GAAP and any other applicable legal and accounting requirements and reflect only actual
transactions. Since December 31, 2013, no independent public accounting firm of the Company
has resigned (or informed the Company that it intends to resign) or been dismissed as
independent public accountants of the Company as a result of or in connection with any
disagreements with the Company on a matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure.
(b) Neither the Company nor any of its Subsidiaries has any liability of any
nature whatsoever (whether absolute, accrued, contingent or otherwise and whether due or to
become due), except for liabilities (i) that are reflected or reserved against on the consolidated
balance sheet of the Company included in its Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 2016 (including any notes thereto) (ii) incurred in the ordinary course of
business consistent with past practice since June 30, 2016, or (iii) incurred in connection with or
expressly contemplated by this Agreement, in each case, which would not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse Effect on the
Company.
(c) The records, systems, controls, data and information of the Company and
its Subsidiaries are recorded, stored, maintained and operated under means (including any
electronic, mechanical or photographic process, whether computerized or not) that are under the
exclusive ownership and direct control of the Company or its Subsidiaries or accountants
(including all means of access thereto and therefrom), except for any non-exclusive ownership
and non-direct control that would not reasonably be expected to have, either individually or in
the aggregate, a Material Adverse Effect on the Company. The Company (x) has implemented
and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) to ensure that material information
relating to the Company, including its Subsidiaries, is made known to the chief executive officer
and the chief financial officer of the Company by others within those entities as appropriate to
allow timely decisions regarding required disclosures and to make the certifications required by
the Exchange Act and Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act of 2002 (the “Xxxxxxxx-
Xxxxx Act”), and (y) has disclosed, based on its most recent evaluation prior to the date hereof,
to the Company’s outside auditors and the audit committee of the Board of Directors of the
Company (i) any significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act)
which are reasonably likely to adversely affect the Company’s ability to record, process,
summarize and report financial information, and (ii) any fraud, whether or not material, that
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(c) Each Company Benefit Plan has been established, operated and
administered in all material respects in accordance with its terms and the requirements of all
applicable laws, including ERISA and the Code, the Health Insurance Portability and
Accountability Act (“HIPAA”) and the Patient Protection and Affordable Care Act (“ACA”) and
all material filings, disclosures and notices required by applicable laws, including ERISA, the
Code, HIPAA and ACA, have been timely made or any interest, fines, penalties or other
impositions for late filings have been paid in full, if due. Neither the Company nor any
Company Subsidiary has engaged in a transaction, or omitted to take action, with respect to any
Company Benefit Plan that would reasonably be expected to subject the Company to a material
unpaid tax or penalty imposed by either Chapter 43 of the Code or Sections 409 or 502 of
ERISA. Neither the Company nor any of its Subsidiaries has taken any action to take corrective
action or make a filing under any voluntary correction program of the IRS, Department of Labor
or any other Governmental Entity with respect to any Company Benefit Plan, and neither the
Company nor any of its Subsidiaries has any Knowledge of any plan defect that would qualify
for correction under any such program.
(d) Section 3.11(d) of the Company Disclosure Schedules identifies each
Company Benefit Plan that is intended to be qualified under Section 401(a) of the Code (each, a
“Company Qualified Plan”). The IRS has issued a favorable determination letter or advisory
opinion with respect to each Company Qualified Plan and the related trust, which letter has not
been revoked (nor has revocation been threatened) or such Company Qualified Plan is a volume
submitter or prototype plan covered by an IRS advisory or opinion letter affording reliance
equivalent to a determination letter, and, to the Knowledge of the Company, there are no existing
circumstances and no events have occurred or are reasonably expected to occur that could
adversely affect the qualified status of any Company Qualified Plan or the related trust or the
reliance by the Company on any such IRS advisory or opinion letter or increase the costs relating
thereto. Section 3.11(d) of the Company Disclosure Schedules identifies each trust funding any
Company Benefit Plan and whether that purports to be a voluntary employee benefit association
(each, a “VEBA”). Each such VEBA has received an exemption letter from the IRS that the form
of such VEBA satisfies the requirements of Code Section 501(c)(9), which letter has not been
revoked (nor has revocation been threatened), and, to the Knowledge of Parent, there are no
existing circumstances and no events have occurred or are reasonably expected to occur that
could adversely affect the continued exemption of such VEBA or increase the costs relating
thereto.
(e) Each Company Benefit Plan that is a “nonqualified deferred compensation
plan” (as defined in Section 409A(d)(1) of the Code) and any award thereunder, in each case that
is subject to Section 409A of the Code, has (i) since January 1, 2005, been maintained and
operated, in all material respects, in good faith compliance with Section 409A of the Code and
IRS Notice 2005-1 and (ii) since January 1, 2009, been, in all material respects, in documentary
and operational compliance with Section 409A of the Code. All Company Stock Options have
been granted with a per share exercise price or reference price at least equal to the fair market
value (as defined pursuant to Section 409A of the Code) of the underlying stock on the date of
grant.
(f) None of the Company or any of its Subsidiaries nor any Company ERISA
Affiliate has sponsored, maintained or contributed to or been obligated to contribute to (i) any
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plan that is subject to Title IV or Section 302 of ERISA or Section 412, 430 or 4971 of the Code,
(ii) any plan that is a “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA
(a “Multiemployer Plan”) or (iii) any plan that has two (2) or more contributing sponsors at least
two (2) of whom are not under common control, within the meaning of Section 4063 of ERISA
(a “Multiple Employer Plan”), and none of the Company or any of its Subsidiaries nor any
Company ERISA Affiliate has incurred any liability to a Multiemployer Plan or Multiple
Employer Plan as a result of a complete or partial withdrawal (as those terms are defined in Part I
of Subtitle E of Title IV of ERISA) from a Multiemployer Plan or Multiple Employer Plan.
(g) Except as provided in Company Disclosure Schedule 3.11(g), neither the
Company nor any of its Subsidiaries sponsors, has sponsored or has any obligation with respect
to, any employee benefit plan, program, agreement or arrangement that provides for any post-
employment or post-retirement health, medical, disability or life insurance benefits for retired,
former or current employees or beneficiaries or dependents thereof, except as required by
Section 4980B of the Code. There has been no communication to employees by the Company or
any of its Subsidiaries that would reasonably be expected to promise or guarantee such
employees’ retiree health, life or disability insurance, or any retiree death benefits.
(h) All contributions required to be made to any Company Benefit Plan by
applicable law or by any plan document or other contractual undertaking, and all premiums due
or payable with respect to insurance policies funding any Company Benefit Plan, for any period
through the date hereof, have been timely made or paid in full or, to the extent not required to be
made or paid on or before the date hereof, have been fully reflected on the books and records of
the Company, including the Company’s financial statements, as applicable, to the extent required
by GAAP.
(i) There are no pending or, to the Knowledge of the Company, threatened
claims (other than claims for benefits in the ordinary course), lawsuits or arbitrations that have
been asserted or instituted, and, to the Company’s Knowledge, no set of circumstances exists that
may reasonably give rise to a claim or lawsuit, against the Company Benefit Plans, any
fiduciaries thereof with respect to their duties to the Company Benefit Plans or the assets of any
of the trusts under any of the Company Benefit Plans that could reasonably be expected to result
in any material liability of the Company or any of its Subsidiaries to the PBGC, the IRS, the
Department of Labor, any Multiemployer Plan, a Multiple Employer Plan, any participant in a
Company Benefit Plan, or any other party.
