1
EXHIBIT 2
EXHIBIT A
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AGREEMENT AND PLAN OF MERGER
BETWEEN
PIONEER BANCORP, INC.,
PIONEER NATIONAL BANK
AND
INTERWEST BANCORP, INC.
AND
INTERWEST BANK
----------------------------------------------
DATED AS OF FEBRUARY 4, 1998
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TABLE OF CONTENTS
ARTICLE I. MERGER....................................................................7
1.1 THE MERGER.............................................................7
1.2 EFFECTIVE DATE.........................................................8
ARTICLE II. CONSIDERATION............................................................8
2.1 CONSIDERATION..........................................................8
2.2 SHAREHOLDER RIGHTS; STOCK TRANSFERS....................................8
2.3 FRACTIONAL SHARES......................................................9
2.4 EXCHANGE PROCEDURES....................................................9
2.5 EXCHANGE RATIO ADJUSTMENTS.............................................9
2.6 EXCEPTION SHARES.......................................................9
2.7 RESERVATION OF RIGHT TO REVISE TRANSACTION.............................9
2.8 OPTIONS...............................................................10
ARTICLE III. ACTIONS PENDING CONSUMMATION...........................................10
3.1 CAPITAL STOCK.........................................................10
3.2 DIVIDENDS, ETC........................................................10
3.3 INDEBTEDNESS; LIABILITIES; ETC........................................11
3.4 LINE OF BUSINESS; OPERATING PROCEDURES; ETC...........................11
3.5 LIENS AND ENCUMBRANCES................................................11
3.6 COMPENSATION; EMPLOYMENT AGREEMENTS; ETC..............................11
3.7 BENEFIT PLANS.........................................................11
3.8 CONTINUANCE OF BUSINESS...............................................11
3.9 AMENDMENTS............................................................11
3.10 CLAIMS................................................................11
3.11 CONTRACTS.............................................................11
3.12 LOANS.................................................................11
3.13 TRANSACTION EXPENSES..................................................12
ARTICLE IV. REPRESENTATIONS AND WARRANTIES..........................................12
4.1 THE COMPANY AND PIONEER BANK REPRESENTATIONS
AND WARRANTIES...................................................12
4.2 INTERWEST AND INTERWEST BANK REPRESENTATIONS
AND WARRANTIES...................................................21
ARTICLE V. COVENANTS................................................................23
5.1 BEST EFFORTS..........................................................23
5.2 THE PROXY.............................................................23
5.3 REGISTRATION STATEMENT COMPLIANCE WITH
SECURITIES LAWS..................................................24
5.4 REGISTRATION STATEMENT EFFECTIVENESS..................................24
5.5 PRESS RELEASES........................................................24
5.6 ACCESS; INFORMATION...................................................24
5.7 ACQUISITION PROPOSALS.................................................25
5.8 REGISTRATION STATEMENT PREPARATION;
REGULATORY APPLICATIONS PREPARATION..............................25
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5.9 BLUE-SKY FILINGS......................................................25
5.10 AFFILIATE AGREEMENTS..................................................25
5.11 CERTAIN POLICIES OF THE COMPANY AND PIONEER BANK......................26
5.12 STATE TAKEOVER LAW....................................................26
5.13 NO RIGHTS TRIGGERED...................................................26
5.14 SHARES LISTED.........................................................26
5.15 REGULATORY APPLICATIONS...............................................26
5.16 REGULATORY DIVESTITURES...............................................26
5.17 CURRENT INFORMATION...................................................27
5.18 INDEMNIFICATION.......................................................27
5.19 POST-MERGER ACTIONS...................................................28
ARTICLE VI. CONDITIONS TO CONSUMMATION OF THE MERGER................................28
6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS................................28
6.2 CONDITIONS TO OBLIGATIONS OF INTERWEST................................29
6.3 CONDITIONS TO OBLIGATIONS OF COMPANY
AND PIONEER BANK.................................................30
ARTICLE VII. TERMINATION............................................................31
7.1 GROUNDS FOR TERMINATION...............................................31
7.2 CONSEQUENCES OF TERMINATION...........................................32
ARTICLE VIII. OTHER MATTERS.........................................................32
8.1 SURVIVAL..............................................................32
8.2 WAIVER; AMENDMENT.....................................................32
8.3 COUNTERPARTS..........................................................32
8.4 GOVERNING LAW.........................................................32
8.5 EXPENSES..............................................................33
8.6 CONFIDENTIALITY.......................................................33
8.7 NOTICES...............................................................33
8.8 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES....................34
8.9 BENEFIT PLANS.........................................................34
8.10 HEADINGS..............................................................34
EXHIBITS
Exhibit A Approval by Directors of Pioneer Bancorp, Inc.
Exhibit B Director's Agreement
Exhibit C Stock Option Agreement
Exhibit D Affiliate Undertakings and Agreements -- InterWest
Exhibit E Affiliate Undertakings and Agreements -- Company
Exhibit F Employment Agreement of Xxxx X. Xxxxxxxx
Exhibit G Employment Agreement of Xxx Xxxxx
Exhibit H Employment Agreement of Xxxxx X. Xxxxx
Exhibit I Employment Agreement of Xxxx X. Xxxxxxxx
Exhibit J Legal Opinion of Xxxxxx, Pepper & Shefelman, PLLC
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Exhibit K Legal Opinion of Xxxxxx & Xxxx, P.C.
SCHEDULES
---------
Company Disclosures
-------------------
Schedule 2.8 Outstanding Options
Schedule 3.4 Changes to Line of Business, Operating Procedures, etc.
Schedule 3.6 New or Changes to Compensation, Employment Agreements, etc.
Schedule 3.7 New or Modifications to Benefit Plans
Schedule 3.11 New or Changes to Material Contracts
Schedule 4.1(C) Shares Outstanding
Schedule 4.1(D) Subsidiaries
Schedule 4.1(G) No Defaults - Agreements Requiring Third Party Consent
Schedule 4.1(H) Financial Reports
Schedule 4.1(I) Undisclosed Liabilities
Schedule 4.1(J) No Events Causing Material Adverse Effect
Schedule 4.1(L) Litigation, Regulatory Action
Schedule 4.1(M) Compliance with Laws
Schedule 4.1(N) Material Contracts
Schedule 4.1(Q)(1) List of Employee Benefit Plans
Schedule 4.1(Q)(2) Employee Benefit Plans Not Qualified Under ERISA
Schedule 4.1(Q)(6) Obligations for Retiree Health and Life Benefits
Schedule 4.1(Q)(7) Agreements Resulting in Payments to Employees Under Any
Compensation and Benefit Plan with Respect to Proposed
Transaction
Schedule 4.1(T) Asset Classification
Schedule 4.1(V) Insurance
Schedule 4.1(W) Affiliates
Schedule 4.1(Z)(2) Pending Proceedings with Respect to Environmental Matters
Schedule 4.1(Z)(3) Pending Proceedings with Respect to Environmental
Matters Involving Loan/Fiduciary Property
Schedule 4.1(Z)(4) Pending Proceedings with Respect to Environmental
Matters Listed in Sections 4.1(Z)(2) or (3)
Schedule 4.1(Z)(5) Actions During Ownership Which could Have Material
Adverse Effect with Respect to Environmental Matters
Schedule 4.1(Z)(6) Actions Prior to Ownership Which could Have Material
Adverse Effect with Respect to Environmental Matters
Schedule 4.1(AA) Tax Reports Matters
Schedule 4.1(CC) Derivative Contracts
Schedule 4.1(EE)(1) Employment Contracts Requiring Payment In Connection
with Termination
Schedule 4.1(EE)(2) Leases with Aggregate Annual Rent Exceeding $10,000
Schedule 4.1(EE)(3) Material Contracts with Affiliates
Schedule 6.2(H) Excluded Loans
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InterWest Disclosures
---------------------
Schedule 4.2(C) Shares
Schedule 4.2(F) No Defaults
Schedule 4.2(G) Financial Reports
Schedule 4.2(H) No Events Causing Material Adverse Effect
Schedule 4.2(I) Litigation, Regulatory Action
Schedule 4.2(L) Derivative Contracts
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of the 4th day of February, 1998
(this "Plan"), is between PIONEER BANCORP, INC. (the "Company"), PIONEER
NATIONAL BANK ("Pioneer Bank"), INTERWEST BANCORP, INC. ("InterWest"), and
INTERWEST BANK.
RECITALS
(A) THE COMPANY. The Company is a corporation duly organized and
existing in good standing under the laws of the State of Washington, with its
principal executive offices located in Yakima, Washington. The Company is a
registered bank holding company under the Bank Holding Company Act of 1956, as
amended. As of the date of this Plan, the Company has 1,000,000 authorized
shares of common stock, no par value ("Company Common Stock") (no other class of
capital stock being authorized), of which 344,699 shares of Company Common Stock
are issued and outstanding. As of the date of this Plan, the Company had 50,000
shares of Company Common Stock reserved for issuance under employee stock option
plans pursuant to which options covering 30,800 shares of Company Common Stock
are outstanding as of the date of this Plan.
(B) PIONEER BANK. Pioneer Bank is a national banking association duly
organized and existing in good standing under the laws of the United States,
with its principal executive offices located in Yakima, Washington. As of the
date of this Plan, Pioneer Bank has 160,000 authorized shares of common stock,
$5.00 par value per share ("Pioneer Bank Common Stock") (no other class of
capital stock being authorized), of which 110,000 shares of Pioneer Bank Common
Stock are issued and outstanding. All of the issued and outstanding shares of
Pioneer Bank Common Stock are owned by the Company, the sole shareholder of
Pioneer Bank. As of December 31, 1997, Pioneer Bank had capital of $9,001,000,
divided into common stock of $550,000, surplus of $2,375,000, and undivided
profits of $6,076,000.
(C) INTERWEST. InterWest is a corporation duly organized and existing in
good standing under the laws of the State of Washington, with its principal
executive offices located in Oak Harbor, Washington. InterWest is a registered
bank holding company under the Bank Holding Company Act of 1956, as amended. As
of the date of this Plan, InterWest has 20,000,000 authorized shares of common
stock, $0.20 par value per share ("InterWest Common Stock") (no other class of
capital stock being authorized), of which 8,445,572 shares of InterWest Common
Stock are issued and outstanding.
(D) INTERWEST BANK. InterWest Bank is a savings bank duly organized and
existing in good standing under the laws of the State of Washington, with its
principal executive offices located in Oak Harbor, Washington. As of the date of
this Plan, InterWest Bank has 6,000,000 authorized shares of common stock, $0.20
par value per share ("InterWest Bank Common Stock") (no other class of capital
stock being authorized), of which 200 shares are issued and outstanding and
owned by InterWest, the sole shareholder of InterWest Bank. As of December 31,
1997, InterWest Bank had capital of $133,398,000, divided into common stock of
$1,615,000, surplus of $20,362,000 and undivided profits of $111,421,000.
(E) VOTING AGREEMENT. As a condition and an inducement to InterWest's
and InterWest Bank's willingness to enter into this Plan, the directors and
officers of Pioneer Bank and the Company have entered into agreements in the
forms attached to this Plan as Exhibit A and Exhibit B, pursuant to which, among
other things, each such individual has agreed to vote his or her shares of
Company Common Stock in favor of approval of the actions contemplated by this
Plan at the Meeting (as defined below) and to refrain from competing with
InterWest and InterWest Bank.
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(F) STOCK OPTION AGREEMENT. Immediately after the execution and delivery
of this Plan, as a condition and an inducement to InterWest's willingness to
enter into this Plan, the Company and InterWest are entering into a Stock Option
Agreement (the "Stock Option Agreement") in the form attached to this Plan as
Exhibit C, pursuant to which the Company is granting to InterWest an option to
purchase, under certain circumstances, shares of Company Common Stock.
(G) RIGHTS, ETC. Except as Previously Disclosed (as defined below) in
Schedule 4. l(C), or paragraph (A) of the Recitals to this Plan, or as
authorized by this Plan or the Stock Option Agreement: there are no shares of
capital stock of the Company or Pioneer Bank authorized and reserved for
issuance; neither the Company nor Pioneer Bank has any Rights (as defined below)
issued or outstanding; and neither the Company nor Pioneer Bank has any
commitment to authorize, issue or sell any such shares or any Rights. The term
"Rights" means securities or obligations convertible into or exchangeable for,
or giving any Person any right to subscribe for or acquire, or any options,
calls or commitments relating to, shares of capital stock. There are no
preemptive rights with respect to the Company Common Stock.
(H) APPROVALS. At meetings of the respective Boards of Directors of the
Company, Pioneer Bank, InterWest and InterWest Bank, each such Board has
approved and authorized the execution of this Plan and the Stock Option
Agreement in counterparts.
In consideration of their mutual promises and obligations, the Parties
further agree as follows:
DEFINITIONS
(A) DEFINITIONS. Capitalized terms used in this Plan have the following
meanings:
"Acquisition Proposal" has the meaning assigned to such term in Section
5.7(A).
"Additional Shares" means the number (calculated to four decimals) equal
to (1) the product of (a) the average of the Company's monthly net income
(determined in accordance with GAAP) for the first six months of 1998 multiplied
by (b) the greater of one or a fraction, the numerator of which shall be the
number of days elapsed during the period beginning on July 1, 1998, and ending
on the Effective Date and the denominator of which shall be 30, divided by (2)
the Average Closing Price.
