As filed with the Securities and Exchange Commission on February 9, 1999.
Securities Act Registration No. 333 - ___________________
Securities and Exchange Commission
Washington, D.C. 20549
Form S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
NEWCO ALASKA, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 6022 92-0166346
- -------- ---- ----------
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or organization) Classification Code Number)
</TABLE>
331 Dock St., P.O. Box 7920
Ketchikan, Alaska 99901 907-228-4474
(Address and telephone number of registrant's principal executive offices)
William G. Moran, Jr., President and Chief Executive Officer
331 Dock St., P.O. Box 7920
Ketchikan, Alaska 99901 907-228-4474
(Name, address and telephone number of agent for service)
Copies of all communications to:
Gordon E. Crim, Esq.
Foster Pepper & Shefelman PLLC
101 S.W. Main St., 15th Floor
Portland, Oregon 97204
Telephone: 503-221-1512
Facsimile: 800-600-1964
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after the Registration Statement becomes
effective
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: |_|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_| __________
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_| __________
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------
Title of each Proposed maximum Proposed maximum
Class of securities Amount to be offering price per aggregate offering Amount of
to be registered registered unit (1) price registration fee
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stock 190,000 $ 111.35 $ 21,156,500 $ 5,881.51
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(1) There is no market for First Bancorp common stock. Pursuant to Rule
457(f)(2) the maximum offering price per share is the book value of First
Bancorp common stock as of December 31, 1998.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
The registrant is currently in organization, and therefore has not yet
issued shares of capital stock, and has no operations or assets. Accordingly, no
financial information for the registrant is included in this registration
statement. All disclosures for the company to be acquired (First Bancorp) are
provided in accordance with General Instruction D.4(c) to Form S-4, disclosures
for transitional small business issuers.
<PAGE>
FIRST BANCORP, INC.
331 Dock Street
P.O. Box 7290
Ketchikan, Alaska 99901
Dear Stockholder:
Seventy-five years ago this coming September, the First National Bank of
Ketchikan received National Bank Charter Number 12578 and opened its doors for
business in the same location that currently houses the Bank's main office. In
the years following, the Company converted its national charter to a state
charter, dropped out of the Federal Reserve System and changed its name to First
Bank in the process. Then, some time later, First Bank reorganized its financial
structure into a one-bank holding company, with the parent company adopting the
name First Bancorp, Inc. As your company enters the final year of the
millennium, the Board of Directors is proposing one more reorganization.
As part of a strategic plan to enhance the competitive position of First
Bancorp, Inc. and improve the long-term return to shareholders, the Board of
Directors has decided to implement a plan of reorganization that will permit the
Company to elect to be taxed under the provisions of Subchapter S of the
Internal Revenue Code. As more fully explained in the accompanying proxy
materials, this reorganization will be accomplished by a merger of First
Bancorp, Inc. into Newco Alaska, Inc. Newco Alaska is a newly formed corporation
organized at the direction of the Board of Directors solely to accomplish the
reorganization. In the merger, newly issued shares of Newco Alaska common stock
will be issued in exchange for qualifying outstanding shares of First Bancorp,
Inc. common stock. Some stockholders will receive cash for their shares, rather
than shares in Newco Alaska. As a result, the number of individual shareholders
will decline from around two hundred to approximately fifty. After the merger,
Newco will change its name to First Bancorp, Inc.
Your Board of Directors unanimously recommends that you vote to approve the
proposed reorganization. This is a complex transaction that is fully described
in the accompanying proxy materials. As a stockholder, you are encouraged to
study this material closely.
You are cordially invited to attend the Annual Meeting of the Shareholders
of First Bancorp, Inc. The meeting will be held at our main banking office at
331 Dock Street, Ketchikan, Alaska, on Tuesday, March 30, 1999 at 11:30 a.m. At
the meeting, stockholders will consider and vote on the election of directors
and the proposed reorganization. The Notice of Annual Meeting of Stockholders,
Prospectus /Proxy Statement and form of Proxy are enclosed.
We hope that you will be able to attend the meeting. Whether or not you
plan to attend, please promptly sign and return the proxy form in the enclosed
postage paid envelope. This will assure that your shares are represented at the
meeting. Even though you execute this proxy, you may revoke it at any time
before it is voted. If you attend the meeting, you will be able to vote in
person, if you wish to do so.
The directors, officers, and employees of First Bancorp and First Bank look
forward to seeing you at the Annual Meeting.
Sincerely,
William G. Moran, Jr., President
<PAGE>
FIRST BANCORP, INC.
331 Dock Street
P.O. Box 7290
Ketchikan, Alaska 99901
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, MARCH 30, 1999
The Annual Meeting of Stockholders of First Bancorp will be
held at First Bank's head office at 331 Dock St., Ketchikan,
Alaska, at 11:30 a.m., March 30, 1999. At the meeting we will
ask you to:
1. Elect four (4) directors;
2. Vote on a proposed reorganization that will allow the
corporation to become an "S-corporation" for income tax
purposes; and
3. To transact such other business as may properly come
before the Meeting.
If you were a stockholder of record as of the close of
business on _____________, 1999, you may vote at the Annual
Meeting.
We cordially invite all stockholders to attend the Meeting
personally. Whether or not you are able to attend, please be
sure to sign, date and promptly return your Proxy in the enclosed
pre-paid envelope.
You may revoke your proxy at any time before the vote is
taken at the Annual Meeting. You may revoke your proxy by
submitting a proxy bearing a later date, or by notifying the
secretary of First Bancorp (personally in writing or by mail) of
your wish to revoke your proxy. You may also revoke your proxy
by oral request if you are present at the Annual Meeting.
By order of the Board of Directors
William G. Moran, Jr., President
___________, 1999
Ketchikan, Alaska
<PAGE>
PROXY STATEMENT OF PROSPECTUS OF
FIRST BANCORP, INC. NEWCO ALASKA, INC.
331 Dock Street 331 Dock Street
P.O. Box 7290 P.O. Box 7290
Ketchikan, Alaska 99901 Ketchikan, Alaska 99901
907-225-6101 907-225-6101
The Annual Meeting
Our Annual Meeting will be held on Tuesday, March 30, 1999, at 11:30 a.m.
at the main office of First Bank located at 331 Dock Street, Ketchikan, Alaska.
The Board of Directors of First Bancorp is soliciting your proxy to vote
your shares at the 1999 Annual Meeting of Stockholders. We sent you this Proxy
Statement to give you important information about the business that will take
place at the Annual Meeting. We are providing this information so that you will
be fully informed when you vote your shares. You do not need to attend the
meeting to vote your shares. Instead, you may simply complete, sign and return
the enclosed proxy. For more information on voting and the use of proxies at the
Annual Meeting, see "Voting at the Meeting."
Business of the Annual Meeting
The stockholders will consider and vote on the following matters:
1. Election of Directors. Stockholders will vote for four directors. You
can find more information about the nominees for directors below under
"Management."
2. Reorganization to form an "S" corporation. We are asking for
stockholders' approval of a plan of reorganization that will permit our company
to be treated as a "Subchapter S" corporation for income tax purposes. In the
reorganization, First Bancorp will merge with a newly organized corporation
called Newco Alaska, Inc. (referred to in this document as "NEWCO"). NEWCO will
acquire all of the outstanding shares of First Bancorp common stock for cash and
newly issued shares of NEWCO. This reorganization is described in detail below
under "Reorganization to Form a Subchapter S Corporation."
Investing in shares of First Bancorp and NEWCO common stock involves
certain risks. You should carefully read the information under "Risk Factors" on
page 4 before sending in your proxy or voting your shares.
You should only rely on the information in this document or in other
documents that we refer you to concerning the Company or the proposed
Reorganization. We have not authorized anyone to provide you with information
that is different.
The date of this Proxy Statement is __________, 1999.
i
<PAGE>
The securities offered hereby have not been approved or disapproved by the
Securities and Exchange Commission or any state securities commission nor has
the Securities and Exchange Commission or any state securities commission passed
upon the accuracy or adequacy of this Proxy Statement. Any representation to the
contrary is a criminal offense.
Other Information is Available
NEWCO has filed a registration statement on Form S-4 (Commission File No.
333 - ______) with the Securities and Exchange Commission (the "SEC") covering
the NEWCO shares to be issued in the Reorganization. This Proxy Statement serves
as the prospectus portion of the registration statement. Some of the information
filed as part of the registration statement has not been included in this Proxy
Statement, as permitted by SEC rules. You can inspect and copy the registration
statement at Public Reference Section of the SEC at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20459, or at the regional offices of the
Commission located at 7 World Trade Center, Suite 1300, New York, New York 10048
and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. You can also obtain a copy of the registration statement online
from the internet website maintained by the SEC at http://www.sec.gov.
ii
<PAGE>
TABLE OF CONTENTS
SUMMARY...........................................................1
Voting at the Meeting.......................................1
Business of the Annual Meeting..............................1
Dissenters'Appraisal Rights.................................2
Tax Consequences............................................3
Regulatory Approvals........................................3
Voting by Directors and Executive Officers..................3
MARKET FOR THE COMMON STOCK.......................................4
RISK FACTORS......................................................5
VOTING AT THE ANNUAL MEETING.....................................10
BUSINESS OF THE MEETING..........................................12
Election of Directors............................................12
Information about the Directors, Nominees and Executive
Officers...................................................12
How We Compensate our Directors............................13
How We Compensate our Executive Officers...................14
Does First Bancorp or First Bank do Business with their
Directors and Officers? ...................................14
How much Stock do the Directors and Executive
Officers Hold? ............................................15
Reorganization to Form a Subchapter S Corporation................16
What is a Subchapter S Corporation?........................16
Who are the Parties Involved in the Transaction?...........16
How will the Reorganization be Accomplished?...............17
Why Form a Subchapter S Corporation?.......................17
How Much Will the Reorganization Cost?.....................18
Is the Cash Price Fair?....................................19
The Board of Directors Recommends a Vote For the
Reorganization.............................................19
Conditions to the Reorganization...........................19
Stockholder Approval is Required...........................20
State Regulatory Approval..................................20
Federal Regulatory Approval................................20
You May Dissent from the Plan..............................20
How do I Exchange My Shares of First Bank Stock for
Cash or Shares of NEWCO? ..................................20
What if I Don't Want To Cash In My Shares?.................21
What if I want to Sell My Shares, But I Own More
750 Shares? ...............................................21
Tax Consequences of the Reorganization.....................21
Accounting Treatment of the Reorganization.................22
Restrictions on Resale.....................................22
i
<PAGE>
Agenda Item 3 Other Business.................................. 22
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA.................23
INFORMATION ABOUT NEWCO, INC.....................................25
General....................................................25
Operations and Employees...................................25
Dividends..................................................25
INFORMATION ABOUT FIRST BANCORP, INC.............................25
General....................................................25
Industry...................................................26
Competition................................................26
Properties.................................................27
Employees..................................................27
Legal Proceedings..........................................27
Year 2000 Readiness........................................28
Capital Adequacy...........................................29
Lending and Credit Management..............................29
Loan Portfolio.............................................30
Investment Portfolio.......................................35
Deposit Liabilities........................................36
Supervision And Regulation.................................37
DESCRIPTION OF CAPITAL STOCK.....................................39
CERTAIN LEGAL MATTERS............................................41
EXPERTS..........................................................41
Appendix A......................................................A-1
Appendix B......................................................B-1
Appendix C......................................................C-1
Index To First Bancorp, Inc. Consolidated Financial Statements..F-1
ii
<PAGE>
SUMMARY
Voting at the Meeting
If you were a stockholder of First Bancorp as of the close of business on
_________, 1999 (the "Record Date"), you are entitled to notice of, and to vote
at, the Annual Meeting
You do not have to attend the Annual Meeting. You may vote your shares by
proxy if you wish. You may mark the enclosed proxy card to indicate your vote on
the matters presented at the Annual Meeting, and the individuals whose names
appear on the proxy card will vote your shares as you instruct.
If you submit a proxy with no instructions, the named proxy holders will
vote your shares in favor of the nominees for directors and in favor of the
proposed Reorganization. In addition, the named proxy holders will vote in their
discretion on any other business at the Annual Meeting.
You may revoke your proxy at any time before the vote is taken at the
Annual Meeting. You may revoke your proxy by submitting a proxy bearing a later
date. You can also revoke your proxy by notifying the secretary of First Bancorp
(personally in writing or by mail) of your wish to revoke your proxy. You may
also revoke your proxy by oral request if you are present at the Annual Meeting.
You may still attend the Annual Meeting even if you have submitted a proxy.
Business of the Annual Meeting
1. ELECTION OF DIRECTORS
At the Annual Meeting, you will be asked to vote on the election of four
(4) directors. Directors are elected by a plurality of votes. You may vote each
share you own for each of the open director positionS. You may not, however,
accumulate your votes in the election of directors.
The Board of Directors is nominating William G. Moran, Sr., Joseph M. Moran
and Ernest Anderes to be elected for three-year terms. These nominees are
currently serving as directors. In addition, the Board is nominating Kay Sims to
fill a currently existing vacancy on the Board and to serve a term of two years.
The Board recommends that you vote FOR all of the nominees.
2. THE REORGANIZATION
Our company has adopted a plan of reorganization that would allow us to be
treated as an S-corporation for income tax purposes. You can find a copy of the
plan in Appendix A to this Proxy Statement. The plan is formally called the
"Agreement and Plan of Reorganization." We refer to the plan in this document as
the "Agreement," and the whole transaction as the "Reorganization."
In the Reorganization, First Bancorp will merge into a newly organized
corporation called Newco Alaska, Inc. ("NEWCO"). After the reorganization is
completed, NEWCO will change its name to "First Bancorp, Inc."
1
<PAGE>
NEWCO has not completed its corporate organization, and therefore has no
assets, no operations, and no stockholders. Prior to completion of the
Reorganization, NEWCO will complete its organization and issue 100 shares of its
common stock to William G. Moran, Jr., First Bancorp's President and Chief
Executive Officer, in exchange for 100 shares of First Bancorp common stock that
he currently holds. NEWCO will then file the necessary election to be treated as
an S-corporation. The election will be effective for the fiscal year commencing
on January 1, 2000.
If you are a qualifying stockholder, NEWCO will issue you one share of its
common stock for each share that you own as of the effective date of the
Reorganization. To be a qualifying stockholder, you must be a natural person and
a citizen or resident of the United States, or an entity that is eligible to be
a stockholder of an S-corporation as provided in Subchapter S of the Internal
Revenue Code. In addition, you must hold at least 750 shares of First Bancorp
common stock on the date the Reorganization becomes effective. Under Alaska law,
directors of a state bank are required to own at least $1,000 par value of stock
of the bank or its parent holding company. Some directors hold no more than this
amount. To preserve the continuity of management and comply with applicable law,
we are not requiring incumbent directors to own or purchase additional shares.
We will exchange their stock on the same terms as all other stockholders, with
the exception that the directors need not hold the minimum number of shares to
receive NEWCO shares in the Reorganization.
If you are not a qualifying stockholder of First Bancorp, we will pay you $
175.00 per share in cash for each share of First Bancorp common stock that you
hold as of the date the Reorganization becomes effective. The Board of Directors
determined the cash price on the basis of an analysis by Alex Sheshunoff & Co.
Investment Banking, an independent financial advisor that conducted an
independent appraisal of the estimated fair value of the common stock of First
Bancorp. See "Reorganization to Form an S Corporation - Is the Cash Price Fair?"
A summary of Sheshunoff's report and a copy of its opinion are included in this
Proxy Statement as Appendix B.
We have provided a detailed explanation of the terms and conditions of the
Reorganization below under "Reorganization to Form a Subchapter S Corporation."
Please read the explanation carefully, and also read the Agreement in Appendix
A.
The holders of at least a majority of the outstanding shares of First
Bancorp must vote in favor of the Reorganization for it to be approved. The
Alaska Department of Commerce and Economic Development, Division of Banking,
Securities and Corporations (the "Alaska Division of Banking") and the Board of
Governors of the Federal Reserve System must also approve the Reorganization.
The Board of Directors recommends a vote FOR the Reorganization.
Dissenters' Appraisal Rights
You have the right, under Delaware law, to dissent from the proposed
Reorganization and to receive the fair value of your First Bancorp shares in
cash, if you are not entitled to receive NEWCO Stock in the reorganization and
if you follow the procedures required by Delaware law. The fair value of your
stock determined through the statutory appraisal process may be more or less
than the $175.00 cash price we are paying.
To properly exercise your dissenters' rights under Delaware law, you must
give written notice to the President of First Bancorp before the vote is taken
at the Annual Meeting of your intent to demand appraisal of your shares, and you
must not vote in favor of the proposal.
If the stockholders approve the Reorganization, and you have properly
perfected your dissenters' appraisal rights, we will send you a notice within 10
days following the effectiveness of the Reorganization. You may, within 20 days
following the date our notice is mailed to you, demand in writing the appraisal
of your shares.
2
<PAGE>
Any time within 60 days following the date the Reorganization becomes
effective, you may withdraw your demand for an appraisal and accept the
consideration proposed in the Agreement.
We have attached a copy of the applicable Delaware statute as Appendix C to
this Proxy Statement.
Tax Consequences
We expect the proposed transaction to qualify as a tax-free reorganization
within the meaning of the Internal Revenue Code of 1986, as amended. If you
receive shares of NEWCO common stock in exchange for your shares of First
Bancorp common stock, you would recognize no gain or loss in the transaction,
for federal income tax purposes, and your basis and holding period of NEWCO
shares would be the same as the basis and holding period of First Bancorp shares
surrendered in the exchange.
If you do not receive NEWCO stock, but instead receive cash for your First
Bancorp stock, you will recognize capital gain or loss in an amount equal to the
difference between your cost basis in the stock and the cash you receive.
Regulatory Approvals
The proposed Reorganization is subject to review and approval by the Board
of Governors of the Federal Reserve System and the Alaska Division of Banking.
We will apply to these regulatory authorities for such approval and would
anticipate receiving approval in due course, although we may encounter delays or
other unfavorable action.
Voting by Directors and Executive Officers
As of the Record Date, directors and executive officers of First Bancorp
beneficially owned 63,049 shares, of which all are entitled to vote. Those
shares constitute 30.3 percent of the total shares outstanding and entitled to
be voted at the Annual Meeting. We expect all directors, executive officers and
principal stockholders to vote in favor of the Reorganization, although there
are no contractual commitments or obligations in that regard.
3
<PAGE>
MARKET FOR THE COMMON STOCK
No registered broker/dealer makes a market in First Bancorp common stock
and the stock is not listed on any stock exchange. Trading is infrequent and
those transactions that have taken place in First Bancorp common stock cannot be
characterized as an established public market. Generally First Bancorp common
stock is traded by individuals on a personal basis, and prices reported reflect
only the transactions known to management. Due to the limited information
available, the following data may not accurately reflect the actual market value
of First Bancorp common stock.
<TABLE>
<CAPTION>
Number of Shares Common Stock Prices Cash Dividends
Period Reported as Traded High Low Declared per Share
------ ------------------ ---- --- ------------------
<S> <C> <C> <C> <C> <C>
Year Ended 1998 822 $115 $115 $5.00
Year Ended 1997 2,496 $100 $ 91 $5.00
Year Ended 1996 944 $ 95 $ 90 $5.00
</TABLE>
As of December 31, 1998, the common stock was held of record by
approximately 210 stockholders, a number that does not include beneficial owners
who hold shares in "street name."
State and federal banking laws and regulations place restrictions on the
payment of dividends by a bank to its stockholders. See "Supervision and
Regulation - Dividends." Our dividend policy is to review the bank's financial
performance, capital adequacy, regulatory compliance and cash resources on a
quarterly basis, and, if such review is favorable, to declare and pay a cash
dividend to stockholders. Although we expect to continue to pay cash dividends,
future dividends are subject to these limitations and to the discretion of the
Board of Directors, and could be reduced or eliminated. We intend to follow
substantially similar dividend policies following the Reorganization.
4
<PAGE>
RISK FACTORS
An investment in First Bancorp or NEWCO common stock can involve certain
risks. You should carefully consider the following risk factors as well as the
other information contained in this Proxy Statement.
Exposure to Adverse Change in Local Economy
First Bancorp conducts the majority of its business in the communities of
southeast Alaska from Ketchikan to Juneau. As a result, adverse economic
developments in southeast Alaska can adversely affect the company's financial
condition. The potential effects of an economic downturn on a commercial bank
are multi-faceted. The primary business of a commercial bank is to take deposits
and to lend or invest the proceeds of those deposits. The level of economic
activity affects the amount of money in circulation and the corresponding
ability of a bank to attract deposits. At the same time, a poor local economy
affects the ability to make and collect loans. Both factors affect the financial
condition of a bank including its ability to grow and to earn an acceptable
return for its shareholders.
The economy of southeast Alaska is in a period of transition from an
economy anchored to renewable resources and capital-intensive, value-added
manufacturing to an economy reliant upon seasonal service industries and
government sponsored projects. This transition may result in a decrease in per
capita income and a corresponding decrease in living standards for a significant
number of the people living in southeast Alaska. This decrease in income and
economic activity could have a material adverse effect on our business.
Credit Risk
Credit risk is the risk of losing principal and interest on a loan or
investment as a result of a customer's failure to repay his or her obligations.
At First Bancorp, credit risk is primarily related to the loan portfolio,
although various components of the investment portfolio also carry a measure of
default risk. As a result, the level of credit risk in the balance sheet is
dependent upon the relative percentage of loans as a component of the balance
sheet, the underlying economic health of the bank's market area, and the quality
of lending decisions.
First Bank is a full service commercial bank. In this regard, it delivers a
full menu of loan products to its market place. These loans include commercial
and residential real estate loans, including home equity loans and construction
loans. The Bank extends personal and business lines of credit, both secured and
unsecured. It conducts multi-purpose personal and business installment lending,
and it offers credit cards. Loans are made on various terms including fixed and
variable rates, and single and multiple payments. In addition, the bank
participates in a variety of government sponsored lending programs including
loans guaranteed by the U. S. Small Business Administration, the Bureau of
Indian Affairs, the Alaska Industrial Development and Export Agency, and the
Alaska Housing Finance Corporation.
As of December 31, 1998, First Bancorp had total loans of $123,122,057 and
total assets of $254,794,872. Total loans represented 48% of total assets. At
the same time, the reserve for loan losses was $1,421,352 or 1.15% of total
loans. Total delinquent loans were $966,852 or 0.79% of total loans. Loans
delinquent over 90 days were $265,561 or 0.22% of total loans. The Bank had no
loans in non-accrual status. For all of 1998, total loans charged off were
$140,385 while recoveries on previously charged off loans amounted to $16,225.
5
<PAGE>
Interest Rate Risk
Our earnings come primarily from net interest income, which is interest
income and fees earned on loans, and investment income less interest expense
paid on deposits and other borrowings. Interest rates are highly sensitive to
many factors that are beyond our control, including general economic conditions
and the policies of various governmental and regulatory authorities.
In general, interest rate risk relates to the exposure of the net interest
margin and stockholders' equity to changes in interest rates and shifts in the
shape of the yield curve. It is a function of the relative imbalance or mismatch
between rate sensitive assets and rate sensitive liabilities. Further
complicating matters, the interest rates that determine the yield on earning
assets and the interest rates of liabilities funding these assets do not always
respond to changes in the market rates of interest simultaneously. To the extent
that there are timing differences between changes in these interest rates, both
net interest margin and the value of stockholders' equity are affected.
Our policy with regard to interest rate risk is to organize the components
of the balance sheet in such fashion as to maintain net interest margin and
stockholders' equity within the limits of volatility established from time to
time by the Board of Directors. See "Information about First Bancorp."
Concentration of Ownership of Common Stock
The directors and executive officers of First Bancorp currently
beneficially own 63,049 shares, or 30.3% of First Bancorp's outstanding shares.
The First Bank Employee Stock Ownership Plan owns 7,572 shares or 3.6% of First
Bancorp's outstanding shares. We expect all of these shares will be voted in
favor of the Reorganization. At the present time approximately 145 stockholders
own fewer than 750 shares each, and in aggregate approximately 20,000 shares or
9.6% of First Bancorp common stock. We expect that these stockholders will
receive cash for their shares as a result of the Reorganization.
Taxation as an S Corporation
NEWCO is being organized from the outset as an S corporation. Following the
Reorganization, it will continue to be an S corporation. Because this
Reorganization will take effect in the middle of a tax year, the first year that
Subchapter S rules will apply to the stockholders of NEWCO (First Bancorp, Inc.)
will be for tax years beginning after December 31, 1999.
Subchapter S is a flow-through structure for federal tax purposes and is
similar to a partnership. Like a partnership, the S corporation stockholders'
pro rata share of income is taxed. Flow-through taxation is imposed upon S
corporation shareholders even if the S corporation does not distribute its
earnings to shareholders. S corporations pay no federal or (in many states)
state corporate income taxes. Instead, both the income of an S corporation and
deductions and credits flow through to shareholders who pay the required federal
and state taxes as part of their personal tax returns. By eliminating federal
taxes at the corporate level, S corporations avoid the double taxation that
taxes both corporate profits and dividends to shareholders. In addition, taxable
income retained by an S corporation increases the S corporation stockholders'
basis in their shares by their pro-rata share of retained earnings.
If you become a stockholder of NEWCO, you will report your share of NEWCO's
income on your personal income tax return, even if NEWCO does not pay you a
dividend. You may therefore owe income taxes on funds you do not actually
receive.
6
<PAGE>
Competition
First Bancorp is a one-bank holding company operating a traditional
commercial bank in southeast Alaska. In this regard, the company's subsidiary
bank competes with a full assortment of modern financial institutions from
commercial banks and thrifts to credit unions, brokerage outfits and insurance
companies.
At the present time, the competition is fairly stable. Our primary banking
competition is the National Bank of Alaska, the First National Bank of
Anchorage, and Key Bank. Bank of America has recently announced plans to leave
the market area. National Bank of Alaska, First National Bank of Anchorage and
Key Bank are three of the best commercial banks in the country. They are very
strong competitors that price their products rationally and evaluate risk return
relationships professionally. These organizations are all significantly larger
than First Bancorp. They have extensive operations in other parts of the state,
and Key Bank has a strong national presence. These competitors can conduct
wide-ranging advertising campaigns and allocate assets to much broader
geographic regions. By virtue of their greater capitalization, these banks also
have substantially higher lending limits. These organizations are also
financially capable of offering a variety of products from trust services to
international banking that First Bank is not prepared to offer.
Alaska Federal Savings and Loan is a savings bank with branches in Juneau,
Sitka, Wrangell and Ketchikan. It offers many of the same products that First
Bank offers. There are also several credit unions, finance companies, and
mortgage companies operating throughout southeast Alaska that have product lines
that overlap those of First Bancorp. Although we have been able to compete
effectively in our market area, the changing nature of the banking industry may
increase competition and adversely affect our profits. See "Information about
First Bancorp- Business."
Dependence on Key Personnel
The success of First Bancorp is dependent on our ability to attract and
retain high quality management. At the present time, all senior officers of the
corporation have been with the company for more than ten years. The company does
not have employment contracts with any of its senior management. The company
maintains key man life insurance on William G. Moran, Jr., President, and
Michael Youngblood, Vice President. Mr. Youngblood manages the Company's data
processing systems.
Lack of Market for the Common Stock
There is no public market for First Bancorp common stock or for NEWCO
common stock. The Company does not expect a public market to develop.
Historically, relatively few shares of the Company's stock have changed hands on
an annual basis, and it is expected that this situation will continue for the
foreseeable future. The effect of the proposed reorganization will be to
concentrate ownership in fewer individuals. This will further restrict the
market for shares of common stock. An investor in the shares of First Bancorp
should expect that the market for shares in this Company will remain illiquid.
Investors in NEWCO should expect to hold their shares for an indefinite period
of time. See "Market for the Common Stock."
Restrictions on Transfer of Common Stock
The purpose of the proposed reorganization is to create a company that
qualifies for treatment as an S corporation under the Internal Revenue Service
Code. In general, S corporations can have only one class of stock, shareholders
can only be individuals, certain trusts, and employee stock ownership programs
and the number of shareholders cannot exceed 75.
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NEWCO's certificate of incorporation includes a provision that restricts
the sale or transfer of shares if, after such sale or transfer, NEWCO would be
disqualified for treatment as an S corporation. As a stockholder of NEWCO, you
may not be able to easily sell or transfer your shares. With a small number of
stockholders, the market for common stock will be limited. See "Description of
Capital Stock."
Dependence on Subsidiary Operations
As a one-bank holding company, NEWCO (First Bancorp) is dependent upon its
wholly owned bank subsidiary for revenues to pay operating expenses and to pay
dividends to stockholders. In recent years, this subsidiary, First Bank, has
been profitable and has provided a consistent stream of dividends to the holding
company. The primary subsidiary, First Bank is an Alaska state chartered bank.
First Bank is subject to a variety of state and federal banking regulations that
could limit the Company's ability to pay dividends if certain adverse economic
or financial conditions came about. These limitations can apply whether the
Company is qualified as a C corporation or as an S corporation for federal tax
purposes.
Regulatory Risk
Bank holding companies and their subsidiary banks are subject to extensive
regulation. These regulations are generally intended to protect depositors of
banks without regard to the company's stockholders. First Bancorp is a one-bank
holding company. As such, it is subject to the rules, regulations and
supervision of the Board of Governors of the Federal Reserve. The Company's
primary subsidiary, First Bank, is a state chartered, FDIC insured commercial
bank. As such, it is regulated by the banking laws and regulations of the State
of Alaska and the laws and regulations of the Federal Deposit Insurance
Corporation.
Regulatory risk can be broken down in to two basic components. First, an
organization like a commercial bank can find itself on the wrong side of a law
or regulation. While this can be either intentional or unintentional, the
potential legal sanctions can be expensive and adversely affect the interests of
individual stockholders. Second, regulatory restrictions can limit an
organization's ability to compete in the market place. To the extent these
restrictions limit a company's ability to compete, the stockholders may suffer.
See "Information about First Bancorp - Supervision and Regulation."
Anti-takeover Provisions
First Bancorp's certificate of incorporation authorizes the Board of
directors to issue additional shares of authorized but unissued shares of common
stock, as well as options or other rights to acquire shares of stock. This
authority gives the Board of Directors the ability to raise capital and provides
flexibility in financing corporate transactions. The issuance of additional
securities could dilute the ownership interest of existing stockholders. The
existence of stock options or the issuance of additional stock could also
increase the cost of acquiring control of the company, and could be deemed to be
an anti-takeover provision. NEWCO's certificate of incorporation has similar
provisions.
The certificates of incorporation and bylaws of each company, First Bancorp
and NEWCO, provide for a staggered board of directors. Approximately one-third
of the director positions are filled each year. In addition, the removal of a
director requires a super majority vote of either the shareholders or the
current directors. These provisions make it difficult for a dissident
stockholder to remove the entire board of directors at one time, and may have
the effect of discouraging potential acquirers. See "Description of Capital
Stock."
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Year 2000
The operations of a financial institution are substantially dependent on
the reliable performance of computer systems and software. It is now widely
recognized that the Year 2000 may pose significant problems if date-sensitive
computer equipment and software fail to properly recognize dates after December
31, 1999. Our company has undertaken a comprehensive assessment of its exposure
to risks of its computer systems to the so-called "Y2K" bug. In addition, we
have, or are in the process, of reviewing the readiness of third-party vendors
and significant customers for the Year 2000 to anticipate and avoid significant
disruptions in our business. While we believe we are well on track to confirming
that our systems will continue to perform in the Year 2000 and beyond, we cannot
be sure that unanticipated problems will not arise. In addition, as Y2K has been
well publicized, certain bank customers may seek to withdraw significant amounts
of funds held on deposit, creating pressure on the bank's liquidity position. We
do not expect widespread withdrawals to occur, but the need to maintain adequate
liquidity could have an adverse effect on our ability to invest in
interest-earning assets at that time, which could adversely affect our earnings
in the short term. See "Information about First Bancorp - Year 2000 Readiness."
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VOTING AT THE ANNUAL MEETINGSPECIAL MEETING OF SBHC SHAREHOLDERS
Who May Vote
If you were a stockholder of First Bancorp as of the close of business on
_________, 1999 (the "Record Date"), you are entitled to notice of, and to vote
at, the Annual Meeting
Voting by Proxy.
You do not have to attend the Annual Meeting. You may vote your shares by
proxy if you wish. You may mark the enclosed proxy card to indicate your vote on
the matters presented at the Annual Meeting, and the individuals whose names
appear on the proxy card will vote your shares as you instruct. If you submit a
proxy with no instructions, the named proxy holders will vote your shares voted
in favor of the nominees for directors and in favor of the proposed
Reorganization. In addition, the named proxy holders will vote in their
discretion on such other matters that may be considered at the Annual Meeting.
The Board of Directors has named Dorothy Benson and Kay Gichard as the proxy
holders. Their names appear on the Proxy form accompanying this Proxy Statement.
You may name another person to act as your proxy if you wish, but it is not
necessary to do so. Your shares will be voted as you instruct on the Proxy.
Revoking a Proxy
You may revoke your proxy at any time before the vote is taken at the
Annual Meeting. You may revoke your proxy by submitting a proxy bearing a later
date or by notifying the secretary of First Bancorp (personally in writing or by
mail) of your wish to revoke your proxy. You may also revoke your proxy by oral
request if you are present at the Annual Meeting.
You may still attend the Annual Meeting even if you have submitted a proxy.
You should be aware that simply attending the Annual Meeting will not, of
itself, revoke a proxy.
Please complete, date, and sign the accompanying proxy and return it
promptly to us in the enclosed, postage-paid envelope, even if you plan to
attend the Annual Meeting.
Number of Shares That May Vote
The authorized capital stock of First Bancorp consists of one million
shares of common stock. As of _________, 1999, the Record Date, there were
208,275 shares of Common Stock issued and outstanding and entitled to vote at
the Annual Meeting.
How We Determine a Quorum
Stockholders holding at least a majority of the outstanding shares of
common stock must either attend the Annual Meeting or submit proxies to have a
quorum. If you come to the meeting or submit a proxy, but you abstain from
voting on a given matter, we will still count your shares as present for
determining a quorum.
How We Count Votes
The named proxies will vote your shares as you instruct on your proxy. We
will not count abstentions or broker non-votes for or against a matter submitted
to a vote of stockholders. Each share is entitled to one vote.
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A broker non-vote occurs when a broker or other nominee holder, such as a
bank, submits a proxy representing shares that another person actually owns, and
that person has not given voting instructions to the broker or other nominee. On
some matters, such as the election of directors, a broker or other nominee can
vote those shares without instructions from the beneficial owner. On other
matters, such as the proposed reorganization, a broker may only vote those
shares if the beneficial owner gives the broker voting instructions. We will
count broker non-votes as present for establishing a quorum.
Counting Votes in the Election of Directors
Directors are elected by a plurality of votes, which means that the
nominees that receive the most votes will be elected, regardless of how many
votes each nominee gets. You may not accumulate your votes in electing
directors, but rather, you may vote the total number of shares that you own for
each open director positions.
Counting Votes for the Reorganization
To approve the Reorganization, stockholders holding at least a majority of
the outstanding shares of common stock must vote in favor of the proposal.
Therefore, we will count abstentions and broker non-votes as votes against the
proposal.
What if I Do Not Mark My Proxy?
If you submit a signed proxy without giving voting instructions, the named
proxies will vote your shares in their discretion. Those individuals named on
the enclosed proxy form intend to vote for the Board of Directors' nominees for
director and in favor of the proposed Reorganization. If you do not sign your
proxy, we will not count you as present for determining a quorum, and we will
not count your votes.
Who has the Votes?
As of the Record Date, we had 210 stockholders of record. Directors and
executive officers of First Bancorp beneficially owned 63,049 shares, of which
all are entitled to vote. Those shares constitute 30.3 percent of the total
shares outstanding and entitled to be voted at the Annual Meeting. We expect all
directors, executive officers and principal stockholders to vote in favor of the
Reorganization, although there are no contractual commitments or obligations in
that regard.
What about Shares I Own in the ESOP?
If you hold shares of common stock through your participation in the
Employee Stock Ownership Plan ("ESOP"), you will be permitted to vote your
shares by giving instructions to the Plan trustees. The trustees will collect
proxies or other voting instructions from ESOP participants and vote the ESOP's
shares accordingly.
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BUSINESS OF THE MEETING
Agenda Item 1. Election of Directors
At the Annual Meeting, you will be asked to vote on the election of four
directors. Directors are elected by a plurality of votes, which means that
nominees receiving the most votes are elected, regardless of how many votes they
receive. You may not accumulate votes in the election of directors.
The Certificate of Incorporation establishes the number of directors
between 5 and 25, with the exact number to be fixed from time to time by
resolution of the Board of Directors. The Board of Directors has set the number
of directors at nine. Directors are elected in three classes to three-year terms
expiring at consecutive annual meetings of the stockholders or when their
successors have been elected and qualified. Five directors are serving terms
that will expire in 2000 or 2001. Three directors have completed their terms.
There is currently one vacant position. These four positions are open for
election, three for three-year terms, and one for a term of two years.
The Board of Directors is nominating William G. Moran, Sr., Joseph M. Moran
and Ernest Anderes for election for three-year terms, and Kay D. Sims for
election for a term of two years. Messrs. Moran and Mr. Anderes are currently
serving as directors.
If you submit a completed proxy, the individuals named as proxy holders
will vote your shares as you instruct. If you do not specify your choices, then
the persons named in the Proxy will vote for the election of the nominees listed
above. If any of the nominees is not available for election, your shares will be
voted for a substitute nominee chosen by the Board of Directors. We believe all
nominees will be available for election. We recommend a vote FOR the election of
all nominees.
Information about the Directors, Nominees and Executive Officers
The following describes certain information about each director, each
nominee for director, and each executive officer of First Bancorp. Following the
Reorganization, each of these individuals will continue in their respective
capacities.
The business experience of each of the directors and executive officers for
the past five years has been as follows:
William G. Moran, Sr., age 80, serves as the Chairman of the Board of
Directors. Mr. Moran has been with First Bank for approximately 45 years
William G. Moran, Jr., age 45, serves as a director, and as the President
and Chief Executive Officer, a position he has had for over 15 years. Mr. Moran
is the son of William G. Moran, Sr. and the brother of Joseph M. Moran, another
director.
Joseph M. Moran, age 47, has served as a director of First Bank since 1984.
Mr. Moran is an attorney and is president of his law firm, DeLisio Moran
Geraghty & Zobel PC in Anchorage, where he has practiced for over 20 years. Mr.
Moran is the son of William G. Moran, Sr., Chairman of the Board of Directors,
and brother of William G. Moran, Jr., President of First Bancorp.
Ernest J. Anderes, age 70, has served as a director of First Bank since
1975 and of First Bancorp since its inception in 1989. Mr. Anderes has been the
owner of Anderes Oil, Inc. a petroleum products distributor, for over 25 years.
Michael J. Cessnun, age 43, has been a pilot for Alaska Airlines for 18
years. He has served as a director of First Bancorp since 1994.
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Michael J. Elerding, age 46, has served as a director since 1990. Mr.
Elerding is the owner of Northern Sales Co. of Alaska, a wholesale food
distributor, and currently serves as its president. Prior to joining that
company in 1983, Mr. Elerding was employed by First Bank as a branch manager.
Lisa A. Murkowski, age 41, has served as a director since 1990. Ms.
Murkowski is an attorney in Anchorage where she has practiced for the past 10
years. She was recently elected to the Alaska House of Representatives.
Alec W. Brindle, age 33, has served as a director since 1995. Mr. Brindle
is an attorney in Seattle, where he has practiced for the past 5 years.
Kay D. Sims, age 59, is a long-time resident of Ketchikan, and has been
active in the community, both in business and in community service
organizations. Ms. Sims is a managing member of Hospitality Unlimited, LLC, the
owner and operator of the Best Western Landing Hotel and Annabelle's Famous Keg
and Chowder House, in Ketchikan, and the Prospector Hotel in Juneau.
James C. Sarvela, age 43, serves as Vice President and Chief Financial
Officer, a position he has had for over 10 years. Mr. Sarvela has more than 20
years of banking experience, most of which is with First Bank.
Jack E. Vaughn, age 51, serves as Vice President and Senior Lending
Officer. Mr. Vaughn has over 22 years of banking experience and has been
employed by First Bank since 1985 in various positions, including loan officer
and branch manager.
E. Michael Youngblood, age 48, serves as Vice President and oversees the
Systems Development Department. Mr. Youngblood has been with First Bank for over
20 years.
The Board of Directors held ten meetings during 1998. All directors,
including those nominated for election, attended at least 75 percent of the
total number of meetings held during 1998.
How We Compensate our Directors
Each director of First Bancorp serves as a director of First Bank, our
subsidiary bank. The bank compensates the directors for their service, and the
directors do not receive additional compensation for serving as a director of
the holding company. We pay each director of the Bank a fee of $500 per meeting
of the Board of Directors and each non-employee director $100 for each committee
meeting.
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How We Compensate our Executive Officers
We compensate our executive officers with a combination of salary, bonus
and other benefits. The table below shows the total compensation during 1998 of
the President and each executive officer that received in excess of $100,000:
Capacities in Which
Name Compensation is Total
Received Compensation (1)
- ------------------- ----------------------- -----------------
William G. Moran, President of First $317,179
Jr. Banorp,
Chief Executive
Officer, First Bank
James C. Sarvela Vice President, Chief $125,343
Financial Officer
Jack E. Vaughn Vice President, $114,195
Senior Lending Officer
E. Michael Vice President, $132,644
Youngblood Systems Adnmistrator
______________
(1) Includes bonuses paid, or to be paid, during the subsequent year but
attributable to the year indicated. Also includes amounts contributed by
the bank to the ESOP and 401(k) plan. Perquisites and other personal
benefits, if any, did not exceed the lesser of $50,000 or 10% of the total
annual salary and bonus for the named executive officer for any of the
periods indicated.
Does First Bancorp or First Bank do Business with their Directors and
Officers?
From time to time, some of the directors and officers of the Bank, members
of their immediate families, and firms and corporations with which they are
associated do business with First Bank. Generally this business involves
ordinary banking transactions, such as borrowings and investments in time
deposits. All such loans and investments in time deposits have been made in the
ordinary course of business, have been made on substantially the same terms,
including interest rates paid or charged and collateral required, as those
prevailing at the time for comparable transactions with unaffiliated persons.
These loans do not involve more than the normal risk of collectibility or have
other features that would be disadvantageous to the bank. As of December 31,
1998, the aggregate outstanding amount of all loans to officers and directors
was approximately $1,619,000 which represented 7% of the Bank's consolidated
stockholders' equity at that date. All of these loans are currently in good
standing and are being paid in accordance with their terms.
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How much Stock do the Directors and Executive Officers Hold?
The following table shows the number of shares that each of the directors
and the named executive officers beneficially owned as of the Record Date, and
the directors and executive officers as a group. The table also includes those
persons known by the Bank to beneficially own more than 10% of the Bank's Common
Stock:
Number of Shares Percentage
Name and Position Beneficially Owned of Class
- ----------------- ------------------ --------
William G. Moran Sr., Chairman of the 21,793 10.5%
Board
William G. Moran, Jr., Director, 28,783 13.8%
President
Ernest J. Anderes, Director 1,553 *
Alec W. Brindle, Jr., Director 222 *
Michael J. Cessnun, Director 3,169(5) 1.5%
Michael J. Elerding, Director 523 *
Joseph M. Moran, Director 8,644 4.2%
Lisa A. Murkowski, Director 201 *
Kay D. Sims, Nominee for Director 5,996 2.9%
James C. Sarvela, Chief Financial 322 *
Officer
Jack E. Vaughn, Vice President 237 *
E. Michael Youngblood 566 *
All directors and executive officers 63,049 30.3%
as a group (11 persons)
- -------------------
* Less than 1.0%.