(j) None of the Company or any of its Subsidiaries nor any Company ERISA
Affiliate nor any other person, including any fiduciary, has engaged in any “prohibited
transaction” (as defined in Section 4975 of the Code or Section 406 of ERISA), which could
subject any of the Company Benefit Plans or their related trusts, the Company, any of its
Subsidiaries, any Company ERISA Affiliate or any person that the Company or any of its
Subsidiaries has an obligation to indemnify, to any material tax or penalty imposed under
Section 4975 of the Code or Section 502 of ERISA.
(k) Except as disclosed in Company Disclosure Schedule 3.11(k), neither the
execution and delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (either alone or in conjunction with any other event) result in, cause the vesting,
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exercisability or delivery of, or increase the amount or value of, any payment, right or other
benefit to any employee, officer, director or other service provider of the Company or any of its
Subsidiaries, or result in any limitation on the right of the Company or any of its Subsidiaries to
amend, merge, terminate or receive a reversion of assets from any Company Benefit Plan or
related trust, except as provided in this Agreement. Without limiting the generality of the
foregoing, no amount paid or payable (whether in cash, in property, or in the form of benefits) by
the Company or any of its Subsidiaries in connection with the transactions contemplated hereby
(either solely as a result thereof or as a result of such transactions in conjunction with any other
event) will be an “excess parachute payment” within the meaning of Section 280G of the Code.
Neither the Company nor any of its Subsidiaries maintains or contributes to a rabbi trust or
similar funding vehicle, and the transactions contemplated by this Agreement will not cause or
require the Company or any of its Affiliates to establish or make any contribution to a rabbi trust
or similar funding vehicle.
(l) No Company Benefit Plan provides for the gross-up or reimbursement of
Taxes under Section 409A or 4999 of the Code, or otherwise. Company Disclosure Schedule
3.11(l) set forth true, correct and complete copies of Section 280G calculations (whether or not
final) with respect to any disqualified individual in connection with the transactions
contemplated hereby, and has also made available a schedule of all termination benefits that
would be payable to the individuals identified thereon, under all employment, change in control
agreements, severance arrangements or policies, supplemental executive retirement plans,
deferred bonus plans, deferred compensation plans, salary contribution plans or any other
material non-qualified compensation arrangement maintained by the Company or any of its
Subsidiaries for the benefit of officers, employee or directors of the Company or any Company
Subsidiary, assuming their employment or service is involuntarily terminated without cause on
July 1, 2017 and the Closing Date occurs on such date and based on other assumptions specified
in the schedule.
(m) There are no pending or, to the Company’s Knowledge, threatened
material labor grievances or material unfair labor practice claims or charges against the
Company or any of its Subsidiaries, or any strikes or other material labor disputes against the
Company or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries are party to
or bound by any collective bargaining or similar agreement with any labor organization, or work
rules or practices agreed to with any labor organization or employee association applicable to
employees of the Company or any of its Subsidiaries and, to the Knowledge of the Company,
there are no organizing efforts by any union or other group seeking to represent any employees
of the Company or any of its Subsidiaries. The Company and its Subsidiaries have complied, in
all material respects, with all laws regarding employment and employment practices (including
anti-discrimination) and terms and conditions of employment and wages and hours (including
classification of employees and equitable pay practices), and no claims relating to non-
compliance with the foregoing are pending or, to the Company’s Knowledge, threatened.
(n) The Company (or its Subsidiary, as applicable) has obtained written
consent for each employee on whose behalf bank-owned life insurance (“BOLI”) has been
purchased to the extent required by Section 101(j) of the Code.
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Xxxxxx Xxxxxx Stock then entitled to vote thereon, or sixty-six and two-thirds percent (66
2/3%) of the voting power of the shares of Parent Common Stock present in person or
represented by proxy at the stockholder meeting and entitled to vote thereon and (B) the majority
vote of the holders of the Class A Common Stock and Class B Common Stock, each voting
separately as a class (the “Requisite Amendment Vote”); (iii) the adoption and approval of the
Bank Merger Agreement by the Board of Directors of Parent Bank and Parent as its sole
shareholder; and (iv) the adoption of resolutions to give effect to the provisions of Section 6.11
in connection with the Closing, no other corporate proceedings on the part of Parent are
necessary to approve this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Parent and (assuming due
authorization, execution and delivery by the Company) constitutes a valid and binding obligation
of Parent, enforceable against Parent in accordance with its terms (except in all cases as such
enforceability may be limited by the Enforceability Exceptions). The shares of Parent Common
Stock to be issued in connection with the Merger have been validly authorized (subject to the
approval of this Agreement and the transactions contemplated hereby by the holders of Parent
Common Stock), when issued, will be validly issued, fully paid and nonassessable, and no
current or past shareholder of Parent will have any preemptive right or similar rights in respect
thereof.
(b) Neither the execution and delivery of this Agreement by Parent, nor the
consummation by Parent of the transactions contemplated hereby, nor compliance by Parent with
any of the terms or provisions hereof, will (i) violate any provision of the Parent Articles or the
Parent Bylaws, or (ii) assuming that the consents, approvals and filings referred to in Section 4.4
are duly obtained and/or made, as applicable, (x) violate any law, statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to Parent, any of its
Subsidiaries or any of their respective properties or assets or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under, result in the
termination of or a right of termination or cancellation under, accelerate the performance
required by, or result in the creation of any Lien upon any of the respective properties or assets
of Parent or any of its Subsidiaries under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which Parent or any of its Subsidiaries is a party, or by which they or any of their
respective properties or assets may be bound, except (in the case of clause (y) above) for such
violations, conflicts, breaches or defaults that, either individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Parent.
4.4 Consents and Approvals. Except for (a) the filing of applications,
filings and notices, as applicable, with the Federal Reserve Board under the BHC Act and
approval of such applications, filings and notices, (b) the filing of any required applications,
filings or notices, as applicable, with the FDIC, the MDOB, the Oregon Division and any state
banking authorities listed on Section 3.4 of the Company Disclosure Schedules or Section 4.4 of
the Parent Disclosure Schedules, and approval of such applications, filings and notices including,
with respect to Parent, the consent of the FDIC under the Loss Share Agreements, (c) the filing
with the SEC of the Joint Proxy Statement and the S-4 in which the Joint Proxy Statement will
be included as a prospectus, and declaration of effectiveness of the S-4, (d) the filing of the
Articles of Merger with the Montana Secretary and the Oregon Secretary pursuant to the MBCA
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such statements or in the notes thereto. The books and records of Parent and its Subsidiaries
have been, and are being, maintained in all material respects in accordance with GAAP and any
other applicable legal and accounting requirements and reflect only actual transactions. Since
December 31, 2013, no independent public accounting firm of Parent has resigned (or informed
Parent that it intends to resign) or been dismissed as independent public accountants of Parent as
a result of or in connection with any disagreements with Parent on a matter of accounting
principles or practices, financial statement disclosure or auditing scope or procedure.
(b) Neither Parent nor any of its Subsidiaries has any liability of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and whether due or to become
due), except for liabilities (i) that are reflected or reserved against on the consolidated balance
sheet of Parent included in its Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 2016 (including any notes thereto), (ii) incurred in the ordinary course of business
consistent with past practice since June 30, 2016, or (iii) incurred in connection with or expressly
contemplated by this Agreement, in each case, which would not reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect on Parent.