"Adjusted Loans" means all loans and other extensions of credit by
Pioneer Bank other than (1) that portion of Small Business Administration loans
or the guaranteed portions of other loans guaranteed by the U.S. Government or
any of its agencies, (2) single-family residential loans in the process of being
sold, and (3) those loans set forth in Schedule 6.2(H).
"Adjustment Factor" means the number equal to the Additional Shares
divided by 344,699.
"Appraisal Laws" has the meaning assigned to such term in Section
1.1(E).
"Asset Classification" has the meaning assigned to such term in Section
4.l(T).
"Average Closing Price" means the price equal to the average (rounded to
four decimals) of each Daily Sales Price of InterWest Common Stock for the ten
consecutive trading days beginning on and including the twentieth day
immediately preceding the Effective Date, subject to any adjustment that may be
required in connection with the adjustment of the Exchange Ratio pursuant to
Section 2.5.
"Bank Financial Reports" has the meaning assigned to such term in
Section 4.1(H).
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"Business Day" means any day other than a Saturday, Sunday, or legal
holiday in the State of Washington.
"Capital" means capital stock, surplus and retained earnings determined
in accordance with GAAP.
"Code" has the meaning assigned to such term in Section 4.1(Q)(2).
"Company" has the meaning assigned to such term in the first paragraph
to this Plan.
"Company Common Stock" has the meaning assigned to such term in
paragraph (A) of the Recitals.
"Company Option" has the meaning assigned to such term in Section 2.8.
"Compensation and Benefit Plans" has the meaning assigned to such term
in Section 4.1(Q)(1).
"Continuing Corporation" has the meaning assigned to such term in
Section 1.1(A).
"Control" with respect to any Person means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting interests, by
contract, or otherwise.
"Daily Sales Price" for any trading day shall be equal to the average of
the closing bid and ask prices per share of all market makers quoting both bid
and ask prices, as reported on Bloomberg Financial Markets, of InterWest Common
Stock on the NASDAQ Stock Market reporting system.
"Department" means the Department of Financial Institutions of the State
of Washington.
"Derivatives Contract" means an exchange-traded or over-the-counter
swap, forward, future, option, cap, floor or collar financial contract or any
other contract that (1) is not included on the balance sheet of the Holding
Company Financial Reports or the InterWest Financial Reports, as the case may
be, and (2) is a derivative contract (including various combinations thereof).
"Dissenting Shares" means the shares of Company Common Stock held by
those shareholders of the Company who have timely and properly exercised their
dissenters' rights in accordance with the Appraisal Laws.
"Dividend Record Date" means the date in June, 1998, that is established
by InterWest for determining shareholders of record who will be entitled to
receive InterWest's regular quarterly cash dividend.
"Effective Date" has the meaning assigned to such term in Section 1.2.
"Eligible Company Common Stock" means shares of Company Common Stock
other than Exception Shares and Dissenting Shares.
"Employment Agreement" shall mean any of Exhibits F, G, H and I.
"Environmental Law" means (1) any federal, state, and/or local law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, legal doctrine, order, judgment,
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decree, injunction, requirement or agreement with any governmental entity,
relating to (a) the protection, preservation or restoration of the environment
(including air, water vapor, surface water, groundwater, drinking water supply,
surface land, subsurface land, plant and animal life or any other natural
resource) or to human health or safety, or (b) the exposure to, or the use,
storage, recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of Hazardous Material, in each case as
amended and as now in effect, including the Federal Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act, the Federal Water Pollution Control Act of 1972, the
Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource
Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste
Amendments thereto), the Federal Solid Waste Disposal and the Federal Toxic
Substances Control Act, and the Federal Insecticide, Fungicide and Rodenticide
Act, the Federal Occupational Safety and Health Act of 1970, and (2) any common
law or equitable doctrine (including injunctive relief and tort doctrines such
as negligence, nuisance, trespass and strict liability) that may impose
liability or obligations for injuries or damages due to, or threatened as a
result of, the presence of or exposure to any Hazardous Material.
"ERISA" has the meaning assigned to such term in Section 4.1(Q)(2).
"ERISA Affiliate" has the meaning assigned to such term in Section
4.1(Q)(3).
"ERISA Plans" has the meaning assigned to such term in Section
4.1(Q)(2).
"Exception Shares" means shares held by any of the Company's
Subsidiaries or by InterWest or any of its Subsidiaries, in each case other than
in a fiduciary capacity or as a result of debts previously contracted.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated under such statute.
"Exchange Agent" has the meaning assigned to such term in Section 2.4.
"Exchange Ratio" has the meaning assigned to such term in Section
2.1(B).
"FDIC" means the Federal Deposit Insurance Corporation.
"Final Capital Requirement" means a dollar amount equal to the sum of $9
million plus $100,000 for each month elapsed between June 30, 1998 and the
Effective Date (with any partial month being prorated).
"Financial Reports" has the meaning assigned to such term in Section
4.1(H).
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.
"GAAP" means generally accepted accounting principles consistently
applied.
"Hazardous Material" means any substance presently listed, defined,
designated or classified as hazardous, toxic, radioactive or dangerous, or
otherwise regulated, under any Environmental Law, whether by type or quantity,
including any oil or other petroleum product, toxic waste, pollutant,
contaminant, hazardous substance, toxic substance, hazardous waste, special
waste or petroleum or any derivative or by-product thereof, radon, radioactive
material, asbestos, asbestos containing material, urea formaldehyde foam
insulation, lead and polychlorinated biphenyl.
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"Holding Company Financial Reports" has the meaning assigned to such
term in Section 4.1(H).
"Indemnified Party" has the meaning assigned to such term in Section
5.18(A).
"InterWest" has the meaning assigned to such term in the first paragraph
of this Plan.
"InterWest Bank Common Stock" has the meaning assigned to such term in
paragraph (D) of the Recitals.
"InterWest Common Stock" has the meaning assigned to such term in
paragraph (C) of the Recitals.
"InterWest Option" has the meaning assigned to such term in Section 2.8.
"InterWest Transaction" means (1) a merger, consolidation or similar
transaction involving InterWest or any of its significant subsidiaries, (2) the
disposition, by sale, lease, exchange or otherwise, of assets or deposits of
InterWest or any of its significant subsidiaries representing in either case 25%
or more of the consolidated assets or deposits of InterWest and its
subsidiaries, or (3) the issuance, sale or other disposition (including by way
of merger, consolidation, share exchange or any similar transaction) of
securities representing 25% or more of the voting power of InterWest or any of
its significant subsidiaries other than the issuance of InterWest Common Stock
upon the exercise of outstanding options or the conversion of outstanding
convertible securities of InterWest.
"Loan/Fiduciary Property" means any property owned or controlled by the
Company or any of its Subsidiaries or in which the Company or any of its
Subsidiaries holds a security or other interest, and, where required by the
context, includes any such property where the Company or any of its Subsidiaries
constitutes the owner or operator of such property, but only with respect to
such property.
"Material Adverse Effect" means, with respect to any Party, an event,
occurrence or circumstance (including (i) the making of any provisions for
possible loan and lease losses, write-downs of other real estate owned and
taxes, and (ii) any breach of a representation or warranty contained in this
Plan by such Party) that (a) has or is reasonably likely to have a material
adverse effect on the financial condition, results of operations, business or
prospects of such Party and its Subsidiaries, taken as a whole, or (b) would
materially impair such Party's ability to perform its obligations under this
Plan or the Stock Option Agreement or the consummation of any of the
transactions contemplated by this Plan or the Stock Option Agreement.
"Maximum Premium Amount" has the meaning assigned to such term in
Section 5.18(C).
"Meeting" has the meaning assigned to such term in Section 5.2.
"Merger" has the meaning assigned to such term in Section 1.1(A).
"Multiemployer Plans" has the meaning assigned to such term in Section
4.l(Q)(2).
"NASDAQ" means the National Association of Securities Dealers Automated
Quotations system.
"Option" has the meaning assigned to such term in the Stock Option
Agreement.
"Option Shares" has the meaning assigned to such term in the Stock
Option Agreement.
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"Participation Facility" means any facility in which the Company or any
of its Subsidiaries participates in the management and, where required by the
context, includes the owner or operator of such facility.
"Party" means a party to this Plan.
"Pension Plan" has the meaning assigned to such term in Section
4.l(Q)(2).
"Person" means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, governmental
body, or other entity.
"Pioneer Bank" has the meaning assigned to such term in the first
paragraph of this Plan.
"Pioneer Bank Common Stock" has the meaning assigned to such term in
paragraph (B) of the Recitals.
"Plan" means this Agreement and Plan of Merger.
"Previously Disclosed" means information provided by a Party in a
Schedule that is delivered by that Party to the other Party contemporaneously
with the execution of this Plan.
"Proxy Statement" has the meaning assigned to such term in Section 5.2.
"Registration Statement" has the meaning assigned to such term in
Section 5.2.
"Regulatory Authorities" means federal or state governmental agencies,
authorities or departments charged with the supervision or regulation of
depository institutions or engaged in the insurance of deposits.
"RCW" means the Revised Code of Washington, as amended.
"Rights" has the meaning assigned to such term in paragraph (G) of the
Recitals to this Plan.
"Securities Act" means the Securities Act of 1933, as amended, together
with the rules and regulations promulgated under such statute.
"SEC" means the Securities and Exchange Commission.
"Stock Option Agreement" has the meaning assigned to such term in
paragraph (F) of the Recitals to this Plan.
"Subsidiary" means, with respect to any entity, each partnership,
limited liability company, or corporation the majority of the outstanding
partnership interests, membership interests, capital stock or voting power of
which is (or upon the exercise of all outstanding warrants, options and other
rights would be) owned, directly or indirectly, at the time in question by such
entity.
"Tax Returns" has the meaning assigned to such term in Section 4.1(AA).
"Taxes" means federal, state, local or foreign income, gross receipts,
windfall profits, severance, property, production, sales, use, license, excise,
franchise, employment, withholding or similar taxes
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imposed on the income, properties or operations of the respective Party or its
Subsidiaries, together with any interest, additions, or penalties with respect
thereto and any interest in respect of such additions or penalties.
"Termination Date" has the meaning assigned to such term in Section 1.2.
"Third Party" means a person within the meaning of Sections 3(a)(9) and
13(d)(3) of the Exchange Act, excluding (1) the Company or any Subsidiary of the
Company, and (2) InterWest or any Subsidiary of InterWest.
"Valuation Price" means the Average Closing Price; provided, however,
that (1) if the Average Closing Price is less than or equal to $36.00, then the
Valuation Price shall be $36.00, and (2) if the Average Closing Price is equal
to or greater than $44.00, then the Valuation Price shall be $44.00.
(B) GENERAL INTERPRETATION. Except as otherwise expressly provided in
this Plan or unless the context clearly requires otherwise, the terms defined in
this Plan include the plural as well as the singular; the words "hereof,"
"herein," "hereunder," "in this Plan" and other words of similar import refer to
this Plan as a whole and not to any particular Article, Section or other
subdivision; and references in this Plan to Articles, Sections, Schedules, and
Exhibits refer to Articles and Sections of and Schedules and Exhibits to this
Plan. Whenever the words "include," "includes," or "including" are used in this
Plan, they shall be deemed to be followed by the words "without limitation."
Unless otherwise stated, references to Subsections refer to the Subsections of
the Section in which the reference appears. All pronouns used in this Plan
include the masculine, feminine and neuter gender, as the context requires. All
accounting terms used in this Plan that are not expressly defined in this Plan
have the respective meanings given to them in accordance with GAAP.
ARTICLE I. MERGER
1.1 THE MERGER. Subject to the provisions of this Plan, on the Effective
Date:
(A) THE CONTINUING CORPORATION. In accordance with the terms of RCW
Ch. 23B.11, the Company shall merge into InterWest (the "Merger"), the separate
existence of the Company shall cease and InterWest (the "Continuing
Corporation") shall survive, and the name of the Continuing Corporation shall be
"InterWest Bancorp, Inc."
(B) RIGHTS, ETC. Upon consummation of the Merger, the Continuing
Corporation shall possess all of the rights, privileges, immunities and
franchises, of a public as well as of a private nature, of each of the merging
corporations; and all property, real, personal and mixed, and all debts due on
whatever account, and all other choses in action, and all and every other
interest, of or belonging to or due to each of the corporations so merged, shall
be deemed to be vested in the Continuing Corporation without further act or
deed; and the title to any real estate or any interest therein, vested in each
of such corporations, shall not revert or be in any way impaired by reason of
the Merger.
(C) LIABILITIES. The Continuing Corporation shall be responsible and
liable for all the liabilities, obligations and penalties of each of the
corporations so merged.
(D) ARTICLES OF INCORPORATION; BYLAWS; DIRECTORS; OFFICERS. The
Articles of Incorporation and Bylaws of the Continuing Corporation shall be
those of InterWest, as in effect immediately prior to the Merger becoming
effective. The directors and officers of InterWest in office immediately prior
to the Merger becoming effective shall be the directors and officers of the
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Continuing Corporation, who shall hold office until such time as their
successors are elected and qualified.
(E) DISSENTING SHARES. Notwithstanding anything to the contrary in
this Plan, each Dissenting Share whose holder, as of the Effective Date of the
Merger, has not effectively withdrawn or lost his dissenters' rights under RCW
23B.13 (the "Appraisal Laws") shall not be converted into or represent a right
to receive InterWest Common Stock, but the holder of such Dissenting Share shall
be entitled only to such rights as are granted by the Appraisal Laws, unless and
until such holder shall have failed to perfect or shall have effectively
withdrawn or lost the right to payment under the Appraisal Laws, in which case
each such share shall be deemed to have been converted at the Effective Date
into the right to receive InterWest Common Stock without any interest thereon.
