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AGREEMENT AND PLAN OF MERGERS
BETWEEN
FRONTIER FINANCIAL CORPORATION
AND
FRONTIER BANK
AND
NORTHSTAR FINANCIAL CORPORATION
AND
NORTHSTAR BANK
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DATED AS OF SEPTEMBER 12, 2005
TABLE OF CONTENTS
Page
RECITALS ..............................................................................................1
DEFINITIONS ..............................................................................................2
ARTICLE I. MERGERS.......................................................................................7
1.1 THE CORPORATE MERGER..........................................................................7
1.2 THE BANK MERGER...............................................................................8
1.3 DISSENTING SHARES.............................................................................8
1.4 EFFECTIVE DATE................................................................................9
ARTICLE II. CONSIDERATION.................................................................................9
2.1 EXCHANGE CONSIDERATION........................................................................9
2.2 FRACTIONAL SHARES.............................................................................9
2.3 SHAREHOLDER RIGHTS; STOCK TRANSFERS...........................................................9
2.4 EXCHANGE PROCEDURES...........................................................................9
2.5 EXCHANGE RATIO/FRONTIER AVERAGE DAILY CLOSING PRICE ADJUSTMENTS..............................10
2.6 OPTIONS......................................................................................10
ARTICLE III. ACTIONS PENDING CONSUMMATION.................................................................10
3.1 CAPITAL STOCK................................................................................10
3.2 DIVIDENDS, ETC...............................................................................11
3.3 INDEBTEDNESS; LIABILITIES; ETC...............................................................11
3.4 OPERATING PROCEDURES; CAPITAL EXPENDITURES; 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.......................................................................................12
3.11 CONTRACTS....................................................................................12
3.12 LOANS........................................................................................12
3.13 TRANSACTION EXPENSES.........................................................................12
ARTICLE IV. REPRESENTATIONS AND WARRANTIES...............................................................12
4.1 NORTHSTAR AND NORTHSTAR BANK REPRESENTATIONS AND WARRANTIES..................................12
4.2 FRONTIER AND FRONTIER BANK REPRESENTATIONS AND WARRANTIES....................................21
ARTICLE V. COVENANTS....................................................................................25
5.1 BEST EFFORTS.................................................................................25
5.2 THE PROXY....................................................................................25
5.3 REGISTRATION STATEMENT COMPLIANCE WITH SECURITIES LAWS.......................................25
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5.4 REGISTRATION STATEMENT EFFECTIVENESS.........................................................25
5.5 PRESS RELEASES...............................................................................25
5.6 ACCESS; INFORMATION..........................................................................26
5.7 REGISTRATION STATEMENT PREPARATION; REGULATORY APPLICATIONS PREPARATION......................26
5.8 AFFILIATE AGREEMENTS.........................................................................26
5.9 CERTAIN POLICIES OF NORTHSTAR AND NORTHSTAR BANK.............................................26
5.10 STATE TAKEOVER LAW...........................................................................27
5.11 NO RIGHTS TRIGGERED..........................................................................27
5.12 SHARES LISTED................................................................................27
5.13 REGULATORY APPLICATIONS......................................................................27
5.14 REGULATORY DIVESTITURES......................................................................27
5.15 CURRENT INFORMATION..........................................................................27
5.16 INSURANCE....................................................................................28
5.17 POST-MERGER ACTIONS..........................................................................28
5.18 CERTAIN ACTIONS..............................................................................28
ARTICLE VI. CONDITIONS TO CONSUMMATION OF THE MERGERS....................................................29
6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS.......................................................29
6.2 CONDITIONS TO OBLIGATIONS OF FRONTIER........................................................30
6.3 CONDITIONS TO OBLIGATIONS OF NORTHSTAR AND NORTHSTAR BANK....................................31
ARTICLE VII. TERMINATION..................................................................................32
7.1 TERMINATION..................................................................................32
7.2 EFFECT OF TERMINATION........................................................................35
ARTICLE VIII. OTHER MATTERS................................................................................36
8.1 SURVIVAL.....................................................................................36
7.3 AMENDMENT....................................................................................36
8.3 EXTENSION; WAIVER............................................................................36
8.4 COUNTERPARTS.................................................................................36
8.5 GOVERNING LAW................................................................................36
8.6 EXPENSES.....................................................................................36
8.7 CONFIDENTIALITY..............................................................................36
8.8 NOTICES......................................................................................36
8.9 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES...............................................37
8.10 BENEFIT PLANS................................................................................37
8.11 HEADINGS.....................................................................................37
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AGREEMENT AND PLAN OF MERGERS
AGREEMENT AND PLAN OF MERGERS, dated as of the 12th day of September,
2005 (this "Agreement"), is between FRONTIER FINANCIAL CORPORATION ("Frontier"),
FRONTIER BANK, NORTHSTAR FINANCIAL CORPORATION ("NorthStar") and NORTHSTAR BANK.
RECITALS
(A) FRONTIER. Frontier 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 Everett, Washington. Frontier is a registered bank
holding company under the Bank Holding Company Act of 1956, as amended. As of
June 30, 2005, Frontier had capital of $273,551,560, divided into common stock
of $128,241,650, comprehensive income of $3,886,956, and retained earnings of
$141,422,954. As of the Execution Date, Frontier has 100,000,000 authorized
shares of common stock, no par value per share ("Frontier Common Stock"), of
which 24,409,918 shares of Frontier Common Stock are issued and outstanding, and
has 10,000,000 authorized shares of preferred stock, no par value per share, of
which no shares are issued and outstanding.
(B) FRONTIER BANK. Frontier Bank is a banking corporation duly
organized and existing in good standing under the laws of the State of
Washington. As of the Execution Date, Frontier Bank has 83,029 authorized shares
of common stock, $37.50 par value per share ("Frontier Bank Common Stock") (no
other class of capital stock being authorized), of which 72,600 shares are
issued and outstanding and owned by Frontier, the sole shareholder of Frontier
Bank.
(C) NORTHSTAR. NorthStar 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 Seattle, Washington. NorthStar is a registered bank
holding company under the Bank Holding Company Act of 1956, as amended. As of
the Execution Date, NorthStar has 3,000,000 authorized shares of common stock,
no par value per share ("NorthStar Common Stock"), of which 830,079 shares of
NorthStar Common Stock are issued and outstanding, no other class of capital
stock being authorized. As of July 31, 2005, NorthStar had capital of
$14,127,531, divided into surplus of $11,919,225, retained earnings of
$2,299,599, and accumulated other comprehensive loss of $91,293. As of the
Execution Date, NorthStar has 175,854 shares of NorthStar Common Stock reserved
for issuance under Employee and Director Stock Option Plans ("NorthStar
Options") pursuant to which options covering 117,608 shares of NorthStar Common
Stock are outstanding.
(D) NORTHSTAR BANK. NorthStar Bank is a banking corporation duly
organized and existing in good standing under the laws of the State of
Washington. As of the Execution Date, NorthStar Bank has 3,000,000 authorized
shares of common stock, no par value per share ("NorthStar Bank Common Stock")
(no other class of capital stock being authorized), of which 815,358 shares of
NorthStar Bank Common Stock are issued and outstanding. All of the issued and
outstanding shares of NorthStar Bank Common Stock are owned by NorthStar, the
sole shareholder of NorthStar Bank.
(E) VOTING AND RELATED AGREEMENTS. As a condition and an inducement to
Frontier's and Frontier Bank's willingness to enter into this Agreement, (i) the
directors and executive officers of NorthStar Bank and NorthStar have entered
into agreements in the forms attached to this Agreement as EXHIBIT A pursuant to
which, among other things, such individuals have agreed to vote their shares of
NorthStar Common Stock in favor of approval of the actions contemplated by this
Agreement at the Meeting (as defined below), (ii) the outside directors of
NorthStar Bank and NorthStar have entered into agreements in the forms attached
to this Agreement as EXHIBIT B, pursuant to which, among other things, such
individuals have agreed to refrain from competing with Frontier and Frontier
Bank, and (iii) and Xxxxx Sas and Xxxxx Xxxx have entered into agreements in the
forms attached to this Agreement as, respectively, EXHIBIT E and EXHIBIT F,
pursuant to which, among other things, such individuals have agreed to refrain
from competing with Frontier and Frontier Bank.
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(F) RIGHTS, ETC. Except as Previously Disclosed (as defined below) in
SCHEDULE 4.1(C), or paragraphs (C) and (D) of the Recitals to this Agreement,
or as authorized by this Agreement, there are no shares of capital stock of
NorthStar or NorthStar Bank authorized and reserved for issuance; neither
NorthStar nor NorthStar Bank has any Rights (as defined below) issued or
outstanding; and neither NorthStar nor NorthStar 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 NorthStar Common Stock.
(G) APPROVALS. At meetings of the respective Boards of Directors of
NorthStar, NorthStar Bank, Frontier and Frontier Bank, each such Board has
approved and authorized the execution of this 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 Agreement have the
following meanings:
"ACQUISITION AGREEMENT" has the meaning assigned to such term in
Section 7.1(G).
"ACQUISITION PROPOSAL" has the meaning assigned to such term in Section
5.18(D)(1).
"ADJUSTMENT TRIGGERS" has the meaning assigned to such term in Section
7.1(J)(i).
"AGREEMENT" means this Agreement and Plan of Mergers, together with all
Exhibits and Schedules annexed to, and incorporated by specific reference, as a
part of this Agreement.
"APPRAISAL LAWS" has the meaning assigned to such term in Section 1.3.
"ASSET CLASSIFICATION" has the meaning assigned to such term in Section
4.1(T).
"BANK FINANCIAL REPORTS" has the meaning assigned to such term in
Section 4.1(H).
"BANK MERGER" has the meaning assigned to such term in Section 1.2(A).
"BUSINESS DAY" means any day other than a Saturday, Sunday, or legal
holiday in the State of Washington.
"CODE" has the meaning assigned to such term in Section 4.1(Q)(2).
"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).