(c) The records, systems, controls, data and information of Parent and its
Subsidiaries are recorded, stored, maintained and operated under means (including any
electronic, mechanical or photographic process, whether computerized or not) that are under the
exclusive ownership and direct control of Parent or its Subsidiaries or accountants (including all
means of access thereto and therefrom), except for any non-exclusive ownership and non-direct
control that would not reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect on Parent. Parent (x) has implemented and maintains disclosure
controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) to ensure that
material information relating to Parent, including its Subsidiaries, is made known to the chief
executive officer and the chief financial officer of Parent by others within those entities as
appropriate to allow timely decisions regarding required disclosures and to make the
certifications required by the Exchange Act and Sections 302 and 906 of the Xxxxxxxx-Xxxxx
Act, and (y) has disclosed, based on its most recent evaluation prior to the date hereof, to
Parent’s outside auditors and the audit committee of Parent’s Board of Directors (i) any
significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) which are reasonably
likely to adversely affect Parent’s ability to record, process, summarize and report financial
information, and (ii) any fraud, whether or not material, that involves management or other
employees who have a significant role in Parent’s internal controls over financial reporting.
These disclosures were made in writing by management to Parent’s auditors and audit
committee. There is no reason to believe that Parent’s outside auditors and its chief executive
officer and chief financial officer will not be able to give the certifications and attestations
required pursuant to the rules and regulations adopted pursuant to Section 404 of the Xxxxxxxx-
Xxxxx Act, without qualification, when next due.
(d) Since January 1, 2013, (i) neither Parent nor any of its Subsidiaries, nor, to
the Knowledge of Parent, any director, officer, auditor, accountant or representative of Parent or
any of its Subsidiaries, has received or otherwise has had or obtained knowledge of any material
complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or
auditing practices, procedures, methodologies or methods (including with respect to loan loss
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4.12 Compliance with Applicable Law. Parent and each of its
Subsidiaries hold, and have at all times since January 1, 2013, held, all licenses, franchises,
permits and authorizations necessary for the lawful conduct of their respective businesses and
ownership of their respective properties, rights and assets under and pursuant to each (and have
paid all fees and assessments due and payable in connection therewith), except where neither the
cost of failure to hold nor the cost of obtaining and holding such license, franchise, permit or
authorization (nor the failure to pay any fees or assessments) would reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect on Parent, and to the
Knowledge of Parent, no suspension or cancellation of any such necessary license, franchise,
permit or authorization is threatened. Parent and each of its Subsidiaries have complied with and
are not in default or violation under any, applicable law, statute, order, rule, regulation, policy
and/or guideline of any Governmental Entity relating to Parent or any of its Subsidiaries,
including without limitation all laws related to data protection or privacy, the USA PATRIOT
Act, the Bank Secrecy Act, the Equal Credit Opportunity Act and Regulation B, the Fair Housing
Act, the Community Reinvestment Act, the Fair Credit Reporting Act, the Truth in Lending Act
and Regulation Z, the Home Mortgage Disclosure Act, the Fair Debt Collection Practices Act,
the Electronic Fund Transfer Act, the Xxxx-Xxxxx Xxxx Street Reform and Consumer Protection
Act, the False Claims Act, the Servicemembers Civil Relief Act, any regulations promulgated by
the Consumer Financial Protection Bureau, the Interagency Policy Statement on Retail Sales of
Nondeposit Investment Products, the SAFE Mortgage Licensing Act of 2008, the Real Estate
Settlement Procedures Act and Regulation X, and any other law relating to bank secrecy,
discriminatory lending, financing or leasing practices, money laundering prevention, Sections
23A and 23B of the Federal Reserve Act, the Xxxxxxxx-Xxxxx Act, and all agency requirements
relating to the origination, sale and servicing of mortgage and consumer loans, except for
noncompliance, defaults or violations that would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on Parent. Parent Bank has a Community
Reinvestment Act rating of “satisfactory” or better. Without limitation, none of Parent, or any of
its Subsidiaries, or to the Knowledge of Parent, any director, officer, employee, agent or other
person acting on behalf of Parent or any of its Subsidiaries has, directly or indirectly, (i) used any
funds of Parent or any of its Subsidiaries for unlawful contributions, unlawful gifts, unlawful
entertainment or other expenses relating to political activity, (ii) made any unlawful payment to
foreign or domestic governmental officials or employees or to foreign or domestic political
parties or campaigns from funds of Parent or any of its Subsidiaries, (iii) violated any provision
that would result in the violation of the Foreign Corrupt Practices Act of 1977, as amended, or
any similar law, (iv) established or maintained any unlawful fund of monies or other assets of
Parent or any of its Subsidiaries, (v) made any fraudulent entry on the books or records of Parent
or any of its Subsidiaries, or (vi) made any unlawful bribe, unlawful rebate, unlawful payoff,
unlawful influence payment, unlawful kickback or other unlawful payment to any person, private
or public, regardless of form, whether in money, property or services, to obtain favorable
treatment in securing business to obtain special concessions for Parent or any of its Subsidiaries,
to pay for favorable treatment for business secured or to pay for special concessions already
obtained for Parent or any of its Subsidiaries, or is currently subject to any United States
sanctions administered by the Office of Foreign Assets Control of the United States Treasury
Department.
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Benefit Plan” means each employee benefit plan (as defined in Section 3(3) of ERISA), whether
or not subject to ERISA, and each bonus, stock option, stock purchase, restricted stock, equity or
equity-based, incentive, deferred compensation, retiree medical or life insurance, welfare benefit
plans (including vacation and paid time off policies and other material benefit policies and
procedures), supplemental retirement, severance or other benefit plan, program or arrangement,
and each retention, bonus, employment, change in control, termination, severance plan, program
or arrangement (i) to or with respect to which Parent or any Subsidiary or any trade or business
of Parent or any of its Subsidiaries, whether or not incorporated, all of which together with
Parent would be deemed a “single employer” within the meaning of Section 4001 of ERISA (a
“Parent ERISA Affiliate”), is a party or has or, would reasonably be expected to have, any
current or future obligation or (ii) that is maintained, contributed to or sponsored, or is required
to be contributed to, by Parent or any of its Subsidiaries or any Parent ERISA Affiliate for the
benefit of any current or former employee, officer, director or independent contractor of Parent
or any of its Subsidiaries or any Parent ERISA Affiliate.
(b) Parent has heretofore made available to the Company a true and complete
copy of each material Parent Benefit Plan and, with respect to each such Parent Benefit Plan, the
following related documents: (i) all summary plan descriptions, amendments, modifications or
material supplements, (ii) the most recent annual report (Form 5500), if any, filed with the IRS,
(iii) the most recently received IRS determination letter, if any, and (iv) the most recently
prepared actuarial report (if applicable).
(c) Each Parent Benefit Plan has been established, operated and administered
in all material respects in accordance with its terms and the requirements of all applicable laws,
including ERISA, the Code, the HIPAA and the ACA and all material filings, disclosures and
notices required by applicable laws, including ERISA, the Code, HIPAA and ACA, have been
timely made or any interest, fines, penalties or other impositions for late filings have been paid in
full, if due. Neither Parent nor any Parent Subsidiary has engaged in a transaction, or omitted to
take action, with respect to any Parent Benefit Plan that would reasonably be expected to subject
the Company to a material unpaid tax or penalty imposed by either Chapter 43 of the Code or
Sections 409 or 502 of ERISA. Neither Parent nor any of its Subsidiaries has taken any action to
take corrective action or make a filing under any voluntary correction program of the IRS,
Department of Labor or any other Governmental Entity with respect to any Parent Benefit Plan,
and neither Parent nor any of its Subsidiaries has any Knowledge of any plan defect that would
qualify for correction under any such program.