Each holder of Dissenting Shares who becomes entitled to payment for his Company
Common Stock pursuant to the provisions of the Appraisal Laws shall receive
payment for such Dissenting Shares from InterWest (but only after the amount
thereof shall have been agreed upon or finally determined pursuant to the
Appraisal Laws).
1.2 EFFECTIVE DATE. Unless the Parties agree upon another date, the
"Effective Date" will be the tenth Business Day after the fulfillment or waiver
of each condition precedent set forth in, and the granting of each approval (and
expiration of any waiting period) required by, Article VI; provided, however,
that if such tenth Business Day occurs during the period commencing on the
Dividend Record Date and terminating on (and including) June 30, 1998, the
Effective Date will be July 1, 1998. If the Merger is not consummated in
accordance with this Plan on or prior to September 30, 1998 (the "Termination
Date"), the Company or InterWest may terminate this Plan in accordance with
Article VII. On the Effective Date, InterWest and the Company shall execute and
deliver to the Secretary of State of the State of Washington articles of merger
in accordance with applicable law.
ARTICLE II. CONSIDERATION
2.1 CONSIDERATION. Subject to the provisions of this Plan, on the
Effective Date:
(A) OUTSTANDING INTERWEST COMMON STOCK. The shares of InterWest
Common Stock issued and outstanding immediately prior to the Effective Date
shall, on and after the Effective Date, remain as issued and outstanding shares
of InterWest Common Stock.
(B) OUTSTANDING COMPANY COMMON STOCK. Each share of Eligible Company
Common Stock issued and outstanding immediately prior to the Effective Date
shall, by virtue of the Merger, automatically and without any action on the part
of the holder of such share, become and be converted into the right to receive
the number of shares of InterWest Common Stock equal to the quotient of $58.98
divided by the Valuation Price (the quotient, as adjusted, if applicable,
pursuant to Section 2.5, being the "Exchange Ratio").
2.2 SHAREHOLDER RIGHTS; STOCK TRANSFERS. On the Effective Date, holders
of Company Common Stock shall cease to be, and shall have no rights as,
shareholders of the Company, other than to receive the consideration provided
under this Article II. After the Effective Date, there shall be no transfers on
the stock transfer books of the Company or the Continuing Corporation of the
shares of Company Common Stock that were issued and outstanding immediately
prior to the Effective Date.
2.3 FRACTIONAL SHARES. Notwithstanding any other provision of this Plan,
no fractional shares of InterWest Common Stock and no certificates or scrip
therefor, or other evidence of
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ownership thereof, will be issued in the Merger. InterWest shall pay to each
holder of Company Common Stock who would otherwise be entitled to a fractional
share an amount in cash determined by multiplying such fraction by the Average
Closing Price.
2.4 EXCHANGE PROCEDURES. As promptly as practicable after the Effective
Date, InterWest shall send or cause to be sent to each former shareholder of the
Company of record immediately prior to the Effective Date transmittal materials
for use in exchanging such shareholder's certificates for Company Common Stock
for the consideration set forth in this Article II. The certificates
representing the shares of InterWest Common Stock into which shares of such
shareholder's Company Common Stock are converted on the Effective Date, any
fractional share checks that such shareholder shall be entitled to receive, and
any dividends paid on such shares of InterWest Common Stock for which the record
date for determination of shareholders entitled to such dividends is on or after
the Effective Date, will be delivered to such shareholder only upon delivery to
InterWest's exchange agent (the "Exchange Agent") of the certificates
representing all of such shares of Company Common Stock (or indemnity
satisfactory to InterWest and the Exchange Agent, in their judgment, if any of
such certificates are lost, stolen or destroyed). No interest will be paid on
any such fractional share checks or dividends to which the holder of such shares
shall be entitled to receive upon such delivery. Certificates surrendered for
exchange by any person constituting an "affiliate" of the Company for purposes
of Rule 145 of the Securities Act shall not be exchanged for certificates
representing InterWest Common Stock until InterWest has received a written
agreement from such person as specified in Section 5.10.
2.5 EXCHANGE RATIO ADJUSTMENTS. In the event InterWest changes the
number of shares of InterWest Common Stock issued and outstanding prior to the
Effective Date as a result of a stock split, stock dividend, recapitalization or
similar transaction with respect to the outstanding InterWest Common Stock and
the record date therefor shall be prior to the Effective Date, the Valuation
Price shall be proportionately adjusted, and the Exchange Ratio shall be
recalculated on the basis of the adjusted Valuation Price. In the event that the
transactions contemplated by this Plan have not been consummated before the
Dividend Record Date, the Exchange Ratio will be increased by the amount of the
Adjustment Factor.
2.6 EXCEPTION SHARES. Each of the Exception Shares of Company Common
Stock shall be canceled and retired upon consummation of the Merger, and no
consideration shall be issued in exchange therefor.
2.7 RESERVATION OF RIGHT TO REVISE TRANSACTION. In its sole discretion,
and notwithstanding any other provision in this Plan to the contrary, InterWest
may at any time change the method of effecting its acquisition of the Company
and Pioneer Bank; provided, however, that (A) no such change shall alter or
change the amount or kind of consideration to be issued to holders of Company
Common Stock as provided for in this Plan, (B) no such change shall adversely
affect the tax treatment to the Company shareholders as a result of receiving
such consideration, and (C) no delay caused by such a change shall be the basis
upon which InterWest terminates this Plan pursuant to Section 7.1(C). If
InterWest elects to change the method of acquisition pursuant to this section,
and the Merger is not accounted for on a pooling-of-interests basis as a result
of such change, InterWest will waive its pooling condition in Section 6.2(F). If
InterWest elects to change the method of acquisition, the Company and Pioneer
Bank will cooperate with and assist InterWest and InterWest Bank with any
necessary amendment to this Plan, and with the preparation and filing of such
applications, documents, instruments and notices as may be necessary or
desirable, in the opinion of counsel for InterWest, to obtain all necessary
shareholder approvals and approvals of any regulatory agency, administrative
body or other governmental entity.
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2.8 OPTIONS. On the Effective Date, by virtue of the Merger, and without
any action on the part of any holder of an option, each option granted by the
Company to purchase shares of Company Common Stock ("Company Option") that is
then outstanding and unexercised shall be converted into and become an option to
purchase InterWest Common Stock ("InterWest Option") on the same terms and
conditions as are in effect with respect to the Company Option immediately prior
to the Effective Date, except that (A) each such InterWest Option may be
exercised solely for shares of InterWest Common Stock, (B) the number of shares
of InterWest Common Stock subject to such InterWest Option shall be equal to the
number of shares of Company Common Stock subject to such Option immediately
prior to the Effective Date multiplied by the Exchange Ratio, the product being
rounded, if necessary, up or down to the nearest whole share, and (C) the per
share exercise price under each such InterWest Option shall be adjusted by
dividing the per share exercise price of the Company Option by the Exchange
Ratio, and rounding up or down to the nearest cent. The number of shares of
Company Common Stock that are issuable upon exercise of Options as of the date
of this Plan are Previously Disclosed in Schedule 2.8. Following the Effective
Date, InterWest shall use its best efforts to promptly prepare and file with the
SEC a registration statement on Form S-8 covering shares of InterWest Common
Stock to be issued upon the exercise of stock options assumed by InterWest
pursuant to this Section 2.8.
ARTICLE III. ACTIONS PENDING CONSUMMATION
Unless otherwise agreed to in writing by InterWest, each of the Company
and Pioneer Bank shall conduct its and each of its Subsidiaries' business in the
ordinary and usual course consistent with past practice and shall use its best
efforts to maintain and preserve its and each of its Subsidiaries' business
organization, employees and advantageous business relationships and retain the
services of its and each of its Subsidiaries' officers and key employees
identified by InterWest Bank, and neither the Company nor Pioneer Bank, without
the prior written consent of InterWest, will (or cause or allow any of it
Subsidiaries to):
3.1 CAPITAL STOCK. Except for or as otherwise expressly permitted by
this Plan, the Stock Option Agreement, or Company Options, or as Previously
Disclosed in Schedule 4.1(C), issue, sell or otherwise permit to become
outstanding any additional shares of capital stock of the Company, Pioneer Bank
or any of their Subsidiaries, or any Rights with respect thereto, or enter into
any agreement with respect to the foregoing, or permit any additional shares of
Company Common Stock to become subject to grants of employee stock options,
stock appreciation rights or similar stock-based employee compensation rights.
3.2 DIVIDENDS, ETC. Make, declare or pay any dividend on or in respect
of, or declare or make any distribution on, or directly or indirectly combine,
redeem, reclassify, purchase or otherwise acquire, any shares of its capital
stock or, other than as permitted in or contemplated by this Plan or the Stock
Option Agreement, authorize the creation or issuance of, or issue, any
additional shares of its capital stock or any Rights with respect thereto.
3.3 INDEBTEDNESS; LIABILITIES; ETC. Other than in the ordinary course of
business consistent with past practice, incur any indebtedness for borrowed
money, assume, guarantee, endorse or otherwise as an accommodation become
responsible or liable for the obligations of any other individual, corporation
or other entity.
3.4 LINE OF BUSINESS; OPERATING PROCEDURES; ETC. Except as may be
directed by any regulatory agency, (A) change its lending, investment, liability
management or other material banking policies in any material respect, except
such changes as are in accordance and in an effort to comply with Section 5.11,
or (B) commit to incur any further capital expenditures beyond those
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Previously Disclosed in Schedule 3.4 other than in the ordinary course of
business and not exceeding $25,000 individually or $50,000 in the aggregate.
3.5 LIENS AND ENCUMBRANCES. Impose, or suffer the imposition, on any
shares of stock of any of its Subsidiaries, any lien, charge or encumbrance, or
permit any such lien, charge or encumbrance to exist.
3.6 COMPENSATION; EMPLOYMENT AGREEMENTS; ETC. Except as Previously
Disclosed in Schedule 3.6, enter into or amend any employment, severance or
similar agreement or arrangement with any of its directors, officers or
employees, or grant any salary or wage increase, amend the terms of any Company
Option or increase any employee benefit (including incentive or bonus payments),
except normal individual increases in regular compensation to employees in the
ordinary course of business consistent with past practice.
3.7 BENEFIT PLANS. Except as Previously Disclosed in Schedule 3.7, enter
into or modify (except as may be required by applicable law) any pension,
retirement, stock option, stock purchase, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement
related thereto, in respect of any of its directors, officers or other
employees, including taking any action that accelerates the vesting or exercise
of any benefits payable thereunder.
3.8 CONTINUANCE OF BUSINESS. Dispose of or discontinue any portion of
its assets, business or properties, that is material to the Company and its
Subsidiaries taken as a whole, or merge or consolidate with, or acquire all or
any portion of, the business or property of any other entity that is material to
the Company and its Subsidiaries taken as a whole (except foreclosures or
acquisitions by Pioneer Bank in its fiduciary capacity, in each case in the
ordinary course of business consistent with past practice).
3.9 AMENDMENTS. Amend its articles of incorporation or bylaws.
3.10 CLAIMS. Settle any claim, litigation, action or proceeding
involving any liability for material money damages or restrictions upon the
operations of the Company or any of its Subsidiaries.
3.11 CONTRACTS. Except as previously disclosed on Schedule 3.11, enter
into, renew, terminate or make any change in any material contract, agreement or
lease (excluding agreements and loans permitted under Section 3.12), except in
the ordinary course of business consistent with past practice with respect to
contracts, agreements and leases that are terminable by it without penalty on no
more than 60 days prior written notice.
3.12 LOANS. Extend credit or account for loans and leases other than in
accordance with existing lending policies and accounting practices, except that
Pioneer Bank shall not, without the prior consent of InterWest's Chief Executive
Officer or Chief Financial Officer, make any new loan or modify, restructure or
renew any existing nonperforming loan (defined as on non-accrual status, or 90
days or more past due) to any borrower if the amount of the resulting loan, when
aggregated with all other loans or extensions of credit to such Person (or which
would be required to be aggregated for loans-to-one-borrower limitations), would
be in excess of $250,000 for any new customer or $500,000 to any customer as of
the date of this Plan, except that (i) single-family residential loans may be
made in amounts that would not exceed applicable FHLMC and FNMA limits, and (ii)
such limits shall not apply to SBA, FmHA, USDA Rural Development or other
governmental or governmental agency guaranteed amounts.
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3.13 TRANSACTION EXPENSES. Incur expenses in connection with the
transactions contemplated by this Plan that exceed $425,000 in the
aggregate.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
4.1 THE COMPANY AND PIONEER BANK REPRESENTATIONS AND WARRANTIES. Each of
the Company and Pioneer Bank hereby represents and warrants to InterWest and
InterWest Bank as follows:
(A) RECITALS. The facts set forth in the Recitals of this Plan with
respect to the Company and its Subsidiaries are true and correct.
