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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
JANUARY 10, 1996
Date of Report (Date of earliest event reported):
CENTRAL BANCORPORATION
(Exact name of registrant as specified in its charter)
WASHINGTON
(State or other jurisdiction of incorporation)
0-16356 91-1203145
(Commission File Number) IRS Employer Identification No.
301 NORTH CHELAN
WENATCHEE, WASHINGTON 98801
(Address of principal executive offices) (zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (206) 663-0733
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ITEM 5 - OTHER EVENTS
On January 10, 1996, Central Bancorporation ("Bancorporation"),
Wenatchee, Washington and its subsidiaries Central Washington Bank and North
Central Washington Bank ("Bank Subsidiaries") entered into an Agreement and Plan
of Mergers ("Merger Agreement") with InterWest Bancorp, Inc. ("InterWest"), Oak
Harbor, Washington and InterWest's subsidiary, InterWest Savings Bank, pursuant
to which Bancorporation will be merged into InterWest. The Merger Agreement
provides that Bancorporation's common stock will be exchanged for shares of
InterWest common stock pursuant to a specified exchange ratio. The aggregate
value of the consideration is approximately $34.5 million, subject to
adjustments.
In connection with the Merger Agreement, Bancorporation and InterWest
entered into a Stock Option Agreement dated January 10, 1996 ("Option
Agreement") whereby Bancorporation granted InterWest an option to purchase
201,898 shares of Bancorporation's common stock at a price of $26.00 per share
(such number of shares and price being subject to adjustment), under the
circumstances, terms and conditions set forth in the Option Agreement. The
Option Agreement is exercisable upon the occurrence of certain events, including
(i) the acquisition by a third party of securities representing 15% or more of
the voting shares of Bancorporation, (ii) the sale of 20% or more of the assets
or deposits of Bancorporation and the Bank Subsidiaries, (iii) the issuance,
sale or other disposition of securities representing 20% or more of the voting
power of Bancorporation or the Bank Subsidiaries; or (iv) the agreement between
Bancorporation and a third party to engage in a merger or consolidation.
Consummation of the acquisition is subject to several conditions,
including receipt of applicable regulatory approval and approval by
Bancorporation's and InterWest's shareholders. For information regarding the
terms of the proposed transaction, reference is made to the Merger Agreement,
Option Agreement and the press release dated January 11, 1996, which are
attached hereto as Exhibits 2, 10 and 99, respectively, and incorporated herein
by reference.
ITEM 7 - FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements - not applicable.
(b) Pro forma financial information - not applicable.
(c) Exhibits:
(2) Plan and Agreement of Mergers dated January
10, 1996
(10) Stock Option Agreement dated January 10, 1996
(99) Joint Press Release issued by Bancorporation
and InterWest
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: January 10, 1996
CENTRAL BANCORPORATION
By /s/ Joseph E. Riordan
--------------------------
Joseph E. Riordan,Treasurer
and Assistant Secretary
3
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EXHIBIT 2
======================================================
AGREEMENT AND PLAN OF MERGERS
BETWEEN
CENTRAL BANCORPORATION
CENTRAL WASHINGTON BANK
AND
NORTH CENTRAL WASHINGTON BANK
AND
INTERWEST BANCORP, INC.
AND
INTERWEST SAVINGS BANK
======================================================
DATED AS OF JANUARY 10, 1996
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TABLE OF CONTENTS
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ARTICLE I. MERGERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.1. THE CORPORATE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.2. THE BANK MERGERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.3. EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE II. CONSIDERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1 CORPORATE MERGER CONSIDERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.2. STOCKHOLDER RIGHTS; STOCK TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3. FRACTIONAL SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.4. EXCHANGE PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.5. ANTI-DILUTION PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.6. EXCEPTION SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.7. RESERVATION OF RIGHT TO REVISE TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.8. OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III. ACTIONS PENDING CONSUMMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1. CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.2. DIVIDENDS, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.3. INDEBTEDNESS; LIABILITIES; ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.4. LINE OF BUSINESS; OPERATING PROCEDURES; ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.5. LIENS AND ENCUMBRANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.6. COMPENSATION; EMPLOYMENT AGREEMENTS; ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.7. BENEFIT PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.8. CONTINUANCE OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.9. AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.10. CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.11. CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.12. LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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ARTICLE IV. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.1. THE COMPANY AND THE BANKS REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.2. INTERWEST AND INTERWEST SAVINGS REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE V. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.1. BEST EFFORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.2. THE PROXY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.3. REGISTRATION STATEMENT COMPLIANCE WITH SECURITIES LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.4. REGISTRATION STATEMENT EFFECTIVENESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.5. PRESS RELEASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.6. ACCESS; INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.7. ACQUISITION PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.8. REGISTRATION STATEMENT PREPARATION; REGULATORY APPLICATIONS PREPARATION . . . . . . . . . . . . . . . . . . . 22
5.9. BLUE-SKY FILINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.10. AFFILIATE AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.11. CERTAIN POLICIES OF THE COMPANY AND THE BANKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.12. STATE TAKEOVER LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.13. NO RIGHTS TRIGGERED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.14. SHARES LISTED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.15. REGULATORY APPLICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.16. REGULATORY DIVESTITURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.17. CURRENT INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.18. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.19. INTERWEST PROXY STATEMENT; SHAREHOLDER APPROVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.20. OTHER EMPLOYMENT AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE VI. CONDITIONS TO CONSUMMATION OF THE MERGERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.2. CONDITIONS TO OBLIGATIONS OF INTERWEST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.3. CONDITIONS TO OBLIGATIONS OF COMPANY AND BANKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
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ARTICLE VII. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.1. MUTUAL CONSENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.2. BREACH. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.3. DELAY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.4. NO STOCKHOLDER APPROVAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.5. INTERWEST COMMON STOCK PRICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.6. CONSEQUENCES OF TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VIII. OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.1. SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.2. WAIVER; AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.3. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.4. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.5. EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.6. CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.7. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.8. ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.9. BENEFIT PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.10. HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
</TABLE>
EXHIBIT A - STOCK OPTION AGREEMENT
EXHIBIT B - VOTING AGREEMENT
EXHIBIT C - FORM OF AFFILIATE AGREEMENT
EXHIBIT D - EMPLOYMENT AGREEMENT WITH GARY M. BOLYARD
EXHIBIT E - EMPLOYMENT AGREEMENT WITH JOSEPH E. RIORDAN
EXHIBIT F - FORM OF EMPLOYMENT AGREEMENT
EXHIBIT G - FORM OF LEGAL OPINION OF COUNSEL TO THE COMPANY AND
THE BANKS
EXHIBIT H - FORM OF LEGAL OPINION OF COUNSEL TO INTERWEST AND
INTERWEST SAVINGS
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AGREEMENT AND PLAN OF MERGERS
AGREEMENT AND PLAN OF MERGERS, dated as of the 10th day of January 1996
(this "Plan"), by and among CENTRAL BANCORPORATION (the "Company"), CENTRAL
WASHINGTON BANK ("CWB"), NORTH CENTRAL WASHINGTON BANK ("NCWB"), INTERWEST
BANCORP, INC. ("InterWest") and INTERWEST SAVINGS BANK ("InterWest Savings").