"CORPORATE MERGER" has the meaning assigned to such term in Section
1.1(A).
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"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 Frontier Financial Reports, as the case may be,
and (2) is a derivative contract (including various combinations thereof).
"DETERMINATION DATE" has the meaning assigned to such term in Section
7.1(J)(i).
"DETERMINATION PERIOD" has the meaning assigned to such term in Section
7.1(J)(i).
"DISSENTING SHARES" means the shares of NorthStar Common Stock held by
those shareholders of NorthStar who have timely and properly exercised their
dissenters' rights in accordance with the Appraisal Laws.
"EFFECTIVE DATE" has the meaning assigned to such term in Section 1.4.
"ELIGIBLE NORTHSTAR COMMON STOCK" means shares of NorthStar Common
Stock other than Dissenting Shares.
"ENVIRONMENTAL LAW" means (1) any federal, state, and/or local law,
statute, ordinance, rule, regulation, code, license, permit, order, judgment,
decree, injunction or agreement with any governmental entity, relating to (a)
the protection, preservation or restoration of the environment (including air,
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).
"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" means 1.754 shares of Frontier Common Stock exchanged
for each share of NorthStar Common Stock outstanding; PROVIDED, HOWEVER, that if
the Adjustment Triggers in Section 7.1(J) occur, the Exchange Ratio may, in
Frontier's sole discretion, be increased as set forth in Section 7.1(J)(ii);
and PROVIDED, FURTHER, that the Exchange Ratio will be adjusted proportionately
for any stock split or other change in the number of outstanding shares of
Frontier Common Stock pursuant to Section 2.5.
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"EXECUTION DATE" means the last date on which this Agreement is
executed by each of the Parties hereto.
"FAILURE TO RECOMMEND SHAREHOLDER APPROVAL" has the meaning assigned to
such term in Section 7.2(B).
"FDIC" means the Federal Deposit Insurance Corporation.
"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.
"FINAL AVERAGE PRICE" has the meaning assigned to such term in Section
7.1(J)(i).
"FINAL INDEX PRICE" has the meaning assigned to such term in Section
7.1(J)(i).
"FINAL PRICE" has the meaning assigned to such term in Section
7.1(J)(i).
"FRONTIER" has the meaning assigned to such term in the first paragraph
of this Agreement.
"FRONTIER AVERAGE CLOSING PRICE" means the average closing price of
Frontier Common Stock (rounded to four decimals) as reported on the website of
xxx.xxxxxx.xxx for the twenty trading day period through and including the third
trading day immediately preceding the Effective Date.
"FRONTIER BANK COMMON STOCK" has the meaning assigned to such term in
paragraph (B) of the Recitals.
"FRONTIER COMMON STOCK" has the meaning assigned to such term in
paragraph (A) of the Recitals.
"FRONTIER FINANCIAL REPORTS" has the meaning assigned to such term in
Section 4.2(H).
"FRONTIER OPTION" has the meaning assigned to such term in Section
2.6.
"FRONTIER TRANSACTION" means: (1) a merger, consolidation or similar
transaction involving Frontier, where Frontier is not the corporation surviving
such transaction or where a change of control of Frontier is otherwise effected,
(2) the disposition, by sale, lease, exchange or otherwise, of assets or
deposits of Frontier or any of its significant subsidiaries representing in
either case 25% or more of the consolidated assets or deposits of Frontier 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 Frontier or any of
its significant subsidiaries other than the issuance of Frontier Common Stock
upon the exercise of outstanding options or the conversion of outstanding
convertible securities of Frontier.
"GAAP" means generally accepted accounting principles consistently
applied.
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"HAZARDOUS MATERIAL" means any substance presently listed, defined,
designated or classified as hazardous, toxic, radioactive or dangerous 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 or petroleum or any derivative or by-product
thereof, radon, radioactive material, asbestos, asbestos containing material,
urea formaldehyde foam insulation, lead and polychlorinated biphenyl.
"HOLDING COMPANY FINANCIAL REPORTS" has the meaning assigned to such
term in Section 4.1(H).
"INDEX GROUP" has the meaning assigned to such term in Section
7.1(J)(i).
"INITIAL INDEX PRICE" has the meaning assigned to such term in Section
7.1(J)(i).
"LOAN/FIDUCIARY PROPERTY" means any property owned or controlled by
NorthStar or any of its Subsidiaries or in which NorthStar or any of its
Subsidiaries holds a security or other interest, and, where required by the
context, includes any such property where NorthStar 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 to this
Agreement, an event, occurrence or circumstance 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 Agreement or the consummation of any of the transactions
contemplated by this Agreement.
"MEETING" has the meaning assigned to such term in Section 5.2.
"MERGERS" means the merger of NorthStar with and into Frontier, and
NorthStar Bank with and into Frontier Bank.
"MULTIEMPLOYER PLANS" has the meaning assigned to such term in Section
4.1(Q)(2).
"NASDAQ" means the National Association of Securities Dealers Automated
Quotations system.
"NORTHSTAR BANK" has the meaning assigned to such term in the first
paragraph of this Agreement.
"NORTHSTAR BANK COMMON STOCK" has the meaning assigned to such term in
paragraph (D) of the Recitals.
"NORTHSTAR COMMON STOCK" has the meaning assigned to such term in
paragraph (C) of the Recitals.
"NORTHSTAR OPTION" has the meaning assigned to such term in paragraph
(C) of the Recitals.
"PARTICIPATION FACILITY" means any facility in which NorthStar 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 Agreement.
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"PENSION PLAN" has the meaning assigned to such term in Section
4.1(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.
"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 Agreement.
"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.
"REPRESENTATIVES" has the meaning assigned to such term in Section
5.18(A).
"RCW" means the Revised Code of Washington, as amended.
"RIGHTS" has the meaning assigned to such term in paragraph (F) of the
Recitals to this Agreement.
"SANDLER X'XXXXX" has the meaning assigned to such term in Section
4.1(P).
"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.
"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.
"SUPERIOR PROPOSAL" has the meaning assigned to such term in Section
5.18(D)(2).
"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 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 FEE AMOUNT" has the meaning assigned to such term in
Section 7.2(B).
"THIRD PARTY" means a person within the meaning of Sections 3(a)(9) and
13(d)(3) of the Exchange Act, excluding: (1) NorthStar or any Subsidiary of
NorthStar, and (2) Frontier or any Subsidiary of Frontier.
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(B) GENERAL INTERPRETATION. Except as otherwise expressly provided in
this Agreement or unless the context clearly requires otherwise, the terms
defined in this Agreement include the plural as well as the singular; the words
"hereof," "herein," "hereunder," "in this Agreement" and other words of similar
import refer to this Agreement as a whole and not to any particular Article,
Section or other subdivision; and references in this Agreement to Articles,
Sections, Schedules, and Exhibits refer to Articles and Sections of and
Schedules and Exhibits to this Agreement. Unless otherwise stated, references to
Subsections refer to the Subsections of the Section in which the reference
appears. The table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." The words "stockholder" or "stockholders" shall
be deemed to include the words "shareholder" or "shareholders" and vice versa,
and the word "stock" shall be deemed to include the word "share" or "shares" and
vice versa. All pronouns used in this Agreement include the masculine, feminine
and neuter gender, as the context requires. All accounting terms used in this
Agreement that are not expressly defined in this Agreement have the respective
meanings given to them in accordance with GAAP. All Parties will be considered
drafters of this Agreement and accordingly any ambiguity shall not be construed
against any particular Party.
ARTICLE I. MERGERS
1.1.THE CORPORATE MERGER. Subject to the provisions of this Agreement, on
the Effective Date:
(A) CONTINUING CORPORATION. NorthStar shall be merged with and into
Frontier pursuant to the terms and conditions set forth herein (the "Corporate
Merger"). Upon consummation of the Corporate Merger, the separate existence of
NorthStar shall cease and Frontier shall continue as the continuing corporation
(the "Continuing Corporation").
(B) ARTICLES, BYLAWS, OFFICERS AND DIRECTORS. The Articles of
Incorporation and Bylaws of Frontier, in effect immediately prior to the
Effective Date, shall become the Articles of Incorporation and Bylaws of the
Continuing Corporation. The directors and officers of Frontier in office
immediately prior to the Corporate Merger becoming effective shall be the
directors and officers of the Continuing Corporation, together with such
additional directors and officers as may thereafter be elected, who shall hold
office until such time as their successors are elected and qualified.
(C) RIGHTS, ETC. The Continuing Corporation shall thereupon and
thereafter possess all of the rights, privileges, immunities and franchises of a
public as well as of a private nature of each of the institutions so merged; and
all property, real, personal and mixed, and all debts due on whatever account,
and all and every other interest, of or belonging to or due to each of the
institutions 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 institutions, shall not revert or be in
any way impaired by reason of the Corporate Merger.
(D) EFFECTS OF THE CORPORATE MERGER. The separate existence of
NorthStar shall cease, and NorthStar shall be merged with and into Frontier
which, as the Continuing Corporation, shall thereupon and thereafter possess all
of the assets, rights, privileges, appointments, powers, licenses, permits and
franchises of the two merged corporations, whether of a public or a private
nature, and shall be subject to all of the liabilities, restrictions,
disabilities and duties of both Frontier and NorthStar.
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(E) TRANSFER OF ASSETS. All rights, assets, licenses, permits,
franchises and interests of Frontier and NorthStar in and to every type of
property, whether real, personal, or mixed, whether tangible or intangible,
shall be deemed to be vested in Frontier as the Continuing Corporation by virtue
of the Corporate Merger becoming effective and without any deed or other
instrument or act of transfer whatsoever.
(F) ASSUMPTION OF LIABILITIES. The Continuing Corporation shall become
and be liable for all debts, liabilities, obligations and contracts of Frontier
as well as those of NorthStar, whether the same shall be matured or un-matured;
whether accrued, absolute, contingent or otherwise; and whether or not reflected
or reserved against in the balance sheets, other financial statements, books of
account or records of Frontier or NorthStar.