(1) Shares held directly with sole voting and investment power, unless
otherwise indicated.
(2) Includes shares held jointly with his spouse.
(3) Includes shares held jointly with his spouse. Also includes shares held by
entities of which Mr. Moran is a principal. Also includes shares held in
the Employee Stock Ownership Plan.
(4) Does not include shares held by the Employee Stock Ownership Plan of which
this person serves as a trustee.
(5) Includes shares held in a family partnership.
(6) Includes shares held by Northern Sales Co. profit sharing plan. Mr.
Elerding is the owner and president of Northern Sales Co. of Alaska.
(7) Includes shares held jointly with his spouse. Also includes shares held by
entities of which Mr. Moran is a principal.
(8) Includes shares held in the Employee Stock Ownership Plan.
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Agenda Item 2. Reorganization to Form a Subchapter S Corporation
What is a Subchapter S Corporation?
The S corporation form of taxation was originally designed for the benefit
of small businesses. It has been around since 1958, but it was the passage of
federal tax legislation in 1996 that made Subchapter S a viable option for
commercial banks. The Small Business Job Protection Act of 1996 modified the tax
rules to allow commercial banks to qualify for this tax treatment. Since the
passage of this law, over 1000 banks and thrifts have exchanged traditional C
corporation status for S corporation status.
Subchapter S is a flow through structure for federal tax purposes and is
similar to a partnership. Like a partnership, the S corporation stockholders'
pro rata share of income is taxed. Flow through taxation is imposed upon S
corporation shareholders even if the S corporation does not distribute its
earnings to shareholders. S corporations pay no federal or (in many states)
state corporate income taxes. Instead, both the income of an S corporation and
deductions and credits flow through to shareholders who pay the required federal
and state taxes as part of their personal tax returns. By eliminating federal
taxes at the corporate level, S corporations avoid the double taxation that
taxes both corporate profits and dividends to shareholders. In addition, taxable
income retained by an S corporation increases the S corporation stockholders'
basis in their shares by their pro-rata share of retained earnings.
To qualify for treatment under Subchapter S, a corporation must meet the
following criteria:
o The corporation must have no more than one class of stock
o The corporation must have no more than 75 stockholders
o Stockholders of an S corporation must be natural persons or a qualifying
trust
o Stockholders must be residents or citizens of the U.S.
Who are the Parties Involved in the Transaction?
NEWCO
NEWCO is a Delaware business corporation organized at the direction of
First Bancorp only for the purpose of completing the proposed reorganization. At
the current time, NEWCO has no material assets or operations, and has
established a $3 million line of credit with an unaffiliated financial
institution to cover organizational expenses and expenses incurred in the
reorganization.
NEWCO's principal office is at the main office of First Bank, located at
331 Dock St., Ketchikan, Alaska 99901, and its telephone number is the same as
that of the bank, 907-228-4474.
As of the date of this Proxy Statement, NEWCO had no stockholders. Prior to
the Annual Meeting, however, NEWCO will complete its corporate organization and
issue a nominal amount of its common stock. William G. Moran, Jr., First
Bancorp's President, will surrender 100 shares of First Bancorp common stock in
exchange for 100 shares of NEWCO common stock prior to the Annual Meeting. NEWCO
will then file an election to be treated as an S-corporation beginning January
1, 2000. Other than the 100 shares of First Bancorp common stock NEWCO will
acquire from Mr. Moran, NEWCO will have no assets until the Reorganization is
completed.
There is currently no market for and there have been no reported
transactions in shares of NEWCO Common Stock.
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FIRST BANCORP, INC.
First Bancorp is a one-bank holding company organized under Delaware law
and maintains its main office at the main office of First Bank, its principal
subsidiary, at 331 Dock St., Ketchikan, Alaska 99901, and its telephone number
is the same as that of the bank, 907-228-4474.
First Bancorp conducts its business through the bank's eight branch offices
located in the boroughs of Ketchikan-Gateway, Sitka, Wrangell, Petersburg, Craig
and Juneau, as well as the surrounding areas. First Bank provides a variety of
commercial financial services, including commercial and residential real estate
loans, commercial and industrial loans, consumer and agricultural loans. The
Bank also provides a variety of deposit products including interest-bearing and
non-interest bearing deposit accounts, checking and saving accounts and
certificates of deposit.
How will the Reorganization be Accomplished?
NEWCO and First Bancorp are planning to merge, with NEWCO being the
surviving corporation. NEWCO will change its name to First Bancorp, Inc. upon
completion of the merger. In the merger, NEWCO will issue shares of its common
stock to certain stockholders of First Bancorp, and cash to other stockholders
of First Bancorp in exchange for all of the outstanding shares.
Only some of First Bancorp stockholders will become stockholders of the
surviving corporation following the reorganization. If you own at least 750
shares of record on the effective date of the Reorganization, you would receive
one share of NEWCO common stock in exchange for each share of First Bancorp
stock that you own. If you own fewer than 750 shares of First Bancorp common
stock, you would receive $175.00 per share in cash and would no longer be a
stockholder.
In addition, certain persons or entities that are current First Bancorp
stockholders are ineligible to be stockholders of an S-corporation, and will
receive cash for their First Bancorp shares, regardless of the number of shares.
You are eligible to become a NEWCO stockholder if:
o You are a natural person or a qualifying trust or estate, and
o You are a citizen or a resident of the United States
Why Form a Subchapter S Corporation?
In approving the transaction, the Board of Directors considered a number of
factors, including the changing nature of the banking industry, our net income,
the number of stockholders holding small numbers of shares, and the overall cost
of the transaction.
The banking industry is undergoing significant changes, among which is the
continuing consolidation through mergers and acquisitions involving both
community banks and large, regional banks. This consolidation results in larger
institutions that have higher lending limits and are able to conduct advertising
and marketing activities on a large scale. The evolution of the banking industry
is increasing the competitive pressures on our bank. We believe that the
Reorganization will enable us to be more profitable and enhance stockholder
value by
o Reducing the costs involved in stockholder communications by reducing the
number of stockholders, and
o Eliminating or reducing the amount of tax on net income at the corporate
level.
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How does forming an S corporation reduce costs?
Not counting small holdings that might be included in nominee accounts
registered by brokers and others, there are approximately 20,000 shares held in
individual accounts ranging in size from one to 749 shares. There are
approximately 145 stockholders owning these shares, which constitute
approximately 9.6% of the total shares outstanding. First Bancorp currently has
approximately 210 stockholders. The aggregate value of shares held by
stockholders owning fewer than 750 shares is approximately $3,500,000 based on
the proposed price we will pay to you in the Reorganization if you do not become
a stockholder of NEWCO. Consequently, we spend a significant sum each year
maintaining stockholder records and communicating with stockholders whose
investment in the company is nominal. We believe that the resources consumed in
this fashion could be put to more productive uses, such as business expansion,
technological upgrades and distributions to stockholders.
Eliminating the Corporate Income Tax
Generally, corporations that qualify under Subchapter S do not pay income
taxes at the corporate level. Unlike other corporations, which are taxed under
Subchapter C of the Internal Revenue Code, the earnings of the corporation can
be distributed to stockholders in the form of dividends without any prior
reduction to account for income taxes. This means that more of the net earnings
of the corporation is available for distribution to stockholders or for other
corporate purposes.
The earnings (or losses) of an S-corporation are, for personal income tax
purposes, passed through to the stockholders according to their respective
ownership interests. This means that your share of the earnings of the
corporation will be taxable income that you must report on your individual
income tax return. The corporation is not required to distribute any portion of
those earnings to you. As a result, if the corporation realizes net earnings,
but makes no dividend distributions, you could have taxable income without
receiving any cash. This could mean that you do not have cash available to pay
the tax on that income. We anticipate that the Board of Directors will declare
dividends sufficient to cover income taxes stockholders will owe on earnings of
the corporation. The Board of Directors is not, however, required to declare and
pay dividends. Earnings of the corporation that are retained, or not paid out in
distributions to stockholders, will increase the cost basis of each stockholder
in his or her shares.
For the year ended December 31, 1998, First Bancorp paid or will pay
approximately $1,432,000 in corporate income taxes on pre-tax earnings of
$3,750,979. We paid out $1,041,773 in dividends in 1998. The amount of net
income available for investment and for distributions to stockholders is
significantly reduced by corporate level taxation. In addition, distributions to
stockholders currently are made on an after-tax basis, meaning that all
dividends have been taxed at the corporate level, and are taxed again at the
individual level. This double taxation of dividends significantly reduces the
value of such distributions to stockholders and can adversely affect the value
of the common stock.
How Much Will the Reorganization Cost?
We expect the Reorganization to cost approximately $75,000 including fees
and expenses paid for professional services, printing and mailing proxy
materials and organizational expenses for NEWCO. We anticipate that cash
payments to those stockholders who do not receive NEWCO stock will total
approximately $5,250,000. We have made arrangements with an unaffiliated
financial institution for a $3 million line of credit to provide funds to cover
the costs of the Reorganization.
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Is the Cash Price Fair?
We engaged Alex Sheshunoff & Co Investment Banking ("Sheshunoff"), an
independent investment banking firm to conduct an appraisal of First Bancorp
common stock and to provide its opinion of the fairness, from a financial point
of view, of the cash consideration to be paid to First Bancorp stockholders who
do not become NEWCO stockholders. The cash price of $175.00 per share is based
on that appraisal.
As part of its investment banking business, Sheshunoff is regularly engaged
in the valuation of securities in connection with mergers and acquisitions, and
valuations for estate, corporate and other purposes. First Bancorp's Board
retained Sheshunoff based upon its experience as a financial advisor in mergers
and acquisitions of financial institutions, and its knowledge of financial
institutions.
A detailed summary of Sheshunoff's report of its appraisal, including the
methodology used, assumptions made, procedures followed, matters considered, and
limitations on the review undertaken, is included in Appendix B to this Proxy
Statement. A copy of Sheshunoff's opinion letter is also included in Appendix B.
You are urged to read the report summary and the fairness opinion carefully.
Sheshunoff's opinion does not constitute a recommendation as to how you should
vote at the Annual Meeting.
First Bancorp has agreed to pay Sheshunoff a retainer fee of $2,500, and
professional fee of $22,500 payable upon the completion and delivery of its
report and fairness opinion. First Bancorp also agreed to indemnify and hold
harmless Sheshunoff and its shareholders, directors, officers, partners, agents,
employees and other affiliates against certain liabilities in connection with
its services under the engagement letter, except in certain cases for
liabilities resulting from the bad faith or negligence of Sheshunoff.
Sheshunoff's fee is not contingent upon or affected by its valuation conclusion.
Sheshunoff has been engaged for the past several years to provide a fair
market value of the shares held by First Bancorp's Employee Stock Ownership Plan
("ESOP"). Other than these activities, to the best of Sheshunoff's and First
Bancorp's knowledge, there has been no material relationship between Sheshunoff
or its affiliates and First Bancorp or its affiliates other than as described in
Sheshunoff's report during the past two years.
The Board of Directors Recommends a Vote For the Reorganization
The Board of Directors of the Bank has unanimously approved the Agreement
and Plan of Reorganization. The Board believes the formation of an S-corporation
is in the best interests of the stockholders and recommends that all
stockholders vote in favor of the proposed reorganization at the Annual Meeting.
If for any reason the Board of Directors believes that completing the
reorganization is inadvisable, then at any time before it becomes effective, the
Agreement may be terminated or amended upon mutual consent of the Boards of
Directors of the First Bancorp and NEWCO.
Conditions to the Reorganization
We will not complete the reorganization unless certain
conditions are satisfied. Those conditions, which are described
below are:
o Stockholder approval by a majority vote
o Regulatory approval by the Federal Reserve and the Alaska Division of
Banking
We may amend the Agreement at any time before the Annual Meeting, and we
may not complete the reorganization if we decide that it would be best for the
stockholders.
19
<PAGE>
Stockholder Approval is Required
The holders of at least a majority of the outstanding shares of First
Bancorp common stock must approve the Reorganization.
State Regulatory Approval
The Director (the "Director") of the Alaska Division of Banking must
approve NEWCO to operate as a holding company of the bank. We have applied to
the Director for such approval, and we anticipate receiving approval in due
course. However, we cannot be sure as to when or if such approval will be given.
Federal Regulatory Approval
The Board of Governors of the Federal Reserve System has regulatory
jurisdiction over bank holding companies and any transactions that would result
in a company becoming a bank holding company or acquiring or merging with a bank
holding company. NEWCO has applied to the Federal Reserve for approval of the
Reorganization. We believe that the Federal Reserve will approve the transaction
in due course. We cannot be sure, however, that we will receive approval. We may
also encounter delays or other unfavorable action.
You May Dissent from the Plan
You have the right, under Delaware law, to dissent from the proposed
Reorganization and to receive the fair value of your First Bancorp shares in
cash, if you are not entitled to receive NEWCO stock in the Reorganization and
if you follow the procedures required by Delaware law. The fair value of your
stock may be more or less than the $175.00 cash price we are paying.
To properly exercise your dissenters' rights under Delaware law, you must
give written notice to William G. Moran, Jr., President of First Bancorp, before
the vote is taken at the Annual Meeting of your intent to demand appraisal of
your shares, and you must not vote in favor of the proposal.
If the stockholders approve the Reorganization, and you have properly
perfected your dissenters' appraisal rights, we will send you a notice within 10
days following the effectiveness of the Reorganization. You may, within 20 days
following the date our notice is mailed to you, demand in writing the appraisal
of your shares.
Any time within 60 days following the date the Reorganization becomes
effective, you may withdraw your demand for an appraisal and accept the
consideration proposed in the Plan.
How do I Exchange My Shares of First Bank Stock for Cash or Shares of NEWCO?
We will file a Certificate of Merger in the State of Delaware to complete
the merger of First Bancorp into NEWCO. At that time we will send to you a
letter notifying you that the reorganization has been completed. If you are
entitled to receive NEWCO stock in the Reorganization, you do not need to take
any further action. Your First Bancorp stock certificates will represent your
ownership interest in the surviving corporation.
If you are not entitled to receive NEWCO stock and you have not notified us
that you dissent from the transaction, we will send you a check for the cash
payment. Your First Bancorp stock certificates will be cancelled and you do not
need to take any further action.
20
<PAGE>
If you are not eligible to be a stockholder of an S-corporation or if you
have fewer than 750 shares of First Bancorp common stock, we will pay you cash
in the amount of $175.00 per share of First Bancorp stock you own. Otherwise, we
will issue you one share of NEWCO common stock for each share of First Bancorp
common stock that you own on the date the Reorganization becomes effective.
What if I Don't Want To Cash In My Shares?
If you own fewer than 750 shares of First Bancorp common stock and wish to
remain a stockholder, you may purchase shares from other stockholders who are
willing to sell their shares so that you hold at least the minimum of 750
shares. All transactions are the responsibility of individual stockholders. We
will, however, assist you in locating stockholders who have indicated an
interest in selling their shares.
We expect that private sales of stock between stockholders would occur at
prices close to the cash price that we are willing to pay, but we cannot
guarantee the price or availability of shares for purchase. We will maintain a
list of stockholders that have notified us of their interest in purchasing or
selling their shares.
What if I want to Sell My Shares, But I Own More 750 Shares?
You are free to sell your shares to other stockholders at any time. In
addition, at the discretion of the Board of Directors, we will purchase your
shares at the cash price, even if you own more than 750 shares. If you are
otherwise not entitled to receive cash under the Agreement, we reserve the right
not to purchase your shares, if such purchase would cause the company's capital
to fall below the regulatory minimum for a well-capitalized institution, or is
otherwise deemed to be inadvisable in the judgment of the Board of Directors.
Tax Consequences of the Reorganization
We expect the proposed transaction to qualify as a tax-free reorganization
within the meaning of the Internal Revenue Code of 1986, as amended. If you
receive shares of NEWCO common stock in exchange for your shares of First
Bancorp common stock, you would recognize no gain or loss in the transaction,
for federal income tax purposes, and your basis and holding period of NEWCO
shares would be the same as the basis and holding period of First Bancorp shares
surrendered in the exchange.
As a stockholder of an S-corporation, your cost basis in your shares will
fluctuate. If the corporation realizes income that is not distributed, your
basis will increase by the amount not distributed. Distributions, or dividends
paid out, will decrease your basis in the stock. Whether or not we pay out a
dividend, you will be liable for income tax on your share of net income of the
corporation.
If you do not become a NEWCO stockholder in the Reorganization, you will
receive cash for your First Bancorp shares. That payment will be treated, for
income tax purposes, as a redemption of your stock and you will realize capital
gain (or loss) on the difference between the amount you receive for your shares
and your cost basis in those shares.
We urge you to consult your own tax advisor about your own tax matters.
First Bancorp will experience certain transitional tax consequences as a
result of converting to an S-corporation. These transitional tax issues tend to
be complex matters that involve two separate areas of tax accounting. One issue
21
<PAGE>
concerns the conversion from the accrual basis to cash basis of accounting
for tax purposes. IRS regulations establish transitional rules that may result
in a one-time tax to the company as a result of the conversion. The other
transitional issue relates to the potential for a built in gains tax. The
company may be subject to a tax on the difference between the fair market value
and the cost basis of certain assets at the date of conversion, if the asset is
sold within ten years of conversion. Management and the Board of Directors
intend to manage the various components of the company's balance sheet and
income statement to minimize the transitional tax consequences to the company
and its shareholders.
Accounting Treatment of the Reorganization
We intend to account for the reorganization as a repurchase of treasury
stock. Under this method of accounting, the assets and liabilities of First
Bancorp are carried forward on a historical basis.
Restrictions on Resale
NEWCO's Certificate of Incorporation provides that transfers of stock are
restricted to the extent the transfer would result in disqualification of the
corporation for income tax treatment as an S-corporation. See "Description of
Capital Stock."
NEWCO has filed a registration statement with the Securities and Exchange
Commission covering the shares NEWCO will issue in the Reorganization. NEWCO
stockholders, other than those deemed to be affiliates, may freely transfer
their shares of common stock. Affiliates may not sell their shares of NEWCO
common stock, except pursuant to an effective registration statement under the
Securities Act of 1933, as amended, or pursuant to the provisions of Rule 144
under the Securities Act of 1933, unless in the opinion of counsel such shares
may be sold pursuant to an applicable exemption from the registration
requirements of the Securities Act.
Agenda Item 3. Other Business
At the Annual Meeting, we will report on our business and you will have the
opportunity to ask questions.
We know of no other business for the Annual Meeting. In the event other
matters are presented for a vote at the Meeting, the proxy holders will vote
your shares in their discretion.
22
<PAGE>
SELECTED HISTORICAL AND PRO FORMA
CONDENSED FINANCIAL DATA
The following are unaudited selected historical and pro forma financial
information for the year ended December 31, 1998. The pro forma amounts assume
the Reorganization is accounted for as a treasury stock buy-back. You should
read these along with the financial statements and notes thereto included in
this Proxy Statement.
<TABLE>
<CAPTION>
As of and for the Year Ended December 31, 1998
--------------------------------------------------
ASSETS: First Bancorp Adjustments (a) Pro Forma
<S> <C> <C> <C>
Cash and due from banks $ 9,783,427 $ (3,250,000) (b) $ 6,533,427
Federal funds sold 9,391,000 - 9,391,000
Investment securities available for sale 100,960,973 - 100,960,973
Investment in Federal Home Loan Bank stock 2,896,900 - 2,896,900
Loans (net) 121,700,705 - 121,700,705
Premises and equipment (net) 5,796,522 - 5,796,522
Accrued interest receivable 1,756,967 - 1,756,967
Other assets 2,508,378 - 2,508,378
Total Assets $ 254,794,872 $ (3,250,000) (b) $ 251,544,872
LIABILITIES & STOCKHOLDERS' EQUITY:
Liabilities:
Deposits:
Demand 68,133,335 - 68,133,335
Savings 48,846,681 - 48,846,681
Time deposits greater than $100,000 60,814,472 - 60,814,472
Other time depsoits 51,733,617 - 51,733,617
Total Deposits 229,528,105 - 229,528,105
Federal Home Loan bank advances - - -
Other borrowings - 1,994,225 (c) 1,994,225
Accrued interest payable 516,779 - 516,779
Other liabilities 1,557,627 - 1,557,627
Total Liabilities 231,602,511 1,994,225 (c) 233,596,736
Stockholders' Equity:
Common stock 1,070,200 (178,660) (d) 891,540
Surplus 6,414,704 (1,070,530) (e) 5,344,174
Undivided profits 16,051,970 (4,523,560) (f) 11,528,410
Treasury stock (at cost) (528,525) 528,525 (d) -
Net unrealized gain on securities availble for sale 184,012 - 184,012
Total Stockholders' Equity 23,192,361 (5,244,225) (a) 17,948,136
Total Liabilities & Stockholders $254,794,872 $ (3,250,000) $ 251,544,872
OTHER DATA:
Total shares outstanding 214,040 214,040
Adjusted shares outstanding 208,275 177,769
Book value per share $ 111.35 $ 100.96
Earnings per share, basic $ 11.12 $ 13.04
</TABLE>
23
<PAGE>
(a) Assumes the purchase of 29,967 shares for a total cash expenditure of
$5,224,225, which is management's best estimate. Actual costs could be as low as
$4,000,000 and as high as $6,000,000.
(b) Cash balance is net of purchase less borrowing.
(c) The purchases of shares will be financed in part by borrowings from an
unrelated institution totaling approximately $1,994,225.
(d) Common stock reduced by the par value of shares purchased and
retirement of 5,765 treasury shares.
(e) Surplus reduced by the proportionate amount based upon number of shares
purchased.
(f) Undivided profits reduced by the premium of purchase price in excess of
book value.
24
<PAGE>
INFORMATION ABOUT NEWCO, INC.
General
NEWCO was incorporated on January 7, 1999, solely for the purpose of
effecting the Reorganization. As of the date of this Proxy Statement, NEWCO has
no assets, no operations and no stockholders and has not yet completed its
corporate organization. Prior to the Annual meting, NEWCO will issue 100 shares
of its common stock in exchange for 100 shares of First Bancorp common stock
held by William G. Moran, Jr. At that time, NEWCO will file an election to be
treated for income tax purposes as a Subchapter S corporation. NEWCO will
acquire additional stockholders upon consummation of the merger with First
Bancorp.
NEWCO's administrative offices will initially be located in the main
offices of First Bank at 331 Dock St., Ketchikan, Alaska.
Operations and Employees
As of the date of this Proxy Statement, the only operations of NEWCO have
been the execution and approval of the Agreement and Plan of Reorganization.
Initially, NEWCO's Board of Directors and executive officers will be the
same as those of First Bancorp and serve for no additional compensation. See
"Management." Management intends that, following the Reorganization, NEWCO will
maintain operations identical to those of First Bancorp prior to the
Reorganization.
Dividends
As NEWCO has had no previous operations, it has no dividend payment
history. NEWCO currently has no policy with regard to the payment of dividends.
In the discretion of the Board of Directors, NEWCO may in the future elect to
distribute dividends on its common stock, in the form of cash or stock, as may
be appropriate or reasonable. The Board of Directors will consider various
factors including earnings, financial condition, cash requirements, general
business conditions, and restrictions imposed by loan agreements and regulatory
authorities. The Board of Directors expects to continue First Bancorp's practice
of regular quarterly dividends, but cannot make any commitments in that regard.
INFORMATION ABOUT FIRST BANCORP, INC.
General
First Bancorp, Inc. is a single-bank holding company registered under the
Bank Holding Company Act of 1956. The administrative office of First Bancorp is
located in Ketchikan, Alaska. The Company was organized as a holding company for
its principal banking subsidiary, First Bank, a state chartered, FDIC insured
commercial bank, through a reorganization completed in, 1989. First Bancorp's
only operating subsidiary, First Bank, is the fifth largest commercial bank in
Alaska, currently operating eight full-service branches in the boroughs of
Ketchikan-Gateway, Sitka, Wrangell, Petersburg, Craig, and Juneau.
First Bancorp offers commercial banking products and services to small and
medium size businesses, professionals and retail customers in the bank's market
area in southeast Alaska. These products and services include commercial loans,
25
<PAGE>
accounts receivable and inventory financing, SBA loans for equipment purchases
and leasehold improvements, consumer installment loans, acceptance of deposits,
and personal savings and checking accounts. Through third-party vendors, the
bank offers credit life/credit health & accident insurance to its loan
customers. No commissions or other compensation is paid to any officer for the
sale of this insurance. Through a subsidiary, the Bank offers acts as a title
insurance agent.
The Bank's deposit accounts are insured by the Federal Deposit Insurance
Corporation. At December 31, 1998, First Bank had assets of $255 million and
deposits of $230 million.
Industry
The commercial banking industry continues to undergo increased competition,
consolidation and change. Non-insured financial service companies such as mutual
funds, brokerage firms, insurance companies, mortgage companies and leasing
companies are offering alternative investment opportunities for customers' funds
or lending sources for their needs. Banks have been granted extended powers to
better compete, including the limited right to sell insurance and securities
products, but the percentage of financial transactions handled by commercial
banks has dropped steadily. Although the amount of deposits in banks is
remaining steady, such deposits represent less than 20% of household financial
assets compared to over 35% twenty-five years ago. This trend represents a
continuing shift to stocks, bonds, mutual funds and retirement accounts.
Nonetheless, commercial banks are reducing costs by consolidation and
exploring alternative ways of providing bank products. Although new community
banks continue to be organized, bank mergers substantially outstrip formations.
In the last dozen years, the number of commercial banks has dropped from 14,000
to 9,500, and this trend is expected to continue.
To more effectively and efficiently deliver its products, banks are opening
in-store branches, installing more ATMs and investing in technology to permit
telephone, personal computer and internet banking. While all banks are
experiencing the effects of the changing environment, the manner in which banks
choose to compete is increasing the gap between larger super-regional banks,
committed to becoming national or regional "brand names" providing a broad
selection of products at low cost and with advanced technology, and community
banks which provide most of the same products but with a commitment to personal
service and with local ties to the customers and communities they serve.
Competition
First Bancorp is a one bank holding company operating a traditional
commercial bank in southeast Alaska. In this regard, the Company's subsidiary
bank competes with a full range of modern financial institutions from commercial
banks and thrifts to credit unions, brokerage outfits, and insurance companies.
At the present time the competition is fairly stable. The primary
commercial banking competition is the National Bank of Alaska, the First
National Bank of Anchorage, and Key Bank. By general industry standards,
National Bank of Alaska, First National Bank of Anchorage and Key Bank are three
of the best commercial banks in country. They are very strong competitors that
price their products rationally and evaluate risk return relationships
professionally. These organizations are all significantly larger than First
Bancorp. They have extensive operations in other parts of the state, and Key
Bank has a strong national presence. These competitors can conduct wide-ranging
advertising campaigns and allocate assets to much broader geographic regions. By
virtue of their greater capitalization, these banks also have substantially
higher lending limits. These organizations are also financially capable of
offering a variety of products from trust services to international banking that
First Bancorp is not prepared to offer.
26
<PAGE>
In addition to commercial banks, First Bancorp competes with a number of
credit unions operating in its market area. In general, these credit unions tend
to be smaller than the commercial banks. However, credit unions continue to
prosper in southeast Alaska as a result of their favorable cost structure and
traditional appeal to a broad section of the population. Nationwide, surveys
indicate that credit unions attract a higher percentage of high income,
well-educated professional customers than their traditional blue-collar roots
would imply. Recent legislation at the national level has liberalized membership
rules. As a result, credit union membership is now available to virtually anyone
living in southeast Alaska. Credit unions offer many of the same consumer
financial products that First Bancorp offers. These include a full range of
consumer loan and deposit products.
Alaska Federal Savings Bank is the only savings bank operating in southeast
Alaska. It currently operates branches in Juneau, Sitka, Wrangell and Ketchikan.
In recent years the laws and regulations affecting Savings Banks have been
liberalized. As a result, savings banks currently offer their customers
essentially the same products available at a commercial bank.
In addition to the traditional competitive financial institutions, the
development of alternative financial products and delivery systems such as
internet banking, has disrupted banking's traditional control over the payments
system and expanded the level of competition for financial services in southeast
Alaska. At the same time, deposit disintermediation is a problem in both the
consumer and commercial deposit sectors. Interest rates on demand and time
deposits remain at relatively low levels while the bull market for stocks has
continued to advance. This has encouraged an outflow of funds from traditional
deposit products to alternative investment vehicles such as mutual funds.
Properties
First Bancorp's principal office is located at the main office of First
Bank in Ketchikan, Alaska. We conduct business through eight full-service
branches located in Ketchikan (2), Craig, Petersburg, Sitka, Wrangell, and
Juneau (2). The Totem Branch in Ketchikan, as well as the Petersburg, Wrangell
and the Mendenhall Branch in Juneau have drive-up windows. We have nine
automated teller machines, of which five are located at branches in Ketchikan
(2), Petersburg and Juneau (2). The bank or the holding company owns all but
four branches. We have options to extend existing leases on the leased
facilities. The eight branches range in size from approximately 1,000 square
feet to slightly more than 15,000 square feet.
Employees
As of December 31, 1998, we had a total of 106 full-time equivalent
employees. None of the employees are subject to a collective bargaining
agreement. We consider our relationship with our employees to be good.
Legal Proceedings
We are, from time to time, a party to various legal actions arising in the
normal course of business. We are not currently a party to any pending legal
proceeding, which, if determined adversely, would have a material effect on our
business or financial position.
27
<PAGE>
Year 2000 Readiness
First Bank has two primary objectives driving our Year 2000 compliance
efforts:
1) Compliance - to satisfy bank examiners using guidelines established by the
Federal Finance Institutions Examinations Council (FFIEC) and
2) Self-assurance - to meet our responsibility to our customers to make every
effort possible to ensure our systems continue to function during the
millennium date change and beyond.
First Bank has undergone two on-site Federal Deposit Insurance Corporation
audits as well as interim audits by telephone. This has involved nearly all
embedded systems, computer software applications, and network systems. These
examinations assist us in determining our progress toward compliance. During
1999, we will be putting more and more emphasis on the self-assurance portion of
the objectives as compliance goals are met.
A Year 2000 Task Force was designated by the Board of Directors consisting
of IS Manager E. Michael Youngblood as Chairman and includes senior department
managers. Individual task force members focus their attentions on various areas
regarding Year 2000 issues. The Systems department conducted an in depth review
of all computer and software currently in use. These systems and applications
were cataloged and prioritized with "Mission Critical" systems receiving top
priority for compliance testing. A full time technical position was created to
identify, track, monitor, and test (or assist in testing) the various systems.
The primary Mission Critical software packages in use by the bank for core
processing are Year 2000 compliant, as certified by their vendors. While having
this certification is beneficial, the bank is still obligated to test these
packages for Year 2000 compliance, and is in the process of doing so. We have
conducted a review of peripheral equipment, security systems, telephone systems,
and building heating and cooling systems for all branch locations. We have
developed a test plan outline for use during the hardware- and software-testing
phase. We have paid close attention to the task of internal and external
communications, including communicating with and training bank staff as well as
customer communications through general publications or response to direct
inquiries. Our senior lending officer is coordinating risk assessment of our
large commercial borrowers and organized an interview process for each
identified borrower.
Status of compliance according to Phase:
Awareness - Completed
Assessment - Completed
Renovation - Substantiall Completed
Validation - In progress
Implementation - Target completion date of June 30, 1999
The budget created for Year 2000 activities is projected at about $150,000
over and above hardware and software that require replacement even without
upgrading specifically to Year 2000 compliance. Direct expenses for compliance
are accounted for but personnel time is not tracked separately for this project.
First Bank is prepared to allocate additional resources should the need become
apparent. Cost is not considered a limiting factor in achieving compliance.
The potential exposure to risk is discussed and reviewed at each Task Force
meeting as well as during each report to the Board of Directors. With systems
testing over 60% complete, the Task Force is reassured that it is meeting its
28
<PAGE>
deadlines and that testing methodology appears to be satisfactory. To date, no
significant problems that would adversely affect processing have been found in
mission critical information systems or in any non-information systems (embedded
technology). The remaining testing will be done as hardware and software
upgrades are received during 1999. Though these upgrades may claim compliance,
testing will be conducted to meet our self-assurance objectives.
As a contingency, First Bank has established lines of credit with the
Federal Reserve Bank of San Francisco, the Federal Home Loan Bank of Seattle,
and with three commercial banks. First Bank has a contractual arrangement with a
disaster recovery provider as an additional backup. A schedule of additional
system back-ups is being developed for implementation in advance of the date
change. Customer communications will be of utmost importance in order to ease
concerns our customers may have regarding Year 2000 readiness. The Year 2000
date change will not affect FDIC deposit insurance coverage.
Overall, no significant problems are anticipated in achieving Year 2000
compliance.
Capital Adequacy
Under FDIC and Federal Reserve regulations, we must maintain capital,
expressed as a percentage of risk-weighted assets, at certain levels. See
"Information about First Bancorp --Supervision and Regulation." The table below
shows our capital ratios as of December 31, 1998:
Regulatory After
First Bancorp Minimum Reorganization
------------- ------- --------------
Tier 1 risk-based capital ratio 16.51% 4.0% 12.75%
Total risk-based capital ratio 17.56% 8.0% 13.76%
Leverage capital ratio 8.83% 4.0% 7.06%
Lending and Credit Management
Although a risk of nonpayment exists with respect to all loans, certain
specific types of risks are associated with different types of loans. Due to the
nature of our customer base, real estate is frequently a material component of
collateral for the loan portfolio. The expected source of repayment of these
loans is generally the operations of the borrower's business or personal income,
but real estate provides an additional measure of security. Risks associated
with real estate loans include fluctuating land values, local economic
conditions, changes in tax policies, and a concentration of loans within a
limited geographic market area.
We mitigate risk on construction loans by generally lending funds to
customers that have been pre-qualified for long term financing and who are using
contractors acceptable to us. The commercial real estate risk is further
mitigated by making the majority of commercial real estate loans on
owner-occupied properties.
We manage the general risks inherent in the loan portfolio by following
loan policies and underwriting practices designed to result in prudent lending
activities. For example, we generally limit commercial loans to 70% of the value
of the collateral, and residential mortgages, which may be first or second
liens, to 80% of the value of the collateral.
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<PAGE>
Loan Portfolio
Interest earned on the loan portfolio is a major source of income. Net
loans represented 47.8 percent of total assets as of December 31, 1998. Although
we strive to serve the credit needs of our service area, our primary focus is on
real estate and commercial loans. We make substantially all of our loans to
customers located within our service area. We have no loans defined as highly
leveraged transactions by the Federal Reserve Bank. We have no significant
agricultural loans.
Commercial real estate loans primarily include owner-occupied commercial
properties occupied by the proprietor of the business conducted on the premises,
and income-producing properties. The primary risks of such loans include loss of
income of the owner or occupier of the property and the inability of the market
to sustain rent levels. Our underwriting standards attempt to mitigate these
risks by requiring a minimum of three consecutive years of sufficient income
generation from the owner or occupier. In addition, a 70% loan-to-value ratio
limitation is expected to provide sufficient protection against unforeseen
circumstances.
Other commercial loans include renewable operating lines of credit,
short-term notes, and equipment financing. These types of loans are principally
at risk due to insufficient business income. Accordingly, we do not lend to
start-up businesses or others lacking operating history, and require personal
guarantees and secondary sources of repayment.
Residential real estate loans include 1-4 family owner- or non-owner
occupied residences, multi-family units, construction and secondary market loans
pending sale. Generally, the risk associated with such loans is the loss of the
borrower's income. We attempt to mitigate the risk by thorough review of the
borrower's credit and employment history, and limit the loan-to-value ratio to
80% to provide protection in the event of foreclosure. Installment loans consist
of personal, automobile or home equity loans. We also offer credit cards to our
customers. These unsecured loans carry significantly higher interest rates than
secured loans, which allows us to maintain a higher loss reserve in conjunction
with maintaining strict credit guidelines when considering loan applications.
The following table presents the composition of the loan portfolio, at the dates
indicated:
12/31/98 12/31/97
--------------------------------------------
Mortgage $ 8,653,771 $ 3,592,629
Commercial 82,214,463 73,870,604
Consumer 32,906,260 30,102,197
--------------------------------------------
Gross loans $ 123,774,494 $ 107,565,430
Less: Unamortized loan
origination fees (652,437) (636,525)
============================================
Total loans $ 123,122,057 $ 106,928,905
============================================
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The following table sets forth the maturity distribution and sensitivity to
changes in interest rates of the loan portfolio at December 31, 1998:
<TABLE>
<CAPTION>
Within One to After
one year five years five years Total
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mortgage $ 308,425 $ 239,647 $ 8,105,699 $ 8,653,771
Commercial 12,741,996 36,676,253 32,796,214 82,214,463
Consumer 6,306,945 25,247,132 1,352,183 32,906,260
========================================================================================
Total loans $ 19,357,366 $ 62,163,032 $ 42,254,096 $ 123,774,494
========================================================================================
Loans at fixed interest rates 12,175,411 51,905,009 10,510,198 74,590,618
Loans at variable interest rates 7,181,955 10,258,023 31,743,898 49,183,876
========================================================================================
Total loans $ 19,357,366 $ 62,163,032 $ 42,254,096 $ 123,774,494
========================================================================================
</TABLE>
The following table presents information with respect to non-performing
assets:
December 31,
-------------------------------
1998 1997
Loans on non-accrual status $ - $ -
Loan past due > 90 days $ 265,561 $ 29,973
Other real estate owned $ 222,123 $ 259,664
Percentage of non performing 0.19% 0.12%
assets to total assets
Interest income that would have been realized on non-accrual or past-due
loans if they had remained current was insignificant.
Allocation of Reserve for Loan Losses
The allowance for loan losses is a general reserve established by
management to absorb unidentified losses in the loan portfolio. In determining
the adequacy of the allowance, management evaluates the prevailing economic
conditions, results of regular examinations and evaluations of the quality of
the loan portfolio by external parties, actual loan loss experience, the extent
of existing risks in the loan portfolio and other factors. The allowance for
impaired loans is based on discounted cash flows using the loans' initial
interest rates, or, if the loan is secured, the fair value of the collateral.
Future additions to the allowance may be necessary based on changes in
economic conditions and other factors used in evaluating the loan portfolio.
Additionally, various regulatory agencies, as an integral part of their
examination process, periodically review the allowance. Such agencies may
require the recognition of additions to the reserve based on their judgment of
information available to them at the time of their examination.
31
<PAGE>
The following is a summary of the allowance for loan losses
as of December 31:
1998 1997 1996
---- ---- ----
Balance at beginning of year $ 1,293,512 $ 1,103,414 $ 1,383,814
Recoveries of loans
previously charged off 16,225 49,524 18,353
Provision charged to expense 252,000 232,000 215,750
Loans charged off (140,385) (91,426) (514,503)
=========== =========== ===========
Balance at end of year $ 1,421,352 $ 1,293,512 $ 1,103,414
=========== =========== ===========
Loan Losses and Recoveries
The provision for loan losses charged to operating expense is based on loan
loss experience and such factors that, in management's judgment, deserve
recognition in estimating possible loan losses. Management monitors the loan
portfolio to ensure that the reserve for loan losses is adequate to cover
outstanding loans on non-accrual status and any current loans deemed to be in
serious doubt of repayment according to each loan's repayment plan. The
following table summarizes the reserve for loan losses, and charge-off and
recovery activity:
Year ended December 31,
-----------------------
1998 1997
---- ----
Loans outstanding at
end of period $ 123,122,057 $ 106,928,905
============= =============
Reserve balance, beginning
of period $ 1,293,512 $ 1,103,414
Recoveries $ 16,225 $ 49,524
Loans charged off $ (140,385) $ (91,426)
------------- -------------
Net loans charged off $ (124,160) $ (41,902)
Provision charged to expense $ 252,000 $ 232,000
------------- -------------
Reserve balance, end of period $ 1,421,352 $ 1,293,512
============= =============
32
<PAGE>
Analysis of Net Interest Margin
The following table presents information regarding yields on
interest-earning assets, expense on interest-bearing liabilities, and net yields
(including loan placement fees) on interest-earning assets for the periods
indicated. Averages shown are monthly averages.
<TABLE>
<CAPTION>
Analysis for the years ended Increase
December 31, 1998 and 1997 1998 1997 (Decrease) Change
<S> <C> <C> <C> <C>
Average interest-earning assets $ 229,895 $ 217,011 $ 12,884 5.9%
Average interest-bearing liabilities $ 196,462 $ 183,671 $ 12,791 7.0%
Average yields earned 8.7% 8.6% 0.1% 1.2%
Average rates paid 4.3% 4.5% -0.2% -4.4%
--- --- --- ---
Net interest spread (including loan
placement fees) 4.4% 4.1% 0.3% 7.3%
=== === === ===
Net interest income to average
interest-earning assets 5.0% 4.8% 0.2% 4.2%
</TABLE>
Interest Sensitivity
Interest sensitivity relates to the effect of changing interest rates on
net interest income. Interest-earning assets which have interest rates tied to
an index, such as prime rate, or which mature in relatively short periods of
time are considered interest-rate sensitive. Interest-bearing liabilities with
interest rates that can be re-priced in a discretionary manner, or which mature
in short periods of time, are also considered interest-rate sensitive. The
differences between the amounts of interest-sensitive assets and
interest-sensitive liabilities, measured at various time periods, are referred
to as sensitivity gaps. As rates change, these gaps will cause either a
beneficial or adverse effect on net interest income. A negative gap represents a
beneficial effect on net interest income if rates were to fall and an adverse
effect if rates were to rise. Conversely, a positive gap would have a beneficial
effect on net interest income in a rising rate environment and a negative effect
if rates fell.
Our policy with regard to interest rate risk is to organize the components
of the balance sheet in such fashion as to maintain net interest margin and
stockholders' equity within the limits of volatility established from time to
time by the Board of Directors.