RECITALS
(A) THE COMPANY. The Company is a corporation duly organized and
existing in good standing under the laws of the State of Washington, with its
principal executive offices located in Wenatchee, Washington. The Company is a
registered bank holding company under the Bank Holding Company Act of 1956, as
amended. As of the date hereof, the Company has 3,000,000 authorized shares of
common stock, $1.67 par value per share ("Company Common Stock")(no other class
of capital stock being authorized), of which 1,014,565 shares of Company Common
Stock are issued and outstanding. As of the date hereof, the Company had 134,350
shares of Company Common Stock reserved for issuance under employee and director
stock option plans pursuant to which options covering 96,836 shares of Company
Common Stock are outstanding as of the date hereof.
(B) CWB. CWB is a commercial bank duly organized and existing in good
standing under the laws of the State of Washington, with its principal executive
offices located in Wenatchee, Washington. As of the date hereof, CWB has 171,406
authorized shares of common stock, $10.00 par value per share ("CWB Common
Stock")(no other class of capital stock being authorized), of which 154,509
shares of CWB Common Stock are issued and outstanding. All of the issued and
outstanding CWB Common Stock are owned by the Company. As of September 30, 1995,
CWB had capital of $12,345,000, divided into common stock of $1,545,000, surplus
of $3,934,000, and undivided profits of $6,917,000, net of unrealized loss on
investment securities of $51,000.
(C) NCWB. NCWB is a commercial bank duly organized and existing in
good standing under the laws of the State of Washington, with its principal
executive offices located in Omak, Washington. As of the date hereof, NCWB has
1,000,000 authorized shares of common stock, no par value ("NCWB Common Stock")
(no other class of capital stock being authorized), of which 10,000 shares of
NCWB Common Stock are issued and outstanding. All of the issued and outstanding
NCWB Common Stock are owned by the Company. As of September 30, 1995, NCWB had
capital of $4,815,000, divided into common stock of $1,500,000, surplus of
$2,619,000, and undivided profits of $685,000, net of unrealized gain on
investment securities of $11,000.
(D) INTERWEST. InterWest is a corporation duly organized and existing
in good standing under the laws of the State of Washington, with its principal
executive offices located in Oak Harbor, Washington. As of the date hereof,
InterWest has 20,000,000 authorized shares of common stock, $.20 par value per
share ("InterWest Common Stock") (no other class of capital stock being
authorized), of which 6,398,398 shares of InterWest Common Stock were issued and
outstanding as of September 30, 1995.
(E) INTERWEST SAVINGS. InterWest Savings is a savings bank duly
organized and existing under the laws of the State of Washington, with its
principal executive offices located in Oak Harbor, Washington. As of the date
hereof, InterWest Savings has 6,000,000 authorized shares of common stock, $.20
par value per share ("InterWest Savings Common Stock") (no other class of
capital stock being authorized), of which 200 shares are issued and outstanding
and owned by InterWest. As of September 30, 1995, InterWest Savings had capital
of $90,141,183, divided into common stock of $200, surplus of $15,759,688 and
undivided profits, including capital reserves, of $74,381,315.
(F) STOCK OPTION AGREEMENT; VOTING AGREEMENT. Immediately after the
execution and delivery of this Plan, as a condition and an inducement to
InterWest's willingness to enter into this Plan, the Company and InterWest agree
to enter into a Stock Option Agreement (the "Stock Option Agreement") in the
form attached hereto as Exhibit A, pursuant to which the Company is granting to
InterWest an option to purchase, under certain circumstances, shares of Company
Common Stock. As a condition and an inducement to InterWest's and
<PAGE> 6
InterWest Savings' willingness to enter into this Plan, the directors and
officers of CWB and NCWB (collectively, the "Banks") and the Company have
entered into an agreement with InterWest and InterWest Savings in the form
attached hereto as Exhibit B, pursuant to which, among other things, each such
individual has agreed to vote his or her shares of Company Common Stock in favor
of approval of the transactions contemplated by this Plan at the Meeting (as
hereinafter defined).
(G) RIGHTS, ETC. Except as Previously Disclosed in Schedule 4.1(C),
there are no shares of capital stock of the Company or the Banks authorized and
reserved for issuance, neither the Company nor either Bank has any Rights (as
defined below) issued or outstanding and neither the Company nor either Bank has
any commitment to authorize, issue or sell any such shares or any Rights, except
pursuant to (i) this Plan or (ii) the Stock Option Agreement. The terms "Rights"
means securities or obligations convertible into or exchangeable for, or giving
any person any right to subscribe for or acquire, or any options, calls or
commitments relating to, shares of capital stock. There are no preemptive rights
in respect of the Company Common Stock.