(B) ORGANIZATION, STANDING AND AUTHORITY. Each of the Company and
its Subsidiaries is duly qualified to do business and is in good standing in the
States of the United States and foreign jurisdictions where the failure to be
duly qualified, individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect on it. Each of the Company and its Subsidiaries has in
effect all federal state, local and foreign governmental authorizations
necessary for it to own or lease its properties and assets and to carry on its
business as it is now conducted, the absence of which, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on it. Pioneer
Bank is an "insured depository institution" as defined in the Federal Deposit
Insurance Act, as amended, and applicable regulations under such statute, and
its deposits are insured by the Bank Insurance Fund of the FDIC.
(C) SHARES. The outstanding shares of the Company and its
Subsidiaries' capital stock are validly issued and outstanding, fully paid and
nonassessable, and subject to no preemptive rights. Except as Previously
Disclosed in Schedule 4.1(C) and paragraph (A) of the Recitals, and as provided
under the Stock Option Agreement, there are no shares of capital stock or other
equity securities of the Company or its Subsidiaries outstanding and no
outstanding Rights with respect thereto.
(D) THE COMPANY SUBSIDIARIES. The Company has Previously Disclosed
in Schedule 4.1(D) a list of all of its Subsidiaries. Each of its Subsidiaries
that is a bank is an "insured depository institution" as defined in the Federal
Deposit Insurance Act, as amended, and applicable regulations under such
statute. No equity securities of any of its Subsidiaries are or may become
required to be issued (other than to the Company or one of its Subsidiaries) by
reason of any Rights with respect thereto. There are no contracts, commitments,
understandings or arrangements by which any of its Subsidiaries is or may be
bound to sell or otherwise issue any shares of such Subsidiary's capital stock,
and there are no contracts, commitments, understandings or arrangements relating
to the rights of the Company or its Subsidiaries, as applicable, to vote or to
dispose of such shares. All of the shares of capital stock of each of its
Subsidiaries held by the Company or one of its Subsidiaries are fully paid and
nonassessable and are owned by the Company or one of its Subsidiaries free and
clear of any charge, mortgage, pledge, security interest, restriction, claim,
lien or encumbrance. Each of its Subsidiaries is in good standing under the laws
of the jurisdiction in which it is incorporated or organized, and is duly
qualified to do business and in good standing in the jurisdictions where the
failure to be duly qualified is reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on it. Except as Previously
Disclosed in Schedule 4.1(D), it does not own beneficially, directly or
indirectly, any shares of any equity securities or similar interests of any
corporation, bank, partnership, joint venture, business trust, association or
other organization. In the case of representations by the Company, the deposits
of its Subsidiaries that are banks are insured by the Bank Insurance Fund of the
FDIC.
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(E) CORPORATE POWER. Each of the Company and its Subsidiaries has
the corporate power and authority to carry on its business as it is now being
conducted and to own all its material properties and assets.
(F) CORPORATE AUTHORITY. Subject to any necessary receipt of
approval by its shareholders referred to in Section 6.1, this Plan and the Stock
Option Agreement have been authorized by all necessary corporate action of the
Company and each of its Subsidiaries that is a Party, and each such agreement is
a valid and binding agreement of the Company and such Subsidiaries, enforceable
against the Company and such Subsidiaries in accordance with its terms, subject
to bankruptcy, insolvency and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(G) NO DEFAULTS. Subject to the approval by its shareholders
referred to in Section 6.1, the required regulatory approvals referred to in
Section 6.1, and the required filings under federal and state securities laws,
and except as Previously Disclosed in Schedule 4.1(G), the execution, delivery
and performance of this Plan and the Stock Option Agreement and the consummation
by the Company and each of its Subsidiaries that is a Party to the transactions
contemplated by this Plan and the Stock Option Agreement do not and will not (1)
constitute a breach or violation of, or a default under, any law, rule or
regulation or any judgment, decree, order, governmental permit or license, or
agreement, indenture or instrument of the Company or of any of its Subsidiaries
or to which the Company or any of its Subsidiaries or its or their properties is
subject or bound, which breach, violation or default is reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on it, (2)
constitute a breach or violation of, or a default under, the articles of
incorporation, charter or bylaws of it or any of its Subsidiaries, or (3)
require any consent or approval under any such law, rule, regulation, judgment,
decree, order, governmental permit or license or the consent or approval of any
other party to any such agreement, indenture or instrument, other than any such
consent or approval that, if not obtained, would not be reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on it.
(H) FINANCIAL REPORTS. Except as Previously Disclosed in Schedule
4.1(H), (1) as to the Company, its audited consolidated balance sheet as of
December 31, 1997 and the related statements of income, changes in shareholders'
equity and cash flows for the fiscal year ended December 31, 1997 (collectively,
the "Holding Company Financial Reports"), and (2) as to each of the Company's
Subsidiaries that is a bank, its call report for the fiscal year ended December
31, 1997, and all other financial reports filed or to be filed subsequent to
December 31, 1997, in the form filed with the FDIC and the Office of the
Comptroller of the Currency (in each case, the "Bank Financial Reports" and
together with the Holding Company Financial Reports, the "Financial Reports")
did not and will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading; and each of the balance sheets in or incorporated by
reference into the Financial Reports (including the related notes and schedules
thereto) fairly presents and will fairly present the financial position of the
entity or entities to which it relates as of its date, and each of the
statements of income and changes in shareholders' equity and cash flows or
equivalent statements in the Bank Financial Reports (including any related notes
and schedules thereto) fairly presents and will fairly present the results of
operations, changes in shareholders' equity and cash flows, as the case may be,
of the entity or entities to which it relates for the periods set forth therein,
in each case in accordance with GAAP during the periods involved, except in each
case as may be noted therein, subject to normal and recurring year-end audit
adjustments in the case of unaudited statements.
(I) ABSENCE OF UNDISCLOSED LIABILITIES. Except as Previously
Disclosed on Schedule 4.1(I), neither the Company nor any of its Subsidiaries
has any obligation or liability
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(contingent or otherwise) that, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect on it, except (1) as reflected in its
Holding Company Financial Reports prior to the date of this Plan, and (2) for
commitments and obligations made, or liabilities incurred, in the ordinary
course of business consistent with past practice since December 31, 1997. Except
as Previously Disclosed on Schedule 4.1(I), since December 31, 1997, neither the
Company nor any of its Subsidiaries has incurred or paid any obligation or
liability (including any obligation or liability incurred in connection with any
acquisitions in which any form of direct financial assistance of the federal
government or any agency thereof has been provided to any Subsidiary) that,
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect on it.
(J) NO EVENTS. Except as Previously Disclosed on Schedule 4.1(J),
since December 31, 1997, no event has occurred that, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on it.
(K) PROPERTIES. Except as reserved against in its Holding Company
Financial Reports, the Company and each of its Subsidiaries have good and
marketable title, free and clear of all liens, encumbrances, charges, defaults,
or equities of any character, to all of the properties and assets, tangible and
intangible, reflected in its Holding Company Financial Reports as being owned by
the Company or its Subsidiaries as of the dates thereof other than those that,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect on it, except those sold or otherwise disposed of in the ordinary
course of business. All buildings and all material fixtures, equipment, and
other property and assets that are held under leases or subleases by the Company
or any of its Subsidiaries are held under valid leases or subleases enforceable
in accordance with their respective terms, other than any such exceptions to
validity or enforceability that, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect on it.
(L) LITIGATION; REGULATORY ACTION. Except as Previously Disclosed in
Schedule 4.l(L), no litigation, proceeding or controversy before any court or
governmental agency is pending that, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on the Company or any of its
Subsidiaries or that alleges claims under any fair lending law or other law
relating to discrimination, including the Equal Credit Opportunity Act, the Fair
Housing Act, the Community Reinvestment Act and the Home Mortgage Disclosure
Act, and, to the best of its knowledge, no such litigation, proceeding or
controversy has been threatened; and except as Previously Disclosed in Schedule
4.1(L), neither the Company nor any of its Subsidiaries or any of its or their
material properties or their officers, directors or controlling persons is a
party to or is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or similar
submission to, any Regulatory Authority, and neither the Company nor any of its
Subsidiaries has been advised by any of such Regulatory Authorities that such
authority is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum or understanding, commitment letter or similar submission.
(M) COMPLIANCE WITH LAWS. Except as Previously Disclosed in Schedule
4.1(M), each of the Company and its Subsidiaries:
(1) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations with, all
Regulatory Authorities that are required in order to permit it to own its
businesses presently conducted and that are material to the business of it and
its Subsidiaries taken as a whole; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect and, to its best
knowledge, no suspension or cancellation of any of them is threatened; and all
such filings, applications and registrations are current;
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(2) has received no notification or communication from any
Regulatory Authority or the staff thereof (a) asserting that the Company or any
of its Subsidiaries is not in compliance with any of the statutes, regulations
or ordinances which such Regulatory Authority enforces, which, as a result of
such noncompliance in any such instance, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on the Company or its
Subsidiaries, (b) threatening to revoke any license, franchise, permit or
governmental authorization, which revocation, individually or in the aggregate,
is reasonably likely to have a Material Adverse Effect on the Company or its
Subsidiaries, or (c) requiring any of the Company or its Subsidiaries (or any of
its or their officers, directors or controlling persons) to enter into a cease
and desist order, agreement or memorandum of understanding (or requiring the
board of directors thereof to adopt any resolution or policy);
(3) is not required to give prior notice to any federal banking
or thrift agency of the proposed addition of an individual to its board of
directors or the employment of an individual as a senior executive; and
(4) is in compliance in all material respects with all fair
lending laws or other laws relating to discrimination, including the Equal
Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act and
the Home Mortgage Disclosure Act.
(N) MATERIAL CONTRACTS. Except as Previously Disclosed in Schedule
4.1(N), none of the Company or its Subsidiaries, nor any of their respective
assets, businesses or operations, is a party to, or is bound or affected by, or
receives benefits under, any material contract or agreement or amendment
thereto. Neither the Company nor any of its Subsidiaries is in default under any
contract, agreement, commitment, arrangement, lease, insurance policy or other
instrument to which it is a party, by which its respective assets, business or
operations may be bound or affected or under which it or any of its respective
assets, business or operations receives benefits, which default, individually or
in the aggregate, is reasonably likely to have a Material Adverse Effect on the
Company or its Subsidiaries, and there has not occurred any event that, with the
lapse of time or the giving of notice or both, would constitute such a default.
Except as Previously Disclosed in Schedule 4.1(N), neither the Company nor any
of its Subsidiaries is subject to or bound by any contract containing covenants
that limit the ability of the Company or any of its Subsidiaries to compete in
any line of business or with any Person or that involve any restriction of
geographical area in which, or method by which, the Company or any of its
Subsidiaries may carry on its business (other than as may be required by law or
any applicable Regulatory Authority). (O) REPORTS. Since January 1, 1993, each
of the Company and its Subsidiaries has filed all reports and statements,
together with any amendments required to be made with respect thereto, that it
was required to file with (1) the Office of the Comptroller of the Currency, (2)
the FDIC, (3) the Federal Reserve Board, and (4) any other Regulatory
Authorities having jurisdiction with respect to the Company and its
Subsidiaries. As of their respective dates (and without giving effect to any
amendments or modifications filed after the date of this Plan with respect to
reports and documents filed before the date of this Plan), each of such reports
and documents, including the financial statements, exhibits and schedules
thereto, complied in all material respects with all of the statutes, rules and
regulations enforced or promulgated by the Regulatory Authority with which they
were filed and did not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
(P) NO BROKERS. All negotiations relative to this Plan and the
transactions contemplated by this Plan have been carried on by it directly with
the other Parties and no action has
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been taken by it that would give rise to any valid claim against any Party for a
brokerage commission, finder's fee or other like payment (except for a fee to be
paid by the Company to Columbia Financial Advisors, Inc.).
(Q) EMPLOYEE BENEFIT PLANS.
(1) Schedule 4.1(Q)(1) contains a complete list of all bonus,
deferred compensation, pension, retirement, profit-sharing, thrift savings,
employee stock ownership, stock bonus, stock purchase restricted stock and stock
option plans, all employment or severance contracts, all medical, dental, health
and life insurance plans, all other employee benefit plans, contracts or
arrangements and any applicable "change of control" or similar provisions in any
plan, contract or arrangement maintained or contributed to by the Company or any
of its Subsidiaries for the benefit of employees, former employees, directors,
former directors or their beneficiaries (the "Compensation and Benefit Plans").
True and complete copies of all Compensation and Benefit Plans of the Company
and its Subsidiaries, including any trust instruments and/or insurance
contracts, if any, forming a part thereof, and all amendments thereto, have been
supplied to the other Parties.
(2) All "employee benefit plans" within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), other than "multiemployer plans" within the meaning of Section 3(37)
of ERISA ("Multiemployer Plans"), covering employees or former employees of the
Company and its Subsidiaries (the "ERISA Plans"), to the extent subject to
ERISA, are in substantial compliance with ERISA. Except as Previously Disclosed
in Schedule 4.1(Q)(2) each ERISA Plan which is an "employee pension benefit
plan" within the meaning of Section 3(2) of ERISA ("Pension Plan") and which is
intended to be qualified under Section 401(a) of the Internal Revenue Code of
1986 (as amended, the "Code") has received a favorable determination letter from
the Internal Revenue Service, and it is not aware of any circumstances
reasonably likely to result in the revocation or denial of any such favorable
determination letter or the inability to receive such a favorable determination
letter. There is no material pending or, to its knowledge, threatened litigation
relating to the ERISA Plans. Neither the Company nor any of its Subsidiaries has
engaged in a transaction with respect to any ERISA Plan that could subject the
Company or any of its Subsidiaries to a tax or penalty imposed by either Section
4975 of the Code or Section 502(i) of ERISA in an amount which would be
material.