33
<PAGE>
Estimated Maturity or Repricing
Of Selected Balance Sheet Items
At December 31, 1998
<TABLE>
<CAPTION>
Within One to Over
one year five years five years Total
----------------------------------------------------------------------
Interest earning assets:
<S> <C> <C> <C> <C>
Federal funds sold $ 9,391,000 $ - $ - $ 9,391,000
Securities available for sale (at amortized cost) (1) 26,628,844 37,016,471 36,999,688 100,645,003
Other investments 2,905,157 - - 2,905,157
Loans (2) 61,359,287 51,905,009 10,510,198 123,774,494
----------------------------------------------------------------------
Total interest earning assets 100,284,288 88,921,480 47,509,886 236,715,654
Reserve for unamortized loan fees (652,438) (652,438)
Reserve for loan losses (1,421,352) - - (1,421,352)
Unrealized gain on available for sale securities 307,714 - - 307,714
Cash and due from banks 9,783,427 - - 9,783,427
Other assets 10,061,867 - - 10,061,867
======================================================================
Total assets $ 118,363,506 $88,921,480 $ 47,509,886 $254,794,872
======================================================================
Interest bearing liabilities:
Interest bearing demand accounts $ 39,337,775 $ - $ - $39,337,775
Savings deposits 48,846,681 - - 48,846,681
Time deposits 99,456,303 13,091,786 - 112,548,089
----------------------------------------------------------------------
Total interest bearing liabilities 187,640,759 13,091,786 - 200,732,545
Non-interest bearing demand accounts 28,795,560 - - 28,795,560
Other liabilities 2,074,406 - - 2,074,406
Stockholders' equity 23,192,361 - - 23,192,361
======================================================================
Total liabilities and stockholders' equity $ 241,703,086 $13,091,786 $ - $254,794,872
======================================================================
Interest sensitivity gap $(87,356,471) $75,829,694 $ 47,509,886
Cumulative interest sensitivity gap $(87,356,471) $ (11,526,777) $ 35,983,109
Cumulative interest sensitivity gap as -34.29% -4.52% 14.12%
a percentage of total assets
<FN>
Notes:
(1) Includes $1,845,223 in variable rate securites that mature in 1 - 5 years
and $8,783,913 in variable rate securities that mature over 5 years.
(2) Includes $10,258,023 in variable rate loans that mature in 1 - 5 years and
$31,743,898 in variable rate loans that mature over 5 years
</FN>
</TABLE>
34
<PAGE>
Investment Portfolio
The following table shows the amortized costs, estimated market values,
unrealized gains and unrealized losses of the portfolio of investments as of
December 31, 1997, and 1998:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Market
cost gains losses value
--------------------------------------------------------------
1998:
<S> <C> <C> <C> <C>
U.S. Government and federal agencies $ 54,763,462 $ 438,739 $ (24,211) $ 55,177,990
States and political subdivisions 1,707,699 85,846 1,793,545
Corporate securities 8,963,078 80,739 (338) 9,043,479
Mortgage-backed securities 33,796,314 110,906 (496,797) 33,410,423
Other debt securities 1,414,450 1,973 1,416,423
Federal National Mortgage Assn. Stock 8,257 110,856 119,113
==============================================================
Total securities $100,653,260 $ 829,059 $ (521,346) $100,960,973
==============================================================
1997:
U.S. Government and federal agencies $ 77,447,591 $ 379,646 $ (6,562) $ 77,820,675
States and political subdivisions 1,846,350 23,220 1,869,570
Corporate securities 5,607,261 53,236 (2,819) 5,657,678
Mortgage-backed securities 27,053,534 128,857 (951,460) 26,230,931
Other debt securities 500,000 500,000
Federal National Mortgage Assn. Stock 6,727 76,519 83,246
==============================================================
Total securities $112,461,463 $ 661,478 $ (960,841) $112,162,100
==============================================================
</TABLE>
Investment Portfolio Maturity Schedule
The following is a summary of the contractual maturities of investment
securities classified as available for sale at December 31, 1998:
<TABLE>
<CAPTION>
Within One to Five to Due after Amortized Market
Securities available for sale one year five years ten years ten years cost value
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Government and federal agencies $11,994,028 $ 31,817,815 $ 2,611,247 $ 8,340,372 $ 54,763,462 $ 55,177,990
States and political subdivisions 293,871 191,779 1,222,049 - 1,707,699 1,793,545
Corporate securities 3,057,268 4,028,225 - 1,877,585 8,963,078 9,043,479
Mortgage-backed securities 154,541 2,823,875 5,544,331 25,273,567 33,796,314 33,410,423
Other debt securities 500,000 - - 914,450 1,414,450 1,416,423
======================================================================================
Total securities $15,999,708 $ 38,861,694 $ 9,377,627 $ 36,405,974 $100,645,003 $100,841,860
======================================================================================
</TABLE>
As of December 31, 1998, First Bank had no securities classified as "held
to maturity".
35
<PAGE>
Deposit Liabilities
The following table sets forth the average deposit
liabilities for the years ended:
<TABLE>
<CAPTION>
12/31/98 12/31/97
---------------------------------------------
<S> <C> <C>
Demand $ 68,133,335 $ 64,669,469
Savings 48,846,681 50,727,050
Time deposits greater than $100,000 60,814,472 53,554,698
Time deposits less than $100,000 51,733,617 50,720,931
=============================================
Total deposits $ 229,528,105 $ 219,672,148
=============================================
</TABLE>
As of December 31, 1998, time deposit maturities were as
follows:
<TABLE>
<CAPTION>
Time Deposits of All Other
$100,000 or more Time Deposits
---------------------------------------------
Remaining Time to Maturity:
<S> <C> <C>
3 months or less $ 27,611,027 $ 31,460,441
3 months to 12 months 28,056,872 12,327,963
1 year to 3 years 2,366,641 4,519,148
Greater than 3 years 2,779,932 3,426,065
=============================================
Total time deposits $ 60,814,472 $ 51,733,617
=============================================
</TABLE>
36
<PAGE>
Supervision and Regulation
General
First Bancorp and First Bank are extensively regulated under federal and
state law. These laws and regulations are intended to protect depositors, not
stockholders. You should refer to the specific statutes and regulations for more
information on the state and federal regulatory scheme. Our operations may be
affected by legislative changes and by the policies of various regulatory
authorities. Any change in applicable laws or regulations may have a material
effect on our business and prospects. We cannot predict accurately as to the
nature or the extent of the effects on its business and earnings that fiscal or
monetary policies, economic control or new federal or state legislation may have
in the future.
First Bancorp and NEWCO
First Bancorp is a bank holding company within the meaning of the Bank
Holding Company Act of 1956, as amended ("BHCA"), and as such, it is subject to
regulation, supervision and examination by the Federal Reserve. We are required
to file annual reports with the Federal Reserve and to provide the Federal
Reserve such additional information as the Federal Reserve may require.
NEWCO is a corporation formed pursuant to the General Corporation Law of
the State of Delaware and, as such, is not regulated by the Federal Deposit
Insurance Corporation. NEWCO will, however, become a bank holding company
registered under the Bank Holding Company Act of 1956, as amended (the "Act"),
and will be subject to supervision by the Board of Governors of the Federal
Reserve System ("Federal Reserve"). As a bank holding company, NEWCO will be
required to obtain permission from the Alaska Division of Banking to conduct
business as a holding company of a state bank. It also will be required to file
annual reports with the Federal Reserve and such other additional information as
the Federal Reserve may require pursuant to the Act. The Federal Reserve may
also make examinations of the holding company and of its subsidiary bank. The
Act requires prior approval by the Federal Reserve for the acquisition by a bank
holding company of direct or indirect ownership or control of more than five
percent of the voting shares, or substantially all of the assets, of any bank or
any bank holding company.
With certain exceptions, a bank holding company is prohibited from
acquiring direct or indirect ownership or control of any company which is not a
bank or bank holding company and from engaging directly or indirectly in any
activity other than banking or of managing or controlling banks. The exceptions
to this prohibition permit a bank holding company or its non-bank subsidiaries
to engage in certain permitted activities, the more important of which are:
operating a commercial finance company, engaging in mortgage banking operations,
offering credit-related insurance, providing data processing services, and
leasing real and personal property in connection with credit transactions.
First Bancorp is, and NEWCO will be, an "affiliate" of First Bank and will
be subject to the provisions of Section 23A of the Federal Reserve Act which set
certain limits with respect to the amount of (1) loans or extensions of credit
to, or investments in, the holding company by the bank, and (2) advances to
third parties collateralized by the securities or obligations of the holding
company.
<PAGE>
First Bank
First Bank, as a state-chartered bank with deposits insured by the FDIC
that is not a member of the Federal Reserve System, is subject to the
supervision and regulation of the Alaska Division of Banking and of the FDIC.
These agencies may prohibit the bank from engaging in what they believe
constitute unsafe or unsound banking practices.
The bank is required to submit periodic reports and is subject to
supervision, examination and regulation by the FDIC. The Federal Deposit
Insurance Act requires prior approval from the FDIC of any merger by or with a
state-insured bank. The consumer lending activities of the bank are regulated by
several particularly detailed laws and regulations which impose disclosure
requirements, prohibit discrimination based on race, sex, age, marital status
and other specified classifications and impose other restrictions on credit
practices in general.
The bank is affected by the credit policies of monetary authorities,
including the Federal Reserve System, which regulates the national supply of
bank credit. Such regulation influences overall growth of bank loans,
investments and deposits. The monetary policies of the Federal Reserve have had
a significant effect on the operating results of commercial banks in the past
and are expected to continue to do so in the future.
Dividends
The principal source of First Bancorp's cash revenues is dividends received
from First Bank. Under Alaska banking law, banks are subject to restrictions on
the payment of cash dividends to their stockholders. A bank may not pay cash
dividends if that payment would reduce the amount of its capital below that
necessary to meet minimum applicable regulatory capital requirements. First Bank
has been paying regular dividends to stockholders, although no assurances can be
given that dividends will continue to be paid
In addition, the appropriate regulatory authorities are authorized to
prohibit banks and bank holding companies from paying dividends that would
constitute an unsafe or unsound banking practice. Neither First Bancorp nor
First Bank is currently subject to any regulatory restrictions on their
dividends other than those noted above.
Capital Adequacy
The federal bank regulatory agencies use capital adequacy guidelines in
their examination and regulation of bank holding companies and banks. If the
capital falls below the minimum levels established by these guidelines, the bank
holding company or bank may be denied approval to acquire or establish
additional banks or non-bank businesses or to open facilities.
Effects of Government Monetary Policy
The earnings and growth of our company, including existing and future
activities, is affected not only by general economic conditions, but also by the
fiscal and monetary policies of the federal government, particularly the Federal
Reserve. The Federal Reserve can and does implement national monetary policy for
such purposes as curbing inflation and combating recession, but its open market
operations in U.S. government securities, control of the discount rate
applicable to borrowings from the Federal Reserve, and establishment of reserve
requirements against certain deposits, influence growth of bank loans,
investments and deposits, and also affect interest rates charged on loans or
paid on deposits. We cannot predict accurately the nature and impact of future
changes in monetary policies on our company.
38
<PAGE>
Changing Regulatory Structure of the Banking Industry
The laws and regulations affecting banks and bank holding companies are
currently undergoing significant changes. Bills are now pending or expected to
be introduced in the United States Congress that contain proposals for altering
the structure, regulation, and competitive relationships of the nation's
financial institutions. If enacted into law, these bills could have the effect
of increasing or decreasing the cost of doing business, limiting or expanding
permissible activities (including activities in the insurance and securities
fields), or affecting the competitive balance among banks, savings associations,
and other financial institutions. Some of these bills would reduce the extent of
federal deposit insurance, broaden the powers or the geographical range of
operations of bank holding companies, modify interstate branching restrictions
applicable to national banks, regulate bank involvement in derivative securities
activities, and realign the structure and jurisdiction of various financial
institution regulatory agencies.
DESCRIPTION OF CAPITAL STOCK
The following description of capital stock applies to both First Bancorp
and NEWCO, except where we specifically refer to one or the other. Generally,
the rights of stockholders of First Bancorp will not be affected by the
Reorganization. As discussed below, certain restrictions will apply to the
transfer of NEWCO common stock that do not currently apply to First Bancorp
common stock.
The Certificate of Incorporation of each company authorizes one class of
capital stock consisting of one million shares of common stock, $5.00 par value
per share. Stockholders do not have preemptive rights to acquire additional
shares of stock. Each outstanding share of common stock has the same relative
rights and preferences as each other share of common stock, including the rights
to the net assets of the company upon liquidation.
The Board of Directors is authorized to issue or sell additional capital
stock of the Bank, at its discretion and for fair value, and to issue future
cash or stock dividends, without prior shareholder approval. As of the date of
this Proxy Statement, there were 208,275 shares of First Bancorp common stock
outstanding and no shares of NEWCO common stock outstanding.
Shares of the common stock have unlimited voting rights. Each share of
common stock is entitled to one vote on matters considered by the stockholders.
Stockholders may not accumulate votes in the election of directors.
Certain provisions of the Certificate of Incorporation can only be amended
or repealed if the shareholders, by the affirmative vote of at least two-thirds
of the outstanding shares, approve such action. These provisions relate to
matters concerning the Board of Directors, including removal of directors,
limitation of liability of directors, and indemnification of directors,
officers, employees and agents. The restriction on transfer described below is
also subject to a super-majority, two-thirds vote to amend or repeal.
Dividends are paid in the discretion of the Board of Directors. See "Market
for the Common Stock."
Limitation of Liability and Indemnification
The General Corporation Law of the State of Delaware permits a
corporation's Certificate of Incorporation to limit the liability of directors
and indemnification of directors and officers under certain circumstances. The
39
<PAGE>
Certificates of Incorporation of both First Bancorp and NEWCO provide that
directors are not personally liable to the corporation or its stockholders for
monetary damages for conduct as a director, except for (i) any breach of a
director's duty of loyalty to the corporation, (ii) acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of the
law, (iii) any distribution to shareholders which is unlawful, or (iv) any
transaction from which the director received an improper personal benefit.
The Certificates of Incorporation of each of First Bancorp and NEWCO also
provide for indemnification of any person who is or was a party, or is
threatened to be made a party, to any civil, administrative or criminal
proceeding because the person is or was a director or officer of the company or
any of its subsidiaries, or is or was serving at the request of the company as a
director, officer, partner, agent or employee of another corporation. The
company will indemnify such person against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by that person. Indemnification is available if (i) the person acted in
good faith and in a manner reasonably believed to not be opposed to the best
interests of the company, or (ii) the act or omission giving rise to such action
or proceeding is ratified, adopted or confirmed by the company, or the company
received the benefit of such actions. Indemnification is available under this
provision of the Certificate of Incorporation in the case of derivative actions,
unless the person is adjudged to be liable for gross negligence or deliberate
misconduct in the performance of the person's duty to the company. To the extent
a director, officer, employee or agent (including an attorney) is successful on
the merits or otherwise in defense of any action to which this provision is
applicable, the person is entitled to indemnification for expenses actually and
reasonably incurred by the person in connection with that defense.
Even if indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers or other controlling persons
pursuant to the foregoing provisions, we have been informed that in the opinion
of the Securities Exchange Commission such indemnification is against public
policy as expressed in the Act and is therefore unenforceable.
Anti-Takeover Provisions
Both First Bancorp's and NEWCO's Certificate of Incorporation contain
certain provisions that could make more difficult the acquisition of the company
by means of a tender offer, proxy contest, merger or otherwise. The Certificates
both provide for staggered boards of directors whereby approximately one-third
of the director positions are filled each year, and directors may only be
removed for cause. "Cause" is defined as (i) a breach of the director's duty of
loyalty to the corporation, (ii) acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) an unlawful
distribution under provisions of the General Corporation Law of the State of
Delaware, or other applicable law, or (iv) a transaction from which the director
received an improper personal benefit. These provisions may make it more
difficult for a dissident shareholder to remove the entire board of directors at
one time.
Restrictions on Transfer
NEWCO's Certificate of Incorporation prohibits any transfer that would
cause the corporation to be disqualified for income tax treatment as a small
business corporation under Subchapter S of the Internal Revenue Code. Stock
certificates will bear a legend reflecting the foregoing restriction.
40
<PAGE>
CERTAIN LEGAL MATTERS
The validity of NEWCO Common Stock to be issued in the Reorganization will
be passed upon for NEWCO by Foster Pepper & Shefelman LLP, Portland, Oregon.
EXPERTS
The consolidated financial statements of First Bancorp, Inc. and subsidiary
as of December 31, 1998 and 1997, and for each of the years in the three-year
period ended December 31, 1998, included in this Proxy Statement and in the
Registration Statement have been included in reliance upon the reports of KPMG
LLP, independent certified public accountants, appearing elsewhere herein, and
upon the authority of said firm as experts in accounting and auditing.
41
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement") is entered
into as of this ______ 1999, by and among First Bancorp, Inc. (the
"Company"), a Delaware corporation with its principal office at 331 Dock
Street, Ketchikan, Alaska, and Newco Alaska, Inc. ("NEWCO"), a Delaware
corporation with its principal office at 331 Dock Street, Ketchikan, Alaska.
RECITALS
A. The Company is a registered bank holding company, and is the sole
stockholder of First Bank (the "Bank"), an Alaska state bank.
B. The Board of Directors of the Company has determined that it would
be in the best interests of the Company, its stockholders, its customers and
those of the Bank to effect a merger with and into NEWCO, with NEWCO to be
the surviving corporation.
C. The respective Boards of Directors of the Company and NEWCO have
agreed to cause the Merger pursuant to the provisions of section 251 of Title
8 of the General Corporation Law of the State of Delaware.
D. The parties intend that the resulting corporation be eligible for
treatment for income tax purposes pursuant to the provisions of Subchapter S
of the Internal Revenue Code of 1986, as amended (the "Code").
AGREEMENT
In consideration of the mutual covenants herein contained, the parties
hereby agree as follows:
1. Definitions. For purposes of this Agreement, the following terms shall
have the definitions given:
1.1 "Director" means the Director of the Alaska Department of Commerce
and Economic Development or his designee.
1.2 "Effective Date" is the date upon which the Merger becomes
effective by filing of a Certificate of Merger with the Secretary of State of
the State of Delaware.
1.3 "Effective Time" is the time at which the Merger becomes effective
as indicated by the filing stamp of the Secretary of State on the Certificate
of Merger.
1.4 "Eligible Stockholder" means a Company stockholder of record as of
the Effective Date who is eligible to be a stockholder of a corporation taxed
pursuant to Subchapter S of the Code, and who either (i) holds, as of the
Effective Date, at least 750 shares of Company common stock, or (ii) is a
director of the Company.
1.5 "Federal Reserve" means the Board of Governors of the Federal
Reserve System, or the Federal Reserve Bank of San Francisco acting upon
authority delegated by the Board of Governors.
A-1
<PAGE>
1.6 "Merger" means the merger of the Company into NEWCO on the
Effective Date in accordance with this Agreement and the Certificate of
Merger.
1.7 "Surviving Corporation" means Newco Alaska, Inc. as the corporation
surviving the Merger under the name "First Bancorp, Inc."
2. Merger; Transactions Pursuant to the Agreement; Effect of the Merger.
Upon performance of all of the covenants of the parties hereto and
fulfillment or waiver of all of the conditions contained herein
2.1 On the Effective Date, the Company shall be merged with and into
NEWCO on the terms and conditions set forth in this Agreement. A
Certificate of Merger, executed by the Surviving Corporation in
accordance with Title 8, section 252(c) of the General Corporation
Law of the State of Delaware, shall be filed with the Secretary of
State of the State of Delaware to effect the Merger.
2.2 On the Effective Date, each share of stock of the Company shall be
cancelled and immediately converted into the right to receive,
subject to the terms, conditions and limitations set forth herein,
the consideration as provided in sections 2.4 and 2.5 hereof (the
"Merger Consideration").
2.3 On and after the Effective Date, each share of NEWCO common stock
outstanding immediately prior to the Effective Date shall be
automatically converted into one share of common stock of the
Surviving Corporation.
2.4 Subject to the terms, conditions and limitations set forth herein,
on the Effective Date, each Eligible Stockholder shall be entitled
to receive one newly issued share of common stock of the Surviving
Corporation in exchange for each share of Company common stock held
of record as of the Effective Date.
2.5 Only Company stockholders who are Eligible Stockholders will be
entitled to receive shares of common stock of the Surviving
Corporation. The Surviving Corporation will pay to each Company
stockholder of record as of the Effective Date who is not an
Eligible Stockholder, cash at the rate of $175.00 per share of
Company common stock.
2.6 Notwithstanding anything to the contrary herein, each Company
stockholder who has timely and properly perfected his or her right
to dissent from the Merger pursuant to the applicable laws of the
State of Delaware ("Appraisal Laws"), and has not effectively
withdrawn or forfeited his or her right to dissent under the
Appraisal Laws, shall not be entitled to receive the Merger
Consideration, but rather such dissenting stockholder shall be
entitled only to such rights as are granted by the Appraisal Laws.
A-2
<PAGE>
2.7 At the Effective Time, the corporate existence of the Company shall,
as provided by Delaware law, be merged into and continued in the
Surviving Corporation (formerly named Newco Alaska, Inc.) and the
separate existence of the Company shall terminate.
2.8 At the Effective Time, all right, title and interest of the Company
in and to all of the business, properties (tangible and intangible),
goodwill, rights, choses in action and other assets of the Company
shall be vested in the Surviving Corporation by virtue of such
Merger without any deed or other instrument of transfer, whether or
not reflected on the balance sheets, books of accounts, or records
of the Company or NEWCO, and the Surviving Corporation, without any
order or action on the part of any court or otherwise, shall hold
and enjoy all such assets in the same manner and to the same extent
as such assets were held or enjoyed by the Company prior to the
Effective Time.
2.9 At the Effective Time, the Surviving Corporation shall be liable for
all debts, obligations, contracts and other liabilities, of the
Company, matured or unmatured, whether accrued, absolute, contingent
or otherwise, and whether or not reflected or reserved against on
balance sheets, books of accounts, or records of the Company or
NEWCO, and shall not be released or impaired by the Merger; and all
rights of creditors and other obligees and all liens on property
shall be preserved unimpaired.
2.10 The Certificate of Incorporation, as amended, of NEWCO in effect at
and as of the Effective Time will be amended to read as set forth in
Exhibit A and, as so amended, will be the Certificate of
Incorporation of the Surviving Corporation in the Merger.
2.11 The Bylaws of NEWCO in effect at and as of the Effective Time will
be the Bylaws of the Surviving Corporation in the Merger.
2.12 As of the Effective Time, the directors and officers of the Company
in office at and as of the Effective Time shall become directors and
officers of the Surviving Corporation with the respective positions
and offices which they previously held in the Company, until such
time as their successors are duly elected.
2.13 After the close of business on the Closing Date, transfers of shares
of Company common stock outstanding prior to the Effective Time
shall not be made on the stock transfer books of the Surviving
Corporation.
3. Representations and Warranties.
3.1 Representations and Warranties of the Company. The Company represents
and warrants to NEWCO as follows:
3.1.1 The Company is duly organized and validly existing and in good
standing as a business corporation under the laws of its jurisdiction of
incorporation, and the Bank is duly organized and validly existing and in
good standing as a banking corporation under the laws of its jurisdiction
of incorporation and each has all requisite corporate power and authority
to own and operate its properties and assets, to lease properties used in
its business, and to carry on its business as now conducted.
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3.1.2 The Company has all requisite corporate power and authority to
enter into and perform its obligations under this Agreement and the
transactions contemplated hereby and to conduct its business in the manner
now being conducted. Its activities do not require it to be qualified to
do business in any foreign jurisdiction where the failure to so qualify
would have a material adverse effect on its business, operations or
financial condition.
3.1.3 The authorized capital stock of the Company consists of
1,000,000 shares of common stock, of which 208,275 shares are issued and
outstanding as of the date hereof. Other than as described therein, no
other stock options, warrants or rights to purchase or receive Company
securities are outstanding.
3.1.4 None of the execution or delivery of this Agreement or the
consummation of the transactions contemplated hereby will conflict with or
result in the breach of any of the terms, conditions or provisions of the
Certificate of Incorporation or Bylaws of the Company, or of any existing
statute, regulation, order, writ, injunction or decree of any court or
governmental agency, or of any contract, agreement or instrument to which
it is a party or by which it is bound.
3.1.5 There are no actions, suits, proceedings, claims or
governmental investigations pending or, to the knowledge of the Company,
threatened against or affecting the Company before any court,
administrative officer or agency, other governmental body or arbitration
which might hinder or delay the consummation of the transactions
contemplated by this Agreement.
3.1.6 No representation or warranty by the Company in this Agreement
or in any statement, certificate or schedule furnished or to be furnished
pursuant to this Agreement, including any information about the Company
given with respect to preparation of the proxy statement for the meeting
of the Company's stockholders, or in connection with the transactions
contemplated by this Agreement, contains or will contain any untrue
statement of a material fact or omits or will omit to state any material
fact necessary to make the statements therein or herein not false or
misleading.
3.2 Representations and Warranties of NEWCO. NEWCO represents and
warrants to the Company as follows:
3.2.1 NEWCO is, or prior to the effective date of the Merger will
be, a corporation duly organized and validly existing under the laws of
the State of Delaware and has all requisite corporate power and authority
to enter into and perform this Agreement including all transactions
contemplated hereby. There are currently no shares of capital stock issued
and outstanding.
3.2.2 NEWCO has, or will have, prior to the Effective Date, issued
not less than one share and not more than 200 shares of capital stock
solely for the purpose of completing its corporate organization, and shall
have, prior to the earlier of the Effective Date or the 15th day of the
third month following completion of the corporate organization of NEWCO,
filed with the Internal Revenue Service an election under section 1362(a)
of the Code to be treated for income taxes as a small business corporation
under Subchapter S of the Code, it being understood that the parties
intend such election to be effective for tax years after December 31,
1999.
3.2.3 There are no outstanding options, warrants, rights, contracts
or commitments relating to the issuance of any shares of NEWCO stock other
than commitments set forth or referred to herein.
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3.2.4 NEWCO has had no material operations prior to this date. Other
than the commitments as undertaken with respect to this Agreement and the
transactions contemplated thereby, NEWCO has entered into no material
outstanding contracts, agreements, leases and has incurred no obligations,
contingent or otherwise, except with respect to costs and expenses
incurred in connection with this Agreement and the transactions
contemplated hereby.
3.2.5 Consummation of the transactions contemplated by this
Agreement will not conflict with or result in a breach of any of the
terms, conditions or provisions of the Certificate of Incorporation or
Bylaws of NEWCO, or of any existing statute, regulation, order, writ,
injunction, ruling or decree or any court or governmental agency, or of
any contract or agreement or instrument to which it is a party or which it
is bound.
3.2.6 On the Effective Date, or within a reasonable time thereafter,
the shares of stock of the Surviving Corporation to be delivered to the
stockholders of the Company pursuant to this Agreement will be, upon
consummation of the transactions, validly issued, fully paid and
non-assessable.
3.2.7 There are no actions, suits, proceedings, claims or
governmental investigations pending or, to the knowledge of NEWCO,
threatened against or affecting NEWCO before any court, administrative
officer or agency, other governmental body or arbitration which might
hinder or delay the consummation of the transactions contemplated by this
Agreement.
3.2.8 No representation or warranty by NEWCO in this Agreement or in
any statement, certificate or schedule furnished or to be furnished
pursuant to this Agreement, including any information about NEWCO given
with respect to preparation of the proxy statement for the meeting of the
Company's stockholders, or in connection with the transactions
contemplated by this Agreement, contains or will contain any untrue
statement of a material fact or omits or will omit to state any material
fact necessary to make the statements therein or herein not false or
misleading.
4. Covenants.
4.1 Covenants of the Company. In addition to any and all other covenants
and undertakings of NEWCO as may be set forth in this Agreement, the Company
covenants and agrees as follows:
4.1.1 The Company shall call a meeting of its stockholders for
purposes of voting on the Merger and shall cooperate fully with NEWCO in
obtaining all necessary federal and state regulatory approvals to effect
the Merger.
4.1.2 The Company shall use its best efforts to effectuate the
transactions contemplated hereby and to fulfill the conditions under this
Agreement.
4.2 Covenants of NEWCO. In addition to any and all other covenants and
undertakings of NEWCO as may be set forth in this Agreement, NEWCO covenants and
agrees as follows:
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4.2.1 Prior to the Effective Date, NEWCO will be authorized to issue
such number of shares of common stock as may be needed to perform this
Agreement and shall have obtained all necessary consents and permits to
issue its stock to the stockholders of the Company as provided herein.
4.2.2 NEWCO shall call a meeting of its stockholders for purposes of
voting on the Merger, or otherwise obtain the approval by unanimous
written consent of its stockholders to effect the Merger, and shall
cooperate fully with the Company in obtaining all necessary federal and
state regulatory approvals to effect the Merger.
4.2.3 NEWCO shall promptly file a registration statement with the
Securities and Exchange Commission to register the shares of its common
stock to be issued in the Merger.
4.2.4 NEWCO shall use its best efforts to obtain a permit under
Title 3 Chapter 2 of the Alaska Administrative Code to conduct business in
the state of Alaska as a bank holding company.
4.2.5 NEWCO shall use its best efforts to obtain approval from the
Federal Reserve for the transactions set forth herein under the Bank
Holding Company Act of 1956, as amended.
4.2.6 On or after the Effective Date, as and when required by the
provisions of this Agreement, NEWCO shall issue shares of its stock to
Eligible Stockholders of the Company, and shall otherwise pay such merger
consideration to Company stockholders in accordance with the provisions of
this Agreement.
4.2.7 NEWCO shall use its best efforts to effectuate the
transactions contemplated hereby and to fulfill the conditions under this
Agreement.
5. Conditions of Closing
5.1 Conditions to Obligations of the Company. The obligations of the
Company under this Agreement to consummate the Merger, shall be subject to the
satisfaction, on or before the Effective Date, of the following conditions
(unless waived by the Company in writing and not required by law):
5.1.1 Approval of the Merger in accordance with law by holders of a
majority of the shares entitled to vote on the Merger of each of NEWCO and
the Company.
5.1.2 The absence of any suit, action or proceeding (made or
threatened) against NEWCO or the Company, or any of their directors or
officers, seeking to challenge, restrain, enjoin, or otherwise affect this
Agreement or the transactions contemplated hereby; seeking to restrict the
rights of the parties or the operation of the business of the Company or
NEWCO after consummation of the Merger; or seeking to subject the parties
to this Agreement or any of their officers or directors to any liability,
fine, forfeiture or penalty on the ground that the parties hereto or their
directors or officers have violated or will violate their fiduciary duties
to their respective stockholders or will violate any applicable law or
regulation in connection with the transactions contemplated by this
Agreement.
5.1.3 Receipt by NEWCO of approval from the Federal Reserve to
become a bank holding company pursuant to Section 3(a)(1) of the Bank
Holding company Act of 1956, as amended, and to take the actions herein
provided.
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5.1.4 Receipt by NEWCO of a permit to do business as a bank holding
company in the State of Alaska.
5.1.5 Procurement of all other consents and approvals, and
satisfaction of all other requirements prescribed by law which are
necessary or appropriate for consummation of the transaction.
5.1.6 Except as contemplated hereby, the representations and
warranties of NEWCO being true at and as of the Effective Date as though
such representations and warranties were made at and as of, such time
period.
5.1.7 NEWCO having complied with all agreements, covenants and
conditions on its part required by this Agreement to be performed or
complied with prior to or at the Effective Date. 5.1.8 Between the date
hereof and the Effective Date, the absence of any material adverse change
in the business, assets, earnings, operation or condition (financial or
otherwise) of NEWCO, except changes contemplated by this Agreement and
such changes as may have been previously approved in writing by the
Company.
5.1.9 Receipt by the Company of a certificate of the President of
NEWCO dated as of the Effective Date, certifying the fulfillment of the
conditions specified in Section 5.2 and such other matters with respect to
the fulfillment by NEWCO of any of the conditions of this Agreement as the
Company may reasonably request on reasonable prior notice.
5.2 Conditions to Obligations of NEWCO. The obligations of NEWCO under
this Agreement to consummate the Merger, shall be subject to the
satisfaction, on or before the Effective Date, of the following conditions
(unless waived by NEWCO in writing and not required by law):
5.2.1 Approval of the Merger in accordance with law by holders of a
majority of the shares entitled to vote on the Merger of each of NEWCO and
the Company.
5.2.2 The absence of any suit, action or proceeding (made or
threatened) against NEWCO or the Company, or any of their directors or
officers, seeking to challenge, restrain, enjoin, or otherwise affect this
Agreement or the transactions contemplated hereby; seeking to restrict the
rights of the parties or the operation of the business of the Company or
NEWCO after consummation of the Merger; or seeking to subject the parties
to this Agreement or any of their officers or directors to any liability,
fine, forfeiture or penalty on the ground that the parties hereto or their
directors or officers have violated or will violate their fiduciary duties
to their respective stockholders or will violate any applicable law or
regulation in connection with the transactions contemplated by this
Agreement.
5.2.3 Approval having been received by NEWCO from the Federal
Reserve to become a bank holding company pursuant to Section 3(a)(1) of
the Bank Holding Company Act of 1956, as amended, and to take the actions
herein provided.
5.2.4 Approval by the Director for NEWCO to conduct business as a
bank holding company in the State of Alaska.
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5.2.5 Procurement of all other consents and approvals, and
satisfaction of all other requirements prescribed by law which are
necessary or appropriate for consummation of the transaction.
5.2.6 Except as contemplated hereby, the representations and
warranties of the Company being true at and as of the Effective Date as
though such representations and warranties were made at and as of such
time period.
5.2.7 The Company having complied with all agreements, covenants and
conditions on their part required by this Agreement to be performed or
complied with prior to or at the Effective Date.
5.2.8 Between the date hereof and the Effective Date, the absence of
any material adverse change in the business, assets, earnings, operations
or condition (financial or otherwise) of the Company, except changes
contemplated by this Agreement and such changes as may have been
previously approved in writing by NEWCO.
5.2.9 Receipt by NEWCO of a certificate of the President of the
Company dated as of the Effective Date, certifying the fulfillment of the
conditions specified in Sections 5.1 above and such other matters with
respect to the fulfillment by the Company of any of the conditions of this
Agreement as NEWCO may reasonably request on reasonable prior notice.
6. Closing.
The transactions contemplated by this Agreement will close in the office
of Foster Pepper & Shefelman LLP, Portland, Oregon, at such time and on such
date within 31 days following the satisfaction of all conditions prior to
closing set forth in Section 5 (not waived or to be satisfied by delivery of
documents or a state of facts to exist at closing) , as set by notice from NEWCO
to the Company or such other time and place as the parties may agree.
7. Termination.
7.1 Procedure for Termination. This Agreement may be terminated or amended
at any time before the Effective Date:
7.1.1 By the mutual consent of the Boards of Directors of the
Company and NEWCO.
7.1.2 By either party acting through its Board of Directors upon
written notice to the other party, if there has been a material
misrepresentation or material breach on the part of the other party in its
representations, warranties and covenants set forth herein or if there has
been any material failure on the part of the other party to comply with
its obligations hereunder which misrepresentation, breach or failure is
not cured within thirty (30) days notice to such other party of such
misrepresentation, breach or failure.
7.1.3 By action of either party acting through its Board of
Directors upon written notice to the other party if any of the conditions
set forth in Section 5 have not been performed at or prior to December 31,
1999.
7.2 Effect of Termination. In the event this Agreement is terminated
pursuant to Section 8.1, it shall become wholly void and of no further force
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and effect and there shall be no liability on the part of either party or its
respective Boards of Directors as a result of such termination or abandonment,
except as provided herein. Such termination shall not relieve any party of
liability for any default prior to termination.
8. Miscellaneous Provisions.
8.1 Amendment or Modification. Prior to the Effective Date, this
Agreement and the Certificate of Merger may be amended or modified, either
before or after approval by the stockholders of the Company or of NEWCO, only
by an agreement in writing executed by the parties hereto upon approval of
their respective boards of directors. Notwithstanding the foregoing, no such
amendment or modification shall reduce the amount or modify the form of
consideration to be received by stockholders of the Company pursuant to this
Agreement without the approval of the Company's stockholders.
8.2 Waivers and Extensions. Each of the parties hereto may, by an
instrument in writing, extend the time for or waive the performance of any of
the obligations of the other party hereto or waive compliance by the other
party hereto of any of the covenants or conditions contained herein, except
that no waiver of the required approval by stockholders of NEWCO and the
Company of this Agreement, or any other condition otherwise required by law,
shall be permitted. No such waiver or extension of time shall constitute a
waiver of any subsequent or other performance or compliance. No such waiver
shall require the approval of the stockholders of any party.
8.3 Expenses. Each of the parties hereto shall pay their respective
expenses in connection with this Agreement and the transactions contemplated
hereby.
8.4 Binding Effect, No Assignment. This Agreement and all the
provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but
neither this Agreement nor any of the rights, interests or obligations
hereunder, shall be assigned by either party without the prior written consent
of the other party.
8.5 Representations and Warranties. The respective representations and
warranties of each party hereto contained herein shall not be deemed to be
waived or otherwise affected by any investigation made by the other party and,
shall not survive the closing hereof.
8.6 No Benefit to Third Parties. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give any person or entity,
other than the parties hereto, any right or remedy under or by reason hereof.
8.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
8.8 Entire Agreement. This Agreement, including all of the exhibits
hereto constitute the entire Agreement between the parties with respect to the
Merger and other transactions contemplated hereby and supersedes all prior
agreements and understandings between the parties with respect to such matters.
8.9 Headings. The article and section headings in this Agreement are for
the convenience of the parties and shall not affect the interpretation of this
Agreement.
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8.10 Counterparts. At the convenience of the parties, this Agreement may
be executed in counterparts, and each such executed counterpart shall be
deemed to be an original instrument, but all such executed counterparts
together shall constitute but one Agreement and Plan of Reorganization.
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IN WITNESS WHEREOF, the parties hereto, pursuant to the approval and
authority duly given by resolutions adopted by a majority of their respective
Board of Directors, have each caused this Agreement to be executed by its
authorized officer.
The Company:
First Bancorp, Inc.
By:
-------------------------------------------
William G. Moran, Jr., President
NEWCO:
Newco Alaska, Inc.
By:
-------------------------------------------
William G. Moran, Jr., President
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APPENDIX B
Opinion of the Independent Investment Advisor
Note: The following discussion is a summary of the report prepared by Alex
Sheshunoff & Co. Investment Banking in connection with the fairness opinion
provided to First Bancorp's Board of Directors. A copy of the opinion letter
follows this discussion.
- -----------------------------------
Alex Sheshunoff & Co. Investment Banking ("Sheshunoff") understands that
the Board of Directors of First Bancorp, Inc. ("First Bancorp") has unanimously
approved an Agreement and Plan of Reorganization (the "Agreement"), as a result
of which First Bancorp will merge with a newly formed corporation (NEWCO), with
NEWCO being the surviving corporation (the "Merger"), upon which NEWCO will
change its name to First Bancorp, Inc. As of the date of this writing, NEWCO was
completing its corporate organization, and in this process, will elect S
Corporation status under the Internal Revenue Code. In conjunction with the
Merger, all shareholders with 749 shares or less , or non-qualifying
stockholders, will have their shares exchanged for cash in the amount of $175.00
per share (the "Cash Amount"), through a cash-for-stock exchange. The remaining
shareholders with 750 shares or more will be entitled to receive NEWCO common
stock or, at the option of the Board of Directors, the Cash Amount. The
pro-forma number of NEWCO shareholders, assuming no shareholders of First
Bancorp common stock with more than 750 shares elects cash in lieu of NEWCO
shares and all shareholders with less than 750 shares elects to accept the Cash
Amount, will total 47.
First Bancorp retained Sheshunoff to provide its opinion of the fairness,
from a financial viewpoint, of the Cash Amount to be received by certain First
Bancorp stockholders (as described in the preceding paragraph) in connection
with the Merger. As part of its investment banking business, Sheshunoff is
regularly engaged in the valuation of securities in connection with mergers and
acquisitions, and valuations for estate, corporate and other purposes. First
Bancorp's Board retained Sheshunoff based upon its experience as a financial
advisor in mergers and acquisitions of financial institutions, and its knowledge
of financial institutions.
The full text of Sheshunoff's opinion letter ("Opinion") which sets forth,
among other things, assumptions made, procedures followed, matters considered,
and limitations on the review undertaken is included in this Appendix B. First
Bancorp stockholders are urged to read the Opinion carefully and in its
entirety. Sheshunoff's Opinion is addressed to First Bancorp's Board and does
not constitute a recommendation to any stockholder of First Bancorp as to how
such stockholder should vote at the First Bancorp Shareholders Meeting.
In connection with its Opinion, Sheshunoff:
1. Reviewed a draft copy of the Agreement;
2. Evaluated First Bancorp's consolidated results based upon a review of its
annual financial statements for each of four-years ending December 31,
1998, 1997, 1996 and 1995;
3. Reviewed Call Report information as of December 1998 for First Bancorp;
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4. Analyzed certain budget and financial projections of First Bancorp
prepared by the management of First Bancorp;
5. Conducted conversations with executive management regarding recent and
projected financial performance of First Bancorp;
6. Compared First Bancorp's recent operating results with those of certain
other banks in the Northwest region of the United States which have
recently been acquired;
7. Compared First Bancorp's recent operating results with those of certain
other banks in the United States which have recently been acquired;
8. Compared the pricing multiples for the Cash Amount in the Merger to those
of certain other banks in the Northwest region of the United States which
have recently been acquired;
9. Compared the pricing multiples for the Cash Amount in the Merger to those
of certain other banks in the United States which have recently been
acquired;
10. Analyzed the net present value of the after-tax cash flows First Bancorp
could produce through the year 2003, based on assumptions provided by
management; and;
11. Performed such other analyses as we deemed appropriate.
In connection with its review, Sheshunoff relied upon and assumed the
accuracy and completeness of all of the foregoing information provided to it or
made publicly available, and Sheshunoff did not assume any responsibility for
independent verification of such information. With respect to internal
confidential financial projections provided by First Bancorp, Sheshunoff assumed
that such projections were reasonably prepared reflecting the best currently
available estimates and judgments of the future financial performance of First
Bancorp and did not independently verify the validity of such assumptions.
Sheshunoff did not make any independent evaluation or appraisal of the assets or
liabilities of First Bancorp, nor was Sheshunoff furnished with any such
appraisals. Sheshunoff did not examine any individual loan files of First
Bancorp. Sheshunoff is not an expert in the evaluation of loan portfolios for
the purposes of assessing the adequacy of the allowance for losses with respect
thereto and has assumed that such allowances for each of the companies are, in
the aggregate, adequate to cover such losses.
Sheshunoff's Opinion is necessarily based on economic, market and other
conditions as in effect on, and the information made available to Sheshunoff as
of December 31, 1998.
In connection with rendering its Opinion, Sheshunoff performed a variety
of financial analyses. The preparation of an opinion involves various
determinations as to the most appropriate and relevant methods of financial
analysis and the application of those methods to the particular circumstances
and, therefore, such an Opinion is not readily susceptible to partial analysis
of summary description. Moreover, the evaluation of fairness, from a financial
point of view, of the consideration to be received by the stockholders of First
Bancorp is to some extent a subjective one based on the experience and judgment
of Sheshunoff and not merely the result of mathematical analysis of financial
data. Accordingly, notwithstanding the separate factors summarized below,
Sheshunoff believes that its analyses must be considered as a whole and that
selecting portions of its analyses and of the factors considered by it, without
considering all analyses and factors, could create an incomplete view of the
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evaluation process underlying its Opinion. The ranges of valuations resulting
from any particular analysis described below should not be taken to be
Sheshunoff's view of the actual value of First Bancorp.
In performing its analyses, Sheshunoff made numerous assumptions with
respect to industry performance, business and economic conditions and other
matters, many of which are beyond the control of First Bancorp. The analyses
performed by Sheshunoff are not necessarily indicative of actual values or
future results, which may be significantly more or less favorable than suggested
by such analyses, nor are they appraisals. In addition, Sheshunoff's analyses
should not be viewed as determinative of First Bancorp Board's or First Bancorp
management's opinion with respect to the value of First Bancorp.