(H) APPROVALS. The Board of Directors of each of the Company, CWB,
NCWB, InterWest and InterWest Savings has approved, at meetings of each of such
Board of Directors, this Plan and, in the case of the Company and InterWest, the
Stock Option Agreement and has authorized the execution hereof and thereof in
counterparts.
(I) OTHER. It is the intention of the Parties that the Mergers (as
hereinafter defined) shall include the right of InterWest to acquire the assets
and assume the liabilities of the subsidiaries of the Company and to assign such
right to any corporation which InterWest controls. Pursuant to the foregoing and
under the authority of Revenue Rulings 64-73 and 70-224, InterWest may assign
its right to acquire the assets and assume the liabilities of the subsidiaries
of the Company to InterWest Savings, and may also direct each such subsidiary to
transfer all of its assets and liabilities to InterWest Savings on the Effective
Date (as hereinafter defined), or at any time thereafter, including by means of
a statutory merger.
In consideration of their mutual promises and obligations, the Parties
further agree as follows:
DEFINITIONS
(A) DEFINITIONS. Capitalized terms used in this Plan have the
following meanings:
"Acquisition Transaction" means (1) a merger, consolidation or similar
transaction involving InterWest or any of its significant subsidiaries, (2) the
disposition, by sale, lease, exchange or otherwise, of assets or deposits of
InterWest or any of its significant subsidiaries representing in either case 25%
or more of the consolidated assets or deposits of InterWest and its
subsidiaries, or (3) the issuance, sale or other disposition (including by way
of merger, consolidation, share exchange or any similar transaction) of
securities representing 25% or more of the voting power of InterWest or any of
its significant subsidiaries other than the issuance of InterWest Common Stock
upon the exercise of outstanding options or the conversion of outstanding
convertible securities of InterWest.
"Appraisal Laws" has the meaning assigned to such term in Section
1.1(E).
"Asset Classification" has the meaning assigned to such term in Section
4.1(T).
"Banks" has the meaning assigned to such term in paragraph (F) of the
Recitals to this Plan.
"Bank Financial Reports" has the meaning assigned to such term in
Section 4.1(H).
"Bank Mergers" has the meaning assigned to such term in Section
1.2(A).
"Business Day" means any day other than a Saturday, Sunday, or a legal
holiday in the State of Washington.
"Code" has the meaning assigned to such term in Section 4.1(Q)(2).
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"Collar Price" means $20.00.
"Company Option" has the meaning assigned to such term in Section 2.8.
"Compensation and Benefit Plans" has the meaning assigned to such term
in Section 4.1(Q)(1).
"Continuing Bank" has the meaning assigned to such term in Section
1.2(A).
"Continuing Corporation" has the meaning assigned to such term in
Section 1.1(A).
"Corporate Merger" has the meaning assigned to such term in Section
1.1(A).
"Daily Sales Price" for any trading day shall be equal to the average
of the bid and ask prices per share of all market makers, as reported on
Bloomberg Financial Markets, of InterWest Common Stock on the Nasdaq Stock
Market reporting system.
"Department" has the meaning assigned to such term in Section 4.1(H).
"Derivatives Contract" means an exchange-traded or over-the-counter
swap, forward, future, option, cap, floor or collar financial contract or any
other contract that (1) is not included on the balance sheet of the Holding
Company Financial Reports or the InterWest Financial Reports, as the case may
be, and (2) is a derivative contract (including various combinations thereof).
"Director" means the Director of the Department.
"Dissenting Shares" means the shares of Company Common stock held by
those shareholders of the Company who have timely and properly exercised their
dissenters' rights in accordance with the Appraisal Laws.
"Effective Date" has the meaning assigned to such term in Section 1.3.
"Eligible Company Common Stock" means shares of Company Common Stock
other than Exception Shares and Dissenting Shares.
"Employment Agreement" shall mean any of Exhibits D, E and F attached
hereto.
"Environmental Law" means (1) any federal, state and local law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, legal doctrine, order, judgment, decree, injunction,
requirement or agreement with any governmental entity, relating to (a) the
protection, preservation or restoration of the environment (including air, water
vapor, surface water, groundwater, drinking water supply, surface land,
subsurface land, plant and animal life or any other natural resource) or to
human health or safety, or (b) the exposure to, or the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production, release or disposal of Hazardous Material, in each case as amended
and as now in effect, including the Federal Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act, the Federal Water Pollution Control Act of 1972, the
Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource
Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste
Amendments thereto), the Federal Solid Waste Disposal and the Federal Toxic
Substances Control Act, and the Federal Insecticide, Fungicide and Rodenticide
Act, the Federal Occupational Safety and Health Act of 1970, each as amended and
as now in effect, and (2) any common law or equitable doctrine (including
injunctive relief and tort doctrines such as negligence, nuisance, trespass and
strict liability) that may impose liability or obligations for injuries or
damages due to, or threatened as a result of, the presence of or exposure to any
Hazardous Material.
"ERISA" has the meaning assigned to such term in Section 4.1(Q)(2).
"ERISA Affiliate" has the meaning assigned to such term in Section
4.1(Q)(3).
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<PAGE> 8
"ERISA Plans" has the meaning assigned to such term in Section
4.1(Q)(2).
"Exception Shares" means shares held by any of the Company's
Subsidiaries or by InterWest or any of its Subsidiaries, in each case other than
in a fiduciary capacity or as a result of debts previously contracted.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.
"Exchange Agent" has the meaning assigned to such term in Section 2.4.
"Exchange Ratio" has the meaning assigned to such term in Section
2.1(B).
"FDIC" means the Federal Deposit Insurance Corporation.
"Financial Reports" has the meaning assigned to such term in Section
4.1(H).
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.
"GAAP" means generally accepted accounting principles consistently
applied.
"Hazardous Material" means any substance presently listed, defined,
designated or classified as hazardous, toxic, radioactive or dangerous, or
otherwise regulated, under any Environmental Law, whether by type or quantity,
including any oil or other petroleum product, toxic waste, pollutant,
contaminant, hazardous substance, toxic substance, hazardous waste, special
waste or petroleum or any derivative or by-product thereof, radon, radioactive
material, asbestos, asbestos containing material, urea formaldehyde foam
insulation, lead and polychiorinated biphenyl.