1.2. THE BANK MERGER. As soon as practicable following the Effective Date:
(A) CONTINUING BANK. NorthStar Bank shall be merged into Frontier Bank
(the "Bank Merger"). Upon consummation of the Bank Merger, the separate
existence of NorthStar Bank shall cease and Frontier Bank shall survive as the
Continuing Bank.
(B) ARTICLES, BYLAWS, DIRECTORS, OFFICERS. The Articles and Bylaws of
the Continuing Bank shall be those of Frontier Bank, as in effect immediately
prior to the Bank Merger becoming effective. The directors and officers of
Frontier Bank in office immediately prior to the Bank Merger becoming effective
shall be the directors and officers of the Continuing Bank, together with such
additional directors and officers as may thereafter be elected, who shall hold
office until such time as their successors are elected and qualified.
(C) EFFECTS OF THE BANK MERGER. The separate existence of NorthStar
Bank shall cease, and NorthStar Bank shall be merged with and into Frontier Bank
which, as the Continuing Bank, shall thereupon and thereafter possess all of the
assets, rights, privileges, appointments, powers, licenses, permits and
franchises of the two merged banks, whether of a public or a private nature, and
shall be subject to all of the liabilities, restrictions, disabilities and
duties of both Frontier Bank and NorthStar Bank.
(D) RIGHTS, ETC. The Continuing Bank shall thereupon and thereafter
possess all of the rights, privileges, immunities and franchises, of a public as
well as of a private nature, of each of the institutions so merged; and all
property, real, personal and mixed, and all debts due on whatever account, and
all and every other interest, of or belonging to or due to each of the
institutions so merged, shall be deemed to be vested in the Continuing Bank
without further act or deed; and the title to any real estate or any interest
therein, vested in each of such institutions, shall not revert or be in any way
impaired by reason of the Bank Merger.
(E) TRANSFER OF ASSETS. All rights, assets, licenses, permits,
franchises and interests of Frontier Bank and NorthStar Bank in and to every
type of property, whether real, personal, or mixed, whether tangible or
intangible, shall be deemed to be vested in Frontier Bank as the Continuing Bank
by virtue of the Bank Merger becoming effective and without any deed or other
instrument or act of transfer whatsoever.
1.3. DISSENTING SHARES. Notwithstanding anything to the contrary in this
Agreement, each Dissenting Share whose holder, as of the Effective Date of the
Corporate 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 Frontier 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 Frontier Common Stock without any
interest thereon. Each holder of Dissenting Shares who becomes entitled to
payment for his NorthStar Common Stock pursuant to the provisions of the
Appraisal Laws shall receive payment for such Dissenting Shares from Frontier
(but only after the amount thereof shall have been agreed upon or finally
determined pursuant to the Appraisal Laws).
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1.4. EFFECTIVE DATE. Subject to the terms and conditions of this Agreement,
the closing of the Mergers will take place at 10:00 a.m. on the first day which
is at least one Business Day after the satisfaction or waiver (subject to
applicable law) of the latest to occur of the conditions set forth in ARTICLE
VI. (other than those conditions which relate to actions to be taken at the
closing) (the "Effective Date"), at the offices of Xxxxxx Xxxxxxxx L.L.P.,
unless another time, date or place is agreed to in writing by the parties
hereto. If the Corporate Merger is not consummated in accordance with this
Agreement on or prior to March 31, 2006, NorthStar or Frontier may terminate
this Agreement in accordance with ARTICLE VII. On the Effective Date,
Certificates of Merger will be issued by the Secretary of State, Corporations
Division, and the Department of Financial Institutions of the State of
Washington in accordance with applicable law.
ARTICLE II. CONSIDERATION
2.1. EXCHANGE CONSIDERATION. Subject to the provisions of this Agreement, on
the Effective Date:
(A) OUTSTANDING FRONTIER COMMON STOCK. The shares of Frontier 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
Frontier Common Stock.
(B) OUTSTANDING NORTHSTAR COMMON STOCK. Each share of Eligible
NorthStar 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, be converted into the right to receive the
number of shares of Frontier Common Stock determined pursuant to the Exchange
Ratio.
2.2. FRACTIONAL SHARES. Notwithstanding any other provision of this
Agreement, no fractional shares of Frontier Common Stock and no certificates,
scrip or other evidence of ownership of fractional shares will be issued in the
Merger. Frontier shall pay to each holder of NorthStar Common Stock who would
otherwise be entitled to a fractional share an amount in cash determined by
multiplying such fraction by the Frontier Average Closing Price.
2.3. SHAREHOLDER RIGHTS; STOCK TRANSFERS. On the Effective Date, holders of
NorthStar Common Stock shall cease to be, and shall have no rights as,
shareholders of NorthStar, 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 NorthStar or the Continuing Corporation of the
shares of NorthStar Common Stock that were issued and outstanding immediately
prior to the Effective Date.
2.4. EXCHANGE PROCEDURES. As promptly as practicable after the Effective
Date, Frontier shall send or cause to be sent to each former shareholder of
NorthStar of record immediately prior to the Effective Date transmittal
materials for use in exchanging such shareholder's certificates for NorthStar
Common Stock for the consideration set forth in this ARTICLE II. The
certificates representing the shares of Frontier Common Stock into which shares
of such shareholder's NorthStar 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 Frontier 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 Frontier's exchange agent (the "Exchange
Agent") of the certificates representing all of such shares of NorthStar Common
Stock (or indemnity satisfactory to Frontier 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 NorthStar for purposes of Rule 145 of the Securities Act shall not be
exchanged for certificates representing Frontier Common Stock until Frontier has
received a written agreement from such person as specified in Section 5.8.
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2.5. EXCHANGE RATIO/FRONTIER AVERAGE CLOSING PRICE ADJUSTMENTS. In the event
Frontier changes the number of shares of Frontier 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 Frontier Common Stock and the record date therefor shall be prior to
the Effective Date, the Exchange Ratio shall be adjusted proportionately.
2.6. OPTIONS. On the Effective Date, by virtue of the Corporate Merger, each
outstanding and unexercised NorthStar Option to purchase shares of NorthStar
Common Stock shall, without any action on the part of the holder, be converted
into and become an option to purchase Frontier Common Stock ("Frontier Option")
on the same terms and conditions as are in effect with respect to NorthStar
Options immediately prior to the Effective Date, except that (A) each such
Frontier Option may be exercised solely for shares of Frontier Common Stock, (B)
the number of shares of Frontier Common Stock subject to such Frontier Option
shall be equal to the number of shares of NorthStar Common Stock subject to such
NorthStar Options 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
Frontier Option shall be adjusted by dividing the per share exercise price of
NorthStar Options by the Exchange Ratio, and rounding up or down to the nearest
cent. The number of shares of NorthStar Common Stock that are issuable upon
exercise of NorthStar Options as of the Execution Date are Previously Disclosed
in SCHEDULE 2.6. Within fifteen (15) days following the Effective Date,
Frontier will prepare and file with the SEC a Registration Statement on Form S-8
covering shares of Frontier Common Stock to be issued upon the exercise of stock
options assumed by Frontier pursuant to this Section 2.6.
ARTICLE III. ACTIONS PENDING CONSUMMATION
Unless otherwise agreed to in writing by Frontier or Frontier Bank,
NorthStar and NorthStar Bank shall each 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 Frontier Bank, and neither NorthStar
nor NorthStar Bank, without the prior written consent of Frontier, will (or
cause or allow any of it Subsidiaries to):
0.0.XXXXXXX STOCK. Except for the exercise of outstanding NorthStar 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 NorthStar,
NorthStar 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 NorthStar Common Stock to become subject to grants of
NorthStar Options, stock appreciation rights or similar stock-based employee
compensation rights.
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3.2. DIVIDENDS, ETC. Make, declare or pay any dividend (other than as
necessary to pay NorthStar's general operating expenses, including the
transaction fee expenses referred to in Section 3.13 as well as distributions
on NorthStar's Subsidiaries' trust preferred stock) 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 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. OPERATING PROCEDURES; CAPITAL EXPENDITURES; 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 5.9,
or (B) commit to incur any further capital expenditures beyond those Previously
Disclosed in SCHEDULE 3.4 other than in the ordinary course of business and not
exceeding $50,000 individually.
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
NorthStar 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 NorthStar 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
NorthStar and its Subsidiaries taken as a whole (except foreclosures or
acquisitions by NorthStar 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.
11
3.10. CLAIMS. Settle any claim, litigation, action or proceeding involving
any liability for material money damages or restrictions upon the operations of
NorthStar 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, or make any
new loan, a loan extension or renewal in a principal amount which exceeds
$500,000, other than in accordance with the loan reporting process agreed to by
the Parties.
3.13. TRANSACTION EXPENSES. Incur expenses in connection with the
transactions contemplated by this Agreement that exceed $2.2-million in the
aggregate. This figure includes severance benefits but does not include the
investment banking fee payable to Sandler X'Xxxxx at closing (estimated at
$550,000) and costs or expenses that may be incurred in conjunction with the
closing of the Mergers, such as conforming to accounting adjustments in
coordination with closing or the Mergers or conversion and integration costs
incurred with respect to any data systems conversion.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
4.1. NORTHSTAR AND NORTHSTAR BANK REPRESENTATIONS AND WARRANTIES. NorthStar
and NorthStar Bank each hereby represent and warrant to Frontier and Frontier
Bank as follows:
(A) RECITALS. The facts set forth in the Recitals of this Agreement
with respect to NorthStar and its Subsidiaries are true and correct.
(B) ORGANIZATION, STANDING AND AUTHORITY. Each of NorthStar and its
Subsidiaries is duly qualified to do business and is in good standing under the
laws of its state of incorporation or organization and in such 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
NorthStar 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. NorthStar 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 NorthStar and its Subsidiaries'
capital stock are validly issued and outstanding, fully paid and non-assessable,
and subject to no preemptive rights. Except as Previously Disclosed in SCHEDULE
4.1(C) and paragraphs (C) or (D) of the Recitals, there are no shares of
capital stock or other equity securities of NorthStar or its Subsidiaries
outstanding and no outstanding Rights with respect thereto.