The following is a summary of the analyses performed by Sheshunoff in
connection with its Opinion dated as of January 29, 1999. The following
discussion contains financial information and market information concerning
First Bancorp as of December 31, 1998.
Analysis of Selected Transactions.
Sheshunoff performed an analysis of premiums paid in selected pending or
recently completed acquisitions of banking organizations in the United States
and in the Northwestern United States, with comparable characteristics to the
First Bancorp transaction. Two sets of comparable transactions were analyzed to
ensure a thorough comparison.
The first set of comparable transactions (the "Northwest Guideline
Transactions") consisted of a group of comparable transactions based upon the
geographical market area of First Bancorp. The State Guideline Transactions
specifically consisted of 7 mergers and acquisitions of banks located in the
Northwestern Region of the United States (specifically Alaska, Idaho, Montana,
Oregon and Washington) which announced their sale between the dates of January
1, 1997 and December 31, 1998 and reported total assets between $100 million and
$300 million. The analysis yielded multiples of the Northwest Guideline
Transactions' purchase price relative to: (i) book value ranging from 2.44 times
to 3.97 times with an average of 3.08 times and a median of 2.60 times (compared
with the multiple associated with the Merger of 1.57 times December 31, 1998
book value); (ii) last 12 months earnings ranging from 12.03 times to 29.78
times with an average of 19.93 times and a median of 20.32 times (compared with
the multiple associated with the Merger of 15.72 times last 12 months earnings
as of December 31, 1998); (iii) total deposits ranging from 17.32% to 37.97%
with an average of 28.92% and a median of 29.53% (compared to the multiple
associated with the Merger of 15.88% as of December 31, 1998); and (iv) total
assets ranging between 16.04% and 32.87% with an average of 24.94% and a median
of 26.64% (compared with the multiple associated with the Merger of 14.30% of
December 31, 1998 total assets).
No sales of banks have been reported in the state of Alaska since January
1, 1997. Many of the transactions in the Northwest Guideline Transactions group
involved banks located in the state of Washington which may not be a strong
indicator of potential acquisition pricing multiples that First Bancorp would
realize in an acquisition. The markets in Washington and other Northwestern
states are generally stronger than Alaska.
The second set of comparable transactions (the "National Guideline
Transactions") consisted of a group of comparable bank transactions based upon
the asset size of First Bancorp. The National Guideline Transactions
specifically consisted of 25 mergers and acquisitions of banks whereby the
seller was located in the United States which announced its sale between January
1, 1998 and December 31, 1998 and reported total assets between $200 million and
$300 million. The analysis yielded multiples of the National Guideline
Transactions' purchase price relative to: (i) book value ranging from 1.85 times
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to 5.59 times with an average of 3.14 times and a median of 3.00 times (compared
with the multiple associated with the Merger of 1.57 times December 31, 1998
book value); (ii) last 12 months earnings ranging from 9.35 times to 57.10 times
with an average of 25.83 times and a median of 23.50 times (compared with the
multiple associated with the Merger of 15.72 times last 12 months earnings as of
December 31, 1998); (iii) total deposits ranging from 19.72% to 68.52% with an
average of 34.68% and a median of 34.93% (compared to the multiple associated
with the Merger of 15.88% as of December 31, 1998); and, (iv) total assets
ranging between 17.47% and 60.56% with an average of 29.71% and a median of
28.68% (compared with the multiple associated with the Merger of 14.30% of
December 31, 1998 total assets).
Discounted Cash Flow Analysis.
Using discounted cash flow analysis, Sheshunoff estimated the present
value of the future stream of after-tax cash flow that First Bancorp could
produce through the year 2003, under various circumstances, assuming that First
Bancorp performed in accordance with the earnings/return projections of
management. Sheshunoff estimated the terminal value for First Bancorp at the end
of the period by capitalizing the final period projected earnings (year 2003)
utilizing an assumed long term growth rate of 4% and discount rates ranging from
11% to 13%, and then discounting the cash flow streams defined as maximum
dividends available to shareholders (assuming all earnings in excess of that
required to maintain First Bancorp's current equity to assets ratio are paid out
in dividends) and the terminal value using discount rates ranging from 11% to
13% chosen to reflect different assumptions regarding the required rates of
return of First Bancorp and the inherent risk surrounding the underlying
projections. This discounted cash flow analysis indicated a per share value
range of $146 to $193 (rounded), compared to the value of the Merger
Consideration for First Bancorp of $175 per share.
Comparable Company Analysis.
As previously mentioned, due to the lack of recent bank acquisitions in
the state of Alaska, multiples for banks and bank holding companies located in
other Northwestern states may not conclusively indicate acquisition value for a
bank located in Alaska. The economic conditions in Alaska are much different
than that of other states located in the Northwestern Region. These differences
may result in much different pricing and acquisition multiples for banks located
in Alaska than other banks in the region. Therefore, in an effort to determine
the trading pricing multiples of banks in Alaska as compared to other banks in
the Northwest region of the United States, Sheshunoff compared selected balance
sheet data, asset quality, capitalization and profitability measures using
financial data at December 31, 1998 and market pricing multiples using financial
data at December 31, 1998 to a group of selected Northwestern bank holding
companies which Sheshunoff deemed to be relevant and compared them to
publicly-traded banks in Alaska with assets below $500 million (only one
publicly-traded bank in Alaska matched this criteria (the "Alaska Bank")).
The group of selected Northwestern bank holding companies (the
"Northwestern Guideline Companies") included all banks (eight banks) in the
Northwestern region of the United States (specifically Alaska, Idaho, Montana,
Oregon and Washington) with reported assets below $500 million.
This comparison, among other things, showed that: (i) the Alaska Bank's
equity to asset percentage was 7.85%, compared to an average of 9.37% and a
median of 9.13% for the Northwestern Guideline Companies; (ii) for the last
twelve months ended September 30, 1998, the Alaska Bank's return on average
equity was 18.28%, compared to an average of 14.92% and a median of 14.65% for
the Northwestern Guideline Companies; (iii) for the last twelve months ended
September 30, 1998, the Alaska Bank's return on average assets was 1.52%,
B-4
<PAGE>
compared to an average of 1.43% and a median of 1.50% for the Northwestern
Guideline Companies; (iv) as of December 31,1998, the Alaska Bank's price per
share to September 30, 1998 book value per share was 1.77 times, compared to an
average of 2.05 times and median of 1.88 times for the Northwestern Guideline
Companies; and (v) as of December 31, 1998, the Alaska Bank's price per share to
last twelve months earnings per share as of September 30, 1998 was 11.07 times,
compared to an average of 15.05 times and median of 13.65 times for the
Northwestern Guideline Companies. Overall, it was determined that the Alaska
Bank's pricing multiples were lower than those reported by the Northwestern
Guideline Companies at the average and the median. It is likely that acquisition
multiples would also be lower reflecting the lower market capitalization.
No company or transaction used in the comparable company and comparable
transaction analyses is identical to First Bancorp or the Merger. Accordingly,
an analysis of the results of the foregoing necessarily involves complex
considerations and judgments concerning differences in financial and operating
characteristics of First Bancorp and other factors that could affect the public
trading value of the companies to which they are being compared. Mathematical
analysis (such as determining the average or median) is not in itself a
meaningful method of using comparable transaction data or comparable company
data.
Pursuant to an engagement letter dated August 12, 1998, between First
Bancorp and Sheshunoff, First Bancorp agreed to pay Sheshunoff a retainer fee of
$2,500, and professional fee of $22,500 payable upon the completion and delivery
of a fair value for the minority shares of First Bancorp in conjunction with its
conversion to S Corporation status, and upon providing its opinion of the
fairness, from a financial viewpoint, of the Cash Amount to be received by
certain First Bancorp stockholders (as described above) in connection with the
Merger and S Corporation conversion. First Bancorp also agreed to indemnify and
hold harmless Sheshunoff and its shareholders, directors, officers, partners,
agents, employees and other affiliates against certain liabilities in connection
with its services under the engagement letter, except in certain cases for
liabilities resulting from the bad faith or negligence of Sheshunoff.
Sheshunoff's fee is not contingent upon or affected by its valuation conclusion.
Sheshunoff has been engaged for the past several years to provide a fair
market value of the shares held by First Bancorp's Employee Stock Ownership Plan
("ESOP"). Other than these activities, to the best of Sheshunoff's and First
Bancorp's knowledge, there has been no material relationship between Sheshunoff
or its affiliates and First Bancorp or its affiliates other than as described
herein during the past two years, nor is any such relationship mutually
understood to be contemplated.
B-5
<PAGE>
January 29, 1999
Board of Directors
First Bancorp, Inc.
331 Dock Street
Ketchikan, AK 99901
Members of the Board:
Alex Sheshunoff & Co. Investment Banking ("Sheshunoff") understands that
the Board of Directors of First Bancorp, Inc. ("First Bancorp") has unanimously
approved an Agreement and Plan of Reorganization (the "Agreement"), as a result
of which First Bancorp will merge with a newly formed corporation (NEWCO), with
NEWCO being the surviving corporation (the "Merger"), upon which NEWCO will
change its name to First Bancorp, Inc. As of the date of this writing, NEWCO was
completing its corporate organization, and in this process, will elect S
Corporation status under the Internal Revenue Code. In conjunction with the
Merger, all shareholders with 750 shares or less will have their shares
exchanged for cash in the amount of $175.00 per share (the "Cash Amount"),
through a cash for stock exchange. The remaining shareholders with more than 750
shares will be entitled to receive NEWCO common stock or, at the option of the
Board of Directors, the Cash Amount. The pro-forma number of NEWCO shareholders,
assuming no shareholders of First Bancorp common stock with more than 750 shares
elects cash in lieu of NEWCO shares and all shareholders with less than 750
shares elects to accept the Cash Amount, will total 47.
You have requested Sheshunoff's opinion, as to whether the Cash Amount to
be received by the holders of shares of First Bancorp common stock pursuant to
the Agreement is fair from a financial point of view to such holders of First
Bancorp Common Stock.
In connection with our opinion, Sheshunoff has, among other things:
1. Reviewed a draft copy of the Agreement;
2. Evaluated First Bancorp's consolidated results based upon a review of its
annual financial statements for each of four-years ending December 31,
1998, 1997, 1996 and 1995;
3. Reviewed Call Report information as of December 1998 for First Bancorp;
4. Analyzed certain budget and financial projections of First Bancorp
prepared by the management of First Bancorp;
5. Conducted conversations with executive management regarding recent and
projected financial performance of First Bancorp;
6. Compared First Bancorp's recent operating results with those of certain
other banks in the Northwest region of the United States which have
recently been acquired;
7. Compared First Bancorp's recent operating results with those of certain
other banks in the United States which have recently been acquired;
B-6
<PAGE>
8. Compared the pricing multiples for the Cash Amount in the Merger to those
of certain other banks in the Northwest region of the United States which
have recently been acquired;
9. Compared the pricing multiples for the Cash Amount in the Merger to those
of certain other banks in the United States which have recently been
acquired;
10. Analyzed the net present value of the after-tax cash flows First Bancorp
could produce through the year 2003, based on assumptions provided by
management; and,
11. Performed such other analyses as we deemed appropriate.
Sheshunoff has assumed and relied upon without independent verification
the accuracy and completeness of the information supplied or otherwise made
available to it by First Bancorp for the purposes of this opinion. Sheshunoff
has not made an independent evaluation of the assets or liabilities of First
Bancorp, nor has Sheshunoff been furnished with any such appraisals. With
respect to First Bancorp budgets and financial forecasts, Sheshunoff has assumed
that they have been reasonably prepared and reflect the best currently available
estimates and judgments of management of First Bancorp, as to the future
financial performance of First Bancorp, and Sheshunoff has assumed such
forecasts and projections will be realized in the amounts and at the times
contemplated thereby. Sheshunoff has assumed that obtaining any necessary
regulatory approvals and third party consents for the Merger or otherwise will
not have an adverse effect on First Bancorp, or NEWCO pursuant to the Agreement.
Sheshunoff is not an expert in the evaluation of loan portfolios for the purpose
of assessing the adequacy of the allowance for losses with respect thereto and
has assumed that such allowances for each of the companies are in the aggregate,
adequate to cover such losses. In addition, Sheshunoff has not reviewed any
individual credit files or made an independent evaluation, appraisal or physical
inspection of the assets or individual properties of First Bancorp, nor has
Sheshunoff been furnished with any such evaluations or appraisals.
Sheshunoff's opinion is necessarily based on economic, market and other
conditions as in effect on, and the information made available to it, as of the
date hereof. Events occurring after the date hereof could materially affect the
assumptions used in preparing this opinion. Sheshunoff has also assumed that
there are no material changes in First Bancorp's assets, financial condition,
results of operations, business or prospects since the respective dates of their
last financial statements reviewed by it, and that off-balance sheet activities
of First Bancorp will not materially and adversely impact the future financial
position or results of operation of First Bancorp. Sheshunoff has also assumed
the Merger will be completed as set forth in the Agreement and that no material
changes will be made or restrictions imposed by regulatory or other parties on
the terms of the Agreement.
Sheshunoff's opinion is limited to the fairness, from a financial point of
view, to the holders of First Bancorp common stock of the Cash Amount and does
not address First Bancorp's underlying business decision to undertake the
Merger. Moreover, this letter, and the opinion expressed herein, does not
constitute a recommendation to any stockholder as to any approval of the Merger
or the Agreement. It is understood that this letter is for the information of
the Board of Directors of First Bancorp and may not be used for any other
purpose without Sheshunoff's prior written consent, except that this opinion may
be included in its entirety in any filing made by First Bancorp with the
Securities and Exchange Commission with respect to the Merger.
Sheshunoff has no past, present or contemplated interest in First Bancorp
or any of its shares. Sheshunoff will receive a fee for providing this opinion.
Sheshunoff's fee is not dependent on the Cash Amount. For the past two years,
Sheshunoff provided an estimate of the value of minority shares of First Bancorp
held by its Employee Stock Ownership Plan.
B-7
<PAGE>
Based upon and subject to the foregoing, Sheshunoff is of the opinion
that, as of the date hereof, the Cash Amount to be received by First Bancorp
common stockholders is fair from a financial point of view to the holders of
such shares.
Very truly yours,
ALEX SHESHUNOFF & CO.
INVESTMENT BANKING
B-8
<PAGE>
APPENDIX C
General Corporation Law of the State of Delaware
262. Appraisal rights
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection d) of this
section with respect to such shares, who continuously holds such shares
through the effective date of the merger or consolidation, who has otherwise
complied with subsection Id) of this section and who has neither voted in
favor of the merger or consolidation nor consented thereto in writing
pursuant to s. 228 of this title shall be entitled to an appraisal by the
Court of Chancery of the fair value of the stockholder's shares of stock
under the circumstances described in subsections (b) and (c) of this section.
As used in this section, the word "stockholder" means a holder of record of
stock in a stock corporation and also a member of record of a nonstock
corporation; the words "stock" and "share" mean and include what is
ordinarily meant by those words and also membership or membership interest of
a member of a nonstock corporation: and the words "depository receipt" mean a
receipt or other instrument issued by a depository representing an interest
in one or more shares, or fractious thereof, solely of stock of a
corporation. which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to
be effected pursuant to s. 251 (other' than a merger effected pursuant to s.
25 1(g) of this title), s. 252, s. 254, s. 25?, s. 258, s. 263 or s. 264 of
this title:
(1) Provided, however, that no appraisal rights under' this section shall
be available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation, were
either (i) listed in a national securities exchange or designated as a
national market system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc. or (ii) held of record by
more than 2,000 holders; and further provided that no appraisal rights shall
be available for any Shares of stock of the constituent corporation surviving
a merger if the merger did not require for its approval the vote of the
stockholders of the surviving corporation as provided in subsection ID of s.
251 of this title,
C-1
<PAGE>
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required by
the terms of an agreement of merger or consolidation pursuant to ss. 251,
252, 254, 257, 258, 263 and 264 of this title to accept for such stock
anything except:
a. Shares of stock of the corporation surviving or resulting
from such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation. or depository
receipts in respect thereof, which shares of stock (or depository
receipts in respect thereof, or depository receipts at the effective
date of the merger or consolidation will be either listed on a national
securities exchange or designated as a national market system security
on an interdealer quotation system by the National Association of
Securities Dealers Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts
and cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a meeting
of' stockholders, the corporation, not less than 20 days prior to the
meeting, shall notify each of its stockholders who was such on the record
date for such meeting with respect to shares for which appraisal rights are
available pursuant to subsection kb) or (c) hereof that appraisal rights are
available for any or all of the shares of the constituent corporations, and
shall include in such notice a copy of this section. Each stockholder
electing to demand the appraisal of such stockholder's shares shall deliver
to the corporation, before the taking of the vote on the merger or
consolidation, a written demand for appraisal of such stockholder's shares.
Such demand will be sufficient if it reasonably informs the corporation of
the identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of' such stockholder's shares. A proxy or vote against
the merger or consolidation shall not constitute such a demand. A stockholder
electing to take such action must do so by a separate written demand as
herein provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective or
C-2
<PAGE>
(2) If the merger or consolidation was approved pursuant to s. 228 or
s. 253 of this title, each consitutent [sic] corporation. Either before the
effective date of the merger or consolidation or within ten days thereafter,
shall notify each of the holders of any class or series of stock of such
constitutent [sic] corporation who are entitled to appraisal rights of the
approval of the merger or consolidation and that appraisal rights are
available for any or all shares of such class or series of stock of such
constituent corporation, and shall include in such notice a copy of this
section; provided that, if the notice is given on or after the effective date
of the merger or consolidation, such notice shall be given by the surviving
or resulting corporation to all such holders of any class or series of stock
of a constituent corporation that are entitled to appraisal rights. Such
notice may, and, if given on or after the effective date of the merger or
consolidation, shall, also notify such stockholders of the effective date of
the merger or consolidation. Any stockholder entitled to appraisal rights
may, within 20 days after the date of mailing of such notice, demand in
writing from the surviving or resulting corporation the appraisal of such
holder's shares. Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of such holder's shares. If such
notice did not notify stockholders of the effective date of the merger or
consolidation, either (i) each such constitutent corporation shall send a
second notice before the effective date of the merger or consolidation
notifying each of the holders of any class or series of stock of such
constitutent corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the surviving or
resulting corporation shall send such a second notice to all such holders on
or within 10 days after such effective date; provided, however, that if such
second notice is sent more than 20 days following the sending of the first
notice, such second notice need only be sent to each stockholder who is
entitled to appraisal rights and who has demanded appraisal of such holder's
shares in accordance with this subsection. An affidavit of' the secretary or
assistant secretary or of the transfer agent of the corporation that is
required to give either notice that such notice has been given shall, in the
absence of fraud be prima fade evidence of the facts stated therein. For
purposes of determining the stockholders entitled to receive either notice,
each constitutent corporation may fix, in advance, a record date that shall
be not more than 10 clays prior to the date the notice is given, provided,
that if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the record
date shall be the close of business on the day next preceding the day on
which the notice is given.
C-3
<PAGE>
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who
has complied with subsections (a) and (d) hereof and who is otherwise
entitled to appraisal rights, may file a petition in the Court of Chancery
demanding a determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms
offered upon the merger or consolidation. Within 120 days after the
effective date of the merger or consolidation, any stockholder who has
complied with the requirements of' subsections (a) and (d) hereof, upon
written request shall be entitled to receive from the corporation surviving
the merger or resulting from the consolidation a statement setting forth the
aggregate number of shares not voted in favor of the merger or consolidation
and with respect to which demands for appraisal have been received and the
aggregate number of holders of such shares. Such written statement shall be
mailed to the stockholder within 10 days after such stockholder's written
request for such a statement is received by the surviving or resulting
corporation or within 10 days after expiration of the period for delivery of
demand for appraisal under subsection (d) hereof, whichever is later.
(h) After determining the stockholders entitled to an appraisal. the
Court shall appraise the shares, determining their fair value exclusive of
any element of value arising from the accomplishment or expectation of the
merger or consolidation, together with a fair rate of interest, if any, to be
paid upon the amount determined to be the fair value. In determining such
fair value, the Court shall take into account all relevant factors. In
determining the fair rate of interest, the Court may consider all relevant
factors, including the rate of interest which the surviving or resulting
corporation would have had to pay to borrow money during the pendency of the
proceeding. Upon application by the surviving or resulting corporation or by
any stockholder entitled to participate in the appraisal proceeding, the
Court may, in its discretion, permit discovery or other pretrial proceedings
and may proceed to trial upon the appraisal prior to the final determination
of the stockholder entitled to an appraisal. Any stockholder whose name
appears on the list tiled by the surviving or resulting corporation pursuant
to subsection (f) of this section and which has submitted such stockholder's
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that such
stockholder is not entitled to appraisal rights under this section.
(k) From and after the effective date of' the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection d) of
this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation);
provided, however, that if no petition for an appraisal shall be filed within
the mime provided in subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a written withdrawal
of' such stockholder's demand for an appraisal and an acceptance of the
merger or consolidation, either within 60 days after the effective date of
the merger or consolidation as provided in subsection (c) of this section or
thereafter with the written approval of the corporation, then the right of
such stockholder to an appraisal shall cease. Notwithstanding the foregoing,
no appraisal proceeding in the Court of Chancery shall be dismissed as to any
stockholder without the approval of the Court, and such approval may be
conditioned upon such terms as the Court. deems just.
(68 Del. Laws, c. 337, ss. 3, 4; 69 Del. Laws, c. 61, s. 10; 69 Del. Laws, c.
262, ss. 1-9; 70 Del. Laws, c. 79, s. 16; 70 Del. Laws, c. 186, s. 1; 70 Del.
Laws, c. 299, ss. 2, 3; 70 Del. Laws, c. 349, s. 22; 71 Del. Laws, c. 120, s.
15; 71 Del. Laws, c. 339, ss. 49-52.)
C-4
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
OF
FIRST BANCORP, INC. and Subsidiary
Independent Auditors Report..................................F - 2
Consolidated Balance Sheets at December 31, 1998 and 1997....F - 3
Consolidated Statements of Income for the years ended
December 31, 1998, 1997 and 1996............................F - 4
Consolidated Statements of Changes in Stockholders' Equity and
Comprehensive Income for the years ended December 31, 1998,
1997 and 1996................................................F - 5
Consolidated Statements of Cash Flow for the years
ended December 31, 1998, 1997 and 1996.......................F - 6
Notes to Consolidated Financial Statements...................F - 7
F-1
<PAGE>
Independent Auditors' Report
The Board of Directors
First Bancorp, Inc.:
We have audited the accompanying consolidated balance sheets of First
Bancorp, Inc. and subsidiary as of December 31, 1998 and 1997, and the related
consolidated statements of income, changes in stockholders' equity and
comprehensive income, and cash flows for each of the years in the three-year
period ended December 31, 1998. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits. We
conducted our audits in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion. In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of First Bancorp, Inc. and
subsidiary as of December 31, 1998 and 1997, and the results of their operations
and their cash flows for each of the years in the three-year period ended
December 31, 1998 in conformity with generally accepted accounting principles.
KPMG LLP
January 21, 1999
Anchorage, Alaska
F-2
<PAGE>
FIRST BANCORP, INC.
AND SUBSIDIARY
Consolidated Balance Sheets
December 31, 1998 and 1997
<TABLE>
<CAPTION>
Assets 1998 1997
--------------- ---------------
<S> <C> <C> <C>
Cash and due from banks (note 2) $ 9,783,427 9,851,577
Federal funds sold 9,391,000 3,935,000
Investment securities available for sale (note 3) 100,960,973 112,162,100
Investment in Federal Home Loan Bank stock 2,896,900 2,683,000
Loans (note 4) 123,122,057 106,928,905
Less allowance for possible loan losses (note 5) 1,421,352 1,293,512
--------------- ---------------
Net loans 121,700,705 105,635,393
--------------- ---------------
Premises and equipment, net (note 6) 5,796,522 5,687,411
Accrued interest receivable 1,756,967 1,938,811
Other assets (note 8) 2,508,378 1,911,094
--------------- ---------------
Total assets $ 254,794,872 243,804,386
=============== ===============
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Demand $ 68,133,335 64,669,469
Savings 48,846,681 50,727,050
Time deposits of $100,000 or more (note 7) 60,814,472 53,554,698
Other time deposits 51,733,617 50,720,931
--------------- ---------------
Total deposits 229,528,105 219,672,148
Federal Home Loan Bank advances (note 11) -- 1,000,000
Accrued interest payable 516,779 476,715
Other liabilities 1,557,627 1,050,977
--------------- ---------------
Total liabilities 231,602,511 222,199,840
--------------- ---------------
Stockholders' equity:
Common stock of $5 par value. Authorized 1,000,000
shares; issued and outstanding 214,040 shares in
1998 and 1997 1,070,200 1,070,200
Surplus 6,414,704 6,414,704
Undivided profits 16,051,970 14,774,999
Accumulated other comprehensive income - net
unrealized gain on securities available for sale 184,012 (179,617)
Treasury stock, at cost (5,765 shares in 1998 and
5,306 shares in 1997) (528,525) (475,740)
--------------- ---------------
Total stockholders' equity 23,192,361 21,604,546
Commitments and contingencies (notes 10, 11 and 15)
--------------- ---------------
Total liabilities and stockholders' equity $ 254,794,872 243,804,386
=============== ===============
See accompanying notes to consolidated financial statements.
</TABLE>
F-3
<PAGE>
FIRST BANCORP, INC.
AND SUBSIDIARY
Consolidated Statements of Income
Years ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
1998 1997 1996
------------- ------------ ------------
Interest income:
<S> <C> <C> <C>
Interest on loans $ 11,383,100 10,284,722 8,730,271
Interest on federal funds sold 550,272 478,661 533,819
Interest-bearing deposits in other banks 69,617 68,611 62,957
Interest on securities available for sale:
Taxable (note 3) 6,146,080 6,510,753 6,699,638
Exempt from federal income taxes 106,482 66,936 117,335
------------- ------------ ------------
Total interest income 18,255,551 17,409,683 16,144,020
------------- ------------ ------------
Interest expense:
Interest on deposits:
Time deposits of $100,000 or more 2,780,460 2,445,427 2,181,080
Other 5,689,568 5,612,024 5,264,338
Interest on federal funds purchased 12,969 40,288 59,835
Other interest 36,734 135,926 158,029
------------- ------------ ------------
Total interest expense 8,519,731 8,233,665 7,663,282
------------- ------------ ------------
Net interest income 9,735,820 9,176,018 8,480,738
Provision for loan losses (note 5) 252,000 232,000 215,750
------------- ------------ ------------
Net interest income after provision
for loan loss 9,483,820 8,944,018 8,264,988
------------- ------------ ------------
Other operating income:
Net realized gains on sales of securities
available for sale (note 3) 73,149 225,240 17,422
Service charges on deposit accounts 645,722 637,960 676,087
Loan placement fees 1,704,721 1,181,208 1,108,479
Other 1,131,122 848,627 855,653
------------- ------------ ------------
Total other operating income 3,554,714 2,893,035 2,657,641
------------- ------------ ------------
Other operating expenses
Salaries and employee benefits 5,558,140 5,174,585 5,025,104
Occupancy, net 618,077 640,190 669,492
Equipment 1,061,888 960,273 921,256
Federal Deposit Insurance Corporation assessments 15,610 25,365 8,264
Other 2,033,840 1,781,384 1,757,492
------------- ------------ ------------
Total other operating expenses 9,287,555 8,581,797 8,381,608
------------- ------------ ------------
Income before income taxes 3,750,979 3,255,256 2,541,021
Provision for income taxes (note 8) 1,432,235 1,065,956 790,311
------------- ------------ ------------
Net income $ 2,318,744 2,189,300 1,750,710
============= ============ ============
Per share amounts - net income $ 11.12 $ 10.48 $ 8.29
============= ============ ============
Weighted average shares outstanding $ 208,460 208,980 209,986
============= ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
FIRST BANCORP, INC.
AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders' Equity
and Comprehensive Income
Years ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
Accumulated
other
Common Undivided Treasury comprehensive
stock Surplus profits stock income Total
------------- ------------ ------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 $ 1,058,300 6,316,648 12,917,381 (313,400) 249,388 20,228,317
Comprehensive income:
Net income -- -- 1,750,710 -- -- 1,750,710
Change in unrealized holding loss on
securities available for sale, net
of taxes of $297,543 -- -- -- -- (446,314) (446,314)
-------------
Total comprehensive income 1,304,396
-------------
Cash dividends ($5 per share) -- -- (1,037,909) -- -- (1,037,909)
Purchase of treasury stock, at cost -- -- -- (56,240) -- (56,240)
------------- ------------ ------------ ------------- ------------- -------------
Balance at December 31, 1996 1,058,300 6,316,648 13,630,182 (369,640) (196,926) 20,438,564
Comprehensive income:
Net income -- -- 2,189,300 -- -- 2,189,300
Change in unrealized holding loss on
securities available for sale, net
of taxes of $11,538 -- -- -- -- 17,309 17,309
-------------
Total comprehensive income 2,206,609
-------------
Cash dividends ($5 per share) -- -- (1,044,483) -- -- (1,044,483)
Purchase of 1,125 shares of
treasury stock, at cost -- -- -- (106,100) -- (106,100)
Exercise 2,380 shares of stock
options (note 10) 11,900 98,056 -- -- -- 109,956
------------- ------------ ------------ ------------- ------------- -------------
Balance at December 31, 1997 1,070,200 6,414,704 14,774,999 (475,740) (179,617) 21,604,546
Comprehensive income:
Net income -- -- 2,318,744 -- -- 2,318,744
Change in unrealized holding loss on
securities available for sale, net
of taxes of $243,447 -- -- -- -- 363,629 363,629
-------------
Total comprehensive income 2,682,373
-------------
Cash dividends ($5 per share) -- -- (1,041,773) -- -- (1,041,773)
Purchase of 459 shares of treasury
stock, at cost -- -- -- (52,785) -- (52,785)
------------- ------------ ------------ ------------- ------------- -------------
Balance at December 31, 1998 $ 1,070,200 6,414,704 16,051,970 (528,525) 184,012 23,192,361
============= ============ ============ ============= ============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
FIRST BANCORP, INC.
AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
1998 1997 1996
---------------- --------------- ----------------
Operating activities:
<S> <C> <C> <C>
Net income $ 2,318,744 2,189,300 1,750,710
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 252,000 232,000 215,750
Provision for losses on other real estate 37,542 3,128 --
Depreciation and amortization 752,609 699,611 687,104
Gain on sale of other real estate -- -- (30,141)
Amortization of investment security premiums 103,822 143,462 196,185
Accretion of investment security discounts (159,566) (171,364) (248,693)
Net investment securities gains (73,149) (225,240) (17,422)
Gain from sale of bank premises and equipment (21,239) -- --
(Increase) decrease in interest receivable 181,844 33,569 110,768
Increase (decrease) in interest payable 40,064 (5,506) 88,948
(Increase) decrease in deferred income taxes 324,701 (34,348) (233,793)
(Increase) decrease in other assets (959,526) (317,178) 550,335
Increase (decrease) in other liabilities 506,650 378,898 (186,306)
---------------- --------------- ----------------
Net cash provided by operating activities 3,304,496 2,926,332 2,883,445
---------------- --------------- ----------------
Investing activities:
Proceeds from sale of securities available for sale 35,011,052 21,993,955 11,498,023
Proceeds from maturity of securities available for sale 67,728,216 57,633,806 75,233,012
Purchase of securities available for sale (91,259,519) (81,689,001) (78,280,496)
Net increase in loans (16,317,313) (15,988,430) (16,601,961)
Purchase of bank premises and equipment (816,481) (639,234) (596,428)
Proceeds from sale of bank premises and equipment (24,000) -- --
Proceeds from sale of other real estate -- -- 30,141
---------------- --------------- ----------------
Net cash used in investing activities (5,678,045) (18,688,904) (8,717,709)
---------------- --------------- ----------------
Financing activities:
Net increase (decrease) in demand deposit and savings accounts 1,583,497 4,127,941 (802,593)
Net increase in time deposits 8,272,460 7,639,208 12,560,246
Net (increase) decrease in federal funds sold (5,456,000) 6,742,000 (1,894,000)
Net decrease in Federal Home Loan Bank advances (1,000,000) (1,000,000) (3,000,000)
Net increase in treasury stock (52,785) (106,100) (56,240)
Proceeds from sale of stock options -- 109,956 --
Cash dividends paid (1,041,773) (1,044,483) (1,037,909)
---------------- --------------- ----------------
Net cash provided by financing activities 2,305,399 16,468,522 5,769,504
---------------- --------------- ----------------
Net increase (decrease) in cash and due from banks (68,150) 705,950 (64,760)
Cash and due from banks at beginning of year 9,851,577 9,145,627 9,210,387
---------------- --------------- ----------------
Cash and due from banks at end of year $ 9,783,427 9,851,577 9,145,627
================ =============== ================
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 8,479,667 8,239,171 7,574,333
================ =============== ================
Cash paid during the year for income taxes $ 1,267,000 909,500 784,500
================ =============== ================
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
FIRST BANCORP, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
(1) Summary of Significant Accounting Policies
In preparing the consolidated financial statements, management is
required to make estimates and assumptions that affect the reported
amounts of assets and liabilities disclosure of contingent assets and
liabilities as of the date of the balance sheet, and revenue and
expenses for the period. Actual results could differ from those
estimates. The significant policies and estimates applied in the
preparation of these consolidated financial statements are discussed
below.
(a) Consolidation
The consolidated financial statements include the accounts of First
Bancorp, Inc. and its wholly-owned subsidiary, First Bank, and its
wholly-owned subsidiaries, Dock Street Building Corporation and Dock
Street Title Agency, Incorporated (Company). All significant
intercompany accounts and transactions have been eliminated. The
Company's primary market area is Southeast Alaska where the majority
of its activities has been with Alaska businesses and individuals.
(b) Reclassifications
Certain prior year balances have been changed to conform to the
present year presentation.
(c) Investments
Securities available for sale are stated at fair value with
unrealized holding gains and losses excluded from earnings and
reported as a net amount in a separate component of other
comprehensive income. Securities are classified as available for
sale when management intends to hold the securities for an
indefinite period of time or when the securities may be utilized for
tactical asset/liability purposes and may be sold from time to time
to effectively manage interest rate exposure and resultant
prepayment risk and liquidity needs.
Federal Home Loan Bank stock is carried at cost which is its
redeemable (fair) value since the market for this stock is limited.
Premiums are amortized (deducted) and discounts are accreted (added)
to interest income on investment securities using methods that
approximate the level-yield method. Gains and losses on sales of
securities are computed using the specific-identification method of
determining the cost of securities sold.
F-7
<PAGE>
FIRST BANCORP, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
(d) Loans
Loans are stated at the principal amount outstanding. Interest on
loans is taken into income when earned. Loan origination fees
received in excess of direct origination costs are deferred and
amortized to income by a method approximating the level-yield method
over the estimated loan term.
Interest income on loans is recorded on an accrual basis until an
interest or principal payment is more than 90 days past due and in
the opinion of management the collectibility of such income becomes
doubtful. The deferral or nonrecognition of interest does not
constitute forgiveness of the borrower's obligation.
(e) Allowance for Loan Losses
The allowance for loan losses is a general reserve established by
management to absorb unidentified losses in the Company's loan
portfolio. In determining the adequacy of the allowance, management
evaluates prevailing economic conditions, results of regular
examinations and evaluations of the quality of the loan portfolio by
external parties, actual loan loss experience, the extent of
existing risks in the loan portfolio and other pertinent factors.
The allowance for impaired loans is based on discounted cash flows
using the loans' initial interest rates or, if the loan is secured,
the fair value of the collateral.
Future additions to the allowance may be necessary based on changes
in economic conditions and other factors used in evaluating the loan
portfolio. Additionally, various regulatory agencies, as an
integral part of their examination process, periodically review the
allowance. Such agencies may require the recognition of additions
to the allowance based on their judgment of information available to
them at the time of their examination.
(f) Loan Servicing
The cost of mortgage servicing rights is amortized in proportion to,
and over the period of, estimated net servicing revenues.
Impairment of mortgage servicing rights is assessed based on the
fair value of those rights. Fair values are estimated using
discounted cash flows based on a current market interest rate. The
amount of impairment recognized is the amount by which the
capitalized mortgage servicing rights exceed their fair value.
(g) Other Real Estate
Other real estate represents properties acquired through foreclosure
or its equivalent. Prior to foreclosure, the carrying value is
adjusted to the lower of cost or fair market value of the real
estate to be acquired by a charge to the allowance for loan losses.
Any subsequent reduction in carrying value is charged against
operating expenses.
F-8
<PAGE>
FIRST BANCORP, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
(h) Premises and Equipment
Premises and equipment are stated at cost, less amortization and
accumulated depreciation. Depreciation expense on leasehold
improvements is computed by use of the straight-line method over the
shorter of the estimated useful lives of the assets or leasehold
improvements. Expenditures for remodeling, improvements and
construction are capitalized, while expenditures for maintenance and
repairs are charged to expense.
(i) Income Taxes
Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which the temporary differences
are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
(j) Net Income Per Share
Per share amounts are calculated based on the weighted average
number of shares and common share equivalents outstanding during
each year. Outstanding stock options are common stock equivalents
and therefore are included in the calculation of the weighted
average number of shares outstanding, if dilutive.
(k) Comprehensive Income
On January 1, 1998, the Company adopted Statement of Financial
Accounting Standard (SFAS) No. 130, Reporting Comprehensive Income.
SFAS No. 130 establishes standards for reporting and presentation of
comprehensive income and its components in a full set of financial
statements. Comprehensive income consists of net income and net
unrealized gains (losses) on securities and is presented in the
consolidated statements of stockholders' equity and comprehensive
income. The statement requires only additional disclosures in the
consolidated financial statements; it does not affect the Company's
financial position or results of operations. Prior year financial
statements have been reclassified to conform to the requirements of
SFAS No. 130.
(2) Cash and Due from Banks
The Company is required to maintain a $200,000 minimum average daily
balance with the Federal Reserve Bank (FRB) for purposes of settling
financial transactions and charges for FRB services. The Company is
also required to maintain sufficient cash balances or deposits with the
FRB to meet its statutory reserve requirements. The reserve requirement
for the two-week maintenance period, which included December 31, 1998
was satisfied by cash on hand in the Company's vault and on deposit with
the FRB.
F-9
<PAGE>
FIRST BANCORP, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
(3) Investment Securities
The following is a comparative summary of investment securities
available for sale at December 31:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Market
cost gains losses value
------------------ -------------- --------------- -----------------
1998:
<S> <C> <C> <C> <C>
U.S. Government and federal agencies $ 54,763,462 438,739 (24,211) 55,177,990
States and political subdivisions 1,707,699 85,846 -- 1,793,545
Corporate securities 8,963,078 80,739 (338) 9,043,479
Mortgage-backed securities 33,796,314 110,906 (496,797) 33,410,423
Other debt securities 1,414,450 1,973 -- 1,416,423
Federal National Mortgage
Association stock 8,257 110,856 -- 119,113
------------------ -------------- --------------- -----------------
$ 100,653,260 829,059 (521,346) 100,960,973
================== ============== =============== =================
1997:
U.S. Government and federal agencies 77,447,591 379,646 (6,562) 77,820,675
States and political subdivisions 1,846,350 23,220 -- 1,869,570
Corporate securities 5,607,261 53,236 (2,819) 5,657,678
Mortgage-backed securities 27,053,534 128,857 (951,460) 26,230,931
Other debt securities 500,000 -- -- 500,000
Federal National Mortgage
Association stock 6,727 76,519 -- 83,246
------------------ -------------- --------------- -----------------
$ 112,461,463 661,478 (960,841) 112,162,100
================== ============== =============== =================
</TABLE>
The amortized cost and market value of available for sale debt securities at
December 31, 1998, are distributed by contractual maturity as shown below.
Expected maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call or
prepayment penalties.
F-10
<PAGE>
FIRST BANCORP, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
<TABLE>
<CAPTION>
Securities Within One to Five to Due after Amortized Market
available for sale one year five years ten years ten years cost value
---------------- ---------------- --------------- ----------------- ------------------ --------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Government and
federal agencies $ 11,994,028 31,817,815 2,611,247 8,340,372 54,763,462 55,177,990
State and political
subdivisions 293,871 191,779 1,222,049 -- 1,707,699 1,793,545
Corporate securities 3,057,268 4,028,225 -- 1,877,585 8,963,078 9,043,479
Mortgage-backed
securities 154,541 2,823,875 5,544,331 25,273,567 33,796,314 33,410,423
Other debt securities 500,000 -- -- 914,450 1,414,450 1,416,423
---------------- ---------------- --------------- ----------------- ------------------ -----------------
$ 15,999,708 38,861,694 9,377,627 36,405,974 100,645,003 100,841,860
================ ================ =============== ================= ================== =================
</TABLE>
Proceeds from sales of available for sale securities during 1998, 1997 and 1996
were $35,011,052, $21,993,955, and $11,498,023, respectively. Gross gains of
$94,602, $241,917, and $37,437 and gross losses of $21,453, $16,677, and $20,015
were realized on those sales for the years ended December 31, 1998, 1997 and
1996, respectively.
Market value of investment securities of approximately $45,753,000 and
$49,630,000 are pledged to secure public deposits at December 31, 1998 and 1997,
respectively.
A summary of taxable interest on securities available for sale for the year
ended December 31 follows:
<TABLE>
<CAPTION>
1998 1997 1996
--------------- ---------------- ----------------
<S> <C> <C> <C>
U.S. Treasury securities $ 1,534,168 1,288,127 1,321,549
Obligations of U.S. Government
agencies and corporations 3,943,459 4,674,469 4,738,098
Other 668,453 548,157 639,991
--------------- ---------------- ----------------
$ 6,146,080 6,510,753 6,699,638
=============== ================ ================
</TABLE>
F-11
<PAGE>
FIRST BANCORP, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
(4) Loans
The Company's primary market area is Southeast Alaska, where the majority
of its lending is with Alaska businesses and individuals. Approximately
66% of the Company's loans at December 31, 1998, are for general
commercial uses, including timber, tourism, retail and small businesses.
Substantially all of these loans are collateralized and repayment is
expected from the borrowers' cash flow or, secondarily, the collateral.
The Company's exposure to credit loss, if any, is the outstanding amount
of the loan if the collateral is proved to be of no value.
The carrying amount of the loan portfolio is as follows at December 31:
1998 1997
------------ ------------
Mortgage $ 8,653,771 3,592,629
Commercial 82,214,463 73,870,604
Consumer 32,906,260 30,102,197
------------ ------------
123,774,494 107,565,430
Less unamortized loan origination fees 652,437 636,525
------------ ------------
$ 123,122,057 106,928,905
============ ============
The following table sets forth the maturity distribution and sensitivity
to changes in interest rates of the Company's loan portfolio at December
31, 1998.