(3) No liability under Subtitle C or D of Title IV of ERISA has
been or is expected to be incurred by the Company or any of its Subsidiaries
with respect to any ongoing, frozen or terminated "single-employer plan," within
the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by
any of them, or the single-employer plan of any entity which is considered one
employer with the Company under Section 4001(a)(15) of ERISA or Section 414 of
the Code (an "ERISA Affiliate"). Neither the Company nor any of its Subsidiaries
presently contributes to a Multiemployer Plan, nor have they contributed to such
a plan within the past five calendar years. No notice of a "reportable event,"
within the meaning of Section 4043 of ERISA for which the 30-day reporting
requirement has not been waived, has been required to be filed for any Pension
Plan or by any ERISA Affiliate within the past 12-month period.
(4) All contributions required to be made under the terms of any
ERISA Plan have been timely made. Neither any Pension Plan nor any
single-employer plan of an ERISA Affiliate has an "accumulated funding
deficiency"(whether or not waived) within the meaning of Section 412 of the Code
or Section 302 of ERISA. Neither the Company nor any of its Subsidiaries has
provided, or is required to provide, security to any Pension Plan or to any
single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the
Code.
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(5) Under each Pension Plan which is a single-employer plan, as
of the last day of the most recent plan year, the actuarially determined present
value of all "benefit liabilities," within the meaning of Section 4001(a)(16) of
ERISA (as determined on the basis of the actuarial assumptions contained in the
plan's most recent actuarial valuation) did not exceed the then current value of
the assets of such plan, and there has been no material change in the financial
condition of such plan since the last day of the most recent plan year.
(6) Neither the Company nor any of its Subsidiaries has any
obligations for retiree health and life benefits under any plan, except as set
forth in Schedule 4.1(Q)(6). There are no restrictions on the rights of the
Company or any of its Subsidiaries to amend or terminate any such plan without
incurring any liability thereunder.
(7) Except as Previously Disclosed in Schedule 4.l(Q)(7),
neither the execution and delivery of this Plan nor the consummation of the
transactions contemplated by this Plan will (a) result in any payment (including
severance, unemployment compensation, golden parachute or otherwise) becoming
due to any director or any employee of the Company or any of its Subsidiaries
under any Compensation and Benefit Plan or otherwise from the Company or any of
its Subsidiaries, (b) increase any benefits otherwise payable under any
Compensation and Benefit Plan, or (c) result in any acceleration of the time of
payment or vesting of any such benefit.
(R) NO KNOWLEDGE. The Company and its Subsidiaries know of no reason
why the regulatory approvals referred to in Section 6.1 should not be obtained.
(S) LABOR AGREEMENTS. Neither the Company nor any of its
Subsidiaries is a party to or is bound by any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization, nor is the Company or any of its Subsidiaries the subject of a
proceeding asserting that it or any such Subsidiary has committed an unfair
labor practice (within the meaning of the National Labor Relations Act) or
seeking to compel it or such Subsidiary to bargain with any labor organization
as to wages and conditions of employment, nor is there any strike or other labor
dispute involving it or any of its Subsidiaries pending or, to the best of its
knowledge, threatened, nor is it aware of any activity involving its or any of
the Subsidiaries' employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.
(T) ASSET CLASSIFICATION. The Company and its Subsidiaries have
Previously Disclosed in Schedule 4.1(T) a list, accurate and complete in all
material respects, of the aggregate amounts of loans, extensions of credit or
other assets of the Company and its Subsidiaries that have been classified by it
as of December 31, 1997 (the "Asset Classification"); and no amounts of loans,
extensions of credit or other assets that have been classified as of December
31, 1997 by any regulatory examiner as "Other Loans Specially Mentioned,"
'Substandard," "Doubtful" "Loss," or words of similar import are excluded from
the amounts disclosed in the Asset Classification, other than amounts of loans,
extensions of credit or other assets that were charged off by the Company or any
Subsidiary prior to December 31, 1997.
(U) ALLOWANCE FOR POSSIBLE LOAN LOSSES. The allowance for possible
loan losses shown on the consolidated balance sheets in the December 31, 1997
Holding Company Financial Reports of the Company was, and the allowance for
possible loan losses to be shown on subsequent Holding Company Financial Reports
of the Company was and will be, adequate in the opinion of the Board of
Directors of the Company to provide for possible losses, net of recoveries
relating to loans previously charged off, on loans outstanding (including
accrued interest receivable) as of the date thereof.
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(V) INSURANCE. Each of the Company and its Subsidiaries has taken
all requisite action (including the making of claims and the giving of notices)
pursuant to its directors' and officers' liability insurance policy or policies
in order to preserve all rights thereunder with respect to all matters that are
known to the Company, except for such matters that, individually or in the
aggregate, are not reasonably likely to have a Material Adverse Effect on the
Company or its Subsidiaries. Set forth in Schedule 4.l(V) is a list of all
insurance policies maintained by or for the benefit of the Company or its
Subsidiaries or their respective directors, officers, employees or agents.
(W) AFFILIATES. Except as Previously Disclosed in Schedule 4.1(W),
to the best of the Company's knowledge, there is no person who, as of the date
of this Plan, may be deemed to be an "affiliate" of the Company as that term is
used in Rule 145 under the Securities Act.
(X) STATE TAKEOVER LAWS, ARTICLES OF INCORPORATION. The Company and
its Subsidiaries have taken all necessary action to exempt this Plan and the
Stock Option Agreement and the transactions contemplated by this Plan and the
Stock Option Agreement from, and this Plan and the Stock Option Agreement and
such transactions are exempt from (1) any applicable state takeover laws,
including, but not limited to, RCW Ch. 23B.19, as amended, and (2) any
takeover-related provisions of the Company's and its Subsidiaries' articles of
incorporation.
(Y) NO FURTHER ACTION. The Company and its Subsidiaries have taken
all action so that the entering into of this Plan and the Stock Option Agreement
and the consummation of the transactions contemplated by this Plan and the Stock
Option Agreement (including the Merger and the exercise of the Option) or any
other action or combination of actions, or any other transactions, contemplated
by this Plan and the Stock Option Agreement do not and will not (1) require a
vote of shareholders (other than as set forth in Section 6.1), or (2) result in
the grant of any rights to any Person under the articles of incorporation,
charter or bylaws of the Company or any of its Subsidiaries or under any
agreement to which the Company or any such Subsidiaries is a party, or (iii)
restrict or impair in any way the ability of the other Parties to exercise the
rights granted under this Plan or the Stock Option Agreement.
(Z) ENVIRONMENTAL MATTERS.
(1) To the Company's knowledge, it and each of its Subsidiaries,
the Participation Facilities and the Loan/Fiduciary Properties are, and have
been, in compliance with all Environmental Laws, except for instances of
noncompliance that are not reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect on the Company or its Subsidiaries.
(2) There is no proceeding pending or, to the Company's
knowledge, threatened before any court, governmental agency or board or other
forum in which the Company or any of its Subsidiaries or any Participation
Facility has been, or with respect to threatened proceedings, reasonably would
be expected to be, named as a defendant or potentially responsible party (a) for
alleged noncompliance (including by any predecessor) with any Environmental Law,
or (b) relating to the release or threatened release into the environment of any
Hazardous Material, whether or not occurring at or on a site owned, leased or
operated by the Company or any of its Subsidiaries or any Participation
Facility, except for such proceedings pending or threatened that are not
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect on the Company or its Subsidiaries or have been Previously Disclosed in
Schedule 4.1(Z)(2).
(3) There is no proceeding pending or, to the Company's
knowledge, threatened before any court, governmental agency or board or other
forum in which any Loan/Fiduciary
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Property (or the Company or any of its Subsidiaries in respect of any
Loan/Fiduciary Property) has been, or with respect to threatened proceedings,
reasonably would be expected to be, named as a defendant or potentially
responsible party (a) for alleged noncompliance (including by any predecessor)
with any Environmental Law, or (b) relating to the release or threatened release
into the environment of any Hazardous Material, whether or not occurring at or
on a Loan/Fiduciary Property, except for such proceedings pending or threatened
that are not reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect on the Company or have been Previously Disclosed in
Schedule 4.1(Z)(3).
(4) To the Company's knowledge, there is no reasonable basis
for any proceeding of a type described in subparagraph (2) or (3) of this
paragraph (Z), except as has been Previously Disclosed in Schedule 4.1(Z)(4).
(5) To the Company's knowledge, during the period of (a)
ownership or operation by the Company or any of its Subsidiaries of any of their
respective current properties, (b) participation in the management of any
Participation Facility by the Company or any of its Subsidiaries, or (c) holding
of a security or other interest in a Loan/Fiduciary Property by the Company or
any of its Subsidiaries, there have been no releases of Hazardous Material in,
on, under or affecting any such property, Participation Facility or
Loan/Fiduciary Property, except for such releases that are not reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect on
the Company or its Subsidiaries or have been Previously Disclosed in Schedule
4.1(Z)(5).
(6) To the Company's knowledge, prior to the period of (a)
ownership or operation by the Company or any of its Subsidiaries of any of their
respective current properties, (b) participation in the management of any
Participation Facility by the Company or any of its Subsidiaries, or (c) holding
of a security or other interest in a Loan/Fiduciary Property by the Company or
any of its Subsidiaries, there were no releases of Hazardous Material in, on,
under or affecting any such property, Participation Facility or Loan) Fiduciary
Property, except for such releases that are not reasonably likely, individually
or in the aggregate, to have a Material Adverse Effect on the Company or its
Subsidiaries or have been Previously Disclosed in Schedule 4.1(Z)(6).
(AA) TAX REPORTS. Except as Previously Disclosed in Schedule
4.1(AA), (1) all reports and returns with respect to Taxes that are required to
be filed by or with respect to the Company or its Subsidiaries, including
consolidated federal income tax returns of the Company and its Subsidiaries
(collectively, the "Tax Returns"), have been duly filed, or requests for
extensions have been timely filed and have not expired, for periods ended on or
prior to the most recent fiscal year-end, except to the extent all such failures
to file, taken together, are not reasonably likely to have a Material Adverse
Effect on the Company or its Subsidiaries, and such Tax Returns were true,
complete and accurate in all material respects, (2) all Taxes shown to be due on
the Tax Returns have been paid in full, (3) the Tax Returns have been examined
by the Internal Revenue Service or the appropriate state, local or foreign
taxing authority, or the period for assessment of the Taxes in respect of which
such Tax Returns were required to be filed has expired, (4) all Taxes due with
respect to completed and settled examinations have been paid in full, (5) no
issues have been raised by the relevant taxing authority in connection with the
examination of any of the Tax Returns which are reasonably likely, individually
or in the aggregate, to result in a determination that would have a Material
Adverse Effect on the Company or its Subsidiaries, except as reserved against in
the Holding Company Financial Reports of the Company, and (6) no waivers of
statutes of limitations (excluding such statutes that relate to years under
examination by the Internal Revenue Service) have been given by or requested
with respect to any Taxes of the Company or its Subsidiaries.
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(BB) ACCURACY OF INFORMATION. The statements with respect to the
Company and its Subsidiaries contained in this Plan and the Stock Option
Agreement, the Schedules and any other written documents executed and delivered
by or on behalf of the Company or any other Party pursuant to the terms of or
relating to this Plan are true and correct in all material respects, and such
statements and documents do not omit any material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading.
(CC) DERIVATIVES CONTRACTS. None of the Company or its Subsidiaries
is a party to or has agreed to enter into a Derivatives Contract or owns
securities that are referred to as "structured notes" except for those
Derivatives Contracts and structured notes Previously Disclosed in Schedule
4.1(CC). Schedule 4.1(CC) includes a list of any assets of the Company or its
Subsidiaries that are pledged as security for each such Derivatives Contract.
(DD) ACCOUNTING CONTROLS. Each of the Company and its Subsidiaries
has devised and maintained systems of internal accounting controls sufficient to
provide reasonable assurances that (1) all material transactions are executed in
accordance with management's general or specific authorization, (2) all material
transactions are recorded as necessary to permit the preparation of financial
statements in conformity with GAAP, and to maintain proper accountability for
items, (3) access to the material property and assets of the Company and its
Subsidiaries is permitted only in accordance with management's general or
specific authorization, and (4) the recorded accountability for items is
compared with the actual levels at reasonable intervals and appropriate action
is taken with respect to any differences.
(EE) COMMITMENTS AND CONTRACTS. Neither the Company nor any of its
Subsidiaries is a party or subject to any of the following (whether written or
oral, express or implied):
(1) except as Previously Disclosed in Schedule 4.1(EE)(1), any
employment contract or understanding (including any understandings or
obligations with respect to severance or termination pay liabilities or fringe
benefits) with any present or former officer, director or employee (other than
those which are terminable at will by the Company or any such Subsidiary without
any obligation on the part of the Company or any such Subsidiary to make any
payment in connection with such termination);
(2) except as Previously Disclosed in Schedule 4.1(EE)(2), any
real or personal property lease with annual rental payments aggregating $10,000
or more; or
(3) except as Previously Disclosed in Schedule 4.1(EE)(3), any
material contract with any affiliate.
(FF) OPTION SHARES. The Option Shares, when issued upon exercise of
the Option, will be validly issued, fully paid and nonassessable and subject to
no preemptive rights.