(D) NORTHSTAR SUBSIDIARIES. NorthStar 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 NorthStar 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 except as Previously Disclosed in SCHEDULE 4.1(D), there are no contracts,
commitments, understandings or arrangements relating to the rights of NorthStar
or its Subsidiaries, as applicable, to vote or to dispose of such shares. Except
as Previously Disclosed in SCHEDULE 4.1(D), all of the shares of capital stock
of each of its Subsidiaries held by NorthStar or one of its Subsidiaries are
fully paid and non-assessable and are owned by NorthStar 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), NorthStar 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
NorthStar, 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 NorthStar 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 Agreement has been
authorized by all necessary corporate action of NorthStar and each of its
Subsidiaries that is a Party, and each such agreement is a valid and binding
agreement of NorthStar and such Subsidiaries, enforceable against NorthStar 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 Agreement and the consummation by NorthStar and each of its
Subsidiaries that is a Party to the transactions contemplated by this 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 NorthStar or of any of its
Subsidiaries or to which NorthStar 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 NorthStar, its consolidated balance sheet as of June 30, 2005
and the related statements of income, changes in shareholders' equity and cash
flows for the fiscal year ended December 31, 2004 (collectively, the "Holding
Company Financial Reports"), and (2) as to each of NorthStar's Subsidiaries that
is a bank, its call report for the fiscal year ended December 31, 2004, and all
other financial reports filed or to be filed subsequent to December 31, 2004, in
the form filed with the FDIC and the Department (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.
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(I) ABSENCE OF UNDISCLOSED LIABILITIES. Except as Previously Disclosed
on SCHEDULE 4.1(I), neither NorthStar nor any of its Subsidiaries has any
obligation or liability (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 Execution
Date, and (2) for commitments and obligations made, or liabilities incurred, in
the ordinary course of business consistent with past practice since December 31,
2004. Except as Previously Disclosed on SCHEDULE 4.1(I), since December 31,
2004, neither NorthStar 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, 2004, 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, NorthStar 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
NorthStar 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 NorthStar
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 4.1(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 NorthStar 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 NorthStar 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 NorthStar 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.
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(M) COMPLIANCE WITH LAWS. Except as Previously Disclosed in SCHEDULE
4.1(M), each of NorthStar 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;
(2) Has received no notification or communication from any
Regulatory Authority or the staff thereof (a) asserting that NorthStar
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 NorthStar 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 NorthStar or its
Subsidiaries, or (c) requiring any of NorthStar 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 NorthStar 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
(excluding extensions of credit made in the ordinary course of business).
Neither NorthStar 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 NorthStar
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 NorthStar nor any of its
Subsidiaries is subject to or bound by any contract containing covenants that
limit the ability of NorthStar 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, NorthStar or any of its Subsidiaries may
carry on its business (other than as may be required by law or any applicable
Regulatory Authority).
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(O) REPORTS. Since December 31, 2002, each of NorthStar 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 Department, (2) the FDIC, (3) the Federal Reserve Board, and (4) any other
Regulatory Authorities having jurisdiction with respect to NorthStar and its
Subsidiaries. As of their respective dates (and without giving effect to any
amendments or modifications filed after the Execution Date with respect to
reports and documents filed before the Execution Date), 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) BROKERS OR FINDERS. No agent, broker, investment banker, financial
advisor or other firm or person is or will be entitled to any broker's or
finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement, based upon arrangements made by
or on behalf of NorthStar or NorthStar Bank, except that NorthStar has engaged,
and will pay a fee or commission to, Sandler X'Xxxxx & Partners, L.P. ("Sandler
X'Xxxxx") in accordance with the terms of a letter agreement between Sandler
X'Xxxxx and NorthStar, a true and correct copy of which has been previously made
available by NorthStar to Frontier.
(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 NorthStar 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 NorthStar 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 NorthStar 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
NorthStar nor any of its Subsidiaries has engaged in a transaction with
respect to any ERISA Plan that could subject NorthStar 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.
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(3) No liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by NorthStar 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 NorthStar under Section 4001(a)(15) of ERISA or Section 414 of the
Code (an "ERISA Affiliate"). Neither NorthStar 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 NorthStar 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.
(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 NorthStar 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 NorthStar or any of its Subsidiaries to amend or terminate
any such plan without incurring any liability thereunder.
(7) Except as Previously Disclosed in SCHEDULE 4.1(Q)(7),
neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement will
(a) result in any payment (including severance, unemployment
compensation, golden parachute or otherwise) becoming due to any
director or any employee of NorthStar or any of its Subsidiaries under
any Compensation and Benefit Plan or otherwise from NorthStar 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. NorthStar 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 NorthStar 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
NorthStar 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.
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(T) ASSET CLASSIFICATION. NorthStar 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 NorthStar and its Subsidiaries that have been classified by it
as of August 15, 2005 (the "Asset Classification"); and no amounts of loans,
extensions of credit or other assets that have been classified as of August 15,
2005 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 NorthStar or any
Subsidiary prior to June 30, 2005.
(U) ALLOWANCE FOR POSSIBLE LOAN LOSSES. The allowance for possible loan
losses shown on the consolidated balance sheets in the December 31, 2004 Holding
Company Financial Reports of NorthStar was, and the allowance for possible loan
losses to be shown on subsequent Holding Company Financial Reports of NorthStar
was and will be, adequate in the opinion of the Board of Directors of NorthStar
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.
(V) INSURANCE. Each of NorthStar 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 NorthStar, except for such matters that, individually or in the
aggregate, are not reasonably likely to have a Material Adverse Effect on
NorthStar or its Subsidiaries. Set forth in SCHEDULE 4.1(V) is a list of all
insurance policies maintained by or for the benefit of NorthStar 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 NorthStar's knowledge, there is no person who, as of the Execution
Date, may be deemed to be an "affiliate" of NorthStar as that term is used in
Rule 145 under the Securities Act.
(X) STATE TAKEOVER LAWS, ARTICLES OF INCORPORATION. NorthStar and its
Subsidiaries have taken all necessary action to exempt this Agreement and the
transactions contemplated by this Agreement 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 NorthStar's and its Subsidiaries'
Articles of Incorporation.
(Y) NO FURTHER ACTION. NorthStar and its Subsidiaries have taken all
action so that the entering into of this Agreement and the consummation of the
transactions contemplated by this Agreement, or any other action or combination
of actions, or any other transactions, contemplated by this 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 NorthStar or any of its Subsidiaries or
under any agreement to which NorthStar 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 Agreement.
(Z) ENVIRONMENTAL MATTERS.
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(1) To NorthStar'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 NorthStar or
its Subsidiaries.
(2) There is no proceeding pending or, to NorthStar's
knowledge, threatened before any court or governmental agency or board
in which NorthStar 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
NorthStar 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 NorthStar or its Subsidiaries or have been Previously
Disclosed in SCHEDULE 4.1(Z)(2).
(3) There is no proceeding pending or, to NorthStar's
knowledge, threatened before any court, governmental agency or board or
other forum in which any Loan/Fiduciary Property (or NorthStar 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
NorthStar or have been Previously Disclosed in SCHEDULE 4.1(Z)(3).
(4) To NorthStar'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 NorthStar's knowledge, during the period of (a)
ownership or operation by NorthStar or any of its Subsidiaries of any
of their respective current properties, (b) participation in the
management of any Participation Facility by NorthStar or any of its
Subsidiaries, or (c) holding of a security or other interest in a
Loan/Fiduciary Property by NorthStar 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 NorthStar or
its Subsidiaries or have been Previously Disclosed in SCHEDULE
4.1(Z)(5).
(6) To NorthStar's knowledge, prior to the period of (a)
ownership or operation by NorthStar or any of its Subsidiaries of any
of their respective current properties, (b) participation in the
management of any Participation Facility by NorthStar or any of its
Subsidiaries, or (c) holding of a security or other interest in a
Loan/Fiduciary Property by NorthStar 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 NorthStar or
its Subsidiaries or have been Previously Disclosed in SCHEDULE
4.1(Z)(6).
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(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 NorthStar or its Subsidiaries, including
consolidated federal income tax returns of NorthStar 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 NorthStar 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 NorthStar or its Subsidiaries, except as reserved against in
the Holding Company Financial Reports of NorthStar, 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 NorthStar or its Subsidiaries.
(BB) ACCURACY OF INFORMATION. The statements with respect to
NorthStar and its Subsidiaries contained in this Agreement, the Schedules and
any other written documents executed and delivered by or on behalf of NorthStar
or any other Party pursuant to the terms of or relating to this Agreement 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 NorthStar 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 NorthStar or its
Subsidiaries that are pledged as security for each such Derivatives Contract.
(DD) ACCOUNTING CONTROLS. Each of NorthStar 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 NorthStar 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.
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(EE) FAIRNESS OPINION. NorthStar has received an opinion from
Sandler X'Xxxxx dated as of the Execution Date to the effect that as of the date
thereof and based upon and subject to the matters set forth therein, the
Exchange Ratio is fair from a financial point of view to the shareholders of
NorthStar.
(FF) REORGANIZATION. As of the Execution Date, to NorthStar's
knowledge, there is no reason to believe that the Mergers will fail to qualify
as a reorganization under Section 368(a) of the Code.
(GG) COMMITMENTS AND CONTRACTS. Neither NorthStar 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(GG)(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 NorthStar or
any such Subsidiary without any obligation on the part of NorthStar or
any such Subsidiary to make any payment in connection with such
termination);
(2) except as Previously Disclosed in SCHEDULE 4.1(GG)(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(GG)(3) ,
any material contract with any affiliate.