Within One to After
one year five years five years Total
------------ ------------ ------------ --------------
Mortgage $ 308,425 239,647 8,105,699 8,653,771
Commercial 12,741,996 36,676,253 32,796,214 82,214,463
Consumer 6,306,945 25,247,132 1,352,183 32,906,260
------------ ------------ ------------ --------------
$ 19,357,366 62,163,032 42,254,096 123,774,494
============ ============ ============ ==============
Loans at fixed
interest rates 12,175,411 51,905,009 10,510,198 74,590,618
Loans at variable
interest rates 7,181,955 10,258,023 31,743,898 49,183,876
------------ ------------ ------------ --------------
$ 19,357,366 62,163,032 42,254,096 123,774,494
============ ============ ============ ==============
F-12
<PAGE>
FIRST BANCORP, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
The Company has and will continue to have banking transactions with its
directors, officers, principal shareholders and its associates in the ordinary
course of business. It is Company policy that all such loan transactions be on
the same terms, including interest rates and collateral, as those prevailing at
the same time for comparable transactions with others. An analysis of these loan
transactions at December 31 follows:
1998 1997
----------- -----------
Balance at beginning of year $ 2,646,307 1,968,729
Net additions (deletions) 113,032 677,578
----------- -----------
Balance at end of year $ 2,759,339 2,646,307
=========== ===========
Mortgage loans serviced for others are not included in the accompanying
consolidated balance sheets. The unpaid principal balances of mortgage loans
serviced for others was $100,712,256 and $86,690,480 at December 31, 1998 and
1997, respectively.
Custodial escrow balances maintained in connection with the foregoing loan
servicing, and included in demand deposits, were approximately $461,236 and
$522,896 at December 31, 1998 and 1997, respectively.
Mortgage servicing rights of $379,422, $153,286, and $152,203 were capitalized
during 1998, 1997, and 1996, respectively. The carrying value of unamortized
mortgage servicing rights of $576,021 and $277,281 approximates its fair value
as of December 31, 1998 and 1997, respectively. Amortization of mortgage
servicing rights was $80,682, $19,029, and $9,179 in 1998, 1997, and 1996,
respectively.
(5) Allowance for Loan Losses
A summary of the allowance for loan losses as of December 31 follows:
1998 1997 1996
----------- ------------ ------------
Balance at beginning of year $ 1,293,512 1,103,414 1,383,814
Recoveries on loans previously
charged off 16,225 49,524 18,353
Provision charged to expense 252,000 232,000 215,750
Loans charged off (140,385) (91,426) (514,503)
----------- ------------ ------------
Balance at end of year $ 1,421,352 1,293,512 1,103,414
=========== ============ ============
The amount of any impaired loans is insignificant at December 31, 1998 and 1997.
The Company had no loans on nonaccrual status at December 31, 1998 and 1997.
F-13
<PAGE>
FIRST BANCORP, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
(6) Premises and Equipment
A summary of premises and equipment at December 31 follows:
1998 1997
----------- -----------
Company premises $ 4,742,278 4,703,952
Land 1,542,083 1,451,608
Equipment 4,869,636 4,279,667
----------- -----------
11,153,997 10,435,227
Less accumulated depreciation (5,357,475) (4,747,816)
----------- -----------
$ 5,796,522 5,687,411
=========== ===========
(7) Deposits
Time deposits in amounts of $100,000 or more and their remaining
maturities at December 31 are as follows:
1998 1997
Three months or less $ 27,611,027 26,496,631
Three through twelve months 28,056,872 22,251,443
Over twelve months 5,146,573 4,806,624
----------- ------------
$ 60,814,472 53,554,698
=========== ============
F-14
<PAGE>
FIRST BANCORP, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
(8) Income Taxes
Components of income tax expense (benefit) are as follows:
Current Deferred Total
----------- ---------- ------------
1998:
Federal $ 1,084,889 78,004 1,162,893
State 266,092 3,250 269,342
----------- ---------- ------------
$ 1,350,981 81,254 1,432,235
=========== ========== ============
1997:
Federal 1,010,936 (44,073) 966,863
State 100,906 (1,813) 99,093
----------- ---------- ------------
$ 1,111,842 (45,886) 1,065,956
=========== ========== ============
1996:
Federal 687,354 54,000 741,354
State 39,207 9,750 48,957
----------- ---------- ------------
$ 726,561 63,750 790,311
=========== ========== ============
The actual tax expense for 1998, 1997 and 1996 differs from the "expected" tax
expense for those years (computed by applying the U.S. Federal statutory tax
rate of 34% to earnings before income taxes) as follows:
1998 1997 1996
----------- ---------- ----------
Computed "expected" income taxes $ 1,275,333 1,106,787 863,947
State income taxes 177,767 65,401 32,300
Tax-exempt interest (69,838) (49,834) (37,867)
Other 48,973 (56,398) (68,069)
----------- ---------- ----------
$ 1,432,235 1,065,956 790,311
=========== ========== ==========
F-15
<PAGE>
FIRST BANCORP, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
The components of and changes in the net deferred tax asset (liability) are as
follows:
<TABLE>
<CAPTION>
(Deferred (Deferred
expense) expense)
Dec.31,1996 benefit Dec.31,1997 benefit Dec.31,1998
------------- ------------- -------------- -------------- ----------------
Deferred tax assets:
<S> <C> <C> <C> <C> <C>
Bad debt deduction $ 266,104 76,018 342,122 51,392 393,514
Loan fees 249,259 6,624 255,883 6,397 262,280
Depreciation 17,633 150,973 168,606 19,292 187,898
Other real estate owned 41,879 (22,489) 19,390 15,092 34,482
Unrealized loss (gain) on
available sale
investment securities 131,284 (11,538) 119,746 (243,447) (123,701)
Other 37,109 (12,351) 24,758 14,886 39,644
------------- ------------- -------------- -------------- ----------------
Total gross deferred
tax assets 743,268 187,237 930,505 (136,388) 794,117
------------- ------------- -------------- -------------- ----------------
Deferred tax liabilities:
Federal Home Loan
Bank stock dividends (424,994) (78,993) (503,987) (85,988) (589,975)
Accretion on bonds (6,774) (19,925) (26,699) 17,768 (8,931)
Loan servicing rights (57,496) (53,971) (111,467) (120,093) (231,560)
------------- ------------- -------------- -------------- ----------------
Total deferred
tax liabilities (489,264) (152,889) (642,153) (188,313) (830,466)
------------- ------------- -------------- -------------- ----------------
Valuation allowance -- -- -- -- --
------------- ------------- -------------- -------------- ----------------
Net deferred
tax asset $ 254,004 34,348 288,352 (324,701) (36,349)
============= ============== ================
Amounts attributed to gain (loss)
on available for sale investment
securities and recorded as a
reduction to unrealized
holding gain or loss 11,538 243,447
------------- --------------
$ 45,886 (81,254)
============= ==============
</TABLE>
A valuation allowance on a deferred tax asset is provided when it is more likely
than not that some portion of the deferred tax asset will not be realized. The
Company has available tax planning strategies, anticipates future taxable income
and historically has had taxable income; accordingly, a valuation allowance was
not established in the current year. The net deferred tax asset is included in
other assets.
F-16
<PAGE>
FIRST BANCORP, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
(9) Comprehensive Income
At December 31, 1998, the related tax effects allocated to each component
of other comprehensive income follows:
<TABLE>
<CAPTION>
Before Tax Net of
tax amount (expense) benefit tax amount
------------------ ------------------- -------------------
<S> <C> <C> <C>
Unrealized holding gains on securities
available for sale arising during 1998 $ 680,225 272,781 407,444
Less: reclassification adjustment for
gains and losses realized in net income 73,149 29,334 43,815
------------------ ------------------- -------------------
Net unrealized gains 607,076 243,447 363,629
================== =================== ===================
</TABLE>
(10) Employee Benefit Plans
On January 1, 1992, the Company merged approximately 60% of its profit
sharing plan into the existing noncontributory defined contribution 401(k)
retirement plan. Contributions made to the 401(k) plan and charged to
expense amounted to $100,000, $75,000 and $60,000 in 1998, 1997 and 1996,
respectively.
Concurrently, the Company established an employee stock ownership plan
(ESOP) with the remaining 40% of the profit sharing plan's assets.
Contributions made to the ESOP and charged to expense amounted to $75,000,
$50,000 and $40,000 in 1998, 1997 and 1996, respectively.
Participation in the plans is available to employees who have completed
six months of service with the Company.
(11) Commitments and Contingencies
General
The Company from time to time may be a defendant in legal proceedings
related to the conduct of its banking business. In the opinion of
management, the Company's financial position and results of operations
will not be affected materially by the final outcome of any present legal
proceedings.
F-17
<PAGE>
FIRST BANCORP, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
Lease
The Company is obligated under noncancelable operating leases for premises, some
of which have renewal options. Net future minimum rental payments required under
the lease are as follows:
Year ending
December 31 Amount
------------- ----------
1999 $ 220,596
2000 197,801
2001 159,156
2002 159,156
2003 142,068
Thereafter 134,845
----------
$ 1,013,622
==========
Rental expense amounted to $198,385, $196,950, and $191,739 in 1998,
1997 and 1996, respectively.
Off-Balance Sheet Financial Instruments
In the ordinary course of business, the Company enters into various types
of transactions which involve financial instruments with off-balance sheet
risk. These instruments include commitments to extend credit and standby
and commercial letters of credit and are not reflected in the accompanying
balance sheets. These transactions may involve, to varying degrees, credit
and interest rate risk in excess of the amount, if any, recognized in the
balance sheets. The Company applies the same credit standards to these
contracts as it uses in its lending process. Management does not
anticipate any loss to result from these commitments.
As of December 31, the Company's off-balance sheet credit risk exposure is
the contractual amount of commitments to extend credit and letters of
credit, is as follows:
1998 1997
---------- -----------
Off-balance sheet commitments:
Commitments to extend credit $ 8,741,433 10,240,000
Standby and commercial
letters of credit 395,120 575,785
Line of Credit
The Company has a line of credit up to 20% of assets or approximately
$51,000,000 at December 31, 1998 with the Federal Home Loan Bank (FHLB).
There is no outstanding balance on the credit line at December 31, 1998.
The Company has pledged its FHLB stock and other assets as collateral on
the line of credit.
(12) Regulatory Matters
The Federal Deposit Insurance Corporation has established risk-based
standards for evaluating a bank's capital adequacy. These standards
require the Company to maintain minimum ratio of qualifying total capital
to risk weighted assets of 8% of which at least 4% must be in the form of
F-18
<PAGE>
FIRST BANCORP, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
core capital (TIER 1). Management believes as of December 31, 1998 and
1997, that the Bank meets all capital adequacy requirements. TIER 1
capital includes the bank's stockholders' equity, minus all intangible
assets. The Bank's actual capital amounts at December 31 are as follows:
1998 1997
-------- ---------
Total risk-based capital ratio 17.6% 17.7%
TIER 1 risk-based capital ratio 16.5% 17.8%
Leverage capital ratio 8.8% 8.9%
(13) Fair Value of Financial Instruments
The following methods and assumptions were used to estimate fair value
disclosures as defined under SFAS No. 107, Disclosures About Fair Value of
Financial Instruments:
Cash and due from banks and federal funds sold - the carrying
amounts reported in the balance sheet represent their fair values.
Investment securities - fair values for investment securities are
based on quoted market prices, where available. If quoted market
prices are not available, fair values are based on quoted market
prices of comparable instruments. Investments in the Federal Reserve
Bank (FRB) and FHLB are recorded at cost, which also represents fair
market value.
Loans - for variable-rate loans that reprice frequently, fair values
are based on carrying amounts. Fair values of residential mortgages
with commitments to sell within 90 days are based on the amounts
receivable under the commitments. An estimate of the fair value of
the remaining portfolio is based on discounted cash flow analyses
applied to pools of similar loans, using weighted average coupon
rate, weighted average maturity, and interest rates currently being
offered for similar loans. The carrying amount of accrued interest
receivable approximates its fair value.
Deposit liabilities - the fair values of demand and savings deposits
are equal to the carrying amount at the reporting date. The carrying
amount for variable rate time deposits approximate their fair value.
Fair values for fixed rate time deposits are estimated using a
discounted cash flow calculation that applies currently offered
interest rates to a schedule of aggregate expected monthly
maturities of time deposits. The carrying amount of accrued interest
payable approximates its fair value.
Short-term borrowings - for FHLB advances and Federal funds
purchased with maturities less than 90 days, the carrying amount
represents their fair value. For FHLB advances and federal funds
purchased with maturities longer than 90 days, fair values are
estimated using a discounted cash flow calculation using current
interest rates for similar borrowings.
Commitments to Extend Credit and Standby Letters of Credit - The
fair value of commitments is estimated using the fees currently
charged to enter into similar agreements, taking into account the
remaining terms of the agreements and the present creditworthiness
of the counterparties. For fixed-rate loan commitments, fair value
also considers the difference between current levels of interest
F-19
<PAGE>
FIRST BANCORP, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
rates and the committed rates. The fair value of letters of credit
is based on fees currently charged for similar agreements or on the
estimated cost to terminate them or otherwise settle the obligation
with the counterparties at the reporting date.
Limitations - Fair value estimates are made at a specific point in
time, based on relevant market information and information about the
financial instrument. These estimates do not reflect any premium or
discount that could result from offering for sale at one time the
Company's entire holdings of a particular financial instrument.
Because no market exists for a significant portion of the Company's
financial instruments, fair value estimates are based on judgments
regarding future expected loss experience, current economic
conditions, risk characteristics of various financial instruments
and other factors. These estimates are subjective in nature and
involve uncertainties and matters of significant judgment and
therefore cannot be determined with precision. Changes in
assumptions could significantly affect the estimates.
Fair value of financial instruments is as follows:
<TABLE>
<CAPTION>
1998 1997
------------------------------ -------------------------------
Carrying Fair Carrying Fair
amount value amount value
--------------- -------------- --------------- ---------------
Financial assets:
<S> <C> <C> <C> <C>
Cash and due from banks $ 9,783,427 9,783,427 9,851,577 9,851,577
Federal funds sold 9,391,000 9,391,000 3,935,000 3,935,008
Investment securities 100,960,973 100,960,973 112,162,100 112,162,100
Loans 123,744,494 125,101,850 107,565,430 107,762,461
Accrued interest receivables 1,756,967 1,756,967 1,938,811 1,938,811
Financial liabilities:
Deposits 229,528,105 229,929,659 219,672,148 220,007,410
Accrued interest payable 516,779 516,779 476,715 476,715
Short-term borrowings -- -- 1,000,000 1,000,000
Unrecognized financial instruments:
Commitments to extend credit 8,741,433 87,414 10,240,000 102,400
Standby and commercial letters
of credit 395,120 3,951 575,785 5,856
</TABLE>
F-20
<PAGE>
FIRST BANCORP, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
(14) Quarterly Results of Operations
(in thousands except per share data. Unaudited.)
<TABLE>
<CAPTION>
Quarter ended
---------------------------------------------------------------
1998 Dec. 31 Sept. 30 June 30 Mar. 31
-------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Total interest income $ 4,657 4,659 4,511 4,429
Total interest expense 2,136 2,189 2,130 2,065
-------------- -------------- ------------- --------------
Net interest income 2,521 2,470 2,381 2,364
Provision for loan losses 48 72 60 72
Other operating income 915 909 882 776
Other operating expense 2,485 2,233 2,273 2,297
Securities gains 13 16 44 --
-------------- -------------- ------------- --------------
Income before income taxes 916 1,090 974 771
Income taxes 523 387 247 275
-------------- -------------- ------------- --------------
Net income $ 393 703 727 496
============== ============== ============= ==============
Earnings per share $ 1.88 3.37 3.49 2.38
============== ============== ============= ==============
Quarter ended
---------------------------------------------------------------
1997 Dec. 31 Sept. 30 June 30 Mar. 31
-------------- -------------- ------------- --------------
Total interest income $ 4,576 4,483 4,301 4,050
Total interest expense 2,209 2,097 2,006 1,922
-------------- -------------- ------------- --------------
Net interest income 2,367 2,386 2,295 2,128
Provision for loan losses 48 72 56 56
Other operating income 254 971 813 630
Other operating expense 1,635 2,407 2,293 2,247
Securities gains -- 135 87 3
-------------- -------------- ------------- --------------
Income before income taxes 938 1,013 846 458
Income taxes 383 341 158 184
-------------- -------------- ------------- --------------
Net income $ 555 672 688 274
============== ============== ============= ==============
Earnings per share $ 2.65 3.22 3.29 1.31
============== ============== ============= ==============
</TABLE>
(15) Subsequent Event
In January 1999, the Board of Directors approved a reorganization plan for
First Bancorp, Inc. This plan is intended to convert the Company into a
Subchapter S under the Internal Revenue Code. Additionally, this plan
would require that the Company re-purchase a portion of their stock with a
value ranging from $4 to 6 million. This plan is to be voted on by the
Company's stockholders in March 1999.
F-21
<PAGE>
PART II -- INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
As a Delaware corporation, NEWCO, Inc. is subject to the General
Corporation Law of the State of Delaware. Under Delaware law, a corporation may
provide in its Certificate of Incorporation or in its Bylaws for the
indemnification of directors and officers against liability where the director
or officer has acted in good faith and with a reasonable belief that actions
taken were in the best interests of the corporation or at least not adverse to
the corporation's best interests and, if in a criminal proceeding, the
individual had no reasonable cause to believe that the conduct in question was
unlawful. A corporation may not indemnify an officer or director against
liability in connection with a claim by or in the right of the corporation in
which such officer or director was adjudged liable to the corporation or in
connection with any other proceeding in which the officer or director was
adjudged liable for receiving an improper personal benefit, however a
corporation may indemnify against the reasonable expenses associated with such
proceeding. A corporation may not indemnify against breaches of the duty of
loyalty. The Business Corporation Act provides for mandatory indemnification of
directors against all reasonable expenses incurred in the successful defense of
any claim made or threatened whether or not such claim was by or in the right of
the corporation. A court may order indemnification if it determines that the
director or officer is fairly and reasonably entitled to indemnification in view
of all the relevant circumstances whether or not the director or officer met the
good faith and reasonable belief standards of conduct set out in the statute.
Unless otherwise stated in the Articles of Incorporation, officers of the
corporation are also entitled to the benefit of the above statutory provisions.
Delaware law also provides that the corporation may, by so providing in
its Certificate of Incorporation, eliminate or limit the personal liability of a
director to the corporation or its shareholders for monetary damages for conduct
as a director, provided that the Certificate of Incorporation may not eliminate
or limit liability for any breach of the director's duty of loyalty, acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, any unlawful distribution, or any transaction from which the
director received an improper personal benefit.
In accordance with Delaware law, the Certificate of Incorporation of
NEWCO, Inc. provides that directors are not personally liable to the corporation
or its shareholders for monetary damages for conduct as a director, except for
(i) any breach of a director's duty of loyalty to the corporation, (ii) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of the law, (iii) any distribution to shareholders which is unlawful,
or (iv) any transaction from which the director received an improper personal
benefit.
The Certificate of Incorporation also provides for indemnification of any
person who is or was a party, or is threatened to be made a party, to any civil,
administrative or criminal proceeding by reason of the fact that the person is
or was a director or officer of the corporation or any of its subsidiaries, or
is or was serving at the request of the corporation as a director, officer,
partner, agent or employee of another corporation or entity, against expenses,
including attorneys' fees, judgments, fines and amounts paid in settlement,
actually and reasonably incurred by that person if (i) the person acted in good
faith and in a manner reasonably believed to not be opposed to the best
interests of the corporation, or (ii) the act or omission giving rise to such
action or proceeding is ratified, adopted or confirmed by the corporation, or
the benefit thereof was received by the corporation. Indemnification is
available under this provision of the Certificate of Incorporation in the case
of derivative actions, unless the person is adjudged to be liable for gross
negligence or deliberate misconduct in the performance of the person's duty to
the corporation. To the extent a director, officer, employee or agent (including
an attorney) is successful on the merits or otherwise in defense of any action
to which this provision is applicable, the person is entitled to indemnification
for expenses actually and reasonably incurred by the person in connection with
that defense.
Item 21. Exhibits and Financial Statement Schedules
The exhibits filed with this registration statement are listed on the
Exhibit Index.
II-1
<PAGE>
Item 22. Undertakings
The undersigned registrant hereby undertakes that:
(A) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers
and controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(B) For determining any liability under the Act, the registrant will treat
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant under Rule 424(b)(1), or (4), or
497(h) under the Act as part of this registration statement as of the time
the Commission declared it effective.
(C) For determining any liability under the Act, the registrant will treat
each post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and that offering of the securities at that time as the initial
bona fide offering of those securities.
(D) The registrant will supply, by means of an post-effective amendment
all information concerning the transaction and the company being acquired
involved therein, that was not the subject of and included in the
registration statement when it became effective.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Ketchikan, State of
Alaska, on February 8, 1999.
NEWCO, INC.
By: /s/ William G. Moran, Jr.
---------------------------------------
William G. Moran, Jr., President
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes and
appoints William G. Moran, Jr. and James C. Sarvela, and each of them, with full
power of substitution to act as his true and lawful attorney in fact and agent
to act in his name, place and stead, and to execute in the name and on behalf of
each person, individually and in each capacity stated below, and to file any and
all amendments to this registration, including any and all post-effective
amendments or new registration pursuant to Rule 462.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement and Power of Attorney has been signed by the following
persons in the capacities indicated on ___________________, 1999:
/s/ James C. Sarvela
- ------------------------------------
James C. Sarvela, Vice President
and Chief Financial Officer
/s/ William G. Moran, Jr.
- ------------------------------------ ------------------------------------
William G. Moran, Sr., Director William G. Moran, Jr., Director
/s/ Ernest J. Anderes /s/ Michael J. Cessnun
- ------------------------------------ ------------------------------------
Ernest J. Anderes, Director Michael J. Cessnun, Director
/s/ Joseph M. Moran /s/ Michael J. Elerding
- ------------------------------------ ------------------------------------
Joseph M. Moran, Director Michael J. Elerding, Director
/s/ Lisa A. Murkowski
- ------------------------------------ ------------------------------------
Lisa A. Murkowski ,Director Alec W. Brindle, Jr., Director
II-3
<PAGE>
EXHIBIT INDEX
Exhibit
2.0 Form of Agreement and Plan of Reorganization by and between First Bancorp,
Inc. and NEWCO, Inc. (included in this Registration Statement as Appendix
A to the Proxy Statement)
3.1 Certificate of Incorporation of NEWCO Alaska, Inc.
3.2 Bylaws of NEWCO Alaska, Inc.
4.0 Specimen Common Stock Certificate *
5.0 Opinion of Foster Pepper & Shefelman LLP regarding legality of shares to
be issued in the Reorganization *
10.1 Lease, dated April 24, 1989, by and between Clifford White et al and First
Bank, relating to the Wrangell branch
10.2 Lease, dated April 20, 1990, by and between Sealaska Corporation and First
Bank, relating to the Downtown (Juneau) branch
10.3 Lease, dated July 1, 198, by and between ADV Properties and First Bank,
relating to the Mendenhall Mall (Juneau) branch
10.4 Agreement of Lease, dated August 11, 1980, by between The Sitka
Professional Center I and First Bank, relating to the Sitka branch.
23.1 Consent of KPMG LLP relating to Financial Statements of First Bancorp,
Inc.
23.2 Consent of Alex Sheshunoff & Co. Investment Banking
23.3 Consent of Foster Pepper & Shefelman LLP relating to opinion regarding
legality (included in Exhibit 5.0) *
24.0 Powers of Attorney (included in the signature page to the Registration
Statement)
99.1 Fairness Opinion of Alex Sheshunoff Investment Bankers (included in this
Registration Statement as Appendix B to the Proxy Statement)
99.2 Form of Proxy to be sent to stockholders of First Bancorp
* To be filed by amendment.
<PAGE>
CERTIFICATE OF INCORPORATION
OF
NEWCO ALASKA, INC.
ARTICLE I - CORPORATE TITLE
The name of the corporation is Newco Alaska, Inc. (the "Corporation").
ARTICLE II - DURATION
The duration of the Corporation shall be perpetual.
ARTICLE III - PURPOSES AND POWERS
The Corporation is organized to engage in any lawful activity for which
a corporation may be organized under the General Corporation Law of the State
of Delaware.
ARTICLE IV - AUTHORIZED CAPITAL STOCK
The Corporation may issue one thousand (1,000) shares of common stock
("Common Stock") with a par value of $1.00 per share. No holder of Common
Stock will be entitled to any preemptive right to purchase or subscribe for
any unissued or treasury shares of the Corporation.
The authorized shares may be issued by the Corporation from time to
time as approved by its board of directors without the approval of its the
stockholders. The consideration for the issuance of the shares shall be paid
in full before their issuance and shall not be less than the par value per
share. Except as permitted by Delaware law, neither promissory notes nor
future services shall constitute payment or part payment for the issuance of
the shares of the Corporation. The consideration for the shares shall be
cash, tangible or intangible property, labor or services actually performed
for the Corporation or any combination of the foregoing. In the absence of
actual fraud in the transaction, the value of such property, labor or
services, as determined by the board of directors of the Corporation, shall
be conclusive. Upon payment of such consideration, such shares shall be
deemed to be fully paid and non-assessable. In the case of the issuance of a
stock dividend on the capital stock, that part of the surplus of the
Corporation which is transferred to stated capital upon the issuance of
shares as a share dividend shall be deemed to be the consideration for the
issuance of shares as payment of such stock dividend.
3.1 - 1
<PAGE>
ARTICLE V - REGISTERED AGENT
The registered agent of the Corporation is The Corporation Trust
Company, and the street address of the registered office and mailing address
of the registered agent are 1209 Orange Street, Wilmington, County of New
Castle, Delaware.
ARTICLE VI - BOARD OF DIRECTORS
The Corporation shall be under the direction of the Board of Directors
which shall consist of not less than 5 and no more than 25 directors. The
exact number of directors of the Corporation will be determined as provided
in the Corporation's bylaws. The names of directors constituting the initial
Board of Directors of the Corporation will be as appointed by the
incorporator of the Corporation at the organizational meeting of the
Corporation, which directors shall serve until the first annual meeting of
the stockholders of the Corporation.
Classified Board of Directors. The Board of Directors shall be divided
into three classes, as nearly equal in number as possible with one class
standing for election at each annual meeting of stockholders, and each class
standing for election every third year. The terms of the directors elected
by the stockholders at the first annual meeting shall be as follows: The
directors in the first class shall be elected to serve until the first annual
meeting of stockholders following such election and until their successors
are duly elected and qualified; the directors in the second class shall be
elected to serve until the second annual meeting of stockholders following
such election and until their successors are duly elected and qualified; and
the directors in the third class shall be elected to serve until the third
annual meeting of stockholders following such election and until their
successors are duly elected and qualified. At each subsequent annual
meeting of stockholders, directors elected to succeed those whose terms are
expiring shall be elected for a term to expire at the third succeeding annual
meeting of stockholders and when their successors are duly elected and
qualified, subject to prior death, resignation or removal. A decrease in the
number of directors will not have the effect of shortening the term of any
incumbent director.
Removal of Directors. Notwithstanding any other provision of this
Certificate of Incorporation, no director shall be removed except for cause
or upon order of any federal or state regulatory agency having jurisdiction
over the Corporation. A director may be removed for cause only by the
affirmative vote of not less than two-thirds of the shares outstanding and
entitled to vote at a meeting of the stockholders called for the purpose of
voting on the matter. For purposes of this subsection, "cause" shall mean:
(i) any breach of a Director's duty of loyalty to the Corporation
or its stockholders;
(ii) acts or omissions which are not in good faith or which
involve intentional misconduct or a knowing violation of the law;
(iii) any unlawful distribution under the provisions of
applicable state or federal laws; or
(iv) any transaction from which the Director derived an
improper personal benefit.
3.1 - 2
<PAGE>
(v) conviction of a criminal offense which constitutes a
felony under applicable federal or state law and such conviction
is not subject to direct appeal; or
(vi) a determination by a court of competent jurisdiction
that the director has engaged in or is liable for gross
negligence or intentional misconduct in the performance of the
directors' duties to the Corporation in a matter of substantial
importance to the Corporation and such determination is final and
not subject to appeal.
Vacancies. Any vacancy in the Board of Directors, however caused,
shall be filled by a majority vote of the directors then in office, whether
or not a quorum, and any directors so chosen shall hold office until the end
of the term of the class to which such director has been appointed and until
his or her successor has been duly elected and qualified.
Power to Amend the Bylaws. The Board of Directors shall have the power
to adopt, amend or repeal the bylaws of the Corporation without the approval
of the stockholders of the Corporation.
Amendment. This Article VI may be amended or repealed only by the
affirmative vote of the holders of not less than two-thirds of the shares of
capital stock outstanding and entitled to vote on the amendment or repeal of
this Article, except that, with the unanimous approval of the Directors then
serving on the Board of Directors, this Article VI may be amended or repealed
by the affirmative vote of the holders of a majority of the shares
represented at a meeting of stockholders called for the purpose of voting on
the amendment or repeal of this Article.
ARTICLE VII - LIMITATIONS ON LIABILITY OF DIRECTORS
No director of the Corporation is personally liable to the Corporation
or its stockholders for monetary damages for conduct as a director, except
for the following:
(a) Any breach of the director's duty of loyalty to the Corporation
or its stockholders;
(b) Acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
(c) Any distribution to stockholders that is unlawful under Delaware
law; or
(d) Any transaction from which the director derived an improper
personal benefit.
This Article does not limit or eliminate the liability of a director
for any act or omission occurring before the effective date of this Article.
No amendment to or repeal of this Article may make any director of the
Corporation personally liable to the Corporation or its stockholders for
monetary damages for any act or omission as a director occurring before the
effective date of that amendment or repeal.
This Article is intended to limit the liability of any director of the
Corporation to the greatest extent authorized under the General Corporation
3.1 - 3
<PAGE>
Law of the State of Delaware. Any further limitation on the liability of
directors authorized under any amendment to the General Corporation Law of
the State of Delaware is incorporated into this Article on the effective date
of that amendment.
Amendment. This Article VII may be amended or repealed only by the
affirmative vote of the holders of not less than two-thirds of the shares of
capital stock outstanding and entitled to vote on the amendment or repeal of
this Article, except that, with the unanimous approval of the Directors then
serving on the Board of Directors, this Article VII may be amended or
repealed by the affirmative vote of the holders of a majority of the shares
represented at a meeting of stockholders called for the purpose of voting on
the amendment or repeal of this Article.
ARTICLE VIII- INDEMNIFICATION
A. Nonderivative Actions. Subject to the provisions of Sections C,
E, and F below, the Corporation shall indemnify any person who was or is a
party to or is threatened to be made a party to any threatened, pending or
completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (including all appeals) (other than an
action by or in the right of the Corporation) by reason of or arising from
the fact that the person is or was a director or officer of the Corporation
or one of its subsidiaries, or is or was serving at the request of the
Corporation as a director, officer, partner, or trustee of another foreign or
domestic corporation, partnership, joint venture, trust, employee benefit
plan, or other enterprise, against reasonable expenses (including attorney
fees), judgments, fines, penalties, excise taxes assessed with respect to any
employee benefit plan and amounts paid in settlement actually and reasonably
incurred by the person to be indemnified in connection with such action,
suit, or proceeding if the person acted in good faith, did not engage in
intentional misconduct, and, with respect to any criminal action or
proceeding, did not know the conduct was unlawful. The termination of any
action, suit, or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith or, with
respect to any criminal action or proceeding, that the person knew that the
conduct was unlawful.
B. Derivative Actions. Subject to the provisions of Sections C, E,
and F below, the Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending, or completed
action or suit (including all appeals) by or in the right of the Corporation
to procure a judgment in its favor by reason of or arising from the fact that
the person is or was a director or officer of the Corporation or one of its
subsidiaries, or is or was serving at the request of the Corporation as a
director, officer, partner, or trustee of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, against reasonable expenses (including attorney fees)
actually incurred by the person to be indemnified in connection with the
defense or settlement of such action or suit if the person acted in good
faith, provided, however, that no indemnification shall be made in respect of
any claim, issue, or matter as to which such person shall have been adjudged
to be liable for deliberate misconduct in the performance of that person's
duty to the Corporation, for any transaction in which the person received an
improper personal benefit, for any breach of the duty of loyalty to the
Corporation, or for any distribution to stockholders that is unlawful under
the General Corporation Law of the State of Delaware, or successor statute,
unless and only to the extent that the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses that the court
shall deem proper.
3.1 - 4
<PAGE>
C. Determination of Right to Indemnification in Certain Cases.
Subject to the provisions of Sections E and F below, indemnification under
Sections A and B of this Article shall not be made by the Corporation unless
it is expressly determined that indemnification of the person who is or was
an officer or director, or is or was serving at the request of the
Corporation as a director, officer, partner, or trustee of another foreign or
domestic corporation, partnership, joint venture, trust, employee benefit
plan, or other enterprise, is proper in the circumstances because the person
has met the applicable standard of conduct set forth in Sections A or B.
That determination may be made by any of the following:
(1) By the Board of Directors by majority vote of a quorum
consisting of directors who are not or were not parties to the action, suit
or proceeding;
(2) If a quorum cannot be obtained under paragraph (1) of this
subsection, by majority vote of a committee duly designated by the Board of
Directors consisting solely of two or more directors not at the time parties
to the action, suit, or proceeding (directors who are parties to the action,
suit, or proceeding may participate in designation of the committee);
(3) By special legal counsel selected by the Board of Directors
or its committee in the manner prescribed in (1) or (2) or, if a quorum of
the Board of Directors cannot be obtained under (1) and a committee cannot be
designated under (2) the special legal counsel shall be selected by majority
vote of the full Board of Directors, including directors who are parties to
the action, suit, or proceeding;
(4) If referred to them by Board of Directors of the
Corporation by majority vote of a quorum (whether or not such quorum consists
in whole or in part of directors who are parties to the action, suit, or
proceeding), by the stockholders; or
(5) By a court of competent jurisdiction.
D. Indemnification of Persons Other than Officers or Directors.
Subject to the provisions of Section F, in the event any person not entitled
to indemnification under Sections A and B of this Article was or is a party
or is threatened to be made a party to any threatened, pending, or completed
action, suit, or proceeding of a type referred to in Sections A or B of this
Article by reason of or arising from the fact that such person is or was an
employee or agent (including an attorney) of the Corporation or one of its
subsidiaries, or is or was serving at the request of the Corporation as an
employee or agent (including an attorney) of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan, or
other enterprise, the Board of Directors of the Corporation by a majority
vote of a quorum (whether or not such quorum consists in whole or in part of
directors who were parties to such action, suit, or proceeding) or the
stockholders of the Corporation by a majority vote of the outstanding shares
upon referral to them by the Board of Directors of the Corporation by a
majority vote of a quorum (whether or not such quorum consists in whole or in
part of directors who were parties to such action, suit, or proceeding) may,
but shall not be required to, grant to such person a right of indemnification
to the extent described in Sections A or B of this Article as if the person
were acting in a capacity referred to therein, provided that such person
meets the applicable standard of conduct set forth in such Sections.
Furthermore, the Board of Directors may designate by resolution in advance of
any action, suit, or proceeding, those employees or agents (including
attorneys) who shall have all rights of indemnification granted under
Sections A and B of this Article.
3.1 - 5
<PAGE>
E. Successful Defense. Notwithstanding any other provision of
Sections A, B, C, or D of this Article, but subject to the provisions of
Section F, to the extent a director, officer, or employee is successful on
the merits or otherwise in defense of any action, suit, or proceeding
referred to in Sections A, B, or D of this article, or in defense of any
claim, issue, or matter therein, that person shall be indemnified against
expenses (including attorney fees) actually and reasonably incurred by him in
connection therewith.
F. Condition Precedent to Indemnification Under Sections A, B and
D. Any person who desires to receive the benefits otherwise conferred by
Sections A, B and D of this article shall promptly notify the Corporation
that the person has been named a defendant to an action, suit, or proceeding
of a type referred to in Sections A, B or D and intends to rely upon the
right of indemnification described in Sections A, B or D of this article.
The notice shall be in writing and mailed, via registered or certified mail,
return receipt requested, to the President of the Corporation at the
executive offices of the Corporation or, in the event the notice is from the
President, to the registered agent of the Corporation. Failure to give the
notice required hereby shall entitle the Board of Directors of the
Corporation by a majority vote of a quorum (consisting of directors who,
insofar as indemnity of officers or directors is concerned, were not parties
to such action, suit, or proceeding, but who, insofar as indemnity of
employees or agents is concerned, may or may not have been parties) or, if
referred to them by the Board of Directors of the Corporation by a majority
vote of a quorum (consisting of directors who, insofar as indemnity of
officers or directors is concerned, were not parties to such action, suit, or
proceeding, but who, insofar as indemnity of employees or agents is
concerned, may or may not have been parties), the stockholders of the
Corporation by a majority of the votes entitled to be cast by holders of
shares of the Corporation's stock which have unlimited voting rights to make
a determination that such a failure was prejudicial to the Corporation in the
circumstances and that, therefore, the right to indemnification referred to
in Sections A, B, or D of this article shall be denied in its entirety or
reduced in amount.
G. Advances for Expenses. Expenses incurred by a person indemnified
hereunder in defending a civil, criminal, administrative, or investigative
action, suit, or proceeding (including all appeals) or threat thereof may be
paid by the Corporation in advance of the final disposition of such action,
suit, or proceeding upon receipt of an undertaking by or on behalf of such
person to repay such expenses if it shall ultimately be determined that the
person is not entitled to be indemnified by the Corporation and a written
affirmation of the person's good faith belief that he or she has met the
applicable standard of conduct. The undertaking must be a general personal
obligation of the party receiving the advances but need not be secured and
may be accepted without reference to financial ability to make repayment.
H. Insurance. The Corporation may purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee, or agent
of the Corporation or one of its subsidiaries or is or was serving at the
request of the Corporation as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic corporation, partnership,
joint venture, trust, employee benefit plan, or other enterprise against any
liability asserted against and incurred by that person in any such capacity,
or arising out of his status as such, whether or not the Corporation would
have the power to indemnify that person against such liability under the
provisions of this Article or under Delaware law.
3.1 - 6
<PAGE>
I. Purpose and Exclusivity. The indemnification referred to in the
various Sections of this Article shall be deemed to be in addition to and not
in lieu of any other rights to which those indemnified may be entitled under
any statute, rule of law or equity, agreement, vote of the stockholders or
Board of Directors, or otherwise. The Corporation is authorized to enter
into agreements of indemnification. The purpose of this Article is to
augment the provisions of Delaware law dealing with indemnification.
J. Severability. If any of the provisions of this Article are
found, in any action, suit or proceeding, to be invalid or ineffective, the
validity and the effect of the remaining provisions shall not be affected.
K. Amendment. This Article VIII may be amended or repealed only by
the affirmative vote of the holders of not less than two-thirds of the shares
of capital stock outstanding and entitled to vote on the amendment or repeal
of this Article, except that, with the unanimous approval of the Directors
then serving on the Board of Directors, this Article VIII may be amended or
repealed by the affirmative vote of the holders of a majority of the shares
represented at a meeting of stockholders called for the purpose of voting on
the amendment or repeal of this Article.
ARTICLE IX - RESTRICTIONS ON STOCK TRANSFER
The Corporation intends to be treated for federal income tax purposes
in accordance with the provisions of Subchapter S of the Internal Revenue
Code of 1986, as amended ("Subchapter S"). Accordingly, to ensure that the
Corporation continues to be eligible for treatment as a Subchapter S
corporation, the transfer of shares of capital stock of the Corporation is
restricted such that no transfer shall be effective or recorded on the books
of the Corporation if, after giving effect to such transfer, the Corporation
would no longer be eligible for treatment as a Subchapter S corporation. By
way of example and without limiting the foregoing, no shares shall be
transferred to any person or entity that is not an eligible stockholder under
Subchapter S, and no transfer of shares shall be made if, after giving effect
to such transfer, the total number of stockholders of the Corporation would
exceed the maximum permissible number of stockholders as set forth under
Subchapter S. Any purported transfer, whether by sale, pledge, gift or
otherwise, in violation of this Article shall be deemed ab initio to be null
and void.
Certificates representing shares of capital stock of the Corporation
shall bear a legend substantially in the following form:
"The transfer of the shares of stock
represented by this certificate is restricted by the
Certificate of Incorporation of Newco Alaska, Inc.
and cannot be sold except in compliance therewith.
Any purported transfer in violation of such
restrictions shall be deemed ab initio null and void.'
Amendment. This Article IX may be amended or repealed only by the
affirmative vote of the holders of not less than two-thirds of the shares of
capital stock outstanding and entitled to vote on the amendment or repeal of
this Article, except that, with the unanimous approval of the Directors then
serving on the Board of Directors, this Article IX may be amended or repealed
by the affirmative vote of the holders of a majority of the shares
represented at a meeting of stockholders called for the purpose of voting on
the amendment or repeal of this Article.
ARTICLE X - INCORPORATOR
The name and address of the incorporator of the Corporation is as
follows:
Gordon E. Crim, Esq.
One Main Place, 15th Floor
101 S.W. Main Street
Portland, Oregon 97204-3223
(503) 221-0607
This Certificate of Incorporation is dated January 7, 1999.
/s/ Gordon E. Crim
Gordon E. Crim, Incorporator
Person to contact about this filing: Gordon E. Crim, daytime phone number
(503) 221-0607.
3.1 - 7
<PAGE>
BYLAWS
OF
NEWCO ALASKA, INC.
TABLE OF CONTENTS
ARTICLE 1. STOCKHOLDERS MEETINGS.............................................2
Section 1.1Annual Meeting.................................................2
Section 1.2Special Meetings...............................................2
Section 1.3Notice.........................................................2
Section 1.4Waiver of Notice...............................................2
Section 1.5Voting.........................................................2
Section 1.6Quorum; Vote Required..........................................2
Section 1.7Action Without Meeting.........................................2
ARTICLE 2. BOARD OF DIRECTORS................................................2
Section 2.1Number and Election of Directors...............................2
Section 2.2Classified Board of Directors..................................2
Section 2.3Vacancies......................................................2
Section 2.4Annual Meeting.................................................2
Section 2.5Regular Meetings...............................................2
Section 2.6Special Meetings...............................................2
Section 2.7Telephonic Meetings............................................2
Section 2.8Waiver of Notice...............................................2
Section 2.9Quorum.........................................................2
Section
2.10.........................................................Voting2
Section 2.11.........................................Action Without
Meeting2
Section 2.12...........................................Removal of
Directors2
Section 2.13............................................Powers of
Directors2
Section
2.14.....................................................Committees2
Section 2.15..........................................Chairman of the
Board2
ARTICLE 3. OFFICERS..........................................................2
Section 3.1Composition....................................................2
Section 3.2Chief Executive Officer........................................2
Section 3.3President......................................................2
Section 3.4Vice President.................................................2
Section 3.5Secretary......................................................2
Section 3.6Treasurer......................................................2
Section 3.7Removal........................................................2
ARTICLE 4. STOCK AND OTHER SECURITIES........................................2
Section 4.1Certificates...................................................2
Section 4.2Transfer Agent and Registrar...................................2
Section 4.3Transfer.......................................................2
Section 4.4Necessity for Registration.....................................2
Section 4.5Fixing Record Date.............................................2
Section 4.6Record Date for Adjourned Meeting..............................2
Section 4.7Lost Certificates..............................................2
ARTICLE 5. CORPORATE SEAL....................................................2
ARTICLE 6. AMENDMENTS........................................................2
ARTICLE 7. SEVERABILITY......................................................2
3.2 - 1
<PAGE>
BYLAWS
OF
NEWCO ALASKA, INC.