(d) Section 4.15(d) of the Parent Disclosure Schedules identifies each Parent
Benefit Plan that is intended to be qualified under Section 401(a) of the Code (each, a “Parent
Qualified Plan”). The IRS has issued a favorable determination letter with respect to each Parent
Qualified Plan and the related trust, which letter has not been revoked (nor has revocation been
threatened) or such Parent Qualified Plan is a volume submitter or prototype plan covered by an
IRS advisory or opinion letter affording reliance equivalent to a determination letter, and, to the
Knowledge of Parent, there are no existing circumstances and no events have occurred or are
reasonably expected to occur that could adversely affect the qualified status of any Parent
Qualified Plan or the related trust or increase the costs relating thereto. Section 4.15(d) of the
Parent Disclosure Schedules identifies each trust funding any Parent Benefit Plan and whether
that purports to be a VEBA. Each such VEBA has received an exemption letter from the IRS that
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the form of such VEBA satisfies the requirements of Code Section 501(c)(9), which letter has
not been revoked (nor has revocation been threatened), and, to the Knowledge of Parent, there
are no existing circumstances and no events have occurred or are reasonably expected to occur
that could adversely affect the continued exemption of such VEBA or increase the costs relating
thereto.
(e) Each Parent Benefit Plan that is a “nonqualified deferred compensation
plan” (as defined in Section 409A(d)(1) of the Code) and any award thereunder, in each case that
is subject to Section 409A of the Code, has (i) since January 1, 2005, been maintained and
operated, in all material respects, in good faith compliance with Section 409A of the Code and
IRS Notice 2005-1 and (ii) since January 1, 2009, been, in all material respects, in documentary
and operational compliance with Section 409A of the Code. All Parent Stock Options have been
granted with a per share exercise price or reference price at least equal to the fair market value
(as defined pursuant to Section 409A of the Code) of the underlying stock on the date of grant.
(f) None of Parent or any of its Subsidiaries nor any Parent ERISA Affiliate
has sponsored, maintained or contributed to or been obligated to contribute to (i) any plan that is
subject to Title IV or Section 302 of ERISA or Section 412, 430 or 4971 of the Code, (ii) any
Multiemployer Plan or (iii) any Multiple Employer Plan, and none of the Parent or any of its
Subsidiaries nor any Parent ERISA Affiliate has incurred any liability to a Multiemployer Plan
or a Multiple Employer Plan as a result of a complete or partial withdrawal (as those terms are
defined in Part I of subtitle E of Title IV of ERISA) from a Multiemployer Plan or Multiple
Employer Plan.
(g) All contributions required to be made to any Parent Benefit Plan by
applicable law or by any plan document or other contractual undertaking, and all premiums due
or payable with respect to insurance policies funding any Parent Benefit Plan, for any period
through the date hereof, have been timely made or paid in full or, to the extent not required to be
made or paid on or before the date hereof, have been fully reflected on the books and records of
Parent.
(h) Neither the execution and delivery of this Agreement nor the consumma-
tion of the transactions contemplated hereby will (either alone or in conjunction with any other
event) result in, cause the vesting, exercisability or delivery of, or increase the amount or value
of, any payment, right or other benefit to any employee, officer, director or other service provid-
er of Parent or any of its Subsidiaries, or result in any limitation on the right of Parent or any of
its Subsidiaries to amend, merge, terminate or receive a reversion of assets from any Parent Ben-
efit Plan or related trust.
(i) There are no pending, or to the Knowledge of Parent, threatened claims
(other than claims for benefits in the ordinary course), lawsuits or arbitrations that have been
asserted or instituted, and, to Parent’s Knowledge, no set of circumstances exists that may
reasonably give rise to a claim or lawsuit, against the Parent Benefit Plans, any fiduciaries
thereof with respect to their duties to Parent Benefit Plans or the assets of any of the trusts under
any of Parent Benefit Plans that could reasonably be expected to result in any material liability of
Parent or any of its Subsidiaries to the PBGC, the IRS, the Department of Labor, any
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(b) (i) adjust, split, combine or reclassify any capital stock;
(ii) make, declare or pay any dividend, or make any other distribution
on, or directly or indirectly redeem, purchase or otherwise acquire, any shares of its
capital stock or any securities or obligations convertible (whether currently convertible or
convertible only after the passage of time or the occurrence of certain events) into or
exchangeable for any shares of its capital stock (except (A) dividends paid by any of the
Subsidiaries of the Company to the Company or any of its wholly-owned Subsidiaries or
(B) the acceptance of shares of Company Common Stock as payment for the exercise
price of Company Options or for withholding taxes incurred in connection with the
exercise of Company Options or the vesting or settlement of Company Equity Awards, in
each case in accordance with past practice and the terms of the applicable award
agreements and outstanding as of the date hereof in accordance with their terms as in
effect on the date hereof);
(iii) grant any Company Equity Awards or any stock options, stock
appreciation rights, performance shares, restricted stock units, restricted shares or other
equity or equity-based awards or interests, or grant any individual, corporation or other
entity any right to acquire any shares of its capital stock;
(iv) issue, sell or otherwise permit to become outstanding any
additional shares of capital stock, voting securities or equity interests, or securities
convertible or exchangeable into, or exercisable for, any shares of its capital stock, voting
securities or equity interests, or any options, warrants, or other rights of any kind to
acquire any shares of capital stock, voting securities or equity interests, except pursuant
to the exercise, vesting or settlement of Company Equity Awards outstanding as of the
date hereof in accordance with their terms as in effect on the date hereof;
(c) sell, transfer, mortgage, encumber or otherwise dispose of any of its
material properties or assets to any individual, corporation or other entity other than a wholly
owned Subsidiary, or cancel, release or assign any material indebtedness to any such person or
any claims held by any such person, in each case other than in the ordinary course of business
consistent with past practice;
(d) except: (i) for foreclosure or acquisitions of control in a fiduciary or
similar capacity or in satisfaction of debts previously contracted in good faith; (ii) for
transactions in the ordinary course of business consistent with past practice for an amount not in
excess of $250,000 individually or $500,000 in the aggregate; or (iii) as may otherwise be
permitted under Section 5.2(k), (i) acquire (whether by merger or consolidation, acquisition of
stock or assets or by formation of a joint venture or otherwise) any other person or business or
any material assets, deposits or properties of any other person, or (ii) make any material
investment either by purchase of stock or securities, contributions to capital, property transfers,
or purchase of any property or assets of any other individual, corporation or other entity other
than a wholly owned Subsidiary of the Company;
(e) terminate, materially amend, or waive any material provision of, any
Company Contract, or make any change in any instrument or agreement governing the terms of
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any of its securities, or material lease, other than renewals of Company Contracts and material
leases on terms with respect to the Company that would not reasonably be expected to have a
Material Adverse Effect on the Company, or enter into any contract that would constitute a
Company Contract if it were in effect on the date of this Agreement; undertake or enter into any
lease, contract or other commitment for its account, other than in the normal course of its
banking business, involving a payment of more than $250,000 annually, or containing any
financial commitment extending beyond 24 months from the date hereof;
(f) except as required under applicable law or the terms of any Company
Benefit Plan existing as of the date hereof or pursuant to this Agreement, (i) enter into, adopt or
terminate any Company Benefit Plan or any employee benefit or compensation plan, program,
policy or arrangement for the benefit or welfare of any current or former employee, officer,
director or consultant that would be a Company Benefit Plan if in effect on the date hereof,
(ii) amend (whether in writing or through the interpretation of) any Company Benefit Plan,
(iii) increase the compensation or benefits payable to any current or former employee, officer,