4.2 FRONTIER AND FRONTIER BANK REPRESENTATIONS AND WARRANTIES. Frontier and
Frontier Bank each hereby represent and warrant to NorthStar and NorthStar Bank
as follows:
(A) RECITALS. The facts set forth in the Recitals of this Agreement
with respect to Frontier and Frontier Bank are true and correct.
(B) ORGANIZATION, STANDING AND AUTHORITY. Each of Frontier and Frontier
Bank 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 Frontier 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 Frontier.
(C) SHARES. The outstanding shares of Frontier's capital stock are
validly issued and outstanding, fully paid and non-assessable, 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) FRONTIER SUBSIDIARIES. Frontier has Previously Disclosed in
SCHEDULE 4.2(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 Frontier 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 Frontier 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 Frontier or one of its Subsidiaries are fully paid and
non-assessable and are owned by Frontier 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 4.2(D), Frontier 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 Frontier, 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 Frontier and Frontier 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.
(F) CORPORATE AUTHORITY. This Agreement has been authorized by all
necessary corporate action of Frontier and such agreement is a valid and binding
agreement of Frontier, enforceable against Frontier 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. As
of the Execution Date, no approval by Frontier's shareholders of the Agreement
is required.
(G) 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(G), the execution, delivery and performance of its obligation under this
Agreement and the Employment Agreements and the consummation by Frontier and
each of its Subsidiaries of the transactions contemplated by this 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 Frontier or of any of its
Subsidiaries or to which Frontier 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
Frontier, (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 Frontier.
(H) FINANCIAL REPORTS. Except as Previously Disclosed in SCHEDULE
4.2(H), in the case of Frontier, its Annual Report on Form 10-K for the fiscal
year ended December 31, 2004, and all other documents filed or to be filed
subsequent to December 31, 2004 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 "Frontier
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 Frontier 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 Frontier 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.
22
(I) NO EVENTS. Except as Previously Disclosed on SCHEDULE 4.2(I),
since December 31, 2004, no event has occurred which is reasonably likely to
have a Material Adverse Effect on it.
(J) LITIGATION; REGULATORY ACTION. Except as Previously Disclosed in
SCHEDULE 4.2(J) 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 Frontier 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(J), neither Frontier 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 Frontier 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.
(K) COMPLIANCE WITH LAWS. Except as Previously Disclosed in SCHEDULE
4.2(K), each of Frontier 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;
(2) Has received no notification or communication from any
Regulatory Authority or the staff thereof (a) asserting that Frontier
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 Frontier 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 Frontier or its
Subsidiaries, or (c) requiring any of Frontier 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);
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(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.
(L) REPORTS. Since January 1, 2002, each of Frontier 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 Frontier and its
Subsidiaries. As of their respective dates (and without giving effect to any
amendments or modifications filed after the Execution Date with respect to
reports and documents filed before the Execution Date), 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.
(M) NO KNOWLEDGE. Frontier and its Subsidiaries know of no reason why
the regulatory approvals referred to in Section 6.1 should not be obtained.
(N) ACCURACY OF INFORMATION. The statements with respect to Frontier
and its Subsidiaries contained in this Agreement, the Schedules and any other
written documents executed and delivered by or on behalf of Frontier or any
other Party pursuant to the terms of this Agreement 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.
(O) DERIVATIVES CONTRACTS. None of Frontier 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(O) includes
a list of any assets of Frontier or its Subsidiaries that are pledged as
security for each such Derivatives Contract.
(P) ABSENCE OF UNDISCLOSED LIABILITIES. Neither Frontier nor any of its
Subsidiaries has any obligation or liability (contingent or otherwise) that,
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect on it, except (1) as reflected the Frontier Financial Reports
prior to the Execution Date, and (2) for commitments and obligations made, or
liabilities incurred, in the ordinary course of business consistent with past
practice since December 31, 2004. Since December 31, 2004, neither Frontier 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.
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ARTICLE V. COVENANTS
Each of NorthStar and NorthStar Bank hereby covenants to Frontier and
Frontier Bank, and each of Frontier and Frontier Bank hereby covenants to
NorthStar and NorthStar Bank, that:
5.1 BEST EFFORTS. Subject to the terms and conditions of this Agreement and,
in the case of NorthStar and NorthStar 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 Corporate Merger by
March 31, 2006, and to otherwise enable consummation of the transactions
contemplated by this Agreement, and shall cooperate fully with the other Parties
to that end (it being understood that any amendments to the Registration
Statement or a re-solicitation of proxies as a consequence of a Frontier
Transaction shall not violate this covenant).
5.2 THE PROXY. In the case of NorthStar: it shall promptly assist Frontier
in the preparation of a proxy statement (the "Proxy Statement") to be mailed to
the holders of NorthStar Common Stock in connection with the transactions
contemplated by this Agreement and to be filed by Frontier in a registration
statement (the "Registration Statement") with the SEC as provided in Section
5.7, which shall conform to all applicable legal requirements, and it shall
call a special meeting (the "Meeting") of the holders of NorthStar Common Stock
to be held as soon as practicable for purposes of voting upon the transactions
contemplated by this Agreement and NorthStar shall use its best efforts to
solicit and obtain votes of the holders of NorthStar Common Stock in favor of
the transactions contemplated by this Agreement and, subject to the exercise of
its fiduciary duties, the Board of Directors of NorthStar 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 NorthStar relating to
NorthStar or its Subsidiaries and by or on behalf of Frontier relating to
Frontier 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.
5.4 REGISTRATION STATEMENT EFFECTIVENESS. Frontier will advise NorthStar,
promptly after Frontier 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 Frontier 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. NorthStar and NorthStar Bank will not, without the prior
approval of Frontier, and Frontier and Frontier Bank will not, without the prior
approval of NorthStar, issue any press release or written statement for general
circulation relating to the transactions contemplated by this Agreement, except
as otherwise required by law.
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5.6 ACCESS; INFORMATION.
(A) Upon reasonable notice, NorthStar and NorthStar Bank shall afford
Frontier 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 NorthStar and its Subsidiaries and, during such period, NorthStar
and NorthStar Bank shall furnish promptly (and cause its accountants and other
agents to furnish promptly) to Frontier (1) a copy of each material report,
schedule and other document filed by NorthStar and its Subsidiaries with any
Regulatory Authority, and (2) all other information concerning the business,
properties and personnel of NorthStar and its Subsidiaries as Frontier 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 NorthStar or NorthStar Bank in this Agreement or the conditions to the
obligations of NorthStar and NorthStar Bank to consummate the transactions
contemplated by this Agreement; and
(B) Frontier 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 Agreement and, if this Agreement is terminated, will hold
all confidential information and documents obtained pursuant to this paragraph
in confidence (as provided in Section 8.7) 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 Frontier 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 Agreement,
Frontier will, upon request by NorthStar, deliver to NorthStar all documents so
obtained by Frontier or destroy such documents and, in the case of destruction,
will certify such fact to NorthStar.
5.7 REGISTRATION STATEMENT PREPARATION; REGULATORY APPLICATIONS PREPARATION.
Frontier shall, as promptly as practicable following the Execution Date, prepare
and file the Registration Statement with the SEC with respect to the shares of
Frontier Common Stock to be issued to the holders of NorthStar Common Stock
pursuant to this Agreement, and Frontier shall use its best efforts to cause the
Registration Statement to be declared effective as soon as practicable after the
filing thereof. Frontier shall, as promptly as practicable following the
Execution Date, prepare and file all necessary notices or applications with
Regulatory Authorities having jurisdiction with respect to the transactions
contemplated by this Agreement.
5.8 AFFILIATE AGREEMENTS. NorthStar will use its best efforts to induce each
person who may be deemed to be an "affiliate" of NorthStar for purposes of Rule
145 under the Securities Act, to execute and deliver to Frontier on or before
the mailing of the Proxy Statement for the Meeting, an agreement in the form
attached hereto as EXHIBIT C restricting the disposition of such affiliate's
shares of NorthStar Common Stock, and, in the case of "affiliates" of NorthStar,
the shares of Frontier Common Stock to be received by such person in exchange
for such person's shares of NorthStar Common Stock. Frontier agrees to use its
best efforts to maintain the availability of Rule 145 for use by such
"affiliates".
5.9 CERTAIN POLICIES OF NORTHSTAR AND NORTHSTAR BANK. NorthStar and
NorthStar Bank, each shall, at Frontier'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 Frontier and GAAP; PROVIDED, HOWEVER, that prior to any such
modification or change, Frontier shall certify that the conditions to the
obligation of Frontier under Section 6.1 and 6.2 to consummate the
transactions contemplated by this Agreement, other than the condition set forth
in Section 6.1(G), have been satisfied or waived. NorthStar's and NorthStar
Bank's representations, warranties, covenants and conditions contained in this
Agreement 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 5.8.
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5.10 STATE TAKEOVER LAW. NorthStar shall not take any action that would
cause the transactions contemplated by this Agreement to be subject to any
applicable state takeover statute, and NorthStar shall take all necessary steps
to exempt (or ensure the continued exemption of) the transactions contemplated
by this Agreement from, or, if necessary, challenge the validity or
applicability of, any applicable state takeover law.
5.11 NO RIGHTS TRIGGERED. Except for those consents of Third Parties
Previously Disclosed on SCHEDULE 5.11, NorthStar shall take all necessary steps
to ensure that the entering into of this Agreement and the consummation of the
transactions contemplated by this Agreement (including the Mergers) and any
other action or combination of actions, or any other transactions contemplated
by this Agreement, do not and will not (A) result in the grant of any rights to
any Person under the Articles of Incorporation or Bylaws of NorthStar or under
any agreement to which NorthStar or any of its Subsidiaries is a party, or (B)
restrict or impair in any way the ability of Frontier or Frontier Bank to
exercise the rights granted under this Agreement.
5.12 SHARES LISTED. Frontier 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 Frontier Common Stock to be issued to the
holders of NorthStar Common Stock.