"Holding Company Financial Reports" has the meaning assigned to such
term in Section 4.1(H).
"Indemnified Party" has the meaning assigned to such term in Section
5.18(A).
"InterWest Option" has the meaning assigned to such term in Section
2.8.
"InterWest Price" means the price equal to the average (rounded to the
nearest penny) of each Daily Sales Price of InterWest Common Stock for the ten
consecutive trading days beginning on and including the twentieth trading day
immediately preceding the Effective Date, subject to any adjustment that may be
required in connection with the adjustment of the Exchange Ratio pursuant to
Section 2.5.
"Loan/Fiduciary Property" means any property owned or controlled by the
Company or any of its Subsidiaries or in which the Company or any of its
Subsidiaries holds a security or other interest, and, where required by the
context, includes any such property where the Company or any of its Subsidiaries
constitutes the owner or operator of such property, but only with respect to
such property.
"Material Adverse Effect" means with respect to any Party an event,
occurrence or circumstance (including (i) the making of any provisions for
possible loan and lease losses, write-downs of other real estate and taxes and
(ii) any breach of a representation or warranty contained herein by such Party)
that (a) has or is reasonably likely to have a material adverse effect on the
financial condition, results of operations, business or prospects of such Party
and its subsidiaries, taken as a whole, or (b) would materially impair such
Party's ability to perform its obligations under this Plan or the Stock Option
Agreement or the consummation of any of the transactions contemplated hereby or
thereby.
"Meeting" has the meaning assigned to such term in Section 5.2.
"Mergers" has the meaning assigned to such term in Section 1.2(A).
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<PAGE> 9
"Multiemployer Plans" has the meaning assigned to such term in Section
4.1(Q)(2).
"Nasdaq" means the National Association of Securities Dealers
Automated Quotations system.
"Option" has the meaning assigned to such term in the Stock Option
Agreement.
"Option Shares" has the meaning assigned to such term in the Stock
Option Agreement.
"Participation Facility" means any facility in which the Company or any
of its Subsidiaries participates in the management and, where required by the
context, includes the owner or operator of such facility.
"Party" means a party to this Plan.
"Pension Plan" has the meaning assigned to such term in Section
4.1(Q)(2).
"Previously Disclosed" means information provided by a Party in a
Schedule that is delivered by that Party to the other Party contemporaneously
with the execution of this Plan and specifically designated as information
"Previously Disclosed" pursuant to this Plan.
"Pre-Triggering Event InterWest Price" means the price equal to the
average (rounded to the nearest penny) of each Daily Sales Price of InterWest
Common Stock for the ten consecutive trading days beginning on and including the
twentieth trading day immediately preceding the date of the Triggering Event,
subject to any adjustment that may be required in connection with the adjustment
of the Exchange Ratio pursuant to Section 2.5.
"Proxy Statement" has the meaning assigned to such term in Section
5.2.
"Registration Statement" has the meaning assigned to such term in
Section 5.2.
"Regulatory Authorities" means federal or state governmental agencies,
authorities or departments charged with the supervision or regulation of
depository institutions or engaged in the insurance of deposits.
"RCW" means the Revised Code of Washington.
"Rights" has the meaning assigned to such term in paragraph (G) of the
Recitals to this Plan.
"Securities Act" means the Securities Act of 1933, as amended, together
with the rules and regulations promulgated thereunder.
"SEC" means the Securities and Exchange Commission.
"Stock Option Agreement" has the meaning assigned to such term in
paragraph (F) of the Recitals to this Plan.
"Subsidiary" with respect to any entity means each partnership or
corporation, the majority of the outstanding partnership interests, capital
stock or voting power of which is (or upon the exercise of all outstanding
warrants, options and other rights would be) owned, directly or indirectly, at
the time in question by such entity.
"Tax Returns" has the meaning assigned to such term in Section
4.1(BB).
"Taxes" means federal, state, local or foreign income, gross receipts,
windfall profits, severance, property, production, sales, use, license, excise,
franchise, employment, withholding or similar taxes imposed on the income,
properties or operations of the respective Party or its Subsidiaries, together
with any interest, additions, or penalties with respect thereto and any interest
in respect of such additions or penalties.
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<PAGE> 10
"Termination Date" has the meaning assigned to such term in Section
1.3.
"Third Party" means a person within the meaning of Sections 3(a)(9) and
13(d)(3) of the Exchange Act, excluding (1) the Company or any Subsidiary of the
Company and (2) InterWest or any Subsidiary of InterWest.
"Total Consideration" means the dollar amount obtained by multiplying
$34.00 by the aggregate number of shares of Eligible Company Common Stock issued
and outstanding immediately prior to the Effective Date.
"Triggering Event" means any one or more of the following events:
(1) InterWest shall have authorized, recommended, publicly
proposed or publicly announced an intention to authorize, recommend or
propose, or entered into an agreement with any Third Party to effect an
Acquisition Transaction.
(2) Any Third Party shall have made a bona fide proposal to
InterWest or its stockholders by public announcement, or by written
communication that is or becomes the subject of public disclosure, to
engage in an Acquisition Transaction.
(3) Any Third Party, other than in connection with a
transaction to which the Company has given its prior written consent,
shall have filed an application or notice with the Federal Reserve
Board, or other federal or state bank regulatory authority, for
approval to engage in an Acquisition Transaction.
(4) Any Third Party shall have commenced (as such term is
defined in Rule 14d-2 under the Exchange Act) or shall have filed a
registration statement under the Securities Act with respect to, a
tender offer or exchange offer to purchase any shares of InterWest
Common Stock such that, upon consummation of such offer, such Third
Party would own or control 20% or more of the then outstanding shares
of InterWest Common Stock.