director or consultant other than in the ordinary course consistent with past practice, (iv) pay or
award, or commit to pay or award, any bonuses or incentive compensation other than in the
ordinary course consistent with past practice, but not to exceed 5.0% of such individual’s base
salary or wage rate as of the date hereof unless such bonus or incentive compensation is
consistent with the terms of any pre-existing arrangement, which pre-existing arrangement is
disclosed in Section 5.2(f) of the Company Disclosure Schedules; provided that such payment or
award would not result in an adverse tax consequence under Section 280G of the Code, (v) grant
or accelerate the vesting of any equity or equity-based awards other than pursuant to the terms of
such awards as in effect on the date hereof, (vi) grant any rights with respect to severance,
change in control, retention, or similar compensation, (vii) enter into any new or amend any
existing employment, severance, change in control, retention or similar agreement of
arrangement, (viii) fund any rabbi trust or similar arrangement, (ix) terminate the employment or
services of any officer or any employee whose annual base salary is greater than $150,000, other
than for cause, or (x) hire any officer, employee, independent contractor or consultant whose
annual base salary would be greater than $150,000;
(g) settle any material claim, suit, action or proceeding, except in the ordinary
course of business in an amount and for consideration not in excess of $250,000 individually or
$500,000 in the aggregate and which would not impose any material restriction on the business
of it or its Subsidiaries or the Surviving Corporation;
(h) take any action or knowingly fail to take any action where such action or
failure to act could reasonably be expected to prevent the Merger from qualifying as a
“reorganization” within the meaning of Section 368(a) of the Code;
(i) amend its articles of incorporation, its bylaws or comparable governing
documents of its Subsidiaries;
(j) merge or consolidate itself or any of its Subsidiaries with any other
person, or restructure, reorganize or completely or partially liquidate or dissolve it or any of its
Subsidiaries;
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(k) materially restructure or materially change its investment securities or
derivatives portfolio or its interest rate exposure, through purchases, sales or otherwise, or the
manner in which the portfolio is classified or reported or purchase any security rated below
investment grade;
(l) implement or adopt any change in its accounting principles, practices or
methods, other than as may be required by Law or GAAP;
(m) (i) enter into any new line of business or change in any material respect its
lending, investment, underwriting, risk and asset liability management and other banking and
operating, securitization and servicing policies (including any change in the maximum ratio or
similar limits as a percentage of its capital exposure applicable with respect to its loan portfolio
or any segment thereof), except as required by applicable law, regulation or policies imposed by
any Governmental Entity or (ii) make any Loans or extensions of credit outside of the ordinary
course of business consistent with practice or that exceed the Company’s internal lending limits
such that the Loan or extension of credit would require approval by the Company’s credit policy
committee or any similar body, provided that any consent sought from Parent pursuant to this
clause (ii) shall be given within two (2) business days after the relevant Loan package is
provided to Parent;
(n) make, or commit to make, any capital expenditures that exceed by more
than 10% in the aggregate the capital expenditures budget of the Company in effect on the date
hereof (a copy of which has been previously made available to Parent);
(o) make, change or revoke any material Tax election, change an annual Tax
accounting period, adopt or change any material Tax accounting method, file any amended
material Tax Return, enter into any material closing agreement with respect to Taxes, or settle
any material Tax claim, audit, assessment or dispute or surrender any material right to claim a
refund of Taxes;
(p) take any action that is intended or expected to result in any of the
conditions to the Merger set forth in Sections 7.1 or 7.2 not being satisfied, except as may be
required by applicable Law;
(q) make any change in its policies and practices outside of the types of
changes made in the ordinary course of business consistent with past practice with respect to the
extension of credit, or the establishment of reserves with respect to the possible loss thereon or
the charge off of losses incurred thereon; investments; asset/liability management; deposit
pricing or gathering; underwriting, pricing, originating, acquiring, selling, servicing, or buying or
selling rights to service, loans; its hedging practices and policies, in each case except as may be
required by such policies and practices or by any applicable laws, regulations, guidelines or
policies imposed or recommended in writing by any Governmental Entity or Regulatory Agency;
(r) make application for the opening, relocation or closing of any, or open,
relocate or close any, branch office, loan production office or other significant office or
operations facility of it or its Subsidiaries, except to the extent required to obtain any Requisite
Regulatory Approvals; or
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the Joint Proxy Statement will be included as a prospectus. Each of Parent and the Company
shall use their reasonable best efforts to have the S-4 declared effective under the Securities Act
as promptly as practicable after such filing, and Parent and the Company shall thereafter mail or
deliver the Joint Proxy Statement to their respective shareholders. Parent shall also use its
reasonable best efforts to obtain all necessary state securities law or “Blue Sky” permits and
approvals required to carry out the transactions contemplated by this Agreement, and the
Company shall furnish all information concerning the Company and the holders of Company
Common Stock as may be reasonably requested by Parent in connection with any such action.
(b) The parties hereto shall cooperate with each other and use their reasonable
best efforts to promptly (and in the case of the applications, notices, petitions and filings in
respect of the Requisite Regulatory Approvals, within thirty (30) business days of the date of this
Agreement) prepare and file all necessary documentation, to effect all applications, notices,
petitions and filings, to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are necessary or advisable to
consummate the transactions contemplated by this Agreement (including, without limitation, the
Merger and the Bank Merger), and to comply with the terms and conditions of all such permits,
consents, approvals and authorizations of all such Governmental Entities. Parent and the
Company shall have the right to review in advance, and, to the extent practicable, each will
consult the other on, in each case subject to applicable laws relating to the exchange of
information, all the information relating to the Company or Parent, as the case may be, and any
of their respective Subsidiaries, which appears in any filing made with, or written materials
submitted to, any third party or any Governmental Entity in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of the parties hereto
shall act reasonably and as promptly as practicable. The parties hereto agree that they will
consult with each other with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary or advisable to
consummate the transactions contemplated by this Agreement, and each party will keep the other
apprised of the status of matters relating to completion of the transactions contemplated herein.
The parties hereto agree to furnish to the other a final copy of each filing made with a
Governmental Entity in connection with the transactions contemplated by this Agreement,
subject to applicable laws governing the confidentiality of such information. Each party shall
consult with the other in advance of any meeting or conference with any Governmental Entity in
connection with the transactions contemplated by this Agreement and to the extent permitted by
such Governmental Entity, give the other party and/or its counsel the opportunity to attend and
participate in such meetings and conferences.
(c) In furtherance and not in limitation of the foregoing, each of Parent and
the Company shall use its reasonable best efforts to (i) avoid the entry of, or to have vacated,
lifted, reversed or overturned, any decree, judgment, injunction or other order, whether
temporary, preliminary or permanent, that would restrain, prevent or materially delay the
Closing, and (ii) avoid or eliminate each and every impediment so as to enable the Closing to
occur as soon as possible, including proposing, negotiating, committing to and effecting, by
consent decree, hold separate order, or otherwise, the sale, divestiture or disposition of
businesses or assets of Parent, the Company and their respective Subsidiaries.