5.13 REGULATORY APPLICATIONS. Frontier and Frontier Bank, each shall (A)
promptly prepare and submit applications to the appropriate Regulatory
Authorities for approval of the Mergers, and (B) promptly make all other
appropriate filings to secure all other approvals, consents and rulings that are
necessary for the consummation of the Mergers by Frontier.
5.14 REGULATORY DIVESTITURES. In the case of NorthStar: No later than the
Effective Date, NorthStar shall cease engaging in such activities as Frontier
shall advise NorthStar in writing are not permitted to be engaged in by Frontier
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 Agreement, NorthStar shall divest any Subsidiary engaged in
activities or holding assets that are impermissible for Frontier or Frontier
Bank, on terms and conditions agreed to by Frontier; PROVIDED, HOWEVER, that
prior to taking such action, Frontier shall certify that the conditions to the
obligations of Frontier under Sections 6.1 and 6.2 to consummate the
transactions contemplated by this Agreement.
5.15 CURRENT INFORMATION.
(A) During the period from the Execution Date to the Effective
Date, each of NorthStar and Frontier shall, and shall cause its representatives
to, confer on a regular and frequent basis with representatives of the other.
(B) Each of NorthStar and Frontier 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 Agreement not to be true and
correct in all material respects as of the Effective Date or prevent it or its
Subsidiaries from fulfilling its or their obligations under this Agreement.
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5.16 INSURANCE. NorthStar will cause the persons serving as officers and
directors of NorthStar and NorthStar Bank immediately prior to the Effective
Date to be covered for a period of five (5) years after the Effective Date by
the current policies of directors and officers liability insurance maintained by
NorthStar with respect to acts or omissions of officers and directors, in their
capacity as such, occurring on or prior to the Effective Date, with the same
policy limits ($5-million) in effect on the Execution Date. The provisions of
this Section 5.16 are intended to be for the benefit of, and shall be
enforceable by, each of the present and former officers and directors of
NorthStar and NorthStar Bank and each such person's respective heirs and
representatives.
5.17 POST-MERGER ACTIONS. Following the Corporate Merger, neither Frontier
nor any of its affiliates shall take any action that will adversely affect the
federal income tax treatment of the Corporate Merger to the shareholders of
NorthStar, including failing to continue at least one historic business line of
NorthStar or to use at least a significant portion of NorthStar's historic
assets in a business, in each case within the meaning of Treas. Reg.
ss.1.368-1(d).
5.18 CERTAIN ACTIONS.
(A) Except with respect to this Agreement and the transactions
contemplated hereby, neither NorthStar, NorthStar Bank nor any of their
directors, officers, agents, affiliates (as such term is used in Rule 12b-2
under the Exchange Act) or representatives (collectively, "Representatives")
shall, directly or indirectly, initiate, solicit, encourage or knowingly
facilitate (including by way of furnishing information) any inquiries with
respect to or the making of any Acquisition Proposal (as defined below).
(B) Notwithstanding anything herein to the contrary, NorthStar and its
Board of Directors shall be permitted to engage in any discussions or
negotiations with, or provide any information to, any person in response to an
unsolicited bona fide written Acquisition Proposal by any such person, if and
only to the extent that (a) NorthStar's Board of Directors concludes in good
faith and consistent with its fiduciary duties to NorthStar's shareholders under
applicable law that such Acquisition Proposal would reasonably be expected to
result in a Superior Proposal (as defined below), (b) prior to providing any
information or data to any person in connection with an Acquisition Proposal by
any such person, NorthStar's Board of Directors receives from such person an
executed confidentiality agreement containing terms at least as stringent as
those contained in the Confidentiality Agreement, dated July 18, 2005, between
NorthStar and Frontier, and (c) prior to providing any information or data to
any person or entering into discussions or negotiations with any person,
NorthStar's Board of Directors notifies Frontier promptly of such inquiries,
proposals, or offers received by, any such information requested from, or any
such discussions or negotiations sought to be initiated or continued with, any
of its Representatives indicating, in connection with such notice, the name of
such person and the material terms and conditions of any inquiries, proposals or
offers.
(C) NorthStar agrees that it will, and will cause its Representatives
to, immediately cease and cause to be terminated any activities, discussions, or
negotiations existing as of the Execution Date with any parties conducted
heretofore with respect to any Acquisition Proposal.
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(D) For purposes of this Section 5.18:
(1) The term "Acquisition Proposal" means any tender offer or
exchange offer or any proposal for a merger, reorganization,
consolidation, share exchange, recapitalization, liquidation,
dissolution or other business combination involving NorthStar or
NorthStar Bank or any proposal or offer to acquire a substantial equity
interest in, or a substantial portion of the assets of, NorthStar or
NorthStar Bank, other than the transaction contemplated or permitted by
this Agreement.
(2) The term "Superior Proposal" means, with respect to
NorthStar and NorthStar Bank, any written Acquisition Proposal made by
a person other than Frontier which is for (i) (a) a merger,
reorganization, consolidation, share exchange, business combination,
recapitalization or similar transaction involving NorthStar or
NorthStar Bank, (b) a sale, lease, exchange, transfer, or other
disposition of at least 50% of the assets of NorthStar or NorthStar
Bank, taken as a whole, in a single transaction or a series of related
transactions, or (c) the acquisition, directly or indirectly, by a
person of beneficial ownership of 50% or more of the NorthStar Common
Stock or the NorthStar Bank Common Stock whether by merger,
consolidation, share exchange, business combination, tender, or
exchange offer or otherwise, and (ii) which is otherwise on terms which
the Board of Directors of NorthStar in good faith concludes (after
consultation with its financial advisors and outside counsel), taking
into account, among other things, all legal, financial, regulatory, and
other aspects of the proposal and the person making the proposal, (a)
would, if consummated, result in a transaction that is more favorable
to its shareholders (in their capacities as shareholders), from a
financial point of view, than the transactions contemplated by this
Agreement, and (b) is reasonably capable of being completed.
ARTICLE VI. CONDITIONS TO CONSUMMATION OF THE MERGERS
6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective obligations of
each Party to consummate the transactions contemplated by this Agreement 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 Agreement shall have been duly approved by
the requisite vote of NorthStar's shareholders under applicable law and the
Articles of Incorporation and Bylaws of NorthStar.
(B) NO PENDING OR THREATENED CLAIMS. No claim, action, suit,
investigation or other proceeding shall be pending or threatened before any
court or governmental agency which presents a substantial risk of the restraint
or the prohibition of the transactions contemplated by this Agreement or the
obtaining of material damages or other relief in connection therewith.
(C) 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 Frontier, would
deprive Frontier of the material economic or business benefits of the
transactions contemplated by this Agreement.
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(D) 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
Agreement.
(E) 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.
(F) TAX OPINION. Frontier and NorthStar shall have received an opinion
from Xxxxxx Xxxxxxxx L.L.P. to the effect that (1) the Corporate Merger
constitutes a reorganization under Section 368 of the Code, and (2) no gain or
loss will be recognized by shareholders of NorthStar who receive shares of
Frontier Common Stock in exchange for their shares of NorthStar 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 Xxxxxxxx
L.L.P. may require and rely upon representations contained in certificates of
officers of Frontier, NorthStar and others.
(G) NASDAQ LISTING. The shares of Frontier Common Stock to be issued
pursuant to this Agreement shall have been approved for listing on the NASDAQ
National Market subject only to official notice of issuance.
6.2 CONDITIONS TO OBLIGATIONS OF FRONTIER. The obligations of Frontier and
Frontier Bank to consummate the transactions contemplated by this Agreement also
are subject to the written waiver by Frontier or the fulfillment on or prior to
the Effective Date of each of the following conditions:
(A) PERFORMANCE. Each of the material acts, covenants and undertakings
of NorthStar to be performed at or before the Effective Date shall have been
duly performed in all material respects.
(B) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of NorthStar contained in this Agreement shall be true and correct on and as of
the Effective Date with the same effect as though made on and at 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; provided in each case that any such failure to be true and correct,
individually or in the aggregate, would have a Material Adverse Effect on
NorthStar.
(C) LEGAL OPINION. Frontier shall have received a legal opinion, dated
the Effective Date, from Xxxxxx & Xxxx PC in the form of EXHIBIT D.
(D) OFFICERS' CERTIFICATE. (1) Each of the representations and
warranties contained in this Agreement of NorthStar and NorthStar Bank shall be
true and correct in all material respects as of the Execution Date 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 5.8, and (2) each and all of the agreements and covenants
of NorthStar and NorthStar Bank to be performed and complied with pursuant to
this Agreement on or prior to the Effective Date shall have been duly performed
and complied with in all material respects, and Frontier shall have received a
certificate signed by the chief executive officers, chief financial officers,
and chief lending officers of NorthStar and NorthStar Bank dated the Effective
Date, to such effect.
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(E) RECEIPT OF AFFILIATE AGREEMENTS. Frontier shall have received from
each affiliate of NorthStar the agreement referred to in Section 5.8.
(F) NO MATERIAL ADVERSE CHANGE. During the period from the Execution
Date to the Effective Date, there shall have occurred or be threatened no change
relative to: (1) the business, property, assets (including loan portfolios),
liabilities (whether absolute, contingent or otherwise), prospects, operations,
liquidity, income or condition (financial or otherwise) of NorthStar and/or its
Subsidiaries which is reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect on NorthStar and/or its Subsidiaries, other than
any such effect attributable to or resulting from (i) any change in banking or
similar laws, rules or regulations of general applicability or interpretations
thereof by courts or governmental authorities, (ii) any change in GAAP (as
defined herein) or regulatory accounting principles applicable to banks or their
holding companies generally, (iii) changes attributable to or resulting from
changes in general economic conditions, including changes in the prevailing
level of interest rates, (iv) any action or omission of NorthStar or Frontier or
any Subsidiary of either of them taken with the prior written consent of the
other party hereto, or (v) any expenses incurred by such party in connection
with this Agreement or the transactions contemplated hereby; or (2) the ability
of NorthStar and NorthStar Bank to consummate the transactions contemplated
hereby.