ARTICLE 1. STOCKHOLDERS MEETINGS
Section 1.1 Annual Meeting. The annual meeting of the stockholders will be
held at the principal office of the Corporation at such time, date, or place as
may be determined by the Board of Directors. At the annual meeting, the
stockholders entitled to vote will elect Directors and transact such other
business as may come before the meeting.
Section 1.2 Special Meetings. Special meetings of stockholders will be held
at any time on call of the President or the Board of Directors, or on demand in
writing by stockholders of record holding shares with at least ten percent (10%)
of the votes entitled to be cast on any matter proposed to be considered at the
special meeting.
Section 1.3 Notice. Written notice stating the place, date and time of the
meeting, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called, will be delivered not less than ten (10) nor more
than sixty (60) days before the date of the meeting, either personally or by
mail, by or at the direction of the President or the Secretary, to each
stockholder of record entitled to vote at such meeting. If mailed, the notice
will be deemed to be delivered when deposited in the United States Mail
addressed to the stockholder at the stockholder's address as it appears on the
current stockholder records of the Corporation, with postage prepaid.
Section 1.4 Waiver of Notice. A stockholder may, at any time, waive any
notice required by these Bylaws, the Certificate of Incorporation, or the
General Corporation Law of the State of Delaware. Except as otherwise provided
by this Section 1.4, the waiver must be in writing, must be signed by the
stockholder, and must be delivered to the Corporation for inclusion in the
minutes and filing in the corporate records. A stockholder's attendance at a
meeting waives any objection to (a) lack of notice or defective notice, unless
the stockholder objects at the beginning of the meeting to holding the meeting
or transacting business at the meeting and (b) consideration of any matter at
the meeting that is not within the purpose or purposes described in the notice
of a special meeting, unless the stockholder objects to considering the matter
when it is first presented.
Section 1.5 Voting. Except as otherwise provided in the Certificate of
Incorporation, each stockholder will be entitled to one vote, in person or by
proxy, on each matter voted on at a stockholder's meeting for each share of
stock outstanding in such stockholder's name on the records of the Corporation
which is entitled to vote on such matter. Unless held as trustee or in another
fiduciary capacity, shares may not be voted if held by another corporation in
which the Corporation holds a majority of the shares entitled to vote for
directors of such other corporation.
Section 1.6 Quorum; Vote Required. A majority of the shares entitled to
vote on a matter, represented in person or by proxies, will constitute a quorum
with respect to that matter at any meeting of the stockholders. If a quorum is
present, action on a matter, other than the election of directors, is approved
if the votes cast in favor of the action exceed the votes cast in opposition,
unless the vote of a greater number is required by the General Corporation Law
of the State of Delaware or the Certificate of Incorporation. Election of
directors is governed by Sections 2.1 and 2.2 of these Bylaws. Unless otherwise
provided in the Certificate of Incorporation, a majority of votes represented at
a meeting of stockholders, whether or not a quorum, may adjourn the meeting to a
3.2 - 2
<PAGE>
different time, date, or place. No further notice of the adjourned meeting is
required if the new time, date, and place is announced at the meeting prior to
adjournment and the date is set thirty (30) days or less from the date of the
original meeting.
Section 1.7 Action Without Meeting. Any action required or permitted to be
taken at a meeting of stockholders may be taken without a meeting if a written
consent, or consents, describing the action taken is signed by all of the
stockholders entitled to vote on the action and is delivered to the Corporation
for inclusion in the minutes and filing with the corporate records. The action
is effective when the last stockholder signs the consent, unless the consent
specifies an earlier or later effective date. A consent signed under this
section has the effect of a meeting vote and may be described as such in any
document. Unless a record date for determining the stockholders entitled to take
action without a meeting is otherwise established, the record date for that
purpose is the date the first stockholder signs the consent. If the General
Corporation Law of the State of Delaware requires that notice of a proposed
action be given to nonvoting stockholders and that the action is to be taken by
unanimous consent of the stockholders, at least ten (10) days written notice of
the proposed action will be given to nonvoting stockholders before the action is
taken.
ARTICLE 2. BOARD OF DIRECTORS
Section 2.1 Number and Election of Directors. The Board of Directors will
consist of not less than five (5) members and not more than twenty-five (25)
members. The number of directors will be established within this range from time
to time by the Board of Directors. A decrease in the number of directors will
not have the effect of shortening the term of any incumbent director. At each
annual meeting, the stockholders will elect directors by a plurality of the
votes cast by the shares entitled to vote in the election.
Section 2.2 Classified Board of Directors. The Board of Directors shall be
divided into three classes, as nearly equal in number as possible with one class
standing for election at each annual meeting of stockholders, and each class
standing for election every third year. The terms of the directors elected by
the stockholders at the first annual meeting shall be as follows: The directors
in the first class shall be elected to serve until the first annual meeting of
stockholders following such election and until their successors are duly elected
and qualified; the directors in the second class shall be elected to serve until
the second annual meeting of stockholders following such election and until
their successors are duly elected and qualified; and the directors in the third
class shall be elected to serve until the third annual meeting of stockholders
following such election and until their successors are duly elected and
qualified. At each subsequent annual meeting of stockholders, directors elected
to succeed those whose terms are expiring shall be elected for a term to expire
at the third succeeding annual meeting of stockholders and when their successors
are duly elected and qualified, subject to prior death, resignation or removal.
A decrease in the number of directors will not have the effect of shortening the
term of any incumbent director. Each director will be elected to hold office
until the next annual meeting of stockholders and until the election and
qualification of a successor, subject to prior death, resignation or removal.
Section 2.3 Vacancies. Unless otherwise provided in the Certificate of
Incorporation, any vacancy occurring in the Board of Directors, including a
vacancy resulting from an increase in the number of directors, may be filled by
the Board of Directors or if the remaining directors do not constitute a quorum,
by the affirmative vote of a majority of the remaining directors. A director
elected to fill a vacancy will serve for the unexpired term of the director's
predecessor in office or for the remainder of the term for the class to which
such director is appointed, subject to prior death, resignation or removal.
3.2 - 3
<PAGE>
Section 2.4 Annual Meeting. An annual meeting of the Board of Directors
will be held without notice immediately after the adjournment of the annual
meeting of the stockholders or at another time designated by the Board of
Directors upon notice in the same manner as provided in Section 2.6. The annual
meeting will be held at the principal office of the Corporation or at such other
place as the Board of Directors may designate.
Section 2.5 Regular Meetings. The Board of Directors may provide by
resolution for regular meetings. Unless otherwise required by such resolution,
regular meetings may be held without notice of the date, time, place or purpose
of the meeting.
Section 2.6 Special Meetings. Special meetings of the Board of Directors
may be called by the President, the Chief Executive Officer or any member of the
Board of Directors. Notice of each special meeting will be given to each
director, either by oral or in written notification actually received not less
than twenty-four (24) hours prior to the meeting or by written notice mailed by
deposit in the United States mail, first class postage prepaid, addressed to the
director at the director's address appearing on the records of the Corporation
not less than seventy-two (72) hours prior to the meeting. Special meetings of
the directors may also be held at any time when all members of the Board of
Directors are present and consent to a special meeting. Special meetings of the
directors will be held at the principal office of the Corporation or at any
other place designated by a majority of the Board of Directors.
Section 2.7 Telephonic Meetings. The Board of Directors may permit
directors to participate in a meeting by any means of communication by which all
of the persons participating in the meeting can hear each other at the same
time. Participation in such a meeting will constitute presence in person at the
meeting.
Section 2.8 Waiver of Notice. A director may, at any time, waive any notice
required by these Bylaws, the Certificate of Incorporation or the General
Corporation Law of the State of Delaware. Except as otherwise provided in this
Section 2.8, the waiver must be in writing, must be signed by the director, must
specify the meeting for which notice is waived, and must be delivered to the
Corporation for inclusion in the minutes and filing in the corporate records. A
director's attendance at a meeting waives any required notice, unless the
director at the beginning of the meeting or promptly upon the director's arrival
objects to holding the meeting or transacting business at the meeting and does
not thereafter vote for or assent to any action taken at the meeting.
Section 2.9 Quorum. A majority of the number of directors that has been
established by the Board of Directors pursuant to Section 2.1 of these Bylaws
will constitute a quorum for the transaction of business.
Section 2.10 Voting. The act of the majority of the directors present at a
meeting at which a quorum is present will for all purposes constitute the act of
the Board of Directors, unless otherwise provided by the Certificate of
Incorporation or these Bylaws.
Section 2.11 Action Without Meeting. Unless otherwise provided by the
Certificate of Incorporation, any action required or permitted to be taken at a
Board of Directors meeting may be taken without a meeting if a written consent,
or consents, describing the action taken is signed by each director and included
in the minutes and filed with the corporate records. The action is effective
when the last director signs the consent, unless the consent specifies an
earlier or later effective date. A consent signed under this section has the
effect of an act of the Board of Directors at a meeting and may be described as
such in any document.
Section 2.12 Removal of Directors. Unless otherwise provided by the
Certificate of Incorporation, the stockholders, at any meeting of the
stockholders called expressly for that purpose, may remove any director from
office, with or without cause.
3.2 - 4
<PAGE>
Section 2.13 Powers of Directors. The Board of Directors will have the sole
responsibility for the management of the business of the Corporation. In the
management and control of the property, business and affairs of the Corporation,
the Board of Directors is vested with all of the powers possessed by the
Corporation itself, so far as this delegation of power is not inconsistent with
the General Corporation Law of the State of Delaware, the Certificate of
Incorporation, or these Bylaws. The Board of Directors will have the power to
determine what amount constitutes net earnings of the Corporation, what amount
will be reserved for working capital and for any other purpose, and what amount,
if any, will be declared as dividends. Such determinations by the Board of
Directors will be final and conclusive except as otherwise expressly provided by
the General Corporation Law of the State of Delaware or the Certificate of
Incorporation. The Board of Directors may designate one or more officers of the
Corporation who will have the power to sign all deeds, leases, contracts,
mortgages, deeds of trust and other instruments and documents executed by and
binding upon the Corporation. In the absence of a designation of any other
officer or officers, the Chief Executive Officer is so designated.
Section 2.14 Committees. Unless the Certificate of Incorporation provides
otherwise, a majority of the Board of Directors may designate from among its
members an Executive Committee and any number of other committees. Each
committee must consist of two or more directors and will have such powers and
will perform such duties as may be delegated and assigned to the committee by
the Board of Directors. No committee will have the authority of the Board of
Directors with respect to (a) approving dividends or other distributions
to stockholders, except as permitted by (h), below; (b) amending the Certificate
of Incorporation, except as permitted by (j), below; (c) adopting a plan of
merger; (d) recommending to the stockholders the sale, lease, exchange, or other
disposition of all or substantially all the property and assets of the
Corporation other than in the usual and regular course of its business;
(e) recommending to the stockholders a voluntary dissolution of the Corporation
or a revocation thereof; (f) approving or proposing to stockholders other
actions required to be approved by the stockholders; (g) approving a plan of
merger which does not require stockholder approval; (h) authorizing or approving
any reacquisition of shares of the Corporation, except pursuant to a formula or
method prescribed by the Board of Directors; (i) authorizing or approving the
issuance, sale or contract for sale of shares of the Corporation's stock except
either pursuant to a stock option or other stock compensation plan or where the
Board of Directors has determined the maximum number of shares and has expressly
delegated this authority to the committee; (j) determining the designation and
relative rights, preferences and limitations of a class or series of shares,
unless the Board of Directors has determined a maximum number of shares and
expressly delegated this authority to the committee; (k) adopting, amending or
repealing Bylaws for the Corporation; or (l) filling vacancies on the Board of
Directors or on any of its committees; or (m) taking any other action which the
General Corporation Law of the State of Delaware prohibits a committee of a
board of directors to take. The provisions of Sections 2.5, 2.6, 2.7, 2.8, 2.9,
2.10 and 2.11 of the Bylaws will also apply to all committees of the Board of
Directors. Each committee will keep written records of its activities and
proceedings. All actions by committees will be reported to the Board of
Directors at the next meeting following the action and the Board of Directors
may ratify, revise or alter such action, provided that no rights or acts of
third parties will be affected by any such revision or alteration.
Section 2.15 Chairman of the Board. The Board of Directors may elect one of
its members to be Chairman of the Board of Directors. The Chairman will advise
and consult with the Board of Directors and the officers of the Corporation as
to the determination of policies of the Corporation, will preside at all
meetings of the Board of Directors and of the stockholders, and will perform
such other functions and responsibilities as the Board of Directors may
designate from time to time.
3.2 - 5
<PAGE>
ARTICLE 3. OFFICERS
Section 3.1 Composition. The officers of this Corporation will consist of
at least a President who shall also be a director, a Secretary and a Treasurer
or Chief Financial Officer, and may also include a separate Chief Executive
Officer, one or more Vice Presidents and a Treasurer, each of whom will be
elected by the Board of Directors at the annual meeting of the Board of
Directors or at any regular meeting of the Board of Directors or at any special
meeting called for that purpose. Other officers and assistant officers and
agents may be elected or appointed by or in the manner directed by the Board of
Directors as the Board of Directors may deem necessary or appropriate. Any
vacancies occurring in any office of this Corporation may be filled by election
or appointment by the Board of Directors at any regular meeting or any special
meeting called for that purpose. Each officer will hold his or her office until
the next annual meeting of the Board of Directors and until the election and
qualification of a successor in such office, subject to prior death, resignation
or removal.
Section 3.2 Chief Executive Officer. The Board of Directors may designate
one of the officers of the Corporation or the Chairman of the Board of Directors
to serve as the Chief Executive Officer of the Corporation. The Chief Executive
Officer will be responsible for implementing the policies and goals of the
Corporation as stated by the Board of Directors and will have general
supervisory responsibility and authority over the property, business and affairs
of the Corporation. Unless otherwise provided by the Board of Directors, the
Chief Executive Officer will have the authority to hire and fire employees and
agents of the Corporation and to take such other actions as the Chief Executive
Officer deems to be necessary or appropriate to implement the policies, goals
and directions of the Board of Directors.
Section 3.3 President. In the absence of a specific designation by the
Board of Directors of a separate Chief Executive Officer, the President, who
shall also be a director, will have all the responsibilities and authority of
the Chief Executive Officer as set forth in Section 3.1 and may be referred to
as the Corporation's Chief Executive Officer. The President may sign any
documents and instruments of the Corporation, which require the signature of the
President under the General Corporation Law of the State of Delaware, the
Certificate of Incorporation or these Bylaws. The President will also have such
responsibilities and authority as may be delegated to the President by the Chief
Executive Officer or prescribed by the Board of Directors. At the request of the
Chairman of the Board of Directors or in the Chairman's absence, the President
will preside at meetings of the Board of Directors and at meetings of the
stockholders. Upon the death, resignation or removal of the President, the Board
of Directors may appoint a Vice President or another person to serve as an
"acting" or "interim" President to serve as such until the position is filled by
action of the Board of Directors. Unless otherwise provided by the Board of
Directors, an "acting" or "interim" President will have all responsibilities and
authority of the President.
Section 3.4 Vice President. A Vice President will have such
responsibilities and authority as may be prescribed by the Board of Directors or
as may be delegated by the Chief Executive Officer or the President to such Vice
President. If at any time there is more than one Vice President, the Board of
Directors may designate the order of seniority or the areas of responsibility of
such Vice Presidents. A Vice President (or if more than one, the Vice Presidents
in order of seniority by designation or order of appointment) will have all of
the powers and perform all of the duties of the President during the absence or
disability of the President.
Section 3.5 Secretary. The Secretary will keep the minutes and records of
all the meetings of the stockholders and directors and of all other official
3.2 - 6
<PAGE>
business of the Corporation. The Secretary will give notice of meetings to the
stockholders and directors and will perform such other duties as may be
prescribed by the Board of Directors.
Section 3.6 Treasurer. The Treasurer will receive all moneys and funds of
the Corporation and deposit such moneys and funds in the name of and for the
account of the Corporation with one or more banks designated by the Board of
Directors or in such other short-term investment vehicles as may from time to
time be designated or approved by the Board of Directors. The Treasurer will
keep accurate books of account and will make reports of financial transactions
of the Corporation to the Board of Directors, and will perform such other duties
as may be prescribed by the Board of Directors. If the Board of Directors elects
a Vice President, Finance or a Chief Financial Officer, the duties of the office
of Treasurer may rest in that officer.
Section 3.7 Removal. The directors, at any regular meeting or any special
meeting called for that purpose, may remove any officer from office with or
without cause; provided, however, that no removal will impair the contract
rights, if any, of the officer removed or of this Corporation or of any other
person or entity.
ARTICLE 4. STOCK AND OTHER SECURITIES
Section 4.1 Certificates. All stock and other securities of this
Corporation will be represented by certificates which will be signed by the
President or a Vice President and the Secretary or an Assistant Secretary of the
Corporation, and which may be sealed with the seal of the Corporation or a
facsimile thereof.
Section 4.2 Transfer Agent and Registrar. The Board of Directors may from
time to time appoint one or more Transfer Agents and one or more Registrars for
the stock and other securities of the Corporation. The signatures of the
President or a Vice President and the Secretary or an Assistant Secretary upon a
certificate may be facsimiles if the certificate is manually signed by a
Transfer Agent, or registered by a Registrar.
Section 4.3 Transfer. Subject to restrictions on transfer set forth in the
Certificate of Incorporation, title to a certificate and to the interest in this
Corporation represented by that certificate can be transferred only (a) by
delivery of the certificate endorsed by the person designated by the certificate
to be the owner of the interest represented thereby either in blank or to a
specified person or (b) by delivery of the certificate and a separate document
containing a written assignment of the certificate or a power of attorney to
sell, assign or transfer the same, signed by the person designated by the
certificate to be the owner of the interest represented thereby either in blank
or to a specified person.
Section 4.4 Necessity for Registration. Prior to presentment for
registration upon the transfer books of the Corporation of a transfer of stock
or other securities of this Corporation, the Corporation or its agent for
purposes of registering transfers of its securities may treat the registered
owner of the security as the person exclusively entitled to vote the securities;
to receive any notices to stockholders; to receive payment of any interest on a
security, or of any ordinary, extraordinary, partial liquidating, final
liquidating, or other dividend, or of any other distribution, whether paid in
cash or in securities or in any other form; and otherwise to exercise or enjoy
any or all of the rights and powers of an owner.
Section 4.5 Fixing Record Date. The Board of Directors may fix in advance a
date as record date for the purpose of determining the registered owners of
stock or other securities (a) entitled to notice of or to vote at any meeting of
the stockholders or any adjournment thereof; (b) entitled to receive payment of
any interest on a security, or of any ordinary, extraordinary, partial
liquidating, final liquidating, or other dividend, or of any other distribution,
whether paid in cash or in securities or in any other form; or (c) entitled to
otherwise exercise or enjoy any or all of the rights and powers of an owner, or
in order to make a determination of registered owners for any other proper
purpose. The record date will be not more than sixty (60) days and, in the case
of a meeting of stockholders, not less than ten (10) days prior to the date on
which the particular action which requires such determination of registered
owners is to be taken.
Section 4.6 Record Date for Adjourned Meeting. A determination of
stockholders entitled to notice of or to vote at a meeting of the stockholders
is effective for any adjournment of the meeting unless the Board of Directors
fixes a new record date. A new record date must be fixed if a meeting of the
stockholders' is adjourned to a date more than thirty (30) days after the date
fixed for the original meeting.
Section 4.7 Lost Certificates. In case of the loss or destruction of a
certificate of stock or other security of this Corporation, a duplicate
certificate may be issued in its place upon such conditions as the Board of
Directors may prescribe.
ARTICLE 5. CORPORATE SEAL
If the Corporation has a corporate seal, its size and style is shown by
the impression below:
ARTICLE 6. AMENDMENTS
Unless otherwise provided in the Certificate of Incorporation, the Bylaws
of the Corporation may be amended or repealed by the directors, subject to
amendment or repeal by action of the stockholders, at any regular meeting or at
any special meeting called for that purpose, provided notice of the proposed
change is given in the notice of the meeting or notice thereof is waived in
writing.
ARTICLE 7. SEVERABILITY
If any provision of these Bylaws is found, in any action, suit or
proceeding, to be invalid or ineffective, the validity and the effect of the
remaining provisions will not be affected.
EXHIBIT 10.1
LEASE
THIS LEASE is made this 24th day of April, 1989, by and between
CLIFFORD WHITE and LAVON WHITE, P.O. Box 861, Wrangell, Alaska 99929 (herein
collectively "Lessor") and FIRST BANK, P.O. Box 7920, Ketchikan, Alaska 99901
(herein "Lessee")
1. PREMISES. Lessor grants to Lessee a lease, with options to renew,
on the following real property located in Wrangell, Alaska:
A certain building at 224 Brueger St., consisting of 2310 square feet,
more or less, located on Lots 19-A and 19-B, Block 1-A, Tidelands Addition.
2. TERM. The term of this lease shall be for fifteen (15)
consecutive years, with options to renew as set forth below.
For purposes of this lease, the term "lease year" shall mean a period
of twelve consecutive full months. The first lease year shall begin on the
commencement of the term hereof, with the succeeding lease year commencing on
the anniversary date of the first lease year.
(a) First Option. Lessee is granted the option to extend this
lease for an additional term of five (5) years provided Lessee gives Lessor
written notice of its election to extend this lease at least ninety (90) days
before the expiration of the term of this lease and further provided that
Lessee is not in default in any manner of the provisions hereof.
(b) Second Option. In the event Lessee exercises one first
option to extend this lease, it is granted the option to extend this lease
for an additional term of five (5) years thereafter, provided Lessee gives
Lessor written notice of its election to extend this lease at least ninety
(90) days before the expiration of the first extended term and further
provided that Lessee is not in default in any manner of the provisions hereof.
3. RENT. The fixed minimum annual rental shall be $1.25 per square
foot for the first two (2) years. Upon the beginning of the third lease year,
rent shall be the fixed minimum annual rental plus a percentage equal to 50%
of the percentage increase, if any, shown to have occurred by the consumer
price index for all items for the United States of America as a whole, issued
by the Bureau of Labor Statistics of the United States Department of Labor.
The increase shall be determined as of the anniversary date of each lease
year. At no time shall rent be less than $1.25 per square foot.
Rental payments shall begin upon occupancy and shall be payable to
Lessor by personal delivery or by mailing to Lessor at P.O. Box 861,
Wrangell, Alaska 99929.
4. UTILITIES AND TAXES. Lessee shall pay all charges for water, gas,
heat, electricity, power, telephone service and all other public utilities or
service charges which shall be incurred during the term of this lease.
Lessee shall pay all sales taxes on rent paid. Lessee shall pay all
increases in tidelands lease payments and real property taxes from the date
hereof, including extraordinary and special assessments which may be levied
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or assessed against the premises and all improvements thereon. Should Lessee
fail to pay any tax or assessment, Lessor shall be entitled to pay the same
and any amount so paid by Lessor shall be deemed to be additional rent, due
and payable by Lessee.
5. OBLIGATIONS PRIOR TO OCCUPANCY.
(a) Lessor shall provide the following:
(1) a 24'x38' addition to the existing building,
including a carport for the drive-up window and completing the exterior
of the building pursuant to Lessee's specifications, a copy of which is
attached hereto and incorporated herein by reference. Any and all work
done by Lessor shall be on the exterior of the building only; Lessor
will provide no interior work whatsoever, with the exception of the
bank vault noted below.
(2) grade the lot and level with crushed rock
(3) build a bank vault (door to be provided by Lessee)
(4) set the fuel tank
(5) accomplish all work necessary to run sewer and water
services to the building
(b) Lessee shall provide the following:
(1) furnish any specialty equipment, including but not
limited to, bullet resistant glass, night deposit box, remote unit for
drive-in window, and vault door.
(2) finish interior of building to its satisfaction
6. REPAIRS AND ALTERATIONS.
(a) Lessee will at all times keep the premises neat, clean, and
in a sanitary condition, and will replace any glass of all windows and doors
as they become cracked or broken; and, except for reasonable wear and tear
and damage by fire or other unavoidable casualty, will keep premises in good
repair. Lessee will maintain and paint the interior and exterior of the
premises and will keep sidewalks free of ice, snow and sleet. All repairs,
maintenance and painting shall be at Lessee s sole cost and expense. Repairs
and maintenance of the roof and foundation will be furnished by Lessor.
(b) Lessee shall have the right to make alterations and
improvements to the interior of the building as long as the building is not
weakened or impaired structurally.
(c) Lessee shall not do any construction work or alterations,
nor install any equipment other than trade fixtures insofar as such work,
alterations or installation affects the structure or exterior appearance of
the building without first providing plans and specifications to Lessor and
obtaining Lessor's written consent.
(d) Lessee shall keep all of the premises free and clear Dr any
and all mechanics', materialmen's and other liens, and shall indemnify Lessor
and all of the premises, building and improvements against all such liens.
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7. USE OF PREMISES AND CONDUCT OF BUSINESS.
(a) Lessee shall comply with all of the requirements of all
local, state, federal and/or applicable government authorities and observe
all local, state and federal statutes, ordinances, rules and regulations
pertaining to the premises.
8. INDEMNITY. Lessee shall indemnify Lessor from and against any and
all claims, actions, damages, liability and expense in connection with loss
of life, personal injury and/or damage to property arising from or out of any
occurrence in, upon, or at the premises, or the occupancy or use by Lessee of
the premises, occasioned by any act or omission of Lessee, its agents,
contractors, employees, or lessees. In case Lessor shall, without fault on
his part, be made a party to any litigation commenced by or against Lessee,
then Lessee shall protect and hold Lessor harmless and shall pay all costs,
expenses and actual attorney's fees incurred or paid by Lessor in connection
with such litigation. It is not the intent of this section that Lessee
indemnify Lessor for any act or omission of Lessor which may give rise to a
claim for damages.
9. INSURANCE. Lessee shall, during the entire term hereof, and at
its own expense, keep in full force and effect a policy of public liability
and property damage insurance with respect to the premises and the business
operated by Lessee and any sub-tenants of Lessee in the premises in which the
limits of public liability and property damage liability shall be no less
than Five Hundred Thousand ($500,000) per occurrence.
The policy shall name Lessor and Lessee as insured, and shall contain a
clause that the insurer will not cancel or change the insurance without first
giving Lessor ten (10) days' prior written notice. Lessee shall be solely
responsible for payment of all premiums.
Lessee shall pay on demand any increase in premiums for Lessor's
insurance resulting from Lessee's use and occupancy of the premises, whether
or not Lessor consented to the same.
10. TOTAL OR PARTIAL DESTRUCTION. In the event of a partial
destruction of, or major repair to, the leased premises during the term of
this lease, from any cause, Lessor shall promptly make the repairs if such
can be made within sixty (60) days under the laws and regulations of
applicable authorities. Any partia1 destruction, or major repair, shall not
void this lease, except Lessee shall be entitled to a proportionate reduction
of rent while repairs are being made, any proportionate reduction being based
on the extent to which the making of repairs interferes with the Lessee's
business operations. If the repairs cannot be made ~n the specified time,
Lessor may, at his option, make repairs within a reasonable time, with this
lease continuing in full force and effect and rent prorated as set forth
above. In the event Lessor does not elect to make repairs that cannot be made
in the specified time, or which cannot be made under the laws and regulations
of the applicable governmental authorities, this lease may be terminated at
the option of either party. Should the building ~n which the leased premises
are located be destroyed to the extent of not less than 33-1/3 percent of the
replacement cost thereof, Lessor, by written notice to Lessee, within thirty
(30) days after such destruction, may terminate this lease.
3
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11. CONDEMNATION. In the event title to the premises shall be taken
by right of eminent domain, this lease shall terminate as of the date on
which title shall vest. Lessee shall make all payments required to the date
of such vesting.
In the event (1) title to less than the whole of the premises, but more
than twenty (20%) percent of the entire premises shall be acquired by eminent
domain, or (2) as a result of exercise of such right of eminent domain, the
part of the leased premises remaining shall not be one undivided whole, then
Lessor shall give written notice to Lessee of the taking, with the latter
having the option to terminate this lease effective on a date to be specified
in a written notice from Lessee to Lessor. The dare so specified shall be a
date not more than sixty (60) days after Lessee receives notice from Lessor
of such acquisition.
In the event Lessee does not exercise its right of termination, then
this lease shall continue In full force and effect as to the portion of the
premises not taken by eminent domain. If a portion of the premises shall have
been so taken without termination of this lease, Lessor shall repair and
rebuild any portion of the premises not so taken in such manner as to render
such portion commercially usable for the purpose of Lessee. The rebuilt
portion shall be a unit of substantially like quality and character as
existed before the taking.
Commencing with the date said portion of the premises is to be taken,
the monthly rental shall be reduced in the proportion to the amount of square
footage so taken.
Any condemnation award with respect to the premises shall be the sole
and exclusive property of Lessor, except that Lessee shall be reimbursed for
the reasonable expenses of moving to a new location, within the City of
Wrangell, out of the proceeds the condemnation award.
12. ATTORNMENT. Lessee shall, in the event any proceedings are
brought for the foreclosure of, or in the event or exercise of the power of
sale under any mortgage made by Lessor covering the premises, attain to the
purchaser upon any such foreclosure or sale and recognize said purchaser as
the Lessor under this lease.
13. TRANSFER OF LEASE. In the event Lessor transfers this lease,
except as collateral security for a loan, upon such transfer, Lessor will be
released from all liability and obligations hereunder, provided the
transferee assumes the obligations of this lease.
In the event of a transfer, each and every condition of this lease
shall be binding on the transferee. Any failure of the transferee to abide by
the terms of this lease shall be deemed a breach of this lease and Lessee may
take whatever action 15 deemed necessary by it as to termination of this
lease.
14. RIGHT OF FIRST REFUSAL TO PURCHASE. In the event Lessor shall
receive a bona fide offer to purchase the premises during the term of this
lease, and the offer of purchase shall be satisfactory to Lessor, Lessor
shall give Lessee the privilege of purchasing the premises at the price and
on the terms of the offer so made. This privilege shall be given by a notice
sent to Lessee by registered mail, requiring Lessee to accept the offer in
writing and to sign a suitable contract to purchase the premises within the
period of thirty (30) days after the receipt of the notice.
4
<PAGE>
Failure of Lessee to accept the offer to purchase or sign a contract
within the period provided shall nullify and void the privilege to Lessee,
and Lessor shall be at liberty to sell the premises to any other person,
firm, or corporation. Any subsequent sale, except to Lessee, shall be subject
to this lease and any renewals or extensions hereof.
15. ASSIGNMENT AND SUBLETTING. Lessee shall not assign, mortgage or
encumber this lease in whole or in part, or sublet any or all the premises
without prior written consent of Lessor, which shall not be unreasonably
withheld. The consent by Lessor to any assignment or subletting shall not
constitute a waiver of the necessity for such consent to any subsequent
assignment or subletting. If this lease is assigned or if the premises , or
any part thereof, be occupied by anyone other than Lessee, Lessor may collect
rent from the assignee or occupant, and apply the net amount collected to the
rent, but no assignment, occupancy or collection shall be deemed a waiver of
this provision of the acceptance of the assignees or occupant, as a release
of Lessee from the further performance of the provisions of this lease.
Notwithstanding any assignment sublease, Lessee shall remain fully liable and
shall nor be released from performing any of the terms of this lease. Lessee
should assign or sublet, or attempt to do so in violation of the provision of
this lease, Lessor shall have the option no terminate this lease, at anytime
thereafter, on thirty (30) days notice.
16. RIGHT OF ENTRY. Lessor or his agents shall have the right to
enter the premises only with the consent of Lessee, which shall not be
unreasonably withheld. Lessor may enter without consent in case of an
emergency.
17. LOSS AND DAMAGE TO LESSEE'S PROPERTY. Lessor shall not be liable
for any damage to Lessee's property or the property of others located on the
premises, unless caused by the negligence of Lessor. All property of Lessee's
kept or stored on the premises shall be kept or stored at the risk of Lessee
only and it shall hold Lessor harmless from any claims arising out of damage
to the same, unless such damage shall be caused by the negligence of Lessor.
18. STANDARD BANKRUPTCY CLAUSE. In the event Lessee, its successors
in interest or assigns, while conducting banking or any related business,
shall, at any time during the term of this lease or any extension hereof,
commit any of the following:
(a) Have any execution or attachment issued against it, or its
effects, and the leased premises shall be taken or an attempt shall be made
to take them; or
(b) In the event it becomes insolvent; or
(c) If it makes an assignment for the benefit of creditors; or
(d) In the event there shall be filed by or against in any
court, pursuant to any statute either of the United States or of any state, a
petition in bankruptcy or insolvency or for reorganization or appointment of
a receiver or a trustee of all or a portion of the property of it; or
(e) In the event that the Bank is closed and/or taken over by
the Division of Banking, Department of Commerce and Economic Development,
State of Alaska or by any other said Lessee, including but not limited to the
Federal Deposit Insurance Corporation;
5
<PAGE>
then the State or Federal Banking Authority, at its option, shall have the
right to continue the lease according to its terms or terminate it.
In the event the State or Federal Banking Authority elects to terminate
this lease, Lessor shall have the right to assert such damages as are allowed
by law, except, as is limited by the Federal Deposit Insurance Act, as
amended from time to time and the regulations promulgated thereunder and,
also, except, as it is limited by the Alaska Banking Act, as amended from
time to time and the regulations promulgated thereunder.
Notwithstanding any other provision in this Lease, if the Lessee or its
successors or assigns become insolvent, bankrupt, or makes an assignment for
the benefit of creditors, or if it or their interest in this Lease is levied
upon or sold under execution or other legal process, or if the bank to be
operated on the demised premises is closed or taken over by a banking
authority of the State or Deposit Insurance Corporation (FDIC) the Lessor may
terminate this Lease only with the concurrence of the bank supervisory
authority; and that supervisory authority will have the election either to
continue or terminate the Lease; however, if the Lease is terminated, the
maximum claim of the Lessor for damages or indemnity for injuries resulting
from the termination of the unexpired Lease shall in no event be an amount
exceeding the rent reserved by the Lease, without acceleration, for the year
next succeeding the date of the surrender of the demised premises to the
Lessor, or the date of re-entry of the Lessor, whichever first occurs,
whether before or after the closing of the Lessee named herein, plus an
amount equal to the unpaid rent accrued, without acceleration, up to such
date.
19. RIGHT TO RE-ENTER. In the event of any failure of Lessee to pay
any rental due hereunder within fifteen (15) days after the receipt of a
written notice of delinquency, or any failure to perform any other of the
terms, conditions or covenants of this lease to be observed or performed by
Lessee for more than thirty (30) days after written notice of such default
shall have been give to Lessee, or if Lessee or any guarantor of this lease
shall become bankrupt or insolvent, or file any debtor proceedings or take or
have taken against Lessee or any guarantor of this lease in any court
pursuant to any statute either of the United States or of any state a
petition in bankruptcy or insolvency or for reorganization or for the
appointment of a receiver or trustee of all or a portion of Lessee s or any
such guarantor s property, or if Lessee or any such guarantor makes an
assignment for the benefit of creditors, or petitions for or enters into an
arrangement, or if Lessee shall abandon the premises, Lessor, in addition to
other rights or remedies, shall have the immediate right of re-entry and may
remove all persons and property from the leased premises and such property
may be removed and stored in a public warehouse or elsewhere at the cost of
Lessee.
20. RIGHT TO RE-LET. Should Lessor elect to re-enter, or should
Lessor take possession pursuant to legal proceedings or any notice provided
for by law, Lessor may either terminate this lease or, without terminating
this lease, make such alterations and repairs as may be necessary in order to
relet the premises. and relet said premises or any part thereof for such term
as Lessor deems appropriate (which may be beyond the term of this lease) .
Termination will not be deemed to have occurred unless written notice of such
as given by Lessor.
6
<PAGE>
Upon reletting, Lessor shall receive all proceeds and rent accruing
from reletting of the prem1ses and shall apply the proceeds first to the
payment of all costs and expenses incurred by Lessor in obtaining possession
and reletting of the premises, and any alterations or repairs reasonably
necessary to enable Lessor to operate or relet the premises and to the
payment of all such amounts as may be due or become payable under the
provisions of this lease. The balance remaining, if any, at the expiration of
the full term of this lease or on the sooner termination thereof by written
notice of termination given by Lessor to Lessee shall be paid over to Lessee.
21. MISCELLANEOUS.
(a) Waiver. No covenant, rent, or conditions of this lease
shall be deemed to have been waived by Lessor, unless such waiver be in
writing signed by Lessor.
(b) Accord and Satisfaction. No payment by Lessee or receipt by
Lessor of a lesser amount than the monthly rent shall be deemed to be other
than on the rental account, nor shall any endorsement or statement on any
check or any letter accompanying any check or payment as rent be deemed an
accord and satisfaction, and Lessor may accept such check or payment without
prejudice to the right to recover the balance of such rent or pursue any
other remedy.
(c) Entire Agreement. This lease sets forth the entire
agreement of the parties. No prior or subsequent agreements shall be binding
upon the parties or in any way modify this agreement unless executed in
writing signed by the parties with specific reference to this agreement.
(d) Notices. Notice provided for in this agreement shall be
mailed first class postage prepaid to the following addresses:
Cliff and Lavon White
P.O. Box 861
Wrangell, Alaska 99929
First Bank
P.O. Box 7920
Ketchikan, Alaska 99901
(e) Binding Effect. This lease shall be binding upon and shall
inure to the benefit of the heirs, devisees, legal representative, successors
and assigns of the parties hereto, providing Lessors permit assignment.
(f) Alaska Law. This lease shall be interpreted according to
the laws of the State of Alaska and interpreted in accordance therewith.
(g) End of Term. At the expiration of the lease, Lessee shall
surrender the premises in a clean, neat, sanitary and safe condition, and
shall deliver all keys to Lessor. Lessee shall remove all its trade fixtures
and shall repair any damage to the premises caused thereby. Lessee's
obligation to observe or perform this covenant shall survive the expiration
or other termination of the term of this lease.
7
<PAGE>
IN WITNESS WHEREOF, the parties have respectively executed this lease
the day and year written below.
DATE:
CLIFFORD WHITE
DATE:
LAVON WHITE
DATE: FIRST BANK
__________________________________________
ROBERT R. ST. CLAIR
Assistant Vice President
STATE OF ALASKA )
) ss
FIRST JUDICAL DISTRICT )
On the _____ day of ____________, 1989, before me, the undersigned, a
Notary Public in and for the State of Alaska, personally appeared CLIFFORD
WHITE and LAVON WHITE, to me known to be the persons named as in the
foregoing instrument, and acknowledged to me that they executed the same
freely and voluntarily for the uses and purposes therein mentioned.
Witness my hand and official seal the day and year in this certificate
first above written.
__________________________________________
Notary Public in and for the State of
Alaska
My commission expires:
8
<PAGE>
STATE OF ALASKA )
) ss
FIRST JUDICAL DISTRICT )
On the _____ day of ____________, 1989, before me, the
undersigned, a Notary Public in and for the State of Alaska, personally
appeared ROBERT R. ST. CLAIR, to me known to be the Assistant Vice-President
of First Bank, and acknowledged to me that he executed the same on behalf of
said bank freely and voluntarily for the uses and purposes therein mentioned,
and on oath acknowledged that he was authorized to execute said instrument on
behalf of First Bank.
Witness my hand and official seal the day and year in this certificate
first above written.
__________________________________________
Notary Public in and for the State of
Alaska
My commission expires:
9
EXHIBIT 10.2
SEALASKA PLAZA BUILDING LEASE
THIS LEASE AGREEMENT (hereinafter referred to as "Lease") made and
entered into this April 20, 1990, between First Bank, as Lessee, and SEALASKA
CORPORATION, an Alaskan Corporation, as Lessor.
WITNESSED:
1. Leased Premises.
(a) Lessor, for an in consideration of the rents, covenants and
conditions herein contained, to be kept, performed and observed by Lessee,
hereby leases to Lessee, and lessee hereby leases and accepts from Lessor,
that certain improved real property located in Juneau, Alaska, more
particularly described as: 2,695 square feet of net usable office space,
consisting of 1,632 square feet of office space of the ground level and 1,063
square feet of office space of the mezzanine level, including the staircase,
all located on the first floor of Sealaska Plaza, Building, located at One
Sealaska Plaza, Juneau, Alaska, 99801, as set forth in Exhibit 1, attached
hereto, and herein called or referred to as the "Premises" or "Leased
Premises"
(b) The Premises, contains 2,695 square feet of space, as
described in Exhibit 1, which is attached and incorporated b) reference
herein, and consists of the usable office space of the first (1st) floor of
the four-story structure commonly known as Sealaska Plaza Building.
(c) Space Pockets, Lessor extends to Lessee the right to
designate a portion of the Premises (which portion shall be approved) as
space pockets. The space total pocket shall not exceed 500 rentable square
feet. These space pockets will be located in the area of the Premises
referred to as the Mezzanine. Space will be rent free until the space is
actually used for any purpose other than inactive storage, if the space
pockets are actually used for Inactive storage; Lessee shall pay rent on the
area so used at current market rates for similar dry storage space. Placement
of furniture in the space pocket area shall not constitute actual use. The
space pockets shall be incorporated into rentable space 50 percent per year
upon the commencement of years 2 and 3 of the anniversary date of the lease
term or upon the actual use of said space If sooner. The rent for the space
pocket shall be the same rent that Lessee is paying for the other space under
this Lease.
(d) Lessee shall be entitled to the use of four (4) parking
spaces, marked and identified, all of which are located in the outdoor
parking lot owned and operated by Lessor, adjacent to and within the Sealaska
Plaza, as shown on Exhibit I.
10.2 - 1
<PAGE>
(e) Lessee shall be entitled to the non-exclusive use of all
other portions of the common areas and limited common areas located in the
first floor of the Sealaska Plaza Building.
2. Use of Premises.
(a) Lessee may use the Premises for conducting a commercial
bank and other banking services. No other uses are permissible without the
prior written consent of the Lessor.
(b) Lessee at all times shall comply with all applicable laws,
ordinances and regulations of duly constituted authorities now or hereafter
in any manner affecting the Premises. Lessee further agrees it will not
permit any unlawful occupation, business or trade to be conducted in or about
the Premises.
3. Commencement Date.
Subject to approval from all relevant regulatory authorities,
the Lease term shall commence on June 1, 1990 and shall end on July 1, 1995,
both dates inclusive, subject to renewal as set forth in paragraph 6 of this
Lease. In the event that the premises are not ready for occupancy and use by
the commencement date set above, then this Lease shall commence on the date
that the Premises are ready for occupancy and use and shall end on the date
three years subsequent thereto.
4. Term.
The term of this Lease shall be five (5) years following
commencement of the term, unless sooner terminated as herein provided, and
subject to renewal as set forth in paragraph 6 of this Lease.
5. Payment of Rental.
Lessee covenants to and shall pay to Lessor at One Sealaska
Plaza, Suite 400, Juneau, Alaska, 99801, or at such other place as Lessor may
designate, in advance, on the first day of each calendar month during the
term of this Lease, a monthly rent as follows:
(a) For the five-year term of this Lease, a monthly rental of
$4,390.00 which is based on a monthly rate of $2.00 per square foot for three
years, $2.10 per square feet for fourth year, $2.20 per square feet for fifth
year.