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agreed, upon other matters of the type customarily brought before a meeting of shareholders
to approve a merger agreement or the transactions contemplated thereby, and each shall use
its reasonable best efforts to cause such meetings to occur on the same date. Each of Parent
and the Company and its respective Board of Directors shall use its reasonable best efforts to
obtain from the shareholders of Parent and the Company, as the case may be, the Requisite
Parent Vote and Requisite Amendment Vote, in the case of Parent, and the Requisite
Company Vote, in the case of the Company, including (except as provided in Section 6.3(b))
by communicating to its respective shareholders its recommendation (and including such
recommendation in the Joint Proxy Statement) that they consider and approve this
Agreement and the transactions contemplated hereby (in the case of the Company, the
“Company Board Recommendation” and in the case of Parent, the “Parent Board
Recommendation”), and, except as provided in Section 6.3(b), shall not (i) withdraw, modify
or qualify in a manner adverse to the other party or make any public statement inconsistent
with the Company Board Recommendation, in the case of the Company, or the Parent Board
Recommendation, in the case of Parent, (ii) fail to make the Company Board
Recommendation, in the case of the Company, or the Parent Board Recommendation, in the
case of Parent, in the Joint Proxy Statement, (iii) fail to publicly, definitively and without
qualification reaffirm the Company Board Recommendation, in the case of the Company, or
the Parent Board Recommendation, in the case of Parent, within three (3) business days after
the other party’s written request (or such fewer number of days as remains prior to the
Company Meeting or the Parent Meeting, as applicable) or (iv) with respect to the Company
and the Company Board of Directors, adopt, approve, recommend or endorse an Acquisition
Proposal or fail to publicly, definitively and without qualification issue a press release
recommending against an Acquisition Proposal, within ten (10) business days after an
Acquisition Proposal is made public (or such fewer number of days as remains prior to the
Company Meeting), or publicly propose to do any of the foregoing (each of the actions in
clauses (i)–(iii), with respect to the Company or Parent, as the case may be, and clause (iv),
with respect to the Company, a “Recommendation Change”).
(b) Notwithstanding the foregoing, subject to and in compliance with Section
6.12, prior to receipt of the Requisite Company Vote, in the case of the Company, or the
Requisite Parent Vote, in the case of Parent, the Board of Directors of the Company or
Parent, after consultation its outside counsel and, with respect to financial matters, its
financial advisor, determines in good faith that it would more likely than not result in a
violation of its fiduciary duties under applicable law to continue to make the Company Board
Recommendation or the Parent Board Recommendation, as the case may be, to its
shareholders (and, in the event such determination is made by the Board of Directors of the
Company in response to an Acquisition Proposal, the Board of Directors of the Company has
taken into account the expected timing of and regulatory conditions related to such
Acquisition Proposal), the Company or Parent and its respective Board of Directors, as the
case may be, may submit this Agreement and the transactions contemplated hereby to its
respective shareholders without recommendation or otherwise effect a Recommendation
Change (although the resolutions adopting this Agreement as of the date hereof may not be
rescinded or amended), in which event the Company or Parent and its respective Board of
Directors, as the case may be, may communicate the basis for its Recommendation Change to
its shareholders in the Joint Proxy Statement or an appropriate amendment or supplement
thereto to the extent required by law; provided, that neither party nor its Board of Directors
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Continuing Employee to be credited with more than 120 hours of vacation, paid time off and sick
leave (collectively, “PTO”) on the Closing Date and to rollover more than eighty hours of PTO
from one calendar year to a subsequent calendar year. With respect to any Parent Plan that
provides medical, dental or vision insurance benefits, for the plan year in which such Continuing
Employee is first eligible to participate, Parent shall use commercially reasonable efforts to (A)
cause any preexisting condition limitations or eligibility waiting periods under such plan to be
waived with respect to such Continuing Employee to the extent such limitation would have been
waived or satisfied under the Company Benefit Plan in which such Continuing Employee
participated immediately prior to the Effective Time, (B) credit each Continuing Employee for
any co-payments or deductibles incurred by such Continuing Employee in such plan year for
purposes of any applicable deductible and annual out-of-pocket expense requirements under any
such Parent Plan, and (C) cause such credited expenses to also count toward any annual or
lifetime limits, treatment or visit limits or similar limitations that apply under the terms of the
applicable plan.
(c) Nothing in this Agreement shall confer upon any employee, officer,
director or consultant of the Company or any of its Subsidiaries or Affiliates any right to
continue in the employ or service of the Surviving Corporation, the Company, or any Subsidiary
or Affiliate thereof, or shall interfere with or restrict in any way the rights of the Surviving
Corporation, Company, Parent or any Subsidiary or Affiliate thereof to discharge or terminate
the services of any employee, officer, director or consultant of the Company or any of its
Subsidiaries or Affiliates at any time for any reason whatsoever, with or without cause, except as
provided in written agreements with such employees, directors, or consultants. Nothing in this
Agreement shall be deemed to (i) establish, amend, or modify any Company Benefit Plan, Parent
Plan or any other benefit or employment plan, program, agreement or arrangement, or (ii) alter or
limit the ability of the Surviving Corporation or any of its Subsidiaries or Affiliates to amend,
modify or terminate any particular Company Benefit Plan, Parent Plan or any other benefit or
employment plan, program, agreement or arrangement after the Effective Time except as
provided in Section 6.6(a) and (b) above. Without limiting the generality of the final sentence of
Section 9.11, nothing in this Agreement, express or implied, is intended to or shall confer upon
any person other than the parties hereto, including without limitation any current or former
employee, officer, director or consultant of Company or any of its Subsidiaries or Affiliates, any
right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
(d) Effective as of the day preceding the Effective Time, and subject to the
occurrence of the Effective Time, the Company shall adopt such resolutions and/or amendments
to cause the Company 401(k) Plan to be terminated (the “Plan Termination Date”) and the
accounts of all participants and beneficiaries in the Company 401(k) Plan as of the Plan
Termination Date to become fully vested as of the Plan Termination Date. The Company shall
provide Parent with a copy of the resolutions and/or plan amendments evidencing that the
Company 401(k) Plan has been terminated in accordance with its terms. The form and substance
of such resolutions and any necessary amendments shall be subject to the review and approval of
Parent, which shall not be unreasonably withheld. Company shall deliver to Parent an executed
copy of such resolutions and any necessary amendments as soon as practicable following their
adoption by the Board of Directors of the Company and shall fully comply with such resolutions
and any necessary amendments. The Surviving Corporation shall take all other actions necessary
to complete the termination of the Company 401(k) Plan, including filing a Final Form 5500 that
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Subsidiaries pursuant to the Company Articles, the Company Bylaws or comparable governing
documents or any indemnification agreement in effect as of the date hereof (and shall also
advance expenses as incurred to the extent provided under the Company Articles, Company
Bylaws or comparable governing documents any such indemnification agreements as in effect as
of the date of this Agreement), each present and former director and officer of the Company and
its Subsidiaries (in each case, in such capacity) (collectively, the “Company Indemnified
Parties”) against any costs or expenses (including reasonable attorneys’ fees), judgments, fines,
losses, amounts paid in settlement, damages or liabilities incurred in connection with any
threatened or actual claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, whether arising before or after the Effective Time, arising out of
the fact that such person is or was a director or officer of the Company or any of its Subsidiaries
and pertaining to any matter existing or occurring at or prior to the Effective Time, including the
transactions contemplated by this Agreement or the enforcement of the Surviving Corporation’s
obligations under this Section 6.7; provided, that the Company Indemnified Party to whom
expenses are advanced provides an undertaking to repay such advances if it is ultimately
determined that such Company Indemnified Party is not entitled to indemnification under
applicable Law.