(G) DISSENTERS' RIGHTS. The number of shares of NorthStar 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 Frontier Common
Stock shall not exceed in the aggregate 15% of the outstanding shares of
NorthStar Common Stock.
(H) VOTING AGREEMENTS. Frontier shall have received from each director
and executive officer of NorthStar the Voting Agreement in substantially the
same form set forth as EXHIBIT A.
(I) DIRECTOR'S AGREEMENT. Frontier shall have received from each
outside director of NorthStar the Director's Agreement in substantially the same
form set forth as EXHIBIT B.
(J) NON-COMPETITION/NON-SOLICITATION AGREEMENTS. The
Non-Competition/Non-Solicitation Agreements of Xxxxx Sas and Xxxxx Xxxx
substantially in the form of EXHIBIT E and EXHIBIT F, shall have been duly
executed and delivered to Frontier.
6.3 CONDITIONS TO OBLIGATIONS OF NORTHSTAR AND NORTHSTAR BANK. The
obligations of NorthStar and NorthStar Bank to consummate the transactions
contemplated by this Agreement also are subject to the written waiver by
NorthStar and NorthStar Bank or the fulfillment on or prior to the Effective
Date of each of the following conditions:
(A) PERFORMANCE. Each of the material acts, covenants and undertakings
of Frontier to be performed at or before the Effective Date shall have been duly
performed in all material respects.
(B) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Frontier contained in this Agreement shall be true and correct on and as of
the Effective Date with the same effect as though made on and at 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; provided in each case that any such failure to be true and correct,
individually or in the aggregate, would have a Material Adverse Effect on
Frontier.
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(C) LEGAL OPINION. NorthStar shall have received a legal opinion, dated
the Effective Date, from Xxxxxx Xxxxxxxx, L.L.P. in the form of EXHIBIT G.
(D) OFFICER'S CERTIFICATE. (1) Each of the representations and
warranties of Frontier and Frontier Bank contained in this Agreement shall be
true and correct in all material respects as of the Execution Date 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 Frontier and Frontier Bank to be performed and
complied with pursuant to this Agreement on or prior to the Effective Date shall
have been duly performed and complied with in all material respects, and
NorthStar shall have received a certificate signed by an executive officer of
Frontier and Frontier Bank dated the Effective Date, to such effect.
(E) NO MATERIAL ADVERSE CHANGE. During the period from the Execution
Date to the Effective Date, there shall have occurred or be threatened no change
relative to: (1) the business, property, assets (including loan portfolios),
liabilities (whether absolute, contingent or otherwise), prospects, operations,
liquidity, income or condition (financial or otherwise) of Frontier and/or its
Subsidiaries which is reasonably likely, individually or in the aggregate to
have a Material Adverse Effect on Frontier and/or its Subsidiaries, other than
any such effect attributable to or resulting from (i) any change in banking or
similar laws, rules or regulations of general applicability or interpretations
thereof by courts or governmental authorities, (ii) any change in GAAP (as
defined herein) or regulatory accounting principles applicable to banks, thrifts
or their holding companies generally, (iii) changes attributable to or resulting
from changes in general economic conditions, including changes in the prevailing
level of interest rates, (iv) any action or omission of NorthStar or Frontier or
any Subsidiary of either of them taken with the prior written consent of the
other party hereto, or (v) any expenses incurred by such party in connection
with this Agreement or the transactions contemplated hereby; or (2) the ability
of Frontier and/or its Subsidiaries to consummate the transactions contemplated
hereby.
(F) FAIRNESS OPINION. NorthStar's financial advisor, Sandler X'Xxxxx,
shall not have withdrawn its fairness opinion described in Section 4.1(EE)
prior to the Effective Date.
ARTICLE VII. TERMINATION
7.1 TERMINATION. This Agreement may be terminated at any time prior to the
Effective Date, before or after approval of the matters presented in connection
with the Corporate Merger by the holders of NorthStar Common Stock, under each
of the following conditions:
(A) MUTUAL CONSENT. By the mutual consent of Frontier and NorthStar, if
the Board of Directors of each so determines by vote of a majority of the
members of its entire board.
(B) DELAY. By Frontier or NorthStar in the event the Corporate Merger
is not consummated by March 31, 2006, unless the failure of the consummation of
the transactions to occur shall be due to the failure of the party seeking to
terminate this Agreement to perform its obligations hereunder in a timely
manner; PROVIDED, HOWEVER, that Frontier may not terminate the Agreement
pursuant to this Section 7.1(B), if such delay results from amendments to the
Registration Statement or a resolicitation of proxies as a consequence of a
Frontier Transaction, or any other acquisition or sale transaction, or any
offering of securities, in which Frontier is involved, and PROVIDED, FURTHER,
that a party may not terminate the Agreement pursuant to this Section 7.1(B)
if it is in material breach of any of the provisions of this Agreement.
32
(C) NO FAIRNESS OPINION. By NorthStar in the event the fairness opinion
described in Section 6.3(F) is not received or is withdrawn; PROVIDED, HOWEVER,
if this Agreement is terminated in reliance upon this Section 7.1(C) and
NorthStar enters into any Acquisition Agreement providing for any transaction
described in clause (1) or clause (2) of Section 5.18(D) on or before March 31,
2006 following the termination of this Agreement pursuant to this Section
7.1(C), NorthStar shall pay to Frontier $1,000,000 (less any Termination Fee
Amount previously paid).
(D) NO REGULATORY APPROVALS. By Frontier or NorthStar, in the event
that any of the required regulatory approvals described in Section 6.1(C) are
denied (or should any such required approval be conditioned upon a substantial
deviation from the transactions contemplated); PROVIDED HOWEVER, that either
party may extend the term of this Agreement for a sixty (60) day period to
prosecute diligently and overturn such denial provided that such denial has been
appealed within fourteen (14) business days of the receipt thereof.
(E) BREACH OF WARRANTY. By Frontier or NorthStar (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if there shall have been
a material breach of any of the representations or warranties set forth in this
Agreement on the part of the other party, which breach is not cured within
thirty (30) days following written notice to the party committing such breach,
or which breach, by its nature, cannot be cured prior to the Effective Date;
PROVIDED, HOWEVER, that neither party shall have the right to terminate this
Agreement pursuant to this Section 7.1(E) unless the breach of representation
or warranty, together with all other such breaches, would entitle the party
receiving such representation or warranty not to consummate the transactions
contemplated hereby under Section 6.2(B) (in the case of a breach of
representation or warranty by NorthStar or NorthStar Bank) or Section 6.3(B)
(in the case of a breach of representation or warranty by Frontier or Frontier
Bank).
(F) BREACH OF COVENANT. By Frontier or NorthStar (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if there shall have been
a material breach of any of the covenants or agreements set forth in this
Agreement on the part of the other party, which breach shall not have been cured
within thirty (30) days following receipt by the breaching party of written
notice of such breach from the other party hereto, or which breach, by its
nature, cannot be cured prior to the Effective Date.
(G) SUPERIOR PROPOSAL. By NorthStar, in the event that the Board of
Directors of NorthStar determines in good faith, after consultation with outside
counsel, that in light of a Superior Proposal (as defined in Section 5.18) it
would not be consistent with its fiduciary duties to NorthStar and to
NorthStar's shareholders under applicable law to continue with the transactions
contemplated under this Agreement; PROVIDED, HOWEVER, that the Board of
Directors of NorthStar may terminate this Agreement pursuant to this Section
7.1(G) solely in order to concurrently enter into a letter of intent,
agreement in principle, acquisition agreement or other similar agreement (each,
an "Acquisition Agreement") related to a Superior Proposal; provided further,
however, that this Agreement may be terminated pursuant to this Section 7.1(G)
only after the fifth day following Frontier's receipt of written notice advising
Frontier that the Board of Directors of NorthStar is prepared to accept a
Superior Proposal, and only if, during such five-day period, if Frontier so
elects, NorthStar and its advisors shall have negotiated in good faith with
Frontier to make such adjustments in the terms and conditions of this Agreement
as would enable Frontier to proceed with the transactions contemplated herein on
such adjusted terms.
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(H) FRONTIER CONDITION PRECEDENT. By Frontier as a result of a Material
Adverse Change in NorthStar or NorthStar Bank as set forth in Section 6.2(F).
(I) NORTHSTAR CONDITION PRECEDENT. By NorthStar as a result of a
Material Adverse Change in Frontier or Frontier Bank as set forth in Section
6.3(E).
(J) FRONTIER AVERAGE CLOSING PRICE. By NorthStar, by written notice to
Frontier on the business day immediately following the Determination Date, in
the event that (i) the Frontier Average Closing Price is less than $22.81, and
(ii) the number obtained by dividing the Frontier Average Closing Price by
$28.51 is less than the number obtained by (x) dividing the Final Index Price
(as defined below) by the Initial Index Price (as defined below), and then (y)
multiplying the quotient so obtained by 0.90. The foregoing events in (i) and
(ii) are referred to as the "Adjustment Triggers." If Frontier declares or
effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchanges of shares or similar transaction between the Execution
Date and the Effective Date, the prices of the Frontier Common Stock shall be
appropriately adjusted for the purposes of applying this Section 7.1(J). If
NorthStar elects to exercise its termination right as a result of the Adjustment
Triggers, the provisions of Section 7.1(J)(ii) will apply.
(i) DEFINITIONS. For purposes of this Section 7.1(J), the
following terms have the meanings indicated below:
"Determination Date" means the third (3rd) trading day immediately
prior to the Effective Date.
"Determination Period" means the twenty (20) trading day period through
and including the third trading day immediately preceding the Effective
Date.
"Final Average Price" means, with respect to any company belonging to
the Index Group, its average Final Price during the Determination
Period.
"Final Index Price" means the sum of the Final Average Price for each
company comprising the Index Group multiplied by the appropriate
weight.
"Final Price" means, with respect to any company belonging to the Index
Group, the daily closing sales price of a share of common stock of such
company, as reported on the consolidated transaction reporting system
for the market or exchange on which such common stock is principally
traded.