(B) GENERAL INTERPRETATION. Except as otherwise expressly provided in
this Plan or unless the context clearly requires otherwise, the terms defined in
this Plan include the plural as well as the singular; the words "hereof,"
"herein," "hereunder," "in this Plan" and other words of similar import refer to
this Plan as a whole and not to any particular Article, Section or other
subdivision; and references in this Plan to Articles, Sections, Schedules, and
Exhibits refer to Articles and Sections of and Schedules and Exhibits to this
Plan. Whenever the words "include," "includes," or "including" are used in this
Plan, they shall be deemed to be followed by the words "without limitation."
Unless otherwise stated, references to Subsections refer to the Subsections of
the Section in which the reference appears. All pronouns used in this Plan
include the masculine, feminine and neuter gender, as the context requires. All
accounting terms used in this Plan that are not expressly defined in this Plan
have the respective meanings given to them in accordance with GAAP.
ARTICLE I. MERGERS
1.1. THE CORPORATE MERGER. Subject to the provisions of this Plan, on
the Effective Date:
(A) THE CONTINUING CORPORATION. In accordance with the terms of RCW
Ch. 23B.11, the Company shall merge into InterWest (the "Corporate Merger"), the
separate existence of the Company shall cease and InterWest (the "Continuing
Corporation") shall survive, and the name of the Continuing Corporation shall be
"InterWest Bancorp, Inc."
(B) RIGHTS, ETC. Upon consummation of the Corporate Merger, the
Continuing Corporation shall possess all of the rights, privileges, immunities
and franchises, of a public as well as of a private nature, of each of the
merging corporations; and all property, real, personal and mixed, and all debts
due on whatever account, and all other choses in action, and all and every other
interest, of or belonging to or due to each of the corporations so merged, shall
be deemed to be vested in the Continuing Corporation without further act or
deed; and the title to any
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<PAGE> 11
real estate or any interest therein, vested in each of such corporations, shall
not revert or be in any way impaired by reason of the Corporate Merger.
(C) LIABILITIES. The Continuing Corporation shall be responsible
and liable for all the liabilities, obligations and penalties of each of the
corporations so merged.
(D) ARTICLES OF INCORPORATION; BYLAWS; DIRECTORS; OFFICERS. The
Articles of Incorporation and Bylaws of the Continuing Corporation shall be
those of InterWest, as in effect immediately prior to the Corporate Merger
becoming effective. The directors and officers of InterWest in office
immediately prior to the Corporate Merger becoming effective shall be the
directors and officers of the Continuing Corporation, together with such
additional directors and officers as may otherwise be agreed to by the Parties
and as may thereafter be elected, who shall hold office until such time as their
successors are elected and qualified.
(E) DISSENTING SHARES. Notwithstanding anything to the contrary
herein, each Dissenting Share whose holder, as of the Effective Date of the
Merger, has not effectively withdrawn or lost his dissenters' rights under RCW
23B.13 (the "Appraisal Laws") shall not be converted into or represent a right
to receive InterWest Common Stock, but the holder thereof shall be entitled only
to such rights as are granted by the Appraisal Laws. Each holder of Dissenting
Shares who becomes entitled to payment for his Company Common Stock pursuant to
the provisions of the Appraisal Laws shall receive payment therefor from
InterWest (but only after the amount thereof shall have been agreed upon or
finally determined pursuant to the Appraisal Laws).
1.2. THE BANK MERGERS. Immediately following consummation of the
Corporate Merger on the Effective Date or as soon thereafter as InterWest may
deem appropriate:
(A) THE CONTINUING BANK. The Banks shall be merged with and into
InterWest Savings (the "Bank Mergers" and together with the Corporate Merger,
the "Mergers"), the separate existence of the Banks shall cease and InterWest
Savings (the "Continuing Bank") shall survive, the name of the Continuing Bank
shall be "InterWest Savings Bank", and the Continuing Bank shall continue to
conduct the business of a savings bank at its main office in Oak Harbor,
Washington and at the legally established branches of the Banks and InterWest
Savings.
(B) RIGHTS, ETC. Upon consummation of the Bank Mergers, the
Continuing Bank shall possess all the rights, privileges, immunities and
franchises, of a public as well as of a private nature, of each of the Banks so
merged; and all property, real personal and mixed, and all debts due on whatever
account, and all other choses in action, and all and every other interest, of or
belonging to or due to each of the Banks so merged, shall be taken and deemed to
be transferred to and vested in the Continuing Bank without further act or deed,
including appointments, designations and nominations and all other rights and
interests in any fiduciary capacity; and the title to any real estate or any
interest therein, vested in each of such Banks, shall not revert or be in any
way impaired by reason of the Bank Mergers.
(C) LIABILITIES, ETC. The Continuing Bank shall be responsible and
liable for all the liabilities, obligations and penalties of the Banks so merged
(including liabilities arising out of the operation of any trust departments).
All rights of creditors and obligors and all liens on the property of each of
each of the Banks and InterWest Savings shall be preserved unimpaired.
(D) CHARTER; BYLAWS; DIRECTORS; OFFICERS. The articles of
incorporation and bylaws of the Continuing Bank shall be those of InterWest
Savings, as in effect immediately prior to the Bank Mergers becoming effective.
The directors and officers of InterWest Savings in office immediately prior to
the Bank Mergers becoming effective shall be the directors and officers of the
Continuing Bank, together with such additional directors and officers as may
otherwise be agreed to by the Parties and as may thereafter be elected, who
shall hold office until such time as their successors are elected and qualified.
(E) OUTSTANDING STOCK OF THE CONTINUING BANK. The shares of InterWest
Savings Common Stock issued and outstanding immediately prior to the Effective
Date shall, on and after the Effective Date, remain as issued and outstanding
shares of InterWest Savings Common Stock, and the holders thereof shall retain
their rights therein.
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<PAGE> 12
(F) OUTSTANDING STOCK OF THE BANKS. The Continuing Corporation
shall deliver all of the issued and outstanding shares of the Banks to the
Continuing Bank for cancellation.