(b) For a period of six (6) years after the Effective Time, the Surviving
Corporation shall cause to be maintained in effect the current policies of directors’ and officers’
liability insurance maintained by the Company (provided, that the Surviving Corporation may
substitute therefor policies with a substantially comparable insurer of at least the same coverage
and amounts containing terms and conditions which are no less advantageous to the insured)
with respect to claims arising from facts or events which occurred at or before the Effective
Time; provided, however, that in no event shall the Surviving Corporation be obligated to
expend, in the aggregate, an amount in excess of 250% of the current annual premium paid as of
the date hereof by the Company for such insurance (the “Premium Cap”), and if such premiums
for such insurance would at any time exceed the Premium Cap, then the Surviving Corporation
shall cause to be maintained policies of insurance which, in the Surviving Corporation’s good
faith determination, provide the maximum coverage available at an annual premium not
exceeding the Premium Cap. In lieu of the foregoing, the Company, in consultation with, but
only upon the consent of Parent (not to be unreasonably withheld, conditioned or delayed), may
(and at the request of Parent, the Company shall use its reasonable best efforts to) obtain at or
prior to the Effective Time a six-year “tail” policy under the Company’s existing directors’ and
officers’ liability insurance policy providing equivalent coverage to that described in the
preceding sentence, if and to the extent that the same may be obtained for an amount that, in the
aggregate, does not exceed the Premium Cap.
(c) In the event that, after the Effective Time, the Surviving Corporation or
any of its respective successors or assigns (i) consolidates with or merges into any other person
and is not the continuing or surviving entity of such consolidation or merger or (ii) transfers or
conveys all or substantially all of its properties and other assets to any person, then, and in each
case, the Surviving Corporation shall cause proper provision to be made so that such successors
and assigns shall expressly assume the obligations set forth in this Section 6.7.
(d) The provisions of this Section 6.7 are intended for the benefit of, and will
be enforceable by, each Company Indemnified Party and his or her heirs and representatives,
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6.11 Governance Matters.
(a) The directors of Parent at the Effective Time shall be the directors of the
Surviving Corporation from and after the Effective Time until their successors are duly elected
or appointed; provided, that prior to the Effective Time, Parent shall take all actions necessary to
cause two (2) current members of the Board of Directors of the Company, each of whom
qualifies as an independent director with respect to both the Company and Parent under the
applicable requirements of the Exchange Act and the rules and regulations of the SEC and
NASDAQ and each of whom shall be mutually agreeable to Parent and the Company, to be
appointed to the Board of Directors of the Surviving Corporation effective at or immediately
following the Effective Time.
(b) The officers of Parent at the Effective Time shall be the officers of the
Surviving Corporation from and after the Effective Time until their successors are duly elected
or appointed, together with such additional persons as may thereafter be elected or appointed.
6.12 Acquisition Proposals.
(a) Except as expressly permitted by this Section 6.12, the Company agrees
that it will not, and will cause each of its Subsidiaries and its and their respective officers,
directors and employees, and will use its reasonable best efforts to cause its and their respective
agents, advisors, financing sources, investment bankers, attorneys and other representatives
(collectively with officers, directors and employees, “Representatives”), not to, directly or
indirectly, (i) initiate, solicit, knowingly encourage or knowingly facilitate inquiries or proposals
regarding, or the making of any proposal or offer that constitutes, or could reasonably be
expected to lead to, any Acquisition Proposal, (ii) engage or participate in any discussions or
negotiations with any person concerning any Acquisition Proposal, (iii) disclose or provide any
confidential or nonpublic information or data to, or otherwise cooperate in any way with, any
person in connection with any Acquisition Proposal (including by affording access to the
personnel, properties, books, records or assets of the Company or its Subsidiaries) or (iv) unless
this Agreement has been terminated in accordance with its terms, enter into any term sheet, letter
of intent, commitment, memorandum of understanding, agreement in principle, acquisition
agreement, merger agreement, or other agreement (whether written or oral, binding or
nonbinding) (other than a confidentiality agreement referred to and entered into in accordance
with this Section 6.12(a)) relating to any Acquisition Proposal (provided, however, that the
foregoing shall not prevent the Company or its Representatives from contacting any person who
has made an Acquisition Proposal or inquiry or proposal relating thereto solely for the purpose of
seeking clarification of the terms and conditions thereof). Notwithstanding the foregoing, prior
to the receipt of the Requisite Company Vote, in the event the Company receives an unsolicited
bona fide written Acquisition Proposal, it may, and may permit its Subsidiaries and its and its
Subsidiaries’ Representatives to, (x) furnish or cause to be furnished confidential or nonpublic
information or data to, (y) participate in negotiations or discussions with and (z) afford access to
its and their personnel, properties, books, records and assets to the person making the
Acquisition Proposal (and such person’s Representatives) if and only if its Board of Directors
concludes in good faith (after consultation with its outside counsel, and with respect to financial
matters, its financial advisors) that failure to take such actions would be more likely than not to
result in a violation of its fiduciary duties under applicable Law; provided, further, that prior to
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providing any confidential or nonpublic information permitted to be provided pursuant to the
foregoing proviso affording such access or participating in such negotiations or discussions, the
Company shall have given Parent at least twenty-four (24) hours’ prior written notice and shall
have entered into a confidentiality agreement with such third party on terms no less favorable to
it than the Confidentiality Agreement, which confidentiality agreement shall not provide such
person with any exclusive right to negotiate with the Company. The Company will, and will
cause its Representatives to, immediately cease and cause to be terminated any activities,
discussions or negotiations conducted before the date of this Agreement with any person other
than Parent with respect to any Acquisition Proposal and will request pursuant to any applicable
confidentiality agreements the return or destruction of any information provided to any such
person in connection therewith. The Company will promptly (and within twenty-four (24)
hours) advise Parent following receipt of any Acquisition Proposal or any inquiry which could
reasonably be expected to lead to an Acquisition Proposal, and the substance thereof (including
the terms and conditions of and the identity of the person making such inquiry or Acquisition
Proposal) and will provide Parent an unredacted copy of such Acquisition Proposal or inquiry
and any draft agreements, proposals or other materials received in connection with such inquiry
or Acquisition Proposal, and will keep Parent apprised of any related material developments,
discussions and negotiations on a reasonably current basis, including any amendments to or
revisions of the terms of such inquiry or Acquisition Proposal (including providing an
unredacted copy of such amended or revised Acquisition Proposal and any further or revised
draft agreements, proposals or other materials received in connection with such inquiry or
Acquisition Proposal). The Company shall use its reasonable best efforts to enforce any existing
confidentiality agreements to which it or any of its Subsidiaries is a party in accordance with the
terms hereof. As used in this Agreement, “Acquisition Proposal” shall mean, other than the
transactions contemplated by this Agreement, any offer, proposal or inquiry relating to, or any
third party indication of interest in, (i) any acquisition or purchase, direct or indirect, of fifteen
percent (15%) or more of the consolidated assets of the Company and its Subsidiaries or fifteen
percent (15%) or more of any class of equity or voting securities of the Company or its
Subsidiaries whose assets, individually or in the aggregate, constitute fifteen percent (15%) or
more of the consolidated assets of the Company, (ii) any tender offer (including a self-tender
offer), exchange offer or other acquisition of equity or voting securities that, if consummated,
would result in such third party beneficially owning fifteen percent (15%) or more of any class of
equity or voting securities of the Company or its Subsidiaries whose assets, individually or in the
aggregate, constitute fifteen percent (15%) or more of the consolidated assets of the Company or
(iii) a merger, consolidation, share exchange, business combination, reorganization,
recapitalization, liquidation, dissolution or other similar transaction involving the Company or its
Subsidiaries whose assets, individually or in the aggregate, constitute fifteen percent (15%) or
more of the consolidated assets of the Company.