"Index Group" means the companies listed on EXHIBIT H attached hereto.
In the event that the common stock of any such company ceases to be
publicly traded or a proposal to acquire any such company is announced
at any time during the period beginning on the Execution Date and
ending on the Determination Date, such company will be removed from the
Index Group, and the weights attributed to the remaining companies will
be adjusted proportionately for purposes of determining the Final Index
Price and the Initial Index Price. The companies and the weights
attributed to them are listed on EXHIBIT H.
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"Initial Index Price" means $24.01, which is the sum of each per share
closing price of the common stock of each company comprising the Index
Group multiplied by the applicable weighting, as such prices are
reported on the consolidated transactions reporting system for the
market or exchange on which such common stock is principally traded, on
September 2, 2005, which amount may be adjusted as described in above
in the definition of "Index Group."
(ii) FRONTIER'S RIGHT TO ADJUST EXCHANGE RATIO. If NorthStar
provides written notice to Frontier in accordance with Section 7.1(J),
then within one business day following Frontier's receipt of such
notice, Frontier may elect by written notice to NorthStar to increase
the Exchange Ratio to the lesser of (a) the amount obtained by dividing
$40 by the Frontier Average Closing Price, or (b) the amount obtained
by (x) dividing the Final Index Price by the Initial Index Price, (y)
multiplying the quotient so obtained by $45 and (z) dividing the
product so obtained by the Frontier Average Closing Price.
7.2 EFFECT OF TERMINATION.
(A) In the event of termination of this Agreement by either Frontier or
NorthStar as provided in Section 7.1, this Agreement shall forthwith become void
and have no effect except (1) Sections 5.6(B), 5.18, 7.1(C), 7.2 and 8.5
through 8.7 shall survive any termination of this Agreement, and (2) that,
notwithstanding anything to the contrary contained in this Agreement, no party
shall be relieved or released from any liabilities or damages arising out of its
willful breach of any provision of this Agreement.
(B) If either party terminates this Agreement pursuant to Section
7.1(E) or Section 7.1(F) by reason of the other party's breach of this
Agreement, the non-breaching party shall be entitled to a payment equal to
$500,000 (the "Termination Fee Amount") from the breaching party. The
Termination Fee Amount shall also be payable under the circumstances set forth
in Section 7.1(G) and Section 7.2(C) if the Board of Directors of NorthStar
fails to recommend approval of the Transaction for any reason and this Agreement
is terminated pursuant to Section 7.1(A), 7.1(B) or 7.1(F) (hereinafter
"Failure to Recommend Shareholder Approval"); PROVIDED, HOWEVER, that if
NorthStar terminates this Agreement pursuant to Section 7.1(G) or Section
7.2(C) applies or by reason of such Failure to Recommend Shareholder Approval,
then the Termination Fee Amount shall be increased to $1,000,000.
(C) In the event that an Acquisition Proposal with respect to NorthStar
shall have been made known to NorthStar and shall have been publicly announced
or otherwise become public, or shall have been made to the shareholders of
NorthStar, and thereafter (1) this Agreement is terminated by either Frontier or
NorthStar pursuant to Section 7.1(B) hereof and prior to such termination the
shareholders of NorthStar shall not have previously approved the Merger, and (2)
NorthStar enters into any Acquisition Agreement providing for any transaction
described in Section 5.18 on or before March 31, 2006 then upon the first
occurrence of an event contemplated by clause (2) of this Section 7.2(C)
NorthStar shall pay Frontier $1,000,000 (less any Termination Fee Amount
previously paid).
(D) NorthStar and Frontier agree that the agreements contained in
Sections 7.2(B) and 7.2(C) above are integral parts of the transactions
contemplated by this Agreement and constitute liquidated damages and not a
penalty.
35
ARTICLE VIII. OTHER MATTERS
8.1 SURVIVAL. Only those agreements and covenants in this Agreement 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 Mergers and shall not survive the
Effective Date. If the MergerS are abandoned and this Agreement is terminated,
the provisions of ARTICLE VII. shall apply and the agreements of the Parties in
Sections 8.6 and 8.7 shall survive such abandonment and termination.
8.2 AMENDMENT. Subject to compliance with applicable law, this Agreement may
be amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors, at any date before or after approval of the
matters presented in connection with the Corporate Merger by the shareholders of
NorthStar; PROVIDED, HOWEVER, that after any approval of the transactions
contemplated by this Agreement by NorthStar's shareholders, there may not be,
without further approval of such shareholders, any amendment of this Agreement
which reduces the amount or changes the form of the consideration to be
delivered to NorthStar shareholders hereunder other than as contemplated by this
Agreement. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
8.3 EXTENSION; WAIVER. At any time prior to the Effective Date, each of the
parties hereto, by action taken or authorized by its Board of Directors, may, to
the extent legally allowed, (A) extend the time for the performance of any of
the obligations or other acts of the other party hereto, (B) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered pursuant hereto and (C) waive compliance
with any of the agreements or conditions of the other party contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in a written instrument signed on behalf of
such party, but such extension or waiver or failure to insist on strict
compliance with an obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
8.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall become effective when one or more counterparts
have been signed by each of the Parties and delivered to the other Party, it
being understood that both Parties need not sign the same counterpart.
8.5 GOVERNING LAW. This Agreement shall be governed by, and interpreted in
accordance with, the laws of the State of Washington, except as federal law may
be applicable.
8.6 EXPENSES. Each Party will bear all expenses incurred by it in connection
with this Agreement and the transactions contemplated by this Agreement, except
printing expenses which shall be shared equally between NorthStar and Frontier.
8.7 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.
8.8 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.
36
If to Frontier or Frontier Bank to: FRONTIER FINANCIAL CORPORATION
000 XX Xxxxxxx Xxxx Xxx Xxxxxxx, XX
00000 Attn: Xxxxxxx X. Xxxxxxxx,
President/CEO
With a copy to: Xxxx X. Xxxxxxxx
Xxxxxx Xxxxxxxx L. L.P.
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
If to NorthStar or NorthStar Bank, to: NORTHSTAR FINANCIAL CORPORATION
0000 - 00xx Xxxxxx X.X.
Xxxxxxx, XX 00000
Attn: Xxxxx Sas, President/CEO
With a copy to: Xxxxxxx X. Xxxxx
Xxxxxx & Xxxx PC
Pier 70
0000 Xxxxxxx Xxx, Xxxxx 000
Xxxxxxx, XX 00000-0000
8.9 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.
(A) This Agreement (including the Exhibits and Schedules hereto)
constitute the entire agreement, and supersede all prior agreements and
understandings, both written and oral, among the Parties with respect to the
subject matter hereof.
(B) This Agreement shall be binding upon and inure solely to the
benefit of each Party hereto, and, other than the provisions of Section 5.16,
nothing in this Agreement, express or implied, is intended to or shall confer
upon any other person any right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement.
8.10 BENEFIT PLANS. Upon consummation of the Mergers, all employees of
NorthStar and its Subsidiaries shall be deemed to be at-will employees of
Frontier and its subsidiaries. From and after the Effective Date, employees of
NorthStar 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 similarly
situated employees of Frontier and its Subsidiaries. With the exception of stock
option plans, for the purpose of determining eligibility to participate in such
plans and the vesting of benefits under such plans (but not for the accrual of
benefits), Frontier shall give effect to years of service with NorthStar or
NorthStar's Subsidiaries, as the case may be, as if such service were with
Frontier or its Subsidiaries. Employees of NorthStar and its Subsidiaries will
be entitled to carry over unused vacation days and sick leave accrued as of the
Effective Date. Frontier shall use its best efforts to facilitate the rollover
of the 401(k) plan maintained by NorthStar into the 401(k) plan maintained by
Frontier Bank.
8.11 HEADINGS. The headings contained in this Agreement are for reference
purposes only and are not part of this Agreement.
37
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.
FRONTIER FINANCIAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxxxx
President and Chief Executive Officer
FRONTIER BANK
By: /s/ Xxxx Xxxxxxx
------------------------------------------
Xxxx Xxxxxxx
Chief Executive Officer
NORTHSTAR FINANCIAL CORPORATION
By: /s/ Xxxxx X. Sas
------------------------------------------
Xxxxx X. Sas
President and Chief Executive Officer
NORTHSTAR BANK
By: /s/ Xxxxx X. Sas
------------------------------------------
Xxxxx X. Sas
President and Chief Executive Officer
38
EXHIBITS
--------
Exhibit A Voting Agreement
Exhibit B Director's Agreement
Exhibit C Affiliate Agreement
Exhibit D Legal Opinion of Xxxxxx & Xxxx PC
Exhibit E Non-Competition/Non-Solicitation Agreement of Xxxxx Sas
Exhibit F Non-Competition/Non-Solicitation Agreement of Xxxxx Xxxx
Exhibit G Legal Opinion of Xxxxxx Xxxxxxxx L.L.P.
Exhibit H Index Group
SCHEDULES
---------
COMPANY DISCLOSURES
-------------------
Schedule 2.6 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
-i-
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, including a list of
any assets pledged as security for such
Derivative Contracts
Schedule 4.1(GG)(1) Employment Contracts Requiring Payment In
Connection with Termination
Schedule 4.1(GG)(2) Leases with Aggregate Annual Rent Exceeding
$10,000
Schedule 4.1(GG)(3) Material Contracts with Affiliates
Schedule 5.11 No Rights Triggered
-ii-
FRONTIER DISCLOSURES
--------------------
Schedule 4.2(C) Shares
Schedule 4.2(D) Subsidiaries
Schedule 4.2(G) No Defaults
Schedule 4.2(H) Financial Reports
Schedule 4.2(I) No Events Causing Material Adverse Effect
Schedule 4.2(J) Litigation, Regulatory Action
Schedule 4.2(K) Compliance With Laws
Schedule 4.2(O) Derivative Contracts, including a list of
any assets pledged as security for such
Derivative Contracts
-iii-