1.3. EFFECTIVE DATE. Unless the Parties agree upon another date, the
"Effective Date" will be the date ten (10) Business Days after the fulfillment
or waiver of each condition precedent set forth in, and the granting of each
approval (and expiration of any waiting period) required by, Article VI. If the
Mergers are not consummated in accordance with this Plan on or prior to
September 30, 1996 (the "Termination Date"), the Company or InterWest may
terminate this Plan in accordance with Article VII. Prior to the Effective Date,
InterWest and the Company shall execute and deliver to the Secretary of State of
the State of Washington articles of merger in accordance with applicable law.
ARTICLE II. CONSIDERATION
2.1 CORPORATE MERGER CONSIDERATION. Subject to the provisions of this
Plan, on the Effective Date:
(A) OUTSTANDING INTERWEST COMMON STOCK. The shares of InterWest
Common Stock issued and outstanding immediately prior to the Effective Date
shall, on and after the Effective Date, remain as issued and outstanding shares
of InterWest Common Stock.
(B) OUTSTANDING COMPANY COMMON STOCK. Each share of Eligible Company
Common Stock issued and outstanding immediately prior to the Effective Date
shall, by virtue of the Corporate Merger, automatically and without any action
on the part of the holder thereof, become and be converted into the right to
receive 1.7 shares of InterWest Common Stock (as subject to adjustment pursuant
to this paragraph, the "Exchange Ratio"); provided, however, that (1) in the
event that the InterWest Price is greater than the Collar Price and no
Triggering Event has occurred, then each share of Eligible Company Common Stock
issued and outstanding immediately prior to the Effective Date shall become and
be converted into the right to receive the greater of: (i) 1.41 shares of
InterWest Common Stock or (ii) that number of shares of InterWest Common Stock
obtained by dividing the Total Consideration by the InterWest Price, and by
further dividing the quotient so reached by the aggregate number of all shares
of Eligible Company Common Stock issued and outstanding immediately prior to the
Effective Date and (2) in the event that the InterWest Price is greater than the
Collar Price and a Triggering Event has occurred, then each share of Eligible
Company Common Stock issued and outstanding immediately prior to the Effective
Date shall become and be converted into the right to receive the greater of: (i)
1.41 shares of InterWest Common Stock or (ii) that number of shares of InterWest
Common Stock obtained by dividing the Total Consideration by the Pre-Triggering
Event InterWest Price, and by further dividing the quotient so reached by the
aggregate number of all shares of Eligible Company Common Stock issued and
outstanding immediately prior to the Effective Date.
2.2. STOCKHOLDER RIGHTS; STOCK TRANSFERS. On the Effective Date,
holders of Company Common Stock shall cease to be, and shall have no rights as,
stockholders of the Company, other than to receive the consideration provided
under this Article II. After the Effective Date, there shall be no transfers on
the stock transfer books of the Company or the Continuing Corporation of the
shares of Company Common Stock which were issued and outstanding immediately
prior to the Effective Date.
2.3. FRACTIONAL SHARES. Notwithstanding any other provision hereof,
no fractional shares of InterWest Common Stock and no certificates or scrip
therefor, or other evidence of ownership thereof, will be issued in the
Corporate Merger; instead, InterWest shall pay to each holder of Company Common
Stock who would otherwise be entitled to a fractional share an amount in cash
determined by multiplying such fraction by the InterWest Price.
2.4. EXCHANGE PROCEDURES. As promptly as practicable after the
Effective Date, InterWest shall send or cause to be sent to each former
stockholder of the Company of record immediately prior to the Effective Date
transmittal materials for use in exchanging such stockholder's certificates for
Company Common Stock for the consideration set forth in this Article II. The
certificates representing the shares of InterWest Common Stock into which shares
of such stockholder's Company Common Stock are converted on the Effective Date,
any fractional share checks which such stockholder shall be entitled to receive,
and any dividends paid on such shares
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<PAGE> 13
of InterWest Common Stock for which the record date for determination of
stockholders entitled to such dividends is on or after the Effective Date, will
be delivered to such stockholder only upon delivery to InterWest Savings (the
"Exchange Agent") of the certificates representing all of such shares of Company
Common Stock (or indemnity satisfactory to InterWest and the Exchange Agent, in
their judgment, if any of such certificates are lost, stolen or destroyed). No
interest will be paid on any such fractional share checks or dividends to which
the holder of such shares shall be entitled to receive upon such delivery.
Certificates surrendered for exchange by any person constituting an "affiliate"
of the Company for purposes of Rule 145 of the Securities Act shall not be
exchanged for certificates representing InterWest Common Stock until InterWest
has received a written agreement from such person as specified in Section 5.10.
2.5. ANTI-DILUTION PROVISIONS. In the event InterWest changes the
number of shares of InterWest Common Stock issued and outstanding prior to the
Effective Date as a result of a stock split, stock dividend, recapitalization or
similar transaction with respect to the outstanding InterWest Common Stock and
the record date therefor shall be prior to the Effective Date, the Exchange
Ratio shall be proportionately adjusted.
2.6. EXCEPTION SHARES. Each of the Exception Shares of Company
Common Stock shall be canceled and retired at the effectiveness of the
Corporate Merger and no consideration shall be issued in exchange therefor.
2.7. RESERVATION OF RIGHT TO REVISE TRANSACTION. InterWest may at any
time change the method of effecting the acquisition of the Company and the Banks
by InterWest (including the provisions of this Article II) if and to the extent
it deems such change to be desirable; provided, however, that no such change
shall (i) alter or change the amount or kind of consideration to be issued to
holders of Company Common Stock as provided for in this Plan or (ii) adversely
affect the tax treatment to the Company stockholders as a result of receiving
such consideration.
2.8. OPTIONS. On the Effective Date, by virtue of the Corporate
Merger, and without any action on the part of any holder of an option, each
option granted by the Company to purchase shares of Company Common Stock
("Company Option") that is then outstanding and unexercised shall be converted
into and become an option to purchase InterWest Common Stock ("InterWest
Option") on the same terms and conditions as are in effect with respect to the
Company Option immediately prior to the Effective Date, except that (i) each
such InterWest Option may be exercised solely for shares of InterWest Common
Stock, (ii) the number of shares of InterWest Common Stock subject to such
InterWest Option shall be equal to the number of shares of Company Common Stock
subject to such Option immediately prior to the Effective Date multiplied by the
Exchange Ratio, the product being rounded, if necessary, up or down to the
nearest whole share, and (iii) the per share exercise price under each such
InterWest Option shall be adjusted by dividing the per share exercise price of
the Company Option by the Exchange Ratio, and rounding up to the nearest cent.