4.2 INTERWEST AND INTERWEST BANK REPRESENTATIONS AND WARRANTIES. Each of
InterWest and InterWest Bank hereby represents and warrants to the Company and
Pioneer Bank as follows:
(A) RECITALS. The facts set forth in the Recitals of this Plan with
respect to InterWest and InterWest Bank are true and correct.
(B) ORGANIZATION, STANDING AND AUTHORITY. Each of InterWest and
InterWest Bank is duly qualified to do business and is in good standing in the
States of the United States
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and foreign jurisdictions where the failure to be duly qualified, individually
or in the aggregate, is reasonably likely to have a Material Adverse Effect on
it. Each of InterWest and its Subsidiaries has in effect all federal state,
local, and foreign governmental authorizations necessary for it to own or lease
its properties and assets and to carry on its business as it is now conducted,
the absence of which, individually or in the aggregate, is reasonably likely to
have a Material Adverse Effect on InterWest.
(C) SHARES. The outstanding shares of InterWest's capital stock are
validly issued and outstanding, fully paid and nonassessable, and subject to no
preemptive rights. Except as Previously Disclosed in Schedule 4.2(C), there are
no shares of capital stock or other equity securities of it or its Subsidiaries
outstanding and no outstanding Rights with respect thereto.
(D) CORPORATE POWER. Each of InterWest and InterWest Bank has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its material properties and assets.
(E) CORPORATE AUTHORITY. This Plan, the Stock Option Agreement and
each of the Employment Agreements have been authorized by all necessary
corporate action of InterWest and InterWest Bank and each such agreement is a
valid and binding agreement of InterWest and InterWest Bank, enforceable against
InterWest and InterWest Bank in accordance with its terms, subject to
bankruptcy, insolvency and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(F) NO DEFAULTS. Subject to receipt of the required regulatory
approvals referred to in Section 6.1, and the required filings under federal and
state securities laws, and except as Previously Disclosed in Schedule 4.2(F),
the execution, delivery and performance of this Plan and each of the Employment
Agreements and the consummation by InterWest and each of its Subsidiaries that
is a Party of the transactions contemplated by this Plan does not and will not
(1) constitute a breach or violation of, or a default under, any law, rule or
regulation or any judgment, decree, order, governmental permit or license, or
agreement, indenture or instrument of InterWest or of any of its Subsidiaries or
to which InterWest or any of its Subsidiaries or its or their properties is
subject or bound, which breach, violation or default is reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on
InterWest, (2) constitute a breach or violation of, or a default under, the
articles of incorporation, charter or bylaws of its or any of its Subsidiaries,
or (3) require any consent or approval under any such law, rule, regulation,
judgment, decree, order, governmental permit or license or the consent or
approval of any other party to any such agreement, indenture or instrument,
other than any such consent or approval that, if not obtained, would not be
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect on InterWest.
(G) FINANCIAL REPORTS. Except as Previously Disclosed in Schedule
4.2(G), in the case of InterWest, its Annual Report on Form 10-K for the fiscal
year ended September 30, 1997, and all other documents filed or to be filed
subsequent to September 30, 1997 under Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act, in the form filed with the SEC (in each such case, the "InterWest
Financial Reports"), did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading; and each of the balance sheets in or
incorporated by reference into the InterWest Financial Reports (including the
related notes and schedules thereto) fairly presents and will fairly present the
financial position of the entity or entities to which it relates as of its date,
and each of the statements of income and changes in
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shareholders' equity and cash flows or equivalent statements in the InterWest
Financial Reports (including any related notes and schedules thereto) fairly
presents and will fairly present the results of operations, changes in
shareholders, equity and changes in cash flows, as the case may be, of the
entity or entities to which it relates for the periods set forth therein, in
each case in accordance with GAAP, except as may be noted therein, subject to
normal and recurring year-end audit adjustments in the case of unaudited
statements.
(H) NO EVENTS. Except as Previously Disclosed on Schedule 4.2(H),
since September 30, 1997, no event has occurred which is reasonably likely to
have a Material Adverse Effect on it.
(I) LITIGATION; REGULATORY ACTION. Except as Previously Disclosed in
Schedule 4.2(I) no litigation, proceeding or controversy before any court or
governmental agency is pending that, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on InterWest or its
Subsidiaries or that alleges claims under any fair lending law or other law
relating to discrimination, including the Equal Credit Opportunity Act, the Fair
Housing Act, the Community Reinvestment Act and the Home Mortgage Disclosure
Act, and, to the best of its knowledge, no such litigation, proceeding or
controversy has been threatened; and except as Previously Disclosed in Schedule
4.2(I), neither InterWest nor any of its Subsidiaries or any of its or their
material properties or their officers, directors or controlling persons is a
party to or is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or similar
submission to, any Regulatory Authority, and neither InterWest nor any of its
Subsidiaries has been advised by any of such Regulatory Authorities that such
authority is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum or understanding, commitment letter or similar submission.
(J) REPORTS. Since September 30, 1995, each of InterWest and its
Subsidiaries has filed all reports and statements, together with any amendments
required to be made with respect thereto, that it was required to file with (1)
the FDIC, (2) the Department, (3) the Federal Reserve Board, and (4) any other
Regulatory Authorities having jurisdiction with respect to InterWest and its
Subsidiaries. As of their respective dates (and without giving effect to any
amendments or modifications filed after the date of this Plan with respect to
reports and documents filed before the date of this Plan), each of such reports
and documents, including the financial statements, exhibits and schedules
thereto, complied in all material respects with all of the statutes, rules and
regulations enforced or promulgated by the Regulatory Authority with which they
were filed and did not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
(K) ACCURACY OF INFORMATION. The statements with respect to
InterWest and its Subsidiaries contained in this Plan, the Schedules and any
other written documents executed and delivered by or on behalf of InterWest or
any other Party pursuant to the terms of this Plan are true and correct in all
material respects, and such statements and documents do not omit any material
fact necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
(L) DERIVATIVES CONTRACTS. None of InterWest or its Subsidiaries is
a party to or has agreed to enter into a Derivatives Contract or owns securities
that are referred to as "structured notes" except for those Derivatives
Contracts and structured notes Previously Disclosed in Schedule 4.2(L). Schedule
4.2(L) includes a list of any assets of InterWest or its Subsidiaries that are
pledged as security for each such Derivatives Contract.
(M) ABSENCE OF UNDISCLOSED LIABILITIES. Neither InterWest nor any of
its Subsidiaries has any obligation or liability (contingent or otherwise) that,
individually or in the
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aggregate, is reasonably likely to have a Material Adverse Effect on it, except
(1) as reflected the InterWest Financial Reports prior to the date of this Plan,
and (2) for commitments and obligations made, or liabilities incurred, in the
ordinary course of business consistent with past practice since September 30,
1997. Since September 30, 1997, neither InterWest nor any of its Subsidiaries
has incurred or paid any obligation or liability (including any obligation or
liability incurred in connection with any acquisitions in which any form of
direct financial assistance of the federal government or any agency thereof has
been provided to any Subsidiary) that, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on it.
ARTICLE V. COVENANTS
Each of the Company and Pioneer Bank hereby covenants to InterWest and
InterWest Bank, and each of InterWest and InterWest Bank hereby covenants to the
Company and Pioneer Bank, that:
5.1 BEST EFFORTS. Subject to the terms and conditions of this Plan and,
in the case of the Company and Pioneer Bank, to the exercise by their respective
Boards of Directors of such Boards' fiduciary duties, each party shall use its
best efforts in good faith to take, or cause to be taken, all actions, and to
do, or cause to be done, all things necessary, proper or desirable, or advisable
under applicable laws, so as to permit consummation of the Merger by the
Dividend Record Date, and to otherwise enable consummation of the transactions
contemplated by this Plan and the Stock Option Agreement, and shall cooperate
fully with the other Parties to that end (it being understood that any
amendments to the Registration Statement or a resolicitation of proxies as a
consequence of an InterWest Transaction shall not violate this covenant).
5.2 THE PROXY. In the case of the Company: it shall promptly assist
InterWest in the preparation of a proxy statement (the "Proxy Statement") to be
mailed to the holders of the Company Common Stock in connection with the
transactions contemplated by this Plan and to be filed by InterWest in a
registration statement (the "Registration Statement") with the SEC as provided
in Section 5.8, which shall conform to all applicable legal requirements, and it
shall call a special meeting (the "Meeting") of the holders of Company Common
Stock to be held as soon as practicable for purposes of voting upon the
transactions contemplated by this Plan and the Company shall use its best
efforts to solicit and obtain votes of the holders of Company Common Stock in
favor of the transactions contemplated by this Plan and, subject to the exercise
of its fiduciary duties, the Board of Directors of the Company shall recommend
approval of such transactions by such holders.
5.3 REGISTRATION STATEMENT COMPLIANCE WITH SECURITIES LAWS. When the
Registration Statement or any post-effective amendment or supplement thereto
shall become effective, and at all times subsequent to such effectiveness, up to
and including the date of the Meeting, such Registration Statement, and all
amendments or supplements thereto, with respect to all information set forth
therein furnished or to be furnished by or on behalf of the Company relating to
the Company or its Subsidiaries and by or on behalf of InterWest relating to
InterWest or its Subsidiaries, (A) will comply in all material respects with the
provisions of the Securities Act and any other applicable statutory or
regulatory requirements, and (B) will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein not misleading; provided,
however, in no event shall any Party be liable for any untrue statement of a
material fact or omission to state a material fact in the Registration Statement
made in reliance upon, and in conformity with, written information concerning
another Party furnished by or on behalf of such other Party specifically for use
in the Registration Statement.
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5.4 REGISTRATION STATEMENT EFFECTIVENESS. In the case of InterWest: it
will advise the Company, promptly after InterWest receives notice thereof, of
the time when the Registration Statement has become effective or any supplement
or amendment has been filed, of the issuance of any stop order or the suspension
of the qualification of the InterWest Common Stock for offering or sale in any
jurisdiction, of the initiation or threat of any proceeding for any such
purpose, or of any request by the SEC for the amendment or supplement of the
Registration Statement or for additional information.
5.5 PRESS RELEASES. The Company and Pioneer Bank will not, without the
prior approval of InterWest, and InterWest and InterWest Bank will not, without
the prior approval of the Company, issue any press release or written statement
for general circulation relating to the transactions contemplated by this Plan,
except as otherwise required by law.
5.6 ACCESS; INFORMATION.
(A) Upon reasonable notice, the Company and Pioneer Bank shall
afford InterWest and its officers, employees, counsel, accountants and other
authorized representatives, access, during normal business hours throughout the
period up to the Effective Date, to all of the properties, books, contracts,
commitments and records of the Company and its Subsidiaries and, during such
period, the Company and Pioneer Bank shall furnish promptly (and cause its
accountants and other agents to furnish promptly) to InterWest (1) a copy of
each material report, schedule and other document filed by the Company and its
Subsidiaries with any Regulatory Authority, (2) such representations and
certifications as are necessary for purposes of the pooling letter described in
Section 6.2(F), and (3) all other information concerning the business,
properties and personnel of the Company and its Subsidiaries as InterWest may
reasonably request, provided that no investigation pursuant to this Section 5.6
shall affect or be deemed to modify or waive any representation or warranty made
by the Company or Pioneer Bank in this Plan or the conditions to the obligations
of the Company and Pioneer Bank to consummate the transactions contemplated by
this Plan; and
(B) InterWest will not use any information obtained pursuant to this
Section 5.6 for any purpose unrelated to the consummation of the transactions
contemplated by this Plan and, if this Plan is terminated, will hold all
confidential information and documents obtained pursuant to this paragraph in
confidence (as provided in Section 8.6) unless and until such time as such
information or documents become publicly available other than by reason of any
action or failure to act by InterWest or as it is advised by counsel that any
such information or document is required by law or applicable stock exchange
rule to be disclosed, and in the event of the termination of this Plan,
InterWest will, upon request by the Company, deliver to the Company all
documents so obtained by InterWest or destroy such documents and, in the case of
destruction, will certify such fact to the Company.
5.7 ACQUISITION PROPOSALS. In the case of the Company:
(A) Without the prior written consent of InterWest, the Company
shall not, and it shall cause its Subsidiaries not to, solicit, initiate or
encourage inquiries or proposals with respect to, or, except to the extent that
the Board of Directors of the Company determines in its good faith judgment
after receipt of advice of counsel that such response is reasonably required in
order to discharge its fiduciary duties, furnish any nonpublic information
relating to or participate in any negotiations or discussions concerning, any
acquisition or purchase of all or a substantial portion of the assets of, or a
substantial equity interest in, the Company or any of its Subsidiaries or any
merger or other business combination with the Company or any of its Subsidiaries
other than as contemplated by this Plan ("Acquisition Proposal"); it shall
instruct its and its Subsidiaries' officers, directors, agents, advisors and
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affiliates to refrain from doing any of the foregoing; and it shall notify
InterWest immediately if any such inquiries or proposals are received by, or any
such negotiations or discussions are sought to be initiated with, the Company or
any of its Subsidiaries.