The monthly rate includes all Lessee's rights under the Lease
and including without limitation, the bas...
janitorial services, parking spaces, use of common ar...
common areas, and utilities. Lessee shall also pay...
taxes which are, or may be, imposed upon said rentals a...
time any rental installments are paid. If this Leas...
commence on the first day of the calendar month, the r...
first month of the Lease term shall be prorated based....
of days the Premises are leased during that month, a...
the last month of the Lease term when due shall be prorated based on the
number of days the premises are leased during that month.
10.2 - 2
<PAGE>
6. Renewal.
Lessor agrees that Lessee has an exclusive option to renew this
Lease for one separate and successive term (extended term) of five (5) years
by giving written notice of the renewal at least sixty (60) days prior to the
expiration of this current Lease term. The extended term shall end on May 31,
2000. Lessee may renew for the extended term provided that Lessee is not in
default under the terms of this Lease at the time of the exercise of its
option to renew. Lessor agrees that if Lessee exercises its option to renew
this Lease, the terms of the Lease shall remain the same, except the monthly
rental rate shall be $2.25/sq. ft. for the first year, $2.30/sq. ft. for the
second year, $2.35/sq. ft. for the third year, $2.40/sq. ft. for the fourth
year, and $2.45/sq. ft. for the fifth year.
7. Acceptance of Leased Premises and Surrender of the Premises.
(a) Lessee agrees to accept the Premises "as is" with all
faults, if any, for Lessee's use and occupancy, which currently contains
approximately 2,695 square feet of net usable office space, and four (4)
parking spaces as shown on Exhibit I.
(b) Lessor agrees that the Leased Premises will be ready for
occupancy "as is" by March 9. 1990. Subject to Lessors duty to provide
janitorial services as provided below, Lessee will at all time keep the
Premises neat, clean and in a sanitary condition. Lessee agrees that at the
expiration of this Lease, Lessee will quit and surrender the Premises without
notice, and in a neat and clean condition, and will deliver up all keys
belonging to the Premises to the Lessor or Lessor's agent.
8. Liens and Insolvency.
Lessee shall keep the Leased Premises and the property in which
the Leased Premises are situated, free from any liens arising out of any work
performed, materials furnished or obligations incurred by Lessee. In the
event Lessee or its successors or assigns shall become insolvent, bankrupt,
or make an assignment for the benefit of creditors, or if it or their
interests herein shall be levied upon or sold under execution or other legal
process, or in the event that the Bank is closed and/or taken over by the
Division of Banking, Department of Commerce and Economic Development, State
of Alaska or by any other said Lessee, including but not limited to the
Federal Deposit Insurance Corporation; then the State or Federal Banking
Authority, at is option, shall have the right to continue the lease according
to its terms or terminate it.
In the event the State or Federal Banking Authority elects to
terminate this lease, Lessor shall have the right to assert such damages as
are allowed by law, except as is limited by the Alaska Banking Act, as
amended from time to time and the regulations promulgated thereunder.
Notwithstanding any other provision in this Lease, if the Lessee
or its successors or assigns become insolvent, bankrupt, or makes an
assignment for the benefit of creditors, or if it or their interest in this
Lease is levied upon or sold under execution or other legal process, or if
the bank to be operated on the demised premises is closed or taken over by a
banking authority of the State or Federal Deposit Insurance Corporation
(FDIC), the Lessor may terminate this Lease only with concurrence of the bank
supervisory authority; and that supervisory authority will have the election
10.2 - 3
<PAGE>
either to continue or terminate the Lease; however, if the Lease is
terminated, the maximum claim of the Lessor for damages or indemnity for
injuries resulting from the termination of the unexpired Lease shall in no
event be an amount exceeding the rent reserved by the Lease, without
acceleration, for the year next succeeding the date of the surrender of the
demised premises to the Lessor, or the date of re-entry of the Lessor,
whichever first occurs, whether before or after the closing of the Lessee
named herein, plus an amount equal to the unpaid rent accrued without
acceleration, up to such date.
Lessor agrees to furnish heat to the Premises to maintain
comfortable occupancy and working conditions to Lessee's satisfaction during
all business hours of the Lessee but shall not be liable for any damages as a
result of any accidents, strikes, power failures, oil shortages, breakdowns
to the heating plant or repairs thereto. The Lessor agrees to furnish all
electricity needed for the business of the Lessee, janitor service and refuse
removal services.
10. Maintenance. Repairs and Janitorial Services.
The Lessor agrees to keep the electric, water, sewer, and
heating systems in good repair and to maintain the exterior of the building
in which the Premises are situated including keeping the roof, foundation,
and parking lot in good condition. Further, Lessor shall provide janitorial
services as described in Exhibit II attached hereto. In the event any window
on the Premises or glass in any door on the Premises is broken by the Lessee,
or any employee of Lessee or any person within the Premises with the implied
or express consent of Lessee, the Lessee will pay for all such damage.
11. Quiet Enjoyment.
Lessee, so long as it pays the rent and other charges herein
provided for, and performs and complies with all other terms of this Lease on
its part to be performed or complied with, shall enjoy the Premises during
the term of this Lease free from any interference by Lessor.
12. Assignment and Subletting.
(a) Lessee shall not assign this Lease or any interest in it, or
to sublet, in whole or in part, the Premises other than to a wholly-owned
subsidiary of Lessee or' Lessee's parent corporation. Except as provided by
paragraph 8, this Lease shall not be assignable by operation of law. Any
transfer of this Lease from Lessee by merger, consolidation, or liquidation
shall constitute an assignment of this Lease shall not extinguish nor
diminish the liability of the Lessee herein.
(b) Lessor shall have the right to convey or assign its interest
in the Premises, or any part thereof, subject to lessee's leasehold interest
in the Premises.
13. Taxes and Assessments.
Lessee shall, during the term hereof, pay as and when due all
taxes, assessed for and during the term hereof, against and on any and all
personal property and trade fixtures which are removable by Lessee at the end
of the Lease term. Lessor shall pay all real estate taxes and assessments and
personal property taxes and assessments improvements composing the leased
premises.
10.2 - 4
<PAGE>
14. Surrender of Possession: Holding Over.
On the last day of the term of this Lease, Lessee shall
peaceably and quietly leave, surrender and yield up unto Lessor, the Premises
in good order and repair, ordinary wear and tear excepted. Further, Lessee
agrees that upon the expiration of any term of this Lease, regardless of the
cause of expiration, it will vacate the Premises, and surrender the Premises
to Lessor in the condition that Lessee accepted them, normal wear and tear
and damage by fire or other casualty excluded. Any temporary improvements and
any permanent improvements constructed or installed on the Premises by Lessee
without Lessor's consent shall be removed at the cost and expense of Lessee
on demand from Lessor, and Lessee will do such repairs or decorating as is
necessary to restore the Premises to its condition prior to construction or
installation of any such improvements not consented to by Lessor. If for any
reason there shall be a holding over at the expiration of the term hereof,
such tenancy shall be considered to be a month-to-month tenancy at a monthly
rental rate equal to that due for the last month of the time prior to the
holdover period.
15. Indemnity.
To the extent not otherwise provided and paid by applicable
insurance policies, Lessee agrees to indemnify, defend and save Lessor
harmless from and against any and all claims, liability, losses, expenses or
cost arising from any act, omission or negligence of Lessee, its contractors,
licensees, agents, servants or employees, or arising from any accident,
injury or damage whatsoever caused to any person or property occurring in,
on, or about the premises or any part of them. Lessee further agrees to
indemnify, defend and hold Lessor harmless from any liability, loss, expense,
or costs attributable to claims brought by or on behalf of any persons,
including employees of Lessee, with respect to any obligation under statutes
or ordinances, if any, pertaining to the safety of the above-described
Premises. Anything to the contrary notwithstanding, lessor shall be liable
for losses, if any, resulting from it own negligence or intentional act of
Lessor, its licensees, agents, servants, or employees.
16. Access.
Subject to the maintenance of the privacy of all Lessee customer
records, Lessee will allow Lessor, or Lessor's agents, at all reasonable
times upon reasonable notice to Lessee, access to the Premises for the
purpose of inspection or of making repairs, additions or alternations to the
Premises, or any property owned by or under the control of the Premises, or
any property owned by or under the control of Lessor. Lessor shall not have
access to the leased Premises and may only gain access with the prior consent
of Lessee.
17. Damage to Premise.
In the event that less than 50 percent of the Premises are
damaged by fire, wind, flood, earthquake or other casualty so as to make such
portion of the premises unfit for occupancy and use, Lessor shall repair the
damage within a reasonable time and give Lessee an abatement of rent equal to
the usable square. footage paid in advance until the damage is repaired and
the Premises are fit for occupancy and use. In the event that more than 50
percent of the Premises are damaged by fire, wind, flood, earthquake, or
other casualty so as to make the Premises unfit for occupancy and use, either
10.2 - 5
<PAGE>
Lessor or Lessee may terminate this Lease, and Lessor may provided that it
obtains the consent of Lessee, choose to continue this Lease, repair the
damage within a reasonable time, and give Lessee an abatement of rent equal
to the unusable square footage paid in advance until the damage is repaired
and the Premises are fit for occupancy and use.
Anything in this Lease to the contrary notwithstanding, but
expressly subject to the consent of the insurance carrier, Lessor and Lessee
each hereby waives any and all claims against the other, its agents,
officers, directors, shareholders or employees, for loss or damage to the
leased Premises or the Building, or any personal property of such party
therein, that is caused by or results from fire and other perils insured
against under (a) the normal fire with extended coverage insurance policies,
or (b) the standard business interruption insurance policies, cared by the
parties and in force at the time of damage or loss. If available each party
shall cause each such insurance policy obtained by it to provide that the
insurance company waives all right to recovery by way of surrogation against
the other party in connection with any such damage or loss.
18. Signs.
No sign, picture, advertisement or notice shall be displayed,
inscribed, painted or affixed to any of the glass or woodwork of the
Premises, except those approved by the Lessor in writing, and painted by a
sign painter approved by the Lessor which consent shall not be unreasonably
withheld. All signs so placed shall be removed at Lessee's expense prior to
termination of this Lease. Except as may be required by Lessee's regulators,
no signs or devices shall be hung or placed against the windows of the
Premises nor on the exterior wall of the building in which the Premises are
situated, without consent of Lessor which consent shall not be unreasonably
withheld; and no furniture, curtain or other obstruction of any kind or size
shall be placed against or in front of any glass partition dividing the
Premises from the corridors of said building, or placed in any way so as to
interfere with the typical and ordinary appearance of the Premises as viewed
from the corridor.
19. Alterations.
Lessee shall not make any alterations, additions, or
improvements in the Premises without the consent of the Lessor in writing
which consent shall not be unreasonably withheld. All alterations, additions,
and improvements which shall be made shall be at the sole cost and expenses
of the Lessee, and shall be coordinated with the Facilities Manager of
Sealaska Plaza.
20. Eminent Domain
In the event that the Premises or any part thereof is taken by
eminent domain, this Lease shall terminate on the date when the Premises
shall be so taken, and the rent shall be apportioned as of that date. No part
of any award shall belong to Lessee.
10.2 - 6
<PAGE>
21. Waste.
Lessee shall not commit or suffer to be committed to any waste
upon the Premises, or any nuisance or other act or thing which may disturb
the quiet enjoyment of any other occupant of the building in which the
Premises are located.
Each of the following shall be deemed a default by Lessee and a
breech of this Lease.
(a) A default in the payment of rent or other charge due to be
paid by Lessee.
(b) A default in the performance of any other covenant or
condition on the part of Lessee to be performed or observed, for a period of
fifteen (15) days following receipt of a written notice from Lessor
specifying the default and demanding cure thereof; provided, however, a
default will not occur if Lessee on or before expiration of such fifteen (15)
days period, in good faith commences to rectify the default and prosecutes
the same to completion with diligence and continuity.
(c) Becoming insolvent, bankrupt, or making an assignment for
the benefit of creditors, or the Lessee's bank being closed or taken over by
banking authorities (including but not limited to the Federal Deposit
Insurance Corporation).
23. Default Remedies.
In the event that Lessee fails to cure any default as provided
in Section 23 above, Lessor, subject to paragraph 8 herein, shall have the
following rights and remedies:
(a) Declare this Lease forfeited and the term ended;
(b) Re-enter the Premises, take possession thereof, and remove
all Lessee's property from the Premises. Such property may be removed and
stored at a public warehouse or elsewhere at the cost and risk of Lessee.
(c) Relet the Premises in whole or in part for any period
equal to or grater or less than the remainder of the original term of the
Lease; and
(d) Recover from Lessee such damages as may be attributable to
Lessee's default, including past-due and/or future rent, as well as costs of
suit and a reasonable attorney's fee.
24. Miscellaneous Provisions.
(a) Furniture and Bulky Articles. Safes, furniture or bulky
articles shall be removed in or out of the Premises only at such hours and in
such manner as shall least inconvenience other tenants, and when and as the
Lessor shall decide; and no safe or other article of over 1,000 pounds shall
be moved into the Premises without the consent of the Lessor, the Lessor to
have the right to fix the position of an article of such weight in said
premises.
10.2 - 7
<PAGE>
(b) Banking Equipment. Lessor shall sell to Lessee all banking
and office furniture and equipment as described in Exhibit III, attached
hereto and incorporated herein by this reference, for the sum of $5,000.00,
to be paid by Lessee upon the execution of this Lease, transfer of title
shall be on bill of sale and title shall be free of all claims, lien or
encumbrance. Lessee agrees that upon the expiration of any term of this
Lease, regardless of the cause of expiration, Lessor shall have the right of
first refusal to purchase from lessee for the sum of $5,000.00, the banking
and office equipment described in Exhibit III.
(c) Water Closets. Water closets and other water fixtures shall
not be used for any purposes other than those for which they are intended,
and any damage resulting from misuse on the part of the Lessee, its agents or
employees, shall be paid for by Lessee. No person shall waste water by
interfering or tampering with the faucets or otherwise.
(d) Doors. Lessor reserves the right to close and keep locked
all entrances and exit doors of the Sealaska Plaza Building during
non-business hours as Lessor may deem to be advisable for the adequate
protection of the property. The doors shall be open during the bank's regular
business hours.
(e) Parking. If parking is provided, the Lessee agrees that
Lessee and Lessee's employees shall use only the parking spaces designated in
paragraph 1(d) of this Lease.
(f) Successors. All rights and liabilities herein given to or
imposed upon the respective parties hereto, shall, subject to the terms of
this Lease, extend to and bind the successors and assigns of said parties.
(g) Waiver. One or more waivers of any of the covenants, terms
and conditions of this Lease by either party shall not be construed as a
waiver of a subsequent breach of the same covenant, term or condition. The
consent or approval of either part to, or of any act by the other party of a
nature requiring consent or approval shall not be deemed to waive consent to
or approval of any subsequent or similar act.
(h) Subordination. This Lease shall be subject and subordinate
at all times to any and all mortgages or deeds of trust that now or may
hereafter encumber the leased premises and to any renewal, modification,
consolidation, replacement, and extension of any such mortgage or deed of
trust. Lessee shall execute any instrument subordinating the interest of
Lessee under this Lease to the lien of such mortgage or deed of trust that
Lessor or the mortgagee or trustee may at any time desire, and Lessee shall
duly comply with all of the provisions of any mortgage or deed of trust to
which this lease is subordinate, except the payment of interest and principal
thereunder.
(i) Entire Agreement. This Lease and the Exhibits attached
hereto, sets forth all covenants, promises, agreements, conditions and
understanding between Lessor and Lessee concerning the Premises and there are
no covenants, promises, agreements, conditions or understandings either oral
or written between them other than as herein set forth. Except as herein
otherwise provided, no subsequent alteration, amendment, change or addition
to this Lease shall be binding upon Lessor and Lessee, unless reduced to
writing and signed by them.
10.2 - 8
<PAGE>
(j) Notices. Any notice required to be served in accordance
with the terms of this Lease shall be sent by prepaid, registered or
certified United States mail. Notices from Lessee shall be sent to Lessor at
one Sealaska Plaza, Suite 400, Juneau, Alaska, 99801. Notices from Lessor
shall be sent to Lessee at P.O. Box 7920, Ketchikan, Alaska, 99901.
(k) Interpretation. The rule of contract interpretation or
construction that ambiguities, if any, in a writing are to be construed
against the drafter shall not apply.
(1) Time and Essence. Time is of the essence of each and every
provision hereof.
(m) Governing Law. This Lease shall be governed by, construed
and enforced in accordance with the laws of the State of Alaska.
IN WITNESS WHEREOF, the parties hereto have executed this Lease the
day and year first above written.
SEALASKA CORPORATION
By: /s/ Edith E. McHenry
Edith E. McHenry
By: /s/ Robert St. Clair
Robert St. Clair
Asst. Vice President
STATE OF ALASKA )
)ss.
FIRST JUDICIAL DISTRICT )
Before me, the undersigned Notary Public in and for the State of
Alaska, duly commissioned and sworn as such Notary Public, May 1990 this 23rd
day personally appeared Edith McHenry, known to me to be Director, Adm. Svcs.
of SEALASKA CORPORATION, and he/she acknowledged to me that he/she executed
the foregoing LEASE on behalf of said corporation by virtue of authority
granted in the bylaws or by resolution of the Board of Directors.
WITNESS by hand and official seal this the 23rd day of May, 1990.
/s/ Karen E. Lamas
Notary Public in and for Alaska
My Commission Expires: 10/28/91
10.2 - 9
<PAGE>
STATE OF ALASKA )
)ss.
FIRST JUDICIAL DISTRICT )
Before me, the undersigned Notary Public in and for the State of
Alaska, duly commissioned and sworn as such Notary Public, May 1990 this 23rd
day personally appeared Robert St. Clair of FIRST BANK, and he/she
acknowledged to me that he/she executed the foregoing LEASE on behalf of said
corporation by virtue of authority granted in the bylaws or by resolution of
the Board of Directors.
WITNESS by hand and official seal this the 23rd day of May, 1990.
/s/ Karen E. Lamas
Notary Public in and for Alaska
My Commission Expires: 10/28/91
10.2 - 10
<PAGE>
EXHIBIT II
JANITORIAL SERVICES
First floor (includes bank premises) and Lobby Daily services:
1. Empty waste baskets. Clean ash trays; place contents in a metal
container separate from other waste materials.
2. Remove finger marks and smudges from all of the building walls,
woodwork and glass surfaces, doors and casings.
3. Check and make sure that all coffee makers and related equipment and
unnecessary lights are turned off.
4. Vacuum all visible surfaces of carpet.
5. Check lights and replace as required.
6. Mop or scrub toilet room floors; wash fixtures with warm water and
soap; disinfect urinals and water closets; damp wipe all fixtures
and dispensers. Provide and maintain adequate supplies of toilet
paper, deodorant, towels, sanitary napkins, and soap in toilet
rooms. All tile walls and partitions will be cleaned.
7. All finger marks and smudges will be cleaned from glass surfaces in
entry ways.
8. Sweep and mop lobby floor.
10.2 - 11
<PAGE>
EXHIBIT III
Banking Equipment
- - IBM Disc Drive
- - Vault Night Depository, Key and Combo
- - Vault 6 ft. Grey, Key and Combo SNc2476-1
- - Vault, Mosler, Top and Bottom
- - Vault, Mosler (Includes Inner Vaults, 4 Small Combination and 4 Large
Combination)
- - Alarm Box, Mosler, Century 21
- - Alarm Box, Mosler Photoguard with 3 Cameras
- - Eight Teller Cash Drawers, Mosler, 3-Drawer
- - Check Protector - Burroughs
- - Check Protector - Burroughs
- - Check Protector - Paymaster
- - Magtek - Electronic Authorization
- - ZONJR - Electronic Authorization
- - Signature Card Fil Cabinet/Brown
- - Electronic Calculator - Burroughs
- - Burroughs Encoder
- - Pitney Bowes Postage Meter
- - Kodak-Reliant 800 Microfilmer with Stand
- - Facsimile Signature Machine
- - IBM 3674 ATM
10.2 - 12
EXHIBIT 10.3
9106 MENDENHALL MALL ROAD LEASE
THIS AGREEMENT is made and entered into this first day of July, 1998,
by and between ADV Properties, and Alaskan Partnership, of 1114 Glacier Ave.,
Juneau, Alaska 99801, hereinafter referred to as the "Landlord" and First
Bank, an Alaska Corporation, hereinafter referred to as "Tenant;"
WITNESSETH:
LANDLORD, for and in consideration of the rent covenants, and
agreements of the Tenant herein set forth, hereby leases unto Tenant 1,934
square feet of Landlord's building which is located at 9106 Mendenhall Mall
Road, Juneau, Alaska as shown on the attached exhibit. In addition, landlord
leases unto Tenant approximately 200 square feet of space in the adjacent
parking lot for the installation of an Automated Teller Machine.
Subject to the following terms and conditions:
1. TERM OF LEASE. The term of this lease shall commence on July 1,
1998, to and including June 30, 2003.
2. RENT. The monthly rent shall be in the amount of $2,748.92 per
month, and shall be due and payable on the first day of each and every month.
The parties further agree that the monthly rent is subject to increases on a
periodic basis to reflect any increases sustained by the Landlord for
building insurance, land lease, real and property taxes. In addition, the
rent shall be renegotiated to become effective on the anniversary date of
this lease.
3. TAXES AND INSURANCE. The Landlord shall be responsible for paying
annually the real property taxes and insurance on the existing building (not
contents, equipment, parts, etc.). The cost of insurance and the amount of
taxes have been calculated into the monthly lease amount, which is subject to
periodic, increases to reflect increases in taxes and insurance paid by the
Landlord.
4. UTILITIES. Tenant will be responsible for providing heat, fuel,
electricity, telephones and janitorial services, sewer, water and any Mall
Association dues during the term of this lease.
5. REPAIRS. Landlord will be responsible for providing maintenance,
repairs and painting to the exterior of the building to maintain an
acceptable professional appearance and Landlord likewise will be responsible
for maintaining the plumbing, heating, and water systems in operational
condition. Tenant, at its own expense, shall be responsible for maintaining
the exterior grounds on which the building is located in addition to
providing repairs as needed to the interior of the subject premises. All
repairs caused by the negligence or an act of the Tenant, its agents,
subleases, or invitees, shall be made at the sole cost of Tenant. Tenant
further agrees to, at all times, keep the premises neat, clean, and in
sanitary condition. Landlord shall be the sole judge as to what repairs are
needed.
6. JANITORIAL SERVICES. Tenant shall be responsible for providing
janitorial services to the interior of the subject premises throughout the
term of this lease.
7. ACCEPTANCE AND SURRENDER OF THE PREMISES. The premises have been
inspected and are accepted by Tenant in their present condition, subject to
10.3 - 1
<PAGE>
alterations as may hereinafter be specifically set forth in Exhibit A and
Tenant will at all times keep the premises neat, clean, and in sanitary
condition. Tenant agrees that at the expiration or sooner termination of this
lease, Tenant will quit and surrender the premises without notice, and in a
neat and clean condition, reasonable wear and tear expected, and will deliver
up all keys belonging to said premises to the Landlord or Landlord's agent.
8. ACCIDENTS. All personal property on said leased premises shall be
at the risk of the Tenant, Landlord, or Landlord's agent, shall not be liable
for theft, or any damage either to person or property, sustained by the
Tenant or others, caused by any defects now on said premises, or within the
building in which the premises are located. Further, Landlord shall not be
responsible for any broken windows or doors during the term of this lease or
responsible for any act of neglect of other occupants of the said building,
or any other person, or due to the happening of any accident from whatsoever
cause in and about said building during this lease or an extension thereof.
Tenant agrees to defend and hold Landlord and Landlord's agent harmless from
any and all claims for damages, suffered, or alleged to be suffered in or
about the leased premises by any person, firm, or corporation, except as
occasioned by the neglect of Landlord of Landlords agent or employees.
9. CARE OF PREMISES. The Landlord shall not be called upon to make
any improvements of any kind upon said premises unless specified in this
agreement, and said premises shall at all times be kept and used in
accordance with the laws of the State of Alaska and ordinances of the City
and Borough of Juneau, Alaska, on which said premises are located and in
accordance with all directions, rules, and regulations of the health officer,
fire marshal, building inspector, or other proper officers of the City and
Borough of Juneau, at the sole cost and expense of said Tenant; and Tenant
will permit no waste, damage, or injury to the premises, and will not use or
permit in said premises anything that will increase the rate of fire
insurance thereon, nor will Tenant maintain anything that may be dangerous to
life or limb; or overload floors; or permit anything to be done upon said
premises in any way that will create a nuisance or to disturb any other
tenants of the building.
10. LIENS AND INSOLVENCY. Tenant shall keep the leased premises and
the property in which the leased premises are situated free from any liens
arising out of any work performed, materials furnished, or obligations
incurred by the Tenant. In the event Tenant or its successors or assigns
shall be come insolvent, bankrupt, or make an assignment for the benefit of
creditors, or if or their interests herein shall be levied upon or sold under
execution or other legal process, or is taken over by the banking authorities
(including but not limited to the Federal Deposit insurance Corporation), the
Landlord may terminate this Lease only with the concurrence of such bank
supervisory authority; and any such bank supervisory authority shall in any
event have the election to either continue subject to all the terms and
conditions of the Lease, or terminate this lease, provided that in the event
this lease is terminated, the maximum claim of Lessor for damages or
indemnity for injuries resulting from the termination of the unexplored Lease
shall in no event be an amount exceeding the rent reserved by the lease,
without acceleration for the year next succeeding the date of the surrender
of the Premises to the Lessor, or the date of re-entry of the Lessor,
whichever first occurs, whether before or after the closing of the bank, plus
an amount equal to the unpaid rent accrued, without acceleration, up to such
date.
11. SUBLEASES. The Tenant shall be allowed to assign this lease in
its entirety to any other party only with the Landlords written consent, such
consent will not be unreasonable with held.
10.3 - 2
<PAGE>
12. ACCESS. Subject to the maintenance of the privacy of all Tenant
customer records, Tenant will allow Landlord or Landlord's agent free access
at all reasonable times to said premises for the purpose of inspection and
making repairs to those items which the Landlord is responsible for making
repairs, additions, or alterations to the premises or any property owned by,
or under control of Landlord, but his right shall not be construed as an
agreement on the part of the Landlord to make repairs, alterations, or
additions. The Landlord shall have the right to place and maintain "For Rent"
signs in a conspicuous place on said premises and to show premises to
prospective tenants for 30 days prior to the expiration of this lease.
13. DAMAGE OR DESTRUCTION. In the event the premises are damaged to
such extent as to render the same untenable in whole or in a substantial part
thereof, or are destroyed it shall be optional with the Landlord to repair or
rebuild the same; and after the happening of any such event, the Landlord
shall give Tenant immediate written notice of his intentions in this regard.
Landlord shall not have more than 30 days after the date of such notification
to notify Tenant in writing of Landlord's intentions to repair or rebuild
said premises, or the cart so damaged as aforesaid, and if Landlord elected
to repair or rebuild said premises. Landlord shall prosecute the work of such
repairing or rebuilding without unnecessary delay; and during such period the
rent of said premises shall be abated in the same ration that portion of the
said premises rendered for the time being unfit for occupancy shall bear to
the whole of the leased premises. If the Landlord shall fall to give the
notice aforesaid, Tenant shall have the right to declare this lease
terminated by written notice served upon the Landlord or Landlord's agent
Landlord shall not be responsible for repair or replacement of leasehold
improvements made to the premises by the Tenant.
In the event the building in which the premises hereby leased are
located shall be damaged (even though the premises hereby leased shall not be
damaged thereby) to such an extent that in the opinion of the Landlord it
shall not be practicable to repair or rebuild, or is destroyed, then it shall
be optional with Landlord to terminate this lease by written notice served on
the Tenant within 30 days after such damage or destruction.
14. NOTICES. All notices to be given by the parties hereto shall be
in writing and may either be served personally, or may be deposited in the
United States mall, postage paid, by either registered mall or regular mall
with certificate of mailing obtained; for said notices the following
addresses shall apply:
Landlord: ADV Properties
1114 Glacier Ave.
Juneau, Alaska 99801
Tenant. First Bank
P 0. Box 7920
Ketchikan, AK 99901
15. ALTERATIONS. Tenant shall not make any alterations, additions,
or improvements in said premises without the consent of the Landlord in
writing first had and obtained, and all alterations, additions, and
improvements which shall be made, shall be at the sole cost and expense of
Tenant and shall become the property of the Landlord, except for improvements
that Landlord, at Landlord's option, may elect to request Tenant to remove,
and shall remain in and be surrendered with the premises as a part thereof at
the termination of the lease, without disturbance, molestation, or injury. If
the Tenant shall perform work with the consent of the Landlord, as aforesaid,
10.3 - 3
<PAGE>
Tenant agrees to comply with all laws, ordinances, rules, and regulations, of
the City and Borough of Juneau, Alaska, and any other public authority. The
Tenant further agrees that Landlord has the right to make alterations to the
premises and to the building in which the premises are situated and Landlord
shall not be liable for any damage, which Tenant might suffer by reason of
such undertaking.
16. DEFAULT AND REENTRY. If default shall be made by Tenant or
Tenant's successors or assigns in the payment of the rent herein reserved,
and that default shall continue for five (5) days after notice thereof in
writing to Tenant or Tenant's successors or assigns, or if a breach other
than in the payment of rent shall be made in the terms and conditions herein
to be performed by Tenant or Tenant's successors and assigns, and the breach
shall continue for five days after notice thereon in writing to Tenant, then
and in either event, the right of Tenant to the possession of the demised
premises shall terminate without notice or demand, and the mere retention or
possession thereafter by Tenant shall constitute a forcible detainer.
If Landlord so elects, but not otherwise, this lease shall thereupon
terminate. On the termination of the right of possession of tenant, whether
this lease be terminated or not, Tenant shall surrender possession of the
demised premises immediately, and under those conditions shall grant to
Landlord full and free license to reenter into and on the premises or any
part thereof to repossess the premises with or without process of law, and to
expel and remove Tenant or any other person who may be occupying the premises
or any part thereof through Tenant. Any reentry by Landlord shall be made
without waiving or postponing any other right against Tenant or the right to
enforce any bond or other security given for the faithful performance of the
terms and conditions herein contained. Any reentry shall be made without
prejudice to any rights or remedies whether by statute or common law that
might otherwise be used for recovering arrears in rent or for breach of any
terms or conditions of this lease. Any reentry, repossession, expulsion, or
removal, whether by direct act of Landlord or through legal proceedings for
that purpose, shall terminate this lease, and release Tenant from any
liability for the payment of any rent stipulated to be paid by this lease and
for the performance or fulfillment of any other term or condition provided
herein.
In the event of any reentry by Landlord, Landlord may lease or relet
the premises in whole or in part, or the buildings and improvements thereon,
to any tenant or tenants that may be satisfactory to the landlord for any
duration and for the best rent, terms, and conditions as Landlord may
obtain. The acceptance of any tenant or the making of any lease by the
Landlord shall be conclusive of the exercise of proper discretion by the
Landlord.
Landlord shall not be under any obligation to repossess the demised
premises during any period wherein Tenant is in default, and the foregoing
provisions regarding the repossession and management of the building and
improvements and the disposition of rents thereof by Landlord are made to
operate only in the event Landlord shall elect to repossess the premises.
17. COSTS AND ATTORNEY'S FEES. If by reason of any default on the
part of the tenant, it becomes necessary for the Landlord to employ an
attorney or in case Landlord shall bring suit to recover any rent due
hereunder, or for breach of any provision of this lease or to recover
possession of the leased premises, or if Tenant shall bring any action for
any relief against Landlord; declaratory or otherwise, arising out of this
lease, the prevailing party shall have and recover against the other party in
addition to the cost allowed by law, such sum as the court may adjudge to be
a reasonable attorney's fee. In the event Tenant defaults in the payment of
rent, the Tenant agrees to pay for the cost of any collection agency, or
attorney, employed by Landlord.
10.3 - 4
<PAGE>
18. REMOVAL OF PROPERTY. In the event of any entry in, or taking
possession of, the leased premises as aforesaid, the Landlords shall have the
right, but not the obligation, to remove the leased premises all personal
property located thereon, and may store same in any place selected by
Landlord, including but not limited to a public warehouse, at the expense and
risk of the owners thereof, with the right to sell stored property, without
notice to the Tenant, after it has been stored for a period of thirty (30)
days or more, the proceeds of such sale to be applied first to the cost of
such sale, second to the payment of charges for storage, if any, and third to
the payment of any sums of money which may then be due from tenant to
Landlord under any of these terms hereof, the balance if any to be paid to
Tenant.
Tenant hereby waives all claims for damages that may be caused by
Landlord's reentering and taking possession of premises or removing and
storing the property of Tenant as provided in this lease, and will save
Landlord harmless from loss, costs, or damages occasioned Tenant thereby, and
no such reentry shall be considered or construed to be forcible entry.
19. CONDITIONS OF OCCUPANCY. Tenant agrees to abide and be bound by
the following rules and policies of Landlord, which shall be considered as
covenants of this lease:
Electrical Installations. Tenant shall not without the written
consent of Landlord replace or move any electric light fixtures provided;
however, that with the consent of the Landlord, Tenant may replace building
lights understanding that such installations will not increase the Tenant's
consumption of electricity; and that the cost of such fixtures and
installations shall be at tenants sole expense. It is further agreed that
Tenant shall at the expiration or sooner termination of the lease, upon
demand of Landlord, pay the cost of replacing the standard light fixtures
belonging to the Landlord.
Parking. Landlord agrees to permit Tenant and its invitees
reasonable access to the leased premises through the adjacent parking lot.
In addition, Landlord shall provide Tenant with adequate parking spaces for
Tenants employees and customers all of which parking shall be located and
designated by Landlord on the adjacent property Landlord does not hereby
lease to Tenant any space under, in or on any of the parking area or sidewalk
adjacent to the demised premises (except as specifically provided in this
lease or its attachments) but does hereby license Tenant. subject to all the
terms and provisions hereof, and at Tenants sole risk, such right to use any
space in and on any such adjacent parking lot or sidewalk as Landlord itself
may have.
MISCELLANEOUS.
a. Water closets and other water fixtures shall not be used
for any purposes other than those for which they were intended, and any
damage resulting from misuse on the part of the Tenant, its agents, or
employees, shall be paid for by Tenant. No person shall waste water by
interfering or tampering with the faucets or otherwise.
b. Landlord reserves the right to make such other and further
reasonable regulations as in its judgment may from time to time be needed or
desirable for the safety, care, and cleanliness of the premises or the
building and the preservation of good order therein.
10.3 - 5
<PAGE>
20. OPTION TO RENEW LEASE. Tenant shall have and is hereby granted
the option to renew and extend this lease for an additional three year term
after the expiration of the term hereby demised, upon the same terms and
conditions provided herein for the original term, except as to the amount of
rental, which shall be renegotiated.
21. INSURANCE. Landlord shall provide insurance coverage as part of
the monthly agreed-upon rental amount, said insurance to consist of liability
and property insurance in an amount of 3300.000/$300.000/$1 ,000.000,
providing the necessary protection to the Landlord. The insurance coverage
shall not cover any sublease's personal property (equipment, supplies. etc.).
22. MEMBERSHIP IN MENDENHALL MALL MERCHANTS ASSOCIATION. By entering
into subject lease with Landlord, Tenant acknowledges that he will be
required to partake in the Mendenhall Mall Merchants Association. Tenant
agrees it will, upon notification from landlord, make all payments promptly
to the Mendenhall Mall Merchants Association and maintain good standing
throughout the term of this lease.
23. HEIRS AND SUCCESSORS. Subject to the provisions hereof
pertaining to assignment and subletting, the covenants and agreements of this
lease shall be binding upon the heirs, legal representatives, successors, and
assigns of any or all of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this lease the
day, month, and year first above written.
LANDLORD:
__________________________________________
TENANT:
__________________________________________
CONSENT TO LEASE
Glacier Village Supermarket, Inc. hereby consents to the foregoing
lease and its terms and conditions thereof.
DATED:
Glacier Village Supermarket, Inc.
By:
Its President
10.3 - 6
<PAGE>
STATE OF ALASKA )
) ss
FIRST JUDICAL DISTRICT )
Before me, the undersigned Notary Public in and for the State of
Alaska, duly commissioned and sworn as such Notary Public, this ____ day of
__________ personally appeared _________________________ of ADV Properties,
and he acknowledged to me that he executed the foregoing Lease on behalf of
said partnership.
WITNESS by hand and official seal this the _____ day of __________,
1991.
__________________________________________
Notary Public in and for the State of
Alaska
My commission expires:
STATE OF ALASKA )
) ss
FIRST JUDICAL DISTRICT )
Before me, the undersigned Notary Public in and for the State of
Alaska, duly commissioned and sworn as such Notary Public, this ____ day of
__________ personally appeared _________________________ of ADV Properties,
and he acknowledged to me that he executed the foregoing Lease on behalf of
said partnership. WITNESS by hand and official seal this the _____ day
of __________, 1991.
__________________________________________
Notary Public in and for the State of
Alaska
My commission expires:
10.3 - 7
<PAGE>
EXHIBIT 10.4
AGREEMENT OF LEASE
THIS AGREEMENT OF LEASE, made and entered into by and between THE SITKA
PROFESSIONAL CENTER I, an Alaska business partnership, hereinafter called the
Lessor, and the FIRST BANK OF KETCHIKAN, an Alaska banking corporation,
hereinafter called the Tenant, WITNESSETH:
RECITALS
A. The Lessor is completing a new building in which Lessors are
providing for commercial use as a professional office building. Tenant
desires to lease a portion of this building in which to house its banking
operations. Lessor's property is described as follows:
Lots Nine (9) and Ten (10), Block Ten (10) U.S.
Survey #l474, Tract A, Sitka Townsite, Sitka
Recording District, First Judicial District, State of
Alaska.
B. The portion of Lessor's property to be leased by Tenant is shown
on Exhibit A hereto which is incorporated herein by this reference. Tenant
shall also be entitled to the use of certain common areas which shall include
parking
C. This lease is intended to be a net lease and shall be construed
as such.
NOW THEREFORE THE PARTIES MUTUALLY AGREE AS FOLLOWS:
ARTICLE I.
GRANT AND TERM
Section 1.01. LEASED PREMISES. In consideration of the rents,
covenants, and agreements hereinafter reserved and contained herein on the
part of Tenant to be observed and performed, the Lessor demises and leases to
the Tenant, and the Tenant rents from the Lessor the premises (hereinafter
referred to as the leased premises or the demised premises) described in
Exhibit A, annexed hereto and incorporated herein by this reference and made
a part hereof. The demised premises are outlined in red on a diagram of
Lessor's Property, which is annexed as Exhibit B and made a part hereof.
Exhibit B sets forth the general layout of Lessor's property, but shall not
be deemed to be a warranty, representation, or agreement on the part of
Lessor that said property will be as indicated on said diagram. Lessor
hereby reserves the right at any time to make alterations or additions to the
layout of the property. Without limiting the generality of the foregoing,
Lessor also reserves the right to construct other buildings and improvements
on Lessor's Property, and from time to time make alterations thereof or
additions thereto, and to build additional stories on any such building or
buildings, and to build adjoining same, and to construct double-deck or
elevated parking facilities.
Section 1.02. USE OF ADDITIONAL AREAS. The use and occupation by the
Tenant of the demised premises shall include the use in common with others
entitled thereto of common areas, employees' parking areas, customer parking
areas, and other facilities shown on Exhibit B and which may be designated
from time to time by Lessor; subject, however, to the terms and conditions of
this agreement and to reasonable rules and regulations for the use thereof as
prescribed from time to time by Lessor.
10.4 - 1
<PAGE>
Section 1.3. COMMENCEMENT AND ENDING OF PRELIMINARY TERM & TERM OF
LEASE. Not applicable.
Section 1.04. LEASE YEAR DEFINED. The term "lease year" as used
herein shall mean the period of twelve (12) consecutive full calendar months.
The first lease year shall begin on the date of the commencement of the term
hereof. Each succeeding lease year shall commence upon the anniversary date
of the first lease year.
ARTICLE II
RENT
Section 2.01. ANNUAL RENT. Tenant shall promptly pay Lessor, without
any prior demand therefore, and without deductions or set-off whatsoever, an
annual rent based on One dollar and ten cents ($1.10) per square foot per
month for building area, commencing August 1, 1980. It is estimated that the
building area will be approximately 2,800 square feet; to be verified and
changed if necessary, to cover the exact portion occupied prior to occupancy.
Rental shall be paid in equal monthly installments and in legal tender of the
United State of America, in advance, on or before the 10th day of each month
of lease year throughout the term of this lease at such place and in such
manner as Lessor, shall, from time to time, in writing designate.
Notwithstanding the foregoing, Tenant shall pay unto Lessor the 1st and last
months regular term rent upon the execution of these presents. Rent to
commence August 1, 1980; there is to be no charge for July, 1980.
Section 2.02. ADDITIONAL RENT. All taxes, charges, costs and expenses
that Tenant assumes or agrees to pay hereunder in the event of the failure of
Tenant to pay those items, and all other damages, costs, expenses, and sums
that Lessor may suffer or incur, or that may become due, by reason of any
default of Tenant or failure by Tenant to comply with the terms and condition
of this lease shall be deemed to be additional rent, and, in the event of
non-payment Lessor shall have all the rights and remedies as hereinafter
provided for failure to pay rent. All rent and additional rent which shall
not be promptly paid when due shall bear interest from the date due at the
maximum lawful rate which may then be charged under the laws of the State of
Alaska. All additional rent shall be promptly paid by Tenant to Lessor
without deduction or set-off whatsoever in legal tender of the United States
of America, in the manner set forth above for the payment of rent.
ARTICLE III.
CONSTRUCTION ALTERATIONS
Section 3.01. IMPROVEMENTS TO BE CONSTRUCTED BY TENANT PRIOR APPROVAL
INDEMNITY. As its own cost and expense, Tenant shall construct all
improvements Tenant deems appropriate to conduct its banking operation in the
demised premises. Landlord however, shall provide a 200 ampere panel to the
bank wall. The improvements to be made by Tenant shall include lighting,
ceilings, floor covering, inside bank premises decor, all fixtures, take down
vault, and signs. The improvements to be constructed by Tenant shall be
accomplished as soon as conveniently possible, and shall not injure or damage
the structure of the building. All liability and responsibility for said
construction shall be that of Tenant, and Tenant shall fully indemnify,
defend, and hold Lessor harmless of and from all liability, damages,
obligation and other claims arising out of such construction or Tenant
occupancy of the demised premises, including the common areas.
10.4 - 2
<PAGE>
Section 3.02. TENANT'S PLANS AND SPECIFICATIONS. Prior to any
construction of improvements on the demised premises and prior to the
commencement of any alterations, the Tenant shall submit complete
architectural and engineering plans and specifications shall describe all the
work which is to be performed in sufficient detail for the Lessor to make his
determination as to whether or not to approve such plans and specifications.
Tenant shall not install any equipment other than trade fixtures insofar as
such work, alterations, or installation affects the structure or exterior
appearance of the building, without first obtaining Lessor's written approval
and consent. Lessor shall act promptly and without delay in either approving
or disapproving said plans and specifications so as not to cause the Tenant
undue delay.