The number of shares of Company Common Stock which are issuable upon exercise of
Options as of the date hereof are Previously Disclosed in Schedule 2.8.
Following the Effective Date, InterWest shall use its best efforts to prepare
and file with the SEC a registration statement on Form S-8 covering shares of
InterWest Common Stock to be issued upon the exercise of stock options assumed
by InterWest pursuant to this Section 2.8.
ARTICLE III. ACTIONS PENDING CONSUMMATION
Without the prior written consent of InterWest, each of the Company and
the Banks shall conduct its and each of its Subsidiaries' business in the
ordinary and usual course consistent with past practice and shall use its best
efforts to maintain and preserve its and each of its Subsidiaries' business
organization, employees and advantageous business relationships and retain the
services of its and each of its Subsidiaries' officers and key employees
identified by InterWest Savings, and each of the Company and the Banks will not,
and will cause each of its Subsidiaries not to, agree to:
3.1. CAPITAL STOCK. Except for or as otherwise permitted in or
expressly contemplated by this Plan or the Stock Option Agreement or as
Previously Disclosed in Schedule 4.1(C), issue, sell or otherwise permit to
become outstanding any additional shares of capital stock of the Company, the
Banks or any of their Subsidiaries, or any Rights with respect thereto, or enter
into any agreement with respect to the foregoing, or permit any additional
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<PAGE> 14
shares of Company Common Stock to become subject to grants of employee stock
options, stock appreciation rights or similar stock- based employee compensation
rights.
3.2. DIVIDENDS, ETC. Make, declare or pay any dividend on or in
respect of (other than a $.40 per share dividend declared on Company Common
Stock on January 10, 1996 and an additional $.40 per share dividend to be
declared on July 10, 1996 if the Corporate Merger has not been completed by such
date), or declare or make any distribution on, or directly or indirectly
combine, redeem, reclassify, purchase or otherwise acquire, any shares of its
capital stock or, other than as permitted in or contemplated by this Plan or the
Stock Option Agreement, authorize the creation or issuance of, or issue, any
additional shares of its capital stock or any Rights with respect thereto.
3.3. INDEBTEDNESS; LIABILITIES; ETC. Other than in the ordinary
course of business consistent with past practice, incur any indebtedness for
borrowed money, assume, guarantee, endorse or otherwise as an accommodation
become responsible or liable for the obligations of any other individual
corporation or other entity.
3.4. LINE OF BUSINESS; OPERATING PROCEDURES; ETC. Except as may be
directed by any regulatory agency, (i) change its lending, investment, liability
management or other material banking policies in any material respect, except
such changes as are in accordance and in an effort to comply with Section 5.11,
or (ii) commit to incur any further capital expenditures beyond those Previously
Disclosed in Schedule 3.4 other than in the ordinary course of business and not
exceeding $30,000 individually or $100,000 in the aggregate.
3.5. LIENS AND ENCUMBRANCES. Impose, or suffer the imposition, on any
shares of stock of any of its Subsidiaries, any lien, charge or encumbrance, or
permit any such lien, charge or encumbrance to exist, except for an existing
lien that encumbers CWB Common Stock and secures a loan to the Company from Key
Bank of Washington.
3.6. COMPENSATION; EMPLOYMENT AGREEMENTS; ETC. Except as Previously
Disclosed in Schedule 3.6, enter into or amend any employment, severance or
similar agreement or arrangement with any of its directors, officers or
employees, or grant any salary or wage increase, amend the terms of any Company
Option (except for an amendment to extend the period of exercisability of any
stock option held by a nonemployee director of the Company for up to four years
following the Effective Date) or increase any employee benefit (including
incentive or bonus payments), except normal individual increases in regular
compensation to employees in the ordinary course of business consistent with
past practice.
3.7. BENEFIT PLANS. Except as Previously Disclosed in Schedule 3.7,
enter into or modify (except as may be required by applicable law) any pension,
retirement, stock option, stock purchase, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement
related thereto, in respect of any of its directors, officers or other
employees, including taking any action that accelerates the vesting or exercise
of any benefits payable thereunder.
3.8. CONTINUANCE OF BUSINESS. Dispose of or discontinue any portion
of its assets, business or properties, that is material to the Company and its
Subsidiaries taken as a whole, or merge or consolidate with, or acquire all or
any portion of, the business or property of any other entity that is material to
the Company and its Subsidiaries taken as a whole (except foreclosures or
acquisitions by the Banks in their fiduciary capacity, in each case in the
ordinary course of business consistent with past practice).
3.9. AMENDMENTS. Amend its Articles of Incorporation or Bylaws.
3.10. CLAIMS. Settle any claim, litigation, action or proceeding
involving any liability for material money damages or restrictions upon the
operations of the Company or any of its Subsidiaries.
3.11. CONTRACTS. Except as previously disclosed on Schedule 3.11,
enter into, renew, terminate or make any change in any material contract,
agreement or lease, except in the ordinary course of business consistent with
past practice with respect to contracts, agreements and leases that are
terminable by it without penalty on no more than 60 days prior written notice.
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<PAGE> 15
3.12. LOANS. Extend credit other than in accordance with existing
lending policies, except that the Banks shall not, without the prior written
consent of InterWest, make any new loan or modify, restructure or renew any
existing nonperforming loan to any borrower if the amount of the resulting loan,
when aggregated with all other loans or extensions of credit to such person or
entity (or which would be required to be aggregated for loans to one borrower
limitations) would be in excess of $250,000 for any new customer or $750,000 to
any customer as of the date of this Plan.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
4.1. THE COMPANY AND THE BANKS REPRESENTATIONS AND WARRANTIES.
Each of the Company and the Banks hereby represents and warrants to InterWest
and InterWest Savings as follows:
(A) RECITALS. The facts set forth in the Recitals of this Plan
with respect to the Company and its Subsidiaries are true and correct.