(B) If (1) an Acquisition Proposal occurs prior to the Meeting, (2)
the Meeting is held and the shareholder approval contemplated by Section 6.1 is
not obtained at the Meeting, and (3) prior to June 30, 1999, Control of the
Company is acquired by a Third Party, by merger, purchase of assets, acquisition
of stock or otherwise, then unless the representations and warranties of
InterWest in this Plan were false in any material respect as of the date of such
Meeting or InterWest was in material default of its covenants in this Plan as of
such date, the Company will promptly pay to InterWest the amount of $300,000.
5.8 REGISTRATION STATEMENT PREPARATION; REGULATORY APPLICATIONS
PREPARATION. In the case of InterWest: InterWest shall, as promptly as
practicable following the date of this Plan, prepare and file the Registration
Statement with the SEC with respect to the shares of InterWest Common Stock to
be issued to the holders of Company Common Stock pursuant to this Plan, and
InterWest shall use its best efforts to cause the Registration Statement to be
declared effective as soon as practicable after the filing thereof. InterWest
shall, as promptly as practicable following the date of this Plan, prepare and
file all necessary notices or applications with Regulatory Authorities having
jurisdiction with respect to the transactions contemplated by this Plan.
5.9 BLUE-SKY FILINGS. In the case of InterWest: InterWest shall use its
best efforts to obtain, prior to the effective date of the Registration
Statement, any necessary state securities laws or "blue sky" permits and
approvals, provided that InterWest shall not be required by virtue thereof to
submit to general jurisdiction in any state.
5.10 AFFILIATE AGREEMENTS. InterWest and the Company will use their best
efforts to induce each person who may be deemed to be an "affiliate" of,
respectively, InterWest or the Company for purposes of Rule 145 under the
Securities Act, to execute and deliver to InterWest on or before the mailing of
the Proxy Statement for the Meeting, an agreement in the form attached hereto as
Exhibit D for "affiliates" of InterWest and Exhibit E for "affiliates" of the
Company, restricting the disposition of such affiliate's shares of,
respectively, InterWest Common Stock or Company Common Stock, and, in the case
of "affiliates" of the Company, the shares of InterWest Common Stock to be
received by such person in exchange for such person's shares of Company Common
Stock. InterWest agrees to use its best efforts to maintain the availability of
Rule 145 for use by such "affiliates".
5.11 CERTAIN POLICIES OF THE COMPANY AND PIONEER BANK. In the case of
each of the Company and Pioneer Bank: Each shall, at InterWest's request, modify
and change its loan, litigation and other reserve and real estate valuation
policies and practices (including loan classifications and levels of reserves),
and generally conform its operating, lending and compliance policies and
procedures, immediately prior to the Effective Date so as to be consistent on a
mutually satisfactory basis with those of InterWest and GAAP; provided, however,
that prior to any such modification or change, InterWest shall certify that the
conditions to the obligation of InterWest under Section 6.1 and 6.2 to
consummate the transactions contemplated by this Plan, other than the condition
set forth in Section 6.1(G), have been satisfied or waived. The Company's and
Pioneer Bank's representations, warranties, covenants and conditions contained
in this Plan shall not be deemed to be untrue, breached or unsatisfied in any
respect for any purpose as a consequence of any modifications or changes
undertaken pursuant to this Section 5.11.
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5.12 STATE TAKEOVER LAW. In the case of the Company: The Company shall
not take any action that would cause the transactions contemplated by this Plan
or the Stock Option Agreement to be subject to any applicable state takeover
statute, and the Company shall take all necessary steps to exempt (or ensure the
continued exemption of) the transactions contemplated by this Plan and the Stock
Option Agreement from, or, if necessary, challenge the validity or applicability
of, any applicable state takeover law.
5.13 NO RIGHTS TRIGGERED. In the case of the Company: Except for those
consents of third parties Previously Disclosed on Schedule 4.1(G), the Company
shall take all necessary steps to ensure that the entering into of this Plan and
the Stock Option Agreement and the consummation of the transactions contemplated
by this Plan and the Stock Option Agreement (including the Merger) and any other
action or combination of actions, or any other transactions contemplated by this
Plan, do not and will not (A) result in the grant of any rights to any Person
under the articles of incorporation or bylaws of the Company or under any
agreement to which the Company or any of its Subsidiaries is a party, or (B)
restrict or impair in any way the ability of InterWest or InterWest Bank to
exercise the rights granted under this Plan or the Stock Option Agreement.
5.14 SHARES LISTED. In the case of InterWest: InterWest shall use its
best efforts to cause to be listed, prior to the Effective Date, on the NASDAQ
National Market upon official notice of issuance the shares of InterWest Common
Stock to be issued to the holders of Company Common Stock.
5.15 REGULATORY APPLICATIONS. In the case of each of InterWest and
InterWest Bank, each shall (A) promptly prepare and submit applications to the
appropriate Regulatory Authorities for approval of the Merger, and (B) promptly
make all other appropriate filings to secure all other approvals, consents and
rulings that are necessary for the consummation of the Merger by InterWest.
5.16 REGULATORY DIVESTITURES. In the case of the Company: No later than
the Effective Date, the Company shall cease engaging in such activities as
InterWest shall advise the Company in writing are not permitted to be engaged in
by InterWest under applicable law following the Effective Date and, to the
extent required by any Regulatory Authority as a condition of approval of the
transactions contemplated by this Plan, the Company shall divest any Subsidiary
engaged in activities or holding assets that are impermissible for InterWest or
InterWest Bank, on terms and conditions agreed to by InterWest; provided,
however, that prior to taking such action, InterWest shall certify that the
conditions to the obligations of InterWest under Sections 6.1 and 6.2 to
consummate the transactions contemplated by this Plan, other than the condition
set forth in Section 6.2(G) (which shall be adjusted to the extent that assets
are divested at less than book value), have been satisfied or waived.
5.17 CURRENT INFORMATION.
(A) During the period from the date of this Plan to the Effective
Date, each of the Company and InterWest shall, and shall cause its
representatives to, confer on a regular and frequent basis with representatives
of the other.
(B) Each of the Company and InterWest shall promptly notify the
other of (1) any material change in the business or operations of it or its
Subsidiaries, (2) any material complaints, investigations or hearings (or
communications indicating that the same may be contemplated) of any Regulatory
Authority relating to it or its Subsidiaries, (3) the initiation or threat of
material litigation involving or relating to it or its Subsidiaries, or (4) any
event or condition that might reasonably be expected to cause any of its
representations or warranties set forth in this Plan not to be true and correct
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in all material respects as of the Effective Date or prevent it or its
Subsidiaries from fulfilling its or their obligations under this Plan.
5.18 INDEMNIFICATION.
(A) For a period of six years from and after the Effective Date,
InterWest shall indemnify, defend and hold harmless the present and former
directors, officers and employees of the Company and its Subsidiaries (each, an
"Indemnified Party") against all costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, and
arising out of matters existing or occurring at or prior to the Effective Date
(including the transactions contemplated by this Plan and the Stock Option
Agreement), whether asserted or claimed prior to, at or after the Effective
Date, to the fullest extent that the Company would have been permitted under
Washington law and its articles of incorporation or bylaws in effect on the date
of this Plan to indemnify such person (and InterWest will also advance expenses
as incurred to the fullest extent permitted under applicable law so long as the
person to whom expenses are advanced provides an undertaking to repay such
advances within a reasonable period of time if it is ultimately determined that
applicable law does not allow for such indemnification).
(B) Any Indemnified Party wishing to claim indemnification under
paragraph (A) of this Section 5.18, upon learning of such claim, action, suit,
proceeding or investigation, shall promptly notify InterWest thereof, provided,
however, that the failure so to notify shall not affect the obligations of
InterWest under paragraph (A) of this Section 5.18 (unless such failure
materially and adversely increases InterWest's liability under such paragraph
(A)). In the event of any such claim, action, suit, proceeding or investigation
(whether arising before or after the Effective Date), (1) InterWest shall have
the right to assume the defense thereof and InterWest shall pay all reasonable
fees and expenses of such counsel for the Indemnified Parties promptly as
statements therefor are received; provided, however, that InterWest shall be
obligated pursuant to this paragraph (B) to pay for only one firm of counsel for
all Indemnified Parties in any jurisdiction for any single action, suit or
proceeding, (2) the Indemnified Parties will cooperate in the defense of any
such matter, and (3) InterWest shall not be liable for any settlement effected
without its prior written consent.
(C) InterWest shall use all reasonable efforts to provide
directors' and officers' liability insurance covering each person who was an
officer or director of the Company or any Subsidiary prior to the Effective Date
for a period of three years after the Effective Date, providing coverage not
materially less favorable to such persons than that provided to similarly
situated persons under InterWest's existing liability insurance policies, as in
effect on the date of this Plan; provided, however, that InterWest shall not be
obligated to make annual premium payments for such insurance in excess of 150%
of the annual premiums paid as of the date of this Plan by the Company for such
insurance (the "Maximum Premium Amount"). If the amount of the annual premiums
necessary to maintain or procure such insurance coverage exceeds the Maximum
Premium Amount, InterWest shall use its best efforts to maintain the most
advantageous policies of directors' and officers' insurance obtainable for an
annual premium equal to the Maximum Premium Amount.
(D) If InterWest or any of its successors or assigns shall
consolidate with or merge into any other entity and shall not be the continuing
or surviving entity of such consolidation or merger or shall transfer all or
substantially all of its assets to any entity, then and in each case, proper
provision shall be made so that the successors and assigns of InterWest shall
assume the obligations set forth in this Section 5.18.
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(E) InterWest shall pay all expenses, including attorneys' fees,
that may be incurred by any Indemnified Party in enforcing the indemnity and
other obligations provided for in this Section 5.18. The rights of each
Indemnified Party under this Section 5.18 shall be in addition to any other
rights such Indemnified Party may have under the articles of incorporation or
bylaws of the Company or under applicable Washington law.
5.19 POST-MERGER ACTIONS. Following the Merger, neither InterWest
nor any of its affiliates shall take any action that will adversely affect the
federal income tax treatment of the Merger to the shareholders of the Company,
including failing to continue at least one historic business line of the Company
or to use at least a significant portion of the Company's historic assets in a
business, in each case with in the meaning of Treas. Reg. ss. 1.368-1(d).
ARTICLE VI. CONDITIONS TO CONSUMMATION OF THE MERGER
6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective obligations
of each Party to consummate the transactions contemplated by this Plan are
subject to the written waiver by such Party or the fulfillment on or prior to
the Effective Date of each of the following conditions:
(A) SHAREHOLDER VOTE. This Plan shall have been duly approved by the
requisite vote of the Company's shareholders under applicable law and the
articles of incorporation and bylaws of the Company.
(B) REGULATORY APPROVALS. The Parties shall have procured all
necessary regulatory consents and approvals by the appropriate Regulatory
Authorities, and any waiting periods relating thereto shall have expired;
provided, however, that no such approval or consent shall have imposed any
condition or requirement not normally imposed in such transactions that, in the
opinion of InterWest, would deprive InterWest of the material economic or
business benefits of the transactions contemplated by this Plan.
(C) NO INJUNCTION. There shall not be in effect any order, decree or
injunction of any court or agency of competent jurisdiction that enjoins or
prohibits consummation of any of the transactions contemplated by this Plan.
(D) EFFECTIVE REGISTRATION STATEMENT. The Registration Statement shall have
become effective and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC or any other
Regulatory Authority.
(E) BLUE-SKY PERMITS. InterWest shall have received all state
securities laws and "blue sky" permits necessary to consummate the Merger.
(F) TAX OPINION. InterWest and the Company shall have received an
opinion from Xxxxxx & Xxxx, P.C. to the effect that (1) the Merger constitutes a
reorganization under Section 368 of the Code, and (2) no gain or loss will be
recognized by shareholders of the Company who receive shares of InterWest Common
Stock in exchange for their shares of the Company Common Stock, except that gain
or loss may be recognized as to cash received in lieu of fractional share
interests, and, in rendering their opinion, Xxxxxx & Xxxx may require and rely
upon representations contained in certificates of officers of InterWest, the
Company and others.
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(G) NASDAQ LISTING. The shares of InterWest Common Stock to be
issued pursuant to this Plan shall have been approved for listing on the NASDAQ
National Market subject only to official notice of issuance.
(H) EMPLOYMENT CONTRACTS. The Employment Agreements attached as
Exhibits F, G, H and I shall have been duly executed and delivered by all
parties to such Employment Agreements.
6.2 CONDITIONS TO OBLIGATIONS OF INTERWEST. The obligations of InterWest
and InterWest Bank to consummate the transactions contemplated by this Plan also
are subject to the written waiver by InterWest or the fulfillment on or prior to
the Effective Date of each of the following conditions:
(A) LEGAL OPINION. InterWest shall have received an opinion, dated
the Effective Date, of Xxxxxx Pepper & Shefelman PLLC, counsel for the Company
and Pioneer Bank, in the form of Exhibit J.
(B) OFFICERS' CERTIFICATE. (1) Each of the representations and
warranties contained in this Plan of the Company and Pioneer Bank shall be true
and correct in all material respects as of the date of this Plan and upon the
Effective Date with the same effect as though all such representations and
warranties had been made on the Effective Date, except for any such
representations and warranties that specifically relate to an earlier date,
which shall be true and correct as of such earlier date and except as otherwise
provided in Section 5.11, and (2) each and all of the agreements and covenants
of the Company and Pioneer Bank to be performed and complied with pursuant to
this Plan on or prior to the Effective Date shall have been duly performed and
complied with in all material respects, and InterWest and InterWest Bank shall
have received a certificate signed by the chief executive officers, chief
financial officers, and chief lending officers of the Company and Pioneer Bank
dated the Effective Date, to such effect.