(b) Nothing contained in this Agreement shall prevent the Company or its
Board of Directors from complying with Rule 14d-9 and Rule 14e-2 under the Exchange Act
with respect to an Acquisition Proposal or making any other disclosure to the Company’s
shareholders that the Company or its Board of Directors concludes in good faith (after receiving
the advice of its outside counsel) that the failure to make such disclosure would be more likely
than not to result in a violation of applicable Law; provided, that such rules or other Law will in
no way eliminate or modify the effect or consequences that any action pursuant to such rules
would otherwise have under this Agreement, and any public disclosure or statement by the
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(Access to Information (Confidentiality)), Section 8.1 (Termination), this Section 8.2 (Effect of
Termination) and Article IX (General Provisions) shall survive any termination of this
Agreement, and (ii) notwithstanding anything to the contrary contained in this Agreement,
neither Parent nor the Company shall be relieved or released from any liabilities or damages
arising out of its willful and material breach of any provision of this Agreement.
(b) In the event that, after the date of this Agreement and prior to the
termination of this Agreement, (i) a bona fide Acquisition Proposal shall have been
communicated to or otherwise made known to the Board of Directors or senior management of
the Company or has been made directly to the shareholders of the Company, or any person shall
have publicly announced an Acquisition Proposal with respect to the Company, (ii) thereafter
this Agreement is terminated (A) by either Parent or the Company pursuant to Section 8.1(c) (but
only if (x) such Acquisition Proposal was made directly to the shareholders of the Company or
otherwise publicly announced prior to the Company Meeting and (y) the Company shall have
failed to obtain the Requisite Company Vote at the duly convened Company Meeting or any
adjournment or postponement thereof at which a vote on the approval of this Agreement was
taken), (B) by Parent pursuant to Section 8.1(d) or (C) by Parent or the Company pursuant to
Section 8.1(g)(ii), and (iii) prior to the date that is twelve (12) months after the date of such
termination, the Company enters into a definitive agreement or consummates a transaction with
respect to an Acquisition Proposal (whether or not the same Acquisition Proposal as that referred
to above), then the Company shall, on the earlier of the date it enters into such definitive
agreement or the date of consummation of such transaction, as applicable, pay Parent, by wire
transfer of same-day funds, a fee equal to 3.75% of aggregate merger consideration, or $[●] (the
“Termination Fee”); provided, that for purposes of this Section 8.2(b), all references in the
definition of Acquisition Proposal to “fifteen percent (15%)” shall instead refer to “fifty percent
(50%).”
(c) In the event that this Agreement is terminated by Parent pursuant to
Section 8.1(f) or the Company pursuant to Section 8.1(h), then the Company shall pay Parent, by
wire transfer of same day funds, the Termination Fee on the date of termination.
(d) In the event that this Agreement is terminated by the Company pursuant to
Section 8.1(e), then Parent shall pay the Company, by wire transfer of same day funds, the
Termination Fee on the date of termination.
(e) Notwithstanding anything to the contrary herein, but without limiting the
right of any party to recover liabilities or damages arising out of the other party’s willful and
material breach of any provision of this Agreement, in the event that this Agreement is
terminated as provided in Section 8.1, the maximum aggregate amount of monetary fees,
liabilities or damages payable by a single party under this Agreement shall be equal to the
Termination Fee, and neither the Company nor Parent shall be required to pay the Termination
Fee on more than one occasion.
(f) Each of Parent and the Company acknowledges that the agreements
contained in this Section 8.2 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent and the Company, respectively, would
not enter into this Agreement; accordingly, if either party fails promptly to pay the amount due
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9.4 Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party incurring such
expense; provided, however, that the costs and expenses of printing and mailing the Joint Proxy
Statement and all filing and other fees paid to the SEC in connection with the Merger shall be
borne equally by Parent and the Company.
9.5 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (with confirmation),
mailed by registered or certified mail (return receipt requested) or delivered by an express
courier (with confirmation) to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
(a) if to the Company, to:
Cascade Bancorp
0000 X.X. Xxxx Xxxxxx
Xxxx, Xxxxxx 00000
Attention: Xxxxx X. Xxxx
Facsimile: (000) 000-0000
With a copy (which shall not constitute notice) to:
Hunton & Xxxxxxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Xxxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
and
(b) if to Parent, to:
First Interstate BancSystem, Inc.
000 Xxxxx 00xx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Facsimile: (000) 000-0000
With a copy (which shall not constitute notice) to:
First Interstate BancSystem, Inc.
000 Xxxxx 00xx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
Xxxx Xxxxxx, PC
0000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 000
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Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Esq.
Xxxxxxxx X.X. Spaccasi, Esq.
Facsimile: (000) 000-0000
9.6 Interpretation. The parties have participated jointly in negotiating
and drafting this Agreement. In the event that an ambiguity or a question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provision of this Agreement. When a reference is made in this Agreement to
Articles, Sections, Exhibits or Schedules, such reference shall be to an Article or Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. Whenever the words “include,” “includes”
or “including” are used in this Agreement, they shall be deemed to be followed by the words
“without limitation.” References to “the date hereof” shall mean the date of this Agreement. As
used in this Agreement, the “Knowledge” of the Company means the actual knowledge of any of
the officers of the Company listed on Section 9.6 of the Company Disclosure Schedules, and the
“Knowledge” of Parent means the actual knowledge of any of the officers of Parent listed on
Section 9.6 of the Parent Disclosure Schedules. As used herein, (i) the term “business day”
means any day other than a Saturday, a Sunday or a day on which banks in Billings, Montana are
authorized by law or executive order to be closed, (ii) the term “person” means any individual,
corporation (including not-for-profit), general or limited partnership, limited liability company,
joint venture, estate, trust, association, organization, Governmental Entity or other entity of any
kind or nature, (iii) an “Affiliate” of a specified person is any person that directly or indirectly
controls, is controlled by, or is under common control with, such specified person and (iv) the
term “made available” means any document or other information that was (a) provided by one
party or its representatives to the other party and its representatives at least one business day
prior to the date hereof, (b) included in the virtual data room of a party at least one business day
prior to the date hereof or (c) filed by a party with the SEC and publicly available on XXXXX at
least one business day prior to the date hereof. The Company Disclosure Schedules and the
Parent Disclosure Schedules, as well as all other schedules and all exhibits hereto, shall be
deemed part of this Agreement and included in any reference to this Agreement.
9.7 Counterparts. This Agreement may be executed in counterparts,
all of which shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
9.8 Entire Agreement. This Agreement (including the documents and
the instruments referred to herein) together with the Confidentiality Agreement constitutes the
entire agreement among the parties and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.
9.9 Governing Law. This Agreement shall be governed by and
strued and enforced in accordance with the laws of the State of New York, including all matters
of construction, validity and performance (but excluding all other choice of law and conflicts of
{Clients/1598/00283791.DOCX/11 } [Signature Page to Agreement and Plan of Merger]
IN WITNESS WHEREOF, Parent and the Company have caused this Agreement to be executed
by their respective officers thereunto duly authorized as of the date first above written.
CASCADE BANCORP
By:
Name:
Title:
FIRST INTERSTATE BANCSYSTEM, INC.
By:
Name:
Title:
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Exhibit A
Form of Voting Agreement
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Exhibit B
Amended and Restated Parent Articles
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Exhibit C
Amended and Restated Company Bylaws