Section 3.03. CONSTRUCTION AND ALTERATIONS INSURANCE COVERAGE. Tenant
shall not commence any such work without first delivering to Lessor a policy
or policies of workmen's compensation liability, and property damage
insurance naming Lessor as additional insured, within limits and with
companies acceptable to the Lessor.
Section 3.04. REMOVAL. Any alterations, additions improvements and
fixtures installed or paid for by the tenant in under, or upon the demised
premises, other than unattached moveable trade fixtures arid decorations,
shall upon the expiration or earlier termination of this lease become the
property of the Lessor. Until the expiration or earlier termination of this
lease, all such alterations, additions and improvements shall remain the
property of Tenant, and Tenant shall be solely entitled to take depreciation
on the same. Tenant shall have the right to remove all trade fixtures
(except for attached lighting fixtures) at any time during Tenant's rightful
occupancy of the leased premises, but not thereafter; however, upon written
demand by the Lessor, any or all improvements in, under or upon the leased
premises shall be removed by Tenant within a reasonable time after Tenant's
rightful occupancy of the leased premises has ended. This provision shall
survive the termination of this lease. Tenant shall repair damage caused by
its removal of trade fixtures.
Section 3.05. LESSOR'S RIGHT TO STOP WORK. Lessor shall have the right
to order Tenant to terminate Tenant's construction work at any time in the
event Tenant is not in compliance with the terms of this agreement. Upon
notification from Lessor to Tenant to cease work, Tenant shall remove from
the leased premises all agents, employees and contractors of Tenant
forthwith, until such time as Lessor shall have given its consent in writing,
and Tenant shall in connection therewith have no claim for damages of any
nature whatsoever against Lessor.
Section 3.06. SIGNS, AWNINGS AND CANOPIES. Tenant shall not place or
cause to be placed or maintained any signs or awnings or canopies outside the
demised premises without first obtaining a written consent and approval of
Lessor in each instance. Lessor shall act reasonable and with dispatch in
this regard. Tenant shall maintain any such sign or other installation as may
be approved in good condition and repair.
ARTICLE IV.
CONDUCT OF BUSINESS & USE OF PREMISES
Section 4.01. THE TENANT SHALL:
(a) Type of Business: Concessionaires. Use the leased premises
solely for the purposes of conducting the business of banking, and shall
conduct continuously in the leased premises said banking business; not use or
permit or suffer the use of the leased premises for any other business or
10.4 - 3
<PAGE>
purpose; and not permit any business to be operated in or from the leased
premises by any concessionaire or licensee without the prior written consent
of the Lessor; and
(b) Waste or Nuisance. Not commit or suffer to be committed
any waste upon the leased premises or any nuisance or other act or thing
which may disturb the quiet enjoyment of any other tenant on the Lessor's
property; and
(c) Governmental Regulations. At Tenant's sole cost and
expense, comply with all the requirements of all local, State, Federal, and
other applicable government authorities, now in force, or which may hereafter
be in force, pertaining to the premises including all local, State, and
Federal statutes and ordinances now in force or which may hereafter be in
force. Notwithstanding the foregoing, the Tenant shall have the right to
contest such rules, regulations, ordinances and statutes if this is done in
good faith, and Tenant shall indemnify, exonerate, defend and hold Lessor
harmless of and from all liability, cost, expense and other loss in this
regard; and
(d) Maintenance. Except for repair and maintenance to the roof
and foundation of the building in which the leased premises are located,
Tenant shall perform all maintenance and repair to the leased premises and
keep the same in good orderly and in a clean, neat, safe and sanitary
condition. Not by way of limiting the generality of the foregoing if Tenant
fails, neglects or refuses to perform such repair and maintenance as required
hereunder to the reasonable satisfaction of the Lessor as soon as reasonably
possible after written demand, the Lessor may make such repairs without
liability to Tenant for any loss or damage that' may accrue to Tenant's
fixtures or other property or to Tenant s business by reason thereof, and
upon completion Thereof, Tenant shall pay Lessor's costs for making such
repairs plus twenty (20%) percent for overhead, upon presentation of billing
therefore, as additional rent.
ARTICLE V
PARKING AND COMMON USE AREAS AND FACILITIES
Section 5.01. CONTROL OF COMMON AREA BY LESSOR. All automobile
parking are as, driveways, entrances and exits thereto and other facilities
furnished by Lessor, including some employee parking areas, to be assigned.
Pedestrian sidewalks, landscaped area, first aid stations, comfort stations
and ocher areas and improvements provided by Lessor for the general use, in
common, of tenants, their office agents, employees and customers, hereinafter
referred to as common areas or facilities, shall at all times be subject to
the exclusive control and management of Lessor, and Lessor shall have the
right from time to time to establish, modify and enforce reasonable rules and
regulations with respect to all facilities and areas mentioned in this
Article. Lessor shall have the right to construct, maintain and operate
lighting facilities on all said areas and improvements, to police same; from
time to time change the area, level, location and arrangement of parking
areas and other facilities hereinabove referred to; to restrict parking by
tenants, their officers, agents and employees to employee parking areas; to
enforce parking charges (by operation of meters or otherwise), with
appropriate provisions for free parking ticket validating by tenants, to
close all or any portion of said areas or facilities to such extent as may,
in the opinion of Lessor s counsel, be legally sufficient to prevent a
dedication thereof or the accrual of any rights to any person or the public
therein; to close temporarily all or any portion of the parking areas or
facilities, to discourage non-customer parking, and to do and perform such
other acts in and to said areas and improvements as, in the use of good
business judgement, the Lessor shall determine to be advisable with a view to
the improvement of the convenience and use thereof by Tenants, their
10.4 - 4
<PAGE>
officers, agents, employees and customers. Lessor will operate and maintain
the common facilities referred to above in such manner as Lessor, in its sole
discretion, shall determine from time to time. Without limiting the scope of
such discretion, Lessor shall have the full right and authority to employ all
personnel and to make all rules and regulations pertaining to and necessary
for the proper operation and maintenance of the common areas and facilities.
Section 5.02. LICENSE. All common areas and facilities not within the
leased premises, which Tenant may be permitted to use and occupy, are to be
used and occupied under a revocable license, and if the amount of such areas
be diminished, Lessor shall not be subject to any liability nor shall Tenant
be entitled to any compensation or diminution or abatement of rent, nor shall
such diminution of such areas be deemed constructive or actual eviction.
Section 5.03. COST AND MAINTENANCE OF COMMON AREAS.
(a) In each lease year, Tenant will pay Lessor as further
additional rent, subject to the limitations herein set forth, a proportion of
the area operating costs, hereinafter defined, based upon the ratio of square
feet of the leased premises, to the total square feet of all building space
leased on Lessor's Property . Tenant shall promptly pay the sum of O dollars
for the first two years as a trial period. If costs warrant, increases will
be negotiated to cover such costs, along with Tenant's monthly installments
of rental as provided above. When the pro-rata costs have been determined for
each lease year, Tenant shall promptly pay any balance due Lessor or receive
any refund from Lessor, as the case may be, upon receipt of Lessor s
computation of such cost.
(b) For the purpose of this Section 5.03, the common area costs
deemed the total cost and expense incurred in operating and maintaining the
common facilities, hereinafter defined, actually used or available for use by
Tenant and the employees, agents, servants, customers, and other invitees of
Tenant including, without limitation, gardening and landscaping, the cost of
public liability and property damage insurance, real estate taxes and
assessments, repairs, line painting, lighting, sanitary control, removal of
snow, trash, rubbish, garbage and other refuse, depreciation on machinery and
equipment used in such maintenance, the cost of personnel to implement such
services, to direct parking, and to police the common facilities and a
prorata share of all the foregoing costs to cover the Lessor's administrative
and overhead costs. "Common Facilities" means all areas, space, equipment and
special services provided by Lessor for the common or joint use and benefit
of the occupants of the building, their employees, agents servants,
customers, and living invitees, including without limitation parking areas,
access roads, driveways, retaining walls, landscaped area; pedestrian malls,
courts, stairs, ramps and sidewalks, comfort and first aid stations,
washrooms and parcel pick-up stations. All such expenses shall be for
services and materials used exclusively for the common facilities, and
consideration shall be given to the benefit Tenant derives from such expenses.
ARTICLE VI.
INDEMNITY -- ATTORNEYS FEES
Section 6.01. INDEMNIFICATION OF OWNER. Tenant will indemnify Lessor
and save it harmless from and against any and all claims, actions, damages,
liability and expense in connection with loss of life, personal injury and/or
damage to property arising from or out of any occurrence in, upon or at the
leased premises, or the occupance or use by Tenant of the leased premises or
10.4 - 5
<PAGE>
any part thereof, or occasioned wholly or in part by any act or omission of
Tenant, its agents, contractors, employees, servants, lessees or
concessionaires, In case Lessor shall, without fault on its part, be made a
party to any litigation commenced by or against Tenant, then Tenant shall
protect, defend and hold Lessor harmless and shall pay all costs, expenses
and the actual attorney's fees incurred or paid by Lessor in connection with
such litigation. Tenant shall also pay all costs, expenses, and actual
attorney's fees incurred or paid by Lessor in connection with such
litigation. Tenant shall also pay all costs, expenses, and actual attorney's
fees that may be incurred or paid by Lessor in enforcing the terms of this
lease.
Section 6.02. LIABILITY INSURANCE. Tenant shall during the entire term
hereof keep in full force and effect a policy of public liability and
property damage insurance with respect to the leased premises, and the
business operated by Tenant and any sub-tenants of Tenant in the leased
premises in which the limits of public liability shall be not less than Five
Hundred Thousand ($500,000.00) Dollars per person, and One Million
($1,000,000.00) Dollars per accident, and in which the property damage
liability shall not be less than Five Hundred Thousand ($500,000.00)
Dollars. The policy shall name the Lessor, any person firm or corporation
designated by the Lessor, and the Tenant as insured, and shall contain a
clause that the insurer will not cancel or change the insurance without first
giving the Lessor thirty (30) days prior written notice. The insurance shall
be in an insurance company approved by Lessor and a copy of the policy or a
certificate of insurance shall be delivered to the Lessor.
Section 6. 03. EXTENDED COVERAGE
(a) This section 6.03 shall become operative and effective only
in the event of' an assignment or transfer of Tenant's rights to this lease
as provided herein.
(b) Tenant shall maintain at its own cost and expense fire and
extended coverage, vandalism, malicious mischief and special extended
coverage insurance in an amount adequate to cover the cost of replacement of
all decorations and improvements in and on the demised premises in the event
of loss, and fire insurance in an amount adequate to cover the cost of
replacement of all fixtures and contents in the improvements on the demised
premises in the event of fire, extended coverage, vandalism, malicious
mischief and special extended coverage.
Section 6.04. INSURED'S WAIVER, NOTICE: Any insurance procured by
Tenant as herein required shall be issued in the name of Lessor and Tenant by
a company licensed to do business in the State of Alaska and shall contain
endorsements that (a) such insurance may not be cancelled or amended with
respect to Lessor without thirty (30) days written notice by registered mail
to Lessor by the insurance company; and (b) Tenant shall be solely
responsible for payment of premiums and that Lessor shall not be required to
pay any premiums for such insurance; and (c) any insurance policies herein
required or permitted to be procured by Tenant or Lessor shall contain an
express waiver of any right to subrogation by the insurance company against
the other party hereto. The original policy of all insurance required to be
procured by the Tenant shall be delivered to the Lessor by the Tenant within
ten (10) days of inception of such policy by the insurance company. The
minimum limits of any insurance coverage required herein shall not limit
Tenant's liability under Article IX.
Section 6.05. INCREASE IN INSURANCE PREMIUMS. Tenant shall not stock,
use or sell any article or do anything in or about the demised premises which
may be prohibited by Lessor's insurance policies or any endorsement or forms
attached thereto, or which will increase any insurance rates and premiums on
the demised premises, the building of which they are a part, and all other
10.4 - 6
<PAGE>
buildings in the Lessor s property. Tenant shall pay on demand any increase
in premiums for Lessors s insurance that may be charged on such insurance
carried by Lessor resulting from (1) Tenant's use and occupancy of the
demised premises or the Lessor's property, whether or not Lessor has
consented to the same; and (2) the waiver of subrogation rights as set forth
in Section 6.04 hereinabove. In determining whether increased premiums are
the result of Tenant's use, occupancy or vacance of the demised premises, a
schedule issued by the organization making the fire insurance extended
coverage, theft, vandalism, malicious mischief, and the like, special
extended coverage or any all-risk insurance rates for said premises or any
rule books issued by the rating organization or similar bodies or by any
rating procedures or rules of Lessor's insurance companies shall be
conclusive evidence of the several items and charges which make up the
insurance rates and premiums on the demised premises and the Lessor's
property. If, due to (a) occupancy, or (b) abandonment, or (c) Tenant's
failure to occupy the demised premises as herein provided, any insurance
shall be cancelled by the insurance carrier or if the premiums for any such
insurance shall be increased, then in any of such events Tenant shall
indemnify and hold Lessor harmless and shall pay on demand the increased cost
of such insurance. Tenant shall also pay in any such events any increased
premium on the rent insurance that may be carried by Lessor for its
protection against rent loss through fire or other casualty.
ARTICLE VII.
EMINENT DOMAIN
Section 7.01
(a) In the event of title to the entire leased premises being
acquired by anyone by exercise of right of eminent domain, this lease shall
cease and terminate upon the vesting of title and Tenant shall make all
payments required to be made by Tenant hereunder pro-rata to the date of such
vesting of title, but Tenant shall be entitled to a pro-rata refund of any
rent paid in advance; and
(b) In the event, (I) title to less than the whole of the
leased premises, but more than twenty (2O%) percent of the entire leased
premises shall be so acquired by eminent domain, or (II) as a result of
exercise of such right of eminent domain, the part of the leased premises
remaining shall not be one divided whole, then Lessor shall immediately give
to Tenant written notice of such acquisition and Tenant shall have the option
to terminate this lease effective on a date to be specified, however, that
the date so specified in such notice shall be a date not more than sixty (60)
days after the receipt by Tenant from Lessor of notice of such acquisition,
and in such event Tenant shall make all payments required to be made by
Tenant hereunder pro-rata to the date of such termination, but Tenant shall
be entitled to a pro-rata refund of any rent paid in advance.
(c) In the event Tenant does not exercise its rights of
termination under Section 7.01(b), then this lease and all of the covenants,
agreements, terms and conditions hereof shall continue in full force and
effect as to the portion of the leased premises not taken by exercise of the
right of eminent domain. If a portion of the leased premises shall have been
so taken by exercise of the right of eminent domain without termination of
this lease, as aforesaid, Tenant shall repair and rebuild the portion of the
leased premises not so taken in such manner as to render such portion
commercially useable for the purpose of Tenant and Tenant shall restore such
portion to a unit of substantially like quality and character as existed
before such taking. Commencing with the date said portion of the premises is
to be taken, the monthly rental shall be proportionately reduced.
10.4 - 7
<PAGE>
(d) Any condemnation award with respect to the leased premises
shall be the sole and exclusive property of the Lessor, except Tenant shall
be entitled to a prorata portion thereof based on the income tax depreciated
value of Tenant's improvements.
ARTICLE VIII.
UTILITIES
Section 8.01. Tenant shall be responsible for electricity or any other
utility used or consumed on the leased premises.
ARTICLE IX.
FUEL OIL
Section 9.01. No oil planned to be used so not applicable at this time
ARTICLE X.
OFFSET STATEMENT, ATTORNMENT ATTORNEY-IN-FACT
Section 10.01. OFFSET STATEMENT. Within ten (10) days after request
therefore by Lessor, or in the event that upon any sale, assignment or
hypothecation of the leased premises and/or the 3.and thereunder by Lessor an
offset statement shall be required from Tenant. Tenant agrees to deliver in
recordable form a certificate to any proposed mortgagee or purchaser, or to
Lessor, certifying (if such be the case) that this lease is in full force and
effect and that there are no defenses or offsets thereto, or stating those
claimed by Tenant.
Section 10.02. ATTORNMENT. Tenant shall, in the event any proceedings
are brought for the foreclosure of, or in the event of exercise of the power
of sale under any mortgage made by the Lessor covering the leased premises,
attornment to the purchaser upon any such foreclosure or sale and recognize
such purchaser as the Lessor under this lease.
Section 10.03. ATTORNEY-IN-FACT. The Tenant, upon request of any
party in interest, shall execute promptly such instruments or certificates to
carry out the intent of Sections 10.01 and 10.02 above as shall be requested
by the Lessor. The Tenant hereby irrevocably appoints the Lessor as
attorney-in-fact for the Tenant with full power and authority to execute and
deliver in the name of the Tenant any such instruments or certificates. If
fifteen (15) days after the date of a written request by Lessor to execute
such instruments, the Tenant shall not have executed the same, the Lessor
may, at its option, cancel this lease without incurring any liability on
account thereof, and the term hereby granted is expressly limited accordingly.
Section 10.04. SUBORDINATION. This lease and all rights of Tenant
hereunder shall be subject and subordinate to the lien of any and all
mortgages that may now or hereafter effect the demised premises, or any part
thereof, and to any and all renewals, modifications, or extensions of any
such mortgages. Tenant shall on demand execute, acknowledge, and deliver to
Lessor, any and all instruments that may be necessary or proper to
subordinate this lease and all rights therein to the lien of any such
mortgage and each renewal, modification or extension thereof.
10.4 - 8
<PAGE>
ARTICLE XI.
LIENS
Section 11.01. Tenant shall not cause or permit any liens to be filed
against Tenant's property arising out of Tenant s occupancy or business
operations. Not by way of limiting the generality of the foregoing, should
any mechanic's or other liens be filed against the demised premises or any
part thereof for any reason whatsoever by reason of Tenant's acts or
omissions or because of a claim against Tenant, Tenant shall cause the same
to be cancelled and discharged of record by bond or otherwise within ten (10)
days after written request by Lessor. Notwithstanding the foregoing, the
Tenant shall have the right to object to and contest the validity of any such
lien if this is done in good faith, and the Tenant shall indemnify,
exonerate, defend, and hold Lessor harmless of and from all liability, cost,
expense and other loss in this regard. Not by way of limiting and generality
of the foregoing the Tenant shall also before commencing any construction or
alterations post notices of non-responsibility on behalf of the Lessor as
provided in Alaska Statutes, Section 34.35.065 or any thereto.
ARTICLE XII.
TAXES
Section 12.01. Tenant shall promptly pay when due all taxes levied or
assessed in connection with the leased premises or the operation of Tenant's
business, including, but not by way of limiting the generality of the
foregoing, sales taxes on rent paid hereunder or on sales or other business
and excise taxes and assessments. The Tenant shall also pay all real property
taxes, including extraordinary and/or special assessments which may be levied
or assessed by any lawful authority against the demised premises and all
improvements thereon provided that such taxes and assessments shall be
pro-rated between Lessor and Tenant as of the commencement of the preliminary
term of this lease. Tenant shall also pay a proportion of real property taxes
and assessment levied against Lessors Property after the commencement of the
preliminary term of this lease. Tenant's obligation with regard to any tax or
assessment levied against Lessor's property after the commencement of the
preliminary term of this lease shall be that percentage of such tax or
assessment which the area of the leased premises bears to the total area of
Lessor's Property, viz.:
area of leased premises
Tenant's obligation = _____________ x Tax or Assessment
area of Lessor's property
The Tenant shall have the right to protest or contest such taxes if
this is done in good faith, and Tenant shall indemnify, exonerate, defend,
and hold Lessor harmless of and from all liability, cost, expense, and loss
in this regard. Lessor warrants that there are no special assessments against
the property as of the 1st day of the term of this lease.
ARTICLE XIII.
NET LEASE
Section 13.01. It is the intention of the parties that the rent
payable hereunder shall be net to the Lessor, so that the lease shall yield
to Lessor the net annual rent specified herein during the term of the lease,
and that all costs, expenses and obligations of every kind and nature
whatsoever relating to the leased premises shall be paid by Tenant.
10.4 - 9
<PAGE>
ARTICLE XIV.
ASSIGNMENT AND SUBLETTING
Section 14.01. CONSENT REQUIRED. Tenant shall be entitled to assign,
mortgage or encumber this lease, in whole or in part, or sublet any or all of
the demised premises if, but only if, (1) the business of the substitute
Tenant is compatible with, and does not compete or otherwise interfere with
the businesses of the other Tenants, including the Lessor, or (2) if Tenant
shall first obtain the prior written consent of Lessor, which, due to its
relationship with Tenant and its duty toward other tenants, Lessor shall not
be obligated to give, but rather shall have full right and privilege to
withhold the consent by Lessor to any assignment or subletting shall not
constitute a waiver of the necessity for such consent to any subsequent
assignment or subletting. This prohibition against any assignment or
subletting shall be construed to include a prohibition against any assignment
or subletting by operation of law. If this lease be assigned or if the
demised premises or any part thereof be occupied by anybody other than
Tenant, Lessor may collect rent from the assignee or occupant, and apply the
net amount collected to the rent herein reserved, but no assignment,
underletting, occupancy or collection shall be deemed a waiver of this
provision or the acceptance of the assignee, under tenant or occupant as
tenant, or as a release of Tenant from the further performance of the
provisions on its part to be observed or performed herein. Notwithstanding
any assignment or sublease, Tenant shall remain fully liable and shall not be
released from performing any of the terms of this lease. If Tenant should
assign or sublet, or attempt to do so in violation of the provisions hereof,
Lessor shall have the option to terminate this lease on five (5) days'
written notice.
ARTICLE XV.
DEFAULT OF TENANT
Section 15.01. RIGHT TO RE-ENTER. In the event of any failure of
Tenant to pay any rental due hereunder within ten (10) days after the same
shall be due, or any failure to perform any other of the terms, conditions or
covenants of this lease to be observed or performed by Tenant for more than
thirty (30) days after written notice of such default shall have been given
to Tenant, then Lessor besides other right or remedies it may have, shall
have the immediate right of re-entry and may remove all persons and property
from the leased premises and such property may be removed and stored in a
public warehouse or elsewhere at the cost of, and for the account of Tenant,
all without service of notice or resort to legal process and without being
deemed guilty of trespass, or becoming liable for any loss or damage which
may be occasioned thereby in the absence of willful misconduct or gross
neglect.
Section 15.015. STANDARD BANKRUPTCY CLAUSE:
In the event the Lessee, its successors in interest or assigns, while
conducting banking or any related business, shall, at any time during the
term of this lease or any extension hereof commit any of the following:
1. Have any execution or attachment issued against it, or its effects, and
the leased premises shall be taken or an attempt shall be made to
take them; or
2. In the event it becomes insolvent; or
3. If it makes an assignment for the benefit of creditors; or
10.4 - 10
<PAGE>
4. In the event there shall be filed by or against it in any court,
pursuant to any statute either of the United States or of any
state, a petition in bankruptcy or insolvency or for
reorganization or appointment of a receiver or a trustee of all
or a portion of the property of it; or
5. In the event that the Bank is closed and/or taken over by the Division
of Banking, Department of Commerce and Economic Development,
State of Alaska or by any other said Lessee, including but not
limited to the Federal Deposit Insurance Corporation;
Then the State or Federal Banking Authority, at its option, shall have
the right to continue the lease according to its terms or terminate it.
In the event the State or Federal Banking Authority elects to terminate
this lease, the Lessor shall have the right to assert such damages as are
allowed by law, except, as is limited by the Federal Deposit Insurance Act,
as amended time to time and the regulations promulgated thereunder and, also,
except, as it is limited by the Alaska Banking Act, as amended from time to
time and the regulations promulgated thereunder.
Section 15.02. RIGHT TO RELET OR TERMINATE. Should Lessor elect to
re-enter, as herein provided, or should it take possession pursuant to legal
proceedings or pursuant to any notice provided for by law, it may either
terminate this lease, or it may from time to time without terminating this
lease, make such alterations and repairs as may be appropriate in order to
relet the premises, and relet said premises or any part thereof for such term
or terms (which may be for a term extending beyond the term of this lease)
and at such rental or rentals and upon such other terms and conditions as
Lessor in its sole discretion may deem advisable upon each such reletting the
lease income shall be applied, first to the payment of any indebtedness other
than rent due hereunder from Tenant to Lessor, second to the payment of any
costs and expenses of such reletting, including brokerage fees and attorney's
fees and costs of such alterations and repairs; third, to the payment of rent
due and unpaid hereunder, and the residue, if any, shall be held by Lessor
and applied in payment of future rent as the same may become due and payable
hereunder. If such rentals received from such reletting during any month
after all of the above mentioned deductions have been made be less than that
to be paid during that month by Tenant hereunder, Tenant shall pay any such
deficiency to Lessor. Such deficiency shall be calculated and paid monthly.
No such re-entry or taking possession of said premises by Lessor shall be
construed as an election on its part to terminate this lease unless the
termination thereof be decreed by a court of competent jurisdiction.
Notwithstanding any such reletting without termination, Lessor may at any
time thereafter elect to terminate this lease for such previous breach.
Should Lessor at any time terminate this lease for any breach, in addition to
any other remedies it may have, it may recover from Tenant all damages it may
incur by reason of such breach, including the cost of recovering the leased
premises, Lessor's actual attorney's fees, and including the worth at the
time of such termination of the excess, if any, of the amount of rent and
charges equivalent to rent reserved in this lease for the remainder of the
stated term over and then reasonable rental value of the leased premises for
the remainder of the stated term, all of which amounts shall be immediately
due and payable from Tenant to Lessor.
Section 15.03. WAIVER OF RIGHTS OF REDEMPTION. Tenant hereby
expressly waives any and all rights of redemption granted by or under any
present or future laws in the event of Tenant being evicted or disposed for
any cause, or in the event of Lessor obtaining possession of the leased
premises, by reason of the violation by Tenant of any of the covenants or
conditions of this lease, or otherwise.
10.4 - 11
<PAGE>
ARTICLE XVI.
ACCESS BY LESSOR
Section 16.01. RIGHT OF ENTRY. Lessor or Lessor's agents shall have
the right to enter the leased premises at all reasonable times to examine the
same, and to show them to prospective purchasers or tenants of the building,
and to make such repairs which do not interfere with Tenant s normal business
use of the premises as Lessor may deem necessary or desirable, and Lessor
shall be allowed to take all material into and upon said premises that may be
required therefore without the same constituting an eviction of Tenant in
whole or in part and the rent reserved shall not abate while said repairs.
alterations, improvements or additions are being made, by reason of loss or
interruption of the business of Tenant, or otherwise. During the three (3)
months prior to the expiration of the term of this lease or any renewal term,
Lessor may exhibit the premises to prospective tenants or purchasers, and
place upon the premises the usual notice "To Let" or "For Sale," which
notices Tenant shall permit to remain thereon without molestation. If Lessor
shall not be able through bona fide effort to contact Tenant or a designated
agent of Tenant to open and permit an entry into said premises, at any time,
when for any reason any entry therein shall be necessary or permissible,
Lessor or Lessor's agents may enter the same by a master key, or may forcibly
enter the same, without rendering Lessor or such agents liable therefore, and
without in any manner affecting the obligations and covenants of this lease.
Nothing herein contained, however, shall be deemed or construed to impose
upon Lessor any obligations responsibility or liability whatsoever, for the
care, maintenance or repair of the leased premises or any part thereof.
ARTICLE XVII.
TENANT'S PROPERTY
Section 17.01. LOSS AND DAMAGE TO TENANT'S PROPERTY. Lessor shall not
be liable for any damage to property of Tenant or of others located on the
leased premises, nor for the loss of or damage to any property of Tenant or
of others by theft or otherwise. Lessor shall not be liable for any injury or
damage to persons or property resulting from fire, explosion, falling
plaster, tidal action, earthquake, steam, sprinkler system, gas, electricity,
water, rain or snow or leaks from any part of the leased premises or from the
pipes, appliances or plumbing works or from the roof, street or sub-surface
or from any other place or by dampness or by any other cause of whatsoever
nature. Lessor shall not be liable for any such damage caused by other
tenants or persons in the leased premises, occupants or adjacent property, or
the public, or caused by operations in construction of any private public or
quasi-public work. All property of Tenant kept or stored on the leased
premises shall be so kept or stored at the risk of Tenant only and Tenant
shall hold Lessor harmless from any claims arising out of damage to the same,
including subrogation claims by Tenant s insurance carrier. Lessor shall,
however, not be excused for any such injury or damage set out above which is
the result of Lessor's willful misconduct.
ARTICLE XVIII.
HOLDING OVER AND SUCCESSORS
Section 18.01. HOLDING OVER. Any holding over after the expiration of
the term hereof, with the consent of the Lessor, shall be construed to be a
tenancy from month to month at the rents herein specified (pro-rated on a
monthly basis) and shall otherwise be on the same terms and conditions herein
specified, so far as applicable.
10.4 - 12
<PAGE>
ARTICLE XVIX.
QUIET ENJOYMENT
Section 19.01. Upon payment by the Tenant of the rents herein
provided, and upon the observance and performance of all the covenants, terms
and conditions on Tenant's part to be observed and performed, Tenant shall
peaceably and quietly hold and enjoy the leased premises hereby demised
without hindrance or interruption by Lessor or any other person or persons
lawfully or equitable claiming by, through or under the Lessor, subject,
nevertheless, to the terms and conditions of this lease.
ARTICLE XX.
WAIVER OF LIABILITY--LESSOR'S DEFAULT
Section 20.01. Anything in this lease to the contrary notwithstanding,
Tenant agrees that it shall look solely to the estate and property of the
Lessor in the land and building comprising the leased premises, and subject
to prior rights of any mortgages of the premises, for the collection of any
judgment (or other judicial process) requiring the payment of money by Lessor
in the event of any default or breach by Lessor with respect to any of the
terms, covenants, and conditions of this lease to be observed and/or
performed by Lessor, and no other assets of the Lessor shall be subject to
levy, execution or other procedures for the satisfaction of Tenant's
remedies. In the event Lessor transfers this lease, except as collateral
security for a loan, upon such transfer Lessor will be released from all
liability and obligations hereunder, provided that the transferee assumes the
obligations of this lease. Further, Tenant acknowledges it has fully and
carefully examined the leased premises and has found the same to be
satisfactory for its purposes involved herein.
ARTICLE XXI
EXTENSION OF LEASE -- OPTIONS TO RENEW
Section 21.01. FIRST OPTION. Tenant is granted the option to extend
this lease for an additional term of five (5) years if Tenant shall give
Lessor written notice of Tenant's election to renew and extend at least
ninety (90) days before the expiration of the term of this lease as herein
provided, and if Tenant is not in default in any manner of the provisions
hereof.
Section 21.02. SECOND OPTION. In the event Tenant exercises the first
option to extend this lease, Tenant is granted the option to extend this
lease for an additional term of five (5) years, commencing at the termination
of the first extended period and ending five (5) years thereafter, if Tenant
shall give Lessor written notice of Tenant's election to renew and extend at
least ninety (90) days before the expiration of said first extended term, and
if Tenant is not in default in any manner of the provisions hereof.
Section 21.03. THIRD OPTION. In the event the Tenant exercises its
first and second options to extend this lease, Tenant is granted the option
to extend this lease for an additional term of five (5) years, commencing at
the termination of the second extended period and ending five (5) years
thereafter, if Tenant is not in default in any manner of the provisions
hereof, and if Tenant shall give Lessor written notice of Tenant's election
to renew and extend at least ninety (90) days before the expiration of said
second extended term.
10.4 - 13
<PAGE>
Section 21.04. CHANGE IN RENT
(a) Notwithstanding the foregoing, the rental for each option
period shall be increased by a percentage equal to 50% the percentage
increase, if any, shown to have occurred during the proceeding five (5) year
term by the consumer price index for all items for the United States of
America as a whole, issued by the Bureau of Labor Statistics of the United
States Department of Labor.
(b) In the event either of the index shall hereinafter be
converted to a different standard reference base of otherwise revised, the
determination of the percentage increase shall be made with use of such
conversion factor, formula or table for converting the index as may be
published by the Bureau of Labor Statistics or if said Bureau shall not
publish the same then with the use of such conversion factor, formula or
table as may be published by Prentice-Hall, Inc., or any other nationally
recognized publisher of similar statistical information. In the event the
index or either of them shall cease to be published, then, for the purposes
of this section, there shall be substituted for index or either of them such
other consumer price index as Lessor and Lessee shall agree upon. If they
are unable to agree within ninety (90) days after the index or either of them
cease to be published, shall be determined by arbitration as provided below.
(c) As used in this section, the term "rent" shall be deemed to
mean the rent provided for in Section 2.01 hereinabove.
ARTICLE XXII.
END OF TERM
Section 22.01. At the expiration of the tenancy hereby created, Tenant
shall surrender the leased premises in a clean, neat, sanitary, and safe
condition, and shall deliver all keys and combinations to locks, safes and
the like to Lessor. Tenant shall remove all its trade fixtures including but
not by way of limiting the generality of the foregoing, its vault, before
surrendering the premises, and shall repair any damage to the leased premises
caused thereby. Tenant's obligation to observe or perform this covenant shall
survive the expiration or other termination of the term of this lease.
ARTICLE XXIII
MISCELLANEOUS PROVISIONS
Section 23.01. ARBITRATION. Any dispute or controversy arising
hereunder shall be determined by arbitration as follows:
(a) The party requesting arbitration shall give the other party
a written notice of demand for arbitration, which notice shall contain, in
addition to the demand for arbitration, the name and address of the
arbitrator selected by the demanding party.
(b) Each party shall select one arbitrator, and the two
arbitrators thus selected shall select a third arbitrator, except that: (1)
if the other party fails to select a second arbitrator within the time
allowed, the demanding party shall be entitled to have the dispute settled by
the single arbitrator previously selected by him; or, (2) if each party
properly selects his arbitrator and the two arbitrators thus selected fail to
agree upon a third arbitrator within the time allowed, either party may apply
to the Superior Court for the State of Alaska at Ketchikan for the
appointment of a third arbitrator, such application to be subject to the
jurisdictional limits of the Court as imposed by the Alaska Uniform
Arbitration Act.
10.4 - 14
<PAGE>
(c) The demanding party may only make his selection of an
arbitrator in the manner set forth in sub-paragraph (a) hereinabove, the
other party may also exercise his right to select the second arbitrator by
giving the demanding party a written notice of his selection within five (5)
days of the date the other party receives notice of the demanding party's
selection. Within five (5) days of the date the two arbitrators are thus
selected, they sha1l select a third arbitrator.
(d) The decision of the arbitrators, or arbitrator as the case
may be, shall be final and binding upon the parties. No legal right of
action may arise out of any dispute until arbitration has been completed.
(e) By unanimous consent of all the parties, the method of
selection of arbitrators, or the arbitrators as selected may be changed at
any time.
(f) The costs of arbitration shall be shared equally by the
parties.
(g) Except to the extent that the terms of this agreement
otherwise provide, the terms and conditions of the Alaska Uniform Arbitration
Act are incorporated in, and made a part of this agreement.
Section 23.02. AUTHORITY. The parties and their undersigned
representatives warrant that they have full authority to enter into this
agreement and to execute these presents.
Section 23.03. CONSIDERATION. The parties do hereby acknowledge the
receipt, sufficiency and mutuality of the consideration supporting this
agreement.
Section 23.04. CONSTRUCTION.
(a) Unless the agreement otherwise requires, words in the
singular include the plural, and in the plural include the singular. Words in
the masculine gender include the feminine and the neuter; and when the sense
so indicates, words in the neuter may refer to any gender.
(b) The captions, section numbers, and article numbers in this
agreement are inserted only as a matter of convenience and in no way define,
limit, construe or describe the scope or intent of such sections or articles
of this agreement, nor in any way affect the agreement.
(c) This agreement shall be governed by and construed in
accordance with the laws of the State of Alaska.
(d) Each provision contained herein shall be deemed to
constitute both a covenant and condition of this agreement.
(e) Each party acknowledges that it has been advised to seek
the advice of an attorney of its own choice and who will act on its own
behalf with regard to these presents, and each party further acknowledges
that it has had ample opportunity to have access to its attorney.
Accordingly, each party shall be deemed to be co-drafters of these presents,
and therefore the doctrine that an instrument shall be construed against the
drafter shall have no application herein.
(f) Time is of the essence of this agreement.
(g) The remedies provided for herein shall be cumulative,
non-exclusive and in addition to any other rights and remedies both at law
and in equity.
10.4 - 15
<PAGE>
(h) Words of broad or general meaning shall in no wise be
limited because of their use in connection with words of more restricted
significance.
Section 23.05. EFFECTIVE DATE. The effective date of this agreement
shall be ____day of ___________ 1980.
Section 23.06. ENTIRE AGREEMENT. This agreement and the exhibits, if
any, attached hereto and forming a part hereof, set forth all the covenants,
promises, agreements, conditions and understandings between the parties
hereto, and there are no covenants, promises, agreements, conditions or
understandings, either oral or written, between them other than are herein
set forth. Except as herein otherwise provided, no subsequent alteration,
amendment, change or addition to this instrument shall be binding upon the
parties hereto unless reduced to writing and signed by them. These presents
constitute a final, complete and exclusive statement of this agreement.
Section 23.07. NON-WAIVER
(a) The failure of the parties to strictly enforce at any time
any of the provisions of this agreement, or to exercise any option which is
herein provided, or to require at any time performance by another party of
any of the provisions hereof, shall not unless specifically otherwise
provided herein, be construed to be a waiver thereof, nor in any way effect
the validity of this agreement, or any part thereof, or the right of the
party thereafter to strictly enforce the same.
(b) No payment hereunder or receipt therefor of a lesser amount
shall be deemed to be other than on account of the required payment; nor
shall any endorsement or statement on any check or any letter or writing
accompanying any check or payment be deemed an accord and satisfaction. The
payee may accept such check or payment without prejudice to his right to
recover the balance of the required amount or pursue any other remedy he may
have.
Section 23.08. NOTICE. Any notice, request, offer or other
communication required, or permitted to be given under this agreement, shall
be deemed properly given or made when mailed by registered or certified mail
in the ordinary course, postage prepaid, if addressed as follows:
To the Lessor: The Sitka Professional Center I
P.O. Box 397
Sitka, Alaska 99835
To the Tenant: First Bank of Ketchikan
_________________________
_________________________
or at such other addresses as may, from time to time, be designated by the
respective parties in writing.
Section 23.09. PARTIAL INVALIDITY. If any term, covenant or condition
of this agreement, or the application thereof to any person or circumstance
shall, to any extent, be invalid or unenforceable, the remainder of this
agreement, or the application of such term, covenant or condition to persons
or circumstances other than those to which it is held invalid or
unenforceable, shall not be affected thereby and each term, covenant or
condition of this agreement shall be valid and be enforced to the fullest
extent permitted by law.
10.4 - 16
<PAGE>
Section 23.10. SPECIFIC PERFORHANCE--INJUCTIVE RELIEF--COSTS.
(a) In addition to and not in lieu of any rights and remedies
provided herein, and which may be otherwise available to a party in case of a
breach or default of the terms, covenants and conditions of this agreement,
the remedy of specific performance shall be available to such non-defaulting
party, and if it is necessary or otherwise appropriate for the non-defaulting
party to engage the services of an attorney, another person or to otherwise
secure or assist in securing his rights and remedies, the defaulting party
shall pay unto the non-defaulting party all costs and expenses resulting from
such default, including but not by way of limiting the generality of the
foregoing, the actual attorneys' fees incurred by the non-defaulting party.
LESSOR
DATE: THE SITKA PROFESSIONAL CENTER I
By:
Managing Partner
DATE: TENANT
THE FIRST BANK OF KETCHIKAN
By:
ACKNOWLEDGMENT
PARTNERSHIP
STATE OF ALASKA )
) ss.
FIRST JUDICIAL DISTRICT )
On the ____ day of _________ 1980, before me, a Notary Public in and
for the State of Alaska, personally appeared __________ to me known to be the
____________ respectively of THE SITKA PROFESSIONAL CENTER I and known to be
the person who executed the within instrument on behalf of the partnership
therein named.
WITNESS my hand and official seal the day and year first hereinabove
written.
__________________________________________
Notary Public in and for the State of
Alaska
My commission expires:
10.4 - 17
<PAGE>
STATE OF ALASKA )
) ss.
FIRST JUDICIAL DISTRICT )
On the ____ day of _________ 1980, before me, a Notary Public in and
for the State of Alaska, personally appeared __________ to me known to be the
____________ respectively of THE FIRST BANK OF KETCHIKAN and known to be the
person who executed the within instrument on behalf of the partnership
therein named.
WITNESS my hand and official seal the day and year first hereinabove
written.
__________________________________________
Notary Public in and for the State of
Alaska
My commission expires:
10.4 - 18
<PAGE>
EXHIBIT 23.1
[KPMG LLP LETTERHEAD]
The Board of Directors
First Bancorp, Inc.
We consent to the use of our reports included herein and to the reference to
our firm under the heading "Experts" in the Registration Statement, Form S-4.
KPMG, LLP
/s/ KPMG, LLP
Anchorage, Alaska
February 5, 1999
EXHIBIT 23.2
[ALEX SHESHUNOFF & CO. LETTERHEAD]
CONSENT OF ALEX SHESHUNOFF & CO. INVESTMENT BANKING
We hereby consent to the Incorporation by reference in this Registration
Statement on Form S-4 of First Bancorp. Inc ("Registration Statement") of our
opinion, dated January 29. 1999 with respect to the corporate reor~anizat1on
of First Bancorp. Inc resulting in its election of S Corporation status under
the Internal Revenue Code and to the inclusion of such opinion as an annex to
the Registration Statement. By giving such consent, we do not thereby admit
that we come within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933 or the rules and regulations of the
Securities and Exchange Commission thereunder.
ALEX SHESHLYNOFF & CO
IN VESTMENT BANKING
By. /s/ Jamey E. Magee
Jamey E. Magee
AUSTIN. TX
February 9. 1998
EXHIBIT 99.2
REVOCABLE PROXY
FIRST BANCORP, INC.
ANNUAL MEETING OF SHAREHOLDERS
March 30, 1999
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Dorothy Benson and Kay Gichard, and
each of them, proxies with power of substitution to vote on behalf of the
undersigned all shares of common stock of First Bancorp, Inc. (the "Company")
at the Annual Meeting to be held on March 30, 1999, and any adjournments
thereof, with all powers the undersigned would possess if personally present,
with respect to the following:
1. Election of directors. [ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed below (except to vote for all nominees
as marked to the listed below
contrary below
INSTRUCTION: To withhold authority to vote for any individual, strike a line
through the nominee's name below.
Nominees for election for three-year terms:
William G. Moran, Sr.
Joseph M. Moran
Ernest J. Anderes
Nominee for election for a two-year term:
Kay D. Sims
2. Plan of Reorganization. If approved, the Company would merge with
Newco Alaska, Inc. for the purpose of becoming an S corporation.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Other Matters. At the discretion of the proxy holder, on such other business
as may properly come before the meeting and any adjournments thereof.
The shares represented by this proxy will be voted as specified above, but if no
specification is made, this proxy will be voted FOR the election of all nominees
and FOR the Plan of Reorganization. The proxies may vote in their discretion as
to other matters which may come before the meeting.
Number of Shares Held:________________
Dated: _______________________, 1999
Please date and sign exactly as
your name appears on your stock
certificate(s) (which should be the
same as the name on the address
label on the envelope in which this
proxy was sent to you), including
designation as executor, trustee,
etc., if applicable. A corporation
must sign its name by the
president or other authorized
officer. All co-owners must sign.