(C) RECEIPT OF AFFILIATE AGREEMENTS. InterWest shall have received
from each affiliate of the Company the agreement referred to in Section 5.10.
(D) ADVERSE CHANGE. During the period from December 31, 1997 to the
Effective Date, there shall not have been any material adverse change in the
financial position or results of operations of the Company or Pioneer Bank, nor
shall the Company or Pioneer Bank have sustained any loss or damage to its
properties, whether or not insured, that materially affects its ability to
conduct its business; and InterWest shall have received a certificate dated the
Effective Date signed by the Chief Executive Officers of the Company and Pioneer
Bank to such effect.
(E) DISSENTERS' RIGHTS. The number of shares of Company Common Stock
for which cash is to be paid because dissenters' rights of appraisal under the
Appraisal Laws shall have been effectively preserved as of the Effective Date or
because of the payment of cash in lieu of fractional shares of InterWest Common
Stock shall not exceed in the aggregate 10% of the outstanding shares of Company
Common Stock.
(F) POOLING LETTER. InterWest shall have received a letter dated as
of the Effective Date, in form and substance acceptable to InterWest, from Xxxx
Xxxxx, LLP to the effect that neither the Company or Pioneer Bank, nor their
respective shareholders, directors, or officers shall have taken any action, or
failed to take any action (other than actions or events required or permitted by
this
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Plan or by InterWest) that would disqualify the Merger from qualifying for
pooling-of-interests accounting treatment.
(G) CAPITAL. The Company's Capital shall not be less than $9 million
(not including capital contributions upon exercise of outstanding Company
Options) at June 30, 1998, and not less than the Final Capital Requirement (not
including capital contributions upon exercise of outstanding Company Options) on
the Effective Date.
(H) ALLOWANCE FOR LOAN AND LEASE LOSSES. Pioneer Bank's allowance
for possible loan and lease losses shall not be less than 1.25% of Pioneer
Bank's Adjusted Loans and will be adequate to absorb Pioneer Bank's anticipated
loan and lease losses.
(I) FAIRNESS OPINION. The Company shall have received, immediately
prior to the mailing of the Proxy Statement to the Company's shareholders, an
opinion of Columbia Financial Advisors, Inc., to the effect that the financial
terms of the Merger are fair from a financial point of view to the Company's
shareholders.
6.3 CONDITIONS TO OBLIGATIONS OF COMPANY AND PIONEER BANK. The
obligations of the Company and Pioneer Bank to consummate the transactions
contemplated by this Plan also are subject to the written waiver by the Company
and Pioneer Bank or the fulfillment on or prior to the Effective Date of each of
the following conditions:
(A) LEGAL OPINION. The Company and Pioneer Bank shall have received
an opinion, dated the Effective Date, of Xxxxxx & Xxxx, P.C., special counsel
for InterWest, in the form of Exhibit K.
(B) OFFICER'S CERTIFICATE. (1) Each of the representations and
warranties of InterWest and InterWest Bank contained in this Plan shall be true
and correct in all material respects as of the date of this Plan and upon the
Effective Date with the same effect as though all such representations and
warranties had been made on the Effective Date, except for any such
representations and warranties that specifically relate to an earlier date,
which shall be true and correct as of such earlier date, and (2) each and all of
the agreements and covenants of InterWest and InterWest Bank to be performed and
complied with pursuant to this Plan on or prior to the Effective Date shall have
been duly performed and complied with in all material respects, and the Company
and Pioneer Bank shall have received a certificate signed by an executive
officer of each of InterWest and InterWest Bank dated the Effective Date, to
such effect.
(C) ADVERSE CHANGE. During the period from September 30, 1997 to the
Effective Date, there shall not have been any material adverse change in the
financial position or results of operations of InterWest and InterWest Bank nor
shall InterWest or InterWest Bank have sustained any loss or damage to its
properties, whether or not insured, that materially affects its ability to
conduct its business; and the Company shall have received a certificate dated
the Effective Date signed by the Chief Executive Officers of InterWest and
InterWest Bank to such effect.
(D) FAIRNESS OPINION. The Company shall have received, immediately
prior to the mailing of the Proxy Statement to the Company's shareholders, an
opinion of Columbia Financial Advisors, Inc., to the effect that the financial
terms of the Merger are fair from a financial point of view to the Company's
shareholders.
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ARTICLE VII. TERMINATION
7.1 GROUNDS FOR TERMINATION. This Plan may be terminated prior to the
Effective Date, either before or after receipt of required shareholder
approvals:
(A) MUTUAL CONSENT. By the mutual consent of InterWest and the
Company, if the Board of Directors of each so determines by vote of a majority
of the members of its entire board.
(B) BREACH. By InterWest or the Company, if its Board of Directors
so determines by vote of a majority of the members of its entire Board, in the
event of (A) a material breach by the other party of any representation or
warranty contained in this Agreement, which breach cannot be or has not been
cured within 30 days after the giving of written notice to the breaching party
of such breach, or (B) a material breach by the other party of any of the
covenants or agreements contained in this Agreement, which breach cannot be or
has not been cured within 30 days after the giving of written notice to the
breaching party of such breach.
(C) DELAY.
(1) By InterWest, if its Board of Directors so determines by
vote of a majority of the members of the entire Board, in the event that the
Merger is not consummated by September 30, 1998, and such delay does not result
from (a) amendments to the Registration Statement or a resolicitation of proxies
as a consequence of an InterWest Transaction or (b) a change to the method of
acquisition pursuant to Section 2.7; provided, however, that InterWest shall not
be entitled to terminate the Plan pursuant to this Section 7.1(C) if it is in
material breach of any of the provisions of this Plan.
(2) By the Company, if its Board of Directors so determines by
vote of a majority of the members of the entire Board, in the event that the
Merger is not consummated by September 30, 1998; provided, however, that if such
delay is the result of (a) amendments to the Registration Statement or a
resolicitation of proxies as a consequence of an InterWest Transaction, then the
Company may terminate the Plan pursuant to this Section 7.1(C) only if the
Merger is not consummated by December 31, 1998; and provided further, that the
Company shall not be entitled to terminate the Plan pursuant to this Section
7.1(C) if it is in material breach of any of the provisions of this Plan.
(D) NO SHAREHOLDER APPROVAL. By InterWest or the Company, if its
Board of Directors so determines by a vote of a majority of the members of its
entire Board, in the event that the shareholder approval contemplated by Section
6.1 is not obtained at the Meeting, including any adjournment or adjournments
thereof.
(E) FIDUCIARY DUTIES. By the Company, subject to the provisions of
Section 5.7 and the Stock Option Agreement, if its Board of Directors, after
receiving advice of counsel, determines in its good faith that it is required to
do so in order to discharge its fiduciary duties, shall withdraw or modify or
resolve to withdraw or modify its recommendation that the shareholders vote in
favor of the Merger.
7.2 CONSEQUENCES OF TERMINATION.
(A) GENERAL CONSEQUENCES. Subject to subsection (B) of this Section
7.2 and to Section 5.7(B), in the event of the termination or abandonment of
this Plan pursuant to the provisions of Section 7.1, this Plan shall become void
and have no force or effect, without any liability
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on the part of the Parties or any of their respective directors or officers or
shareholders with respect to this Plan.
(B) OTHER CONSEQUENCES. Notwithstanding anything in this Plan to the
contrary, no termination of this Plan will relieve any Party of any liability
for breach of this Plan or for any misrepresentation under this Plan or be
deemed to constitute a waiver of any remedy available for such breach or
misrepresentation. In any action or proceeding in connection with such breach or
misrepresentation, the prevailing party will be entitled to reasonable
attorneys' fees and expenses.
ARTICLE VIII. OTHER MATTERS
8.1 SURVIVAL. Only those agreements and covenants in this Plan that by
their express terms apply in whole or in part after the Effective Date shall
survive the Effective Date. All other representations, warranties, and covenants
shall be deemed only to be conditions of the Merger and shall not survive the
Effective Date. If the Merger is abandoned and this Plan is terminated, the
provisions of Article VII shall apply and the agreements of the Parties in
Sections 5.6(B), 8.5 and 8.6 shall survive such abandonment and termination.
8.2 WAIVER; AMENDMENT. Prior to the Effective Date, any provision of
this Plan may be (A) waived in writing by the Party benefited by the provision,
or (B) amended or modified at any time (including the structure of the
transactions contemplated by this Plan) by an agreement in writing among the
Parties approved by their respective Boards of Directors and executed in the
same manner as this Plan, except that, after the vote by the shareholders of the
Company, the consideration to be received by the shareholders of the Company for
each share of Company Common Stock shall not thereby be altered. Nothing
contained in this Section 8.2 is intended to modify InterWest's rights pursuant
to Section 2.7.
8.3 COUNTERPARTS. This Plan may be executed in one or more facsimile
counterparts, each of which shall be deemed to constitute an original. This Plan
shall become effective when one counterpart has been signed by each Party.
8.4 GOVERNING LAW. This Plan shall be governed by, and interpreted in
accordance with, the laws of the State of Washington, except as federal law may
be applicable.
8.5 EXPENSES. Each Party will bear all expenses incurred by it in
connection with this Plan and the transactions contemplated by this Plan, except
printing expenses which shall be shared equally between the Company and
InterWest.
8.6 CONFIDENTIALITY. Except as otherwise provided in Section 5.6(B),
each of the Parties and their respective agents, attorneys and accountants will
maintain the confidentiality of all information provided in connection herewith
which has not been publicly disclosed.
8.7 NOTICES. All notices, requests and other communications hereunder to
a "Party" shall be in writing and shall be deemed to have been duly given when
delivered by hand, telegram, certified or registered mail, overnight courier,
telecopy or telex (confirmed in writing) to such Party at its address set forth
below or such other address as such Party may specify by notice to the Parties.
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If to InterWest or InterWest Bank to:
InterWest Bancorp, Inc.
0000 Xxxx Xxxxxxx Xxx
Xxx Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxxx, President
Copies to:
Xxxxxx X. Xxxxxxx
Zylstra, Beeksma, Xxxxxx and Xxxxxxx
0000-000 Xxxxxx Xxxx
Xxx Xxxxxx, Xxxxxxxxxx 00000
Xxxxxxx X. Xxxxx
Xxxxxx & Xxxx, P.C.
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
If to the Company or Pioneer Bank, to:
Pioneer Bancorp, Inc.
Xxx Xxxxx
XX Xxx 0000
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, President and CEO
Copies to:
Xxxxxxx X. Xxxxxxx
Xxxxxx Pepper & Shefelman PLLC
0000 Xxxxx Xxxxxx #0000
Xxxxxxx, XX 00000
Xxxxxx X. Xxxxx
Velikanje, Xxxxx & Shore, P.S.
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
8.8 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. This Plan and
the Stock Option Agreement represent the entire understanding of the Parties
with reference to transactions contemplated by this Plan, the Stock Option
Agreement and the Confidentiality Agreement and related Addendum, dated
respectively December 12 and December 15, 1997 between the parties, and
supersede any and all other oral or written agreements previously made. Except
for Section 5.10, 5.18, 5.19 and 8.9, nothing in this Plan or the Stock Option
Agreement, expressed or implied, is intended to confer upon any Person, other
than the Parties or their respective successors, any rights, remedies,
obligations or liabilities under or by reason of this Plan or the Stock Option
Agreement.
8.9 BENEFIT PLANS. Upon consummation of the Merger, all employees of the
Company and its Subsidiaries shall be deemed to be at-will employees of
InterWest and its Subsidiaries except for
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those employees who are parties to the Employment Agreements. From and after the
Effective Date, employees of the Company and its Subsidiaries shall be entitled
to participate in the pension, employee benefit and similar plans (including
stock option, bonus or other incentive plans) on substantially the same terms
and conditions as employees of InterWest and its Subsidiaries. For the purpose
of determining eligibility to participate in such plans and the vesting and
related calculations of benefits under such plans (but not for the accrual of
benefits), InterWest shall give effect to years of service with the Company or
the Company's Subsidiaries, as the case may be, as if such service were with
InterWest or its Subsidiaries. Employees of the Company and its Subsidiaries
will be entitled to carry over unused vacation days and sick leave accrued as of
the Effective Date. InterWest shall use its best efforts to facilitate the
rollover of the 401(k) plan maintained by the Company into the 401(k) plan
maintained by InterWest Bank.
8.10 HEADINGS. The headings contained in this Plan are for reference
purposes only and are not part of this Plan.
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IN WITNESS WHEREOF, the Parties have caused this instrument to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
INTERWEST BANCORP, INC.
By: /s/
-------------------------------------------
NAME: XXXXXXX X. XXXXXX
TITLE: PRESIDENT AND CHIEF EXECUTIVE OFFICER
INTERWEST BANK
By: /s/
-------------------------------------------
NAME: XXXXXXX X. XXXXXX
TITLE: PRESIDENT AND CHIEF EXECUTIVE OFFICER
PIONEER BANCORP, INC.
By: /s/
-------------------------------------------
NAME: XXXX X. XXXXXXXX
TITLE: PRESIDENT AND CHIEF EXECUTIVE OFFICER
PIONEER NATIONAL BANK
By: /s/
-------------------------------------------
NAME: XXXX X. XXXXXXXX
TITLE: PRESIDENT AND CHIEF EXECUTIVE OFFICER
35