(B) ORGANIZATION, STANDING AND AUTHORITY. Each of the Company and its
Subsidiaries is duly qualified to do business and is in good standing in the
States of the United States and foreign jurisdictions where the failure to be
duly qualified, individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect on it. Each of the Company and its Subsidiaries has in
effect all federal state, local, and foreign governmental authorizations
necessary for it to own or lease its properties and assets and to carry on its
business as it is now conducted, the absence of which, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on it.
(C) SHARES. The outstanding shares of the Company and its
Subsidiaries' capital stock are validly issued and outstanding, fully paid and
nonassessable, and subject to no preemptive rights. Except as Previously
Disclosed in Schedule 4.1(C), there are no shares of capital stock or other
equity securities of the Company or its Subsidiaries outstanding and no
outstanding Rights with respect thereto (except as provided under the Stock
Option Agreement).
(D) THE COMPANY SUBSIDIARIES. The Company has Previously Disclosed in
Schedule 4.1(D) a list of all of its Subsidiaries. Each of its Subsidiaries that
is a bank is an "insured depository institution" as defined in the Federal
Deposit Insurance Act, as amended, and applicable regulations thereunder. No
equity securities of any of its Subsidiaries are or may become required to be
issued (other than to the Company or one of its Subsidiaries) by reason of any
Rights with respect thereto. There are no contracts, commitments, understandings
or arrangements by which any of its Subsidiaries is or may be bound to sell or
otherwise issue any shares of such Subsidiary's capital stock, and there are no
contracts, commitments, understandings or arrangements relating to the rights of
the Company or its Subsidiaries, as applicable, to vote or to dispose of such
shares. All of the shares of capital stock of each of its Subsidiaries held by
the Company or one of its Subsidiaries are fully paid and nonassessable and are
owned by the Company or one of its Subsidiaries free and clear of any charge,
mortgage, pledge, security interest, restriction, claim, lien or encumbrance
(except for the lien that encumbers CWB Common Stock and secures a loan to the
Company from Key Bank of Washington). Each of its Subsidiaries is in good
standing under the laws of the jurisdiction in which it is incorporated or
organized, and is duly qualified to do business and in good standing in the
jurisdictions where the failure to be duly qualified is reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on it.
Except as Previously Disclosed in Schedule 4.1(D), it does not own beneficially,
directly or indirectly, any shares of any equity securities or similar interests
of any corporation, bank, partnership, joint venture, business trust,
association or other organization. In the case of representations by the
Company, the deposits of its Subsidiaries that are banks are insured by the Bank
Insurance Fund of the FDIC.
(E) CORPORATE POWER. Each of the Company and its Subsidiaries has
the corporate power and authority to carry on its business as it is now being
conducted and to own all its material properties and assets.
(F) CORPORATE AUTHORITY. Subject to any necessary receipt of approval
by its stockholders referred to in Section 6.1, this Plan and the Stock Option
Agreement have been authorized by all necessary corporate action of the Company
and each of its Subsidiaries that is a Party, and each such agreement is a valid
and binding agreement of the Company and such Subsidiaries, enforceable against
the Company and such Subsidiaries in
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accordance with its terms, subject to bankruptcy, insolvency and other laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.
(G) NO DEFAULTS. Subject to the approval by its shareholders referred
to in Section 6.1, the required regulatory approvals referred to in Section 6.1,
and the required filings under federal and state securities laws, and except as
Previously Disclosed in Schedule 4.1(G), the execution, delivery and performance
of this Plan and the Stock Option Agreement, and the consummation by the Company
and each of its Subsidiaries that is a Party of the transactions contemplated
hereby and thereby, does not and will not (i) constitute a breach or violation
of, or a default under, any law, rule or regulation or any judgment, decree,
order, governmental permit or license, or agreement, indenture or instrument of
the Company or of any of its Subsidiaries or to which the Company or any of its
Subsidiaries or its or their properties is subject or bound, which breach,
violation or default is reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect on it, (ii) constitute a breach or violation of,
or a default under, the Articles of Incorporation, Charter or Bylaws of its or
any of its Subsidiaries, or (iii) require any consent or approval under any such
law, rule, regulation, judgment, decree, order, governmental permit or license
or the consent or approval of any other party to any such agreement, indenture
or instrument, other than any such consent or approval that, if not obtained,
would not be reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect on it.
(H) FINANCIAL REPORTS. Except as Previously Disclosed in Schedule
4.1(H), (i) as to the Company, its Annual Report on Form 10-K for the fiscal
year ended December 31, 1994, and all other documents filed or to be filed
subsequent to December 31, 1994 under Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act, in the form filed with the SEC (in each such case, the "Holding
Company Financial Reports"), and (ii) as to each of the Company's Subsidiaries
that is a bank, its call report for the fiscal year ended December 31, 1994, and
all other financial reports filed or to be filed subsequent to December 31,
1994, in the form filed with the FDIC and the Department of Financial
Institutions of the State of Washington ("Department") (in each case, the "Bank
Financial Reports" and together with the Holding Company Financial Reports, the
"Financial Reports") did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading; and each of the balance sheets in or
incorporated by reference into the Financial Reports (including the related
notes and schedules thereto) fairly presents and will fairly present the
financial position of the entity or entities to which it relates as of its date,
and each of the statements of income and changes in stockholders' equity and
cash flows or equivalent statements in the Bank Financial Reports (including any
related notes and schedules thereto) fairly presents and will fairly present the
results of operations, changes in stockholders' equity and cash flows, as the
case may be, of the entity or entities to which it relates for the periods set
forth therein, in each case in accordance with GAAP during the periods involved,
except in each case as may be noted therein, subject to normal and recurring
year- end audit adjustments in the case of unaudited statements.
(I) ABSENCE OF UNDISCLOSED LIABILITIES. Neither the Company nor any
of its Subsidiaries has any obligation or liability (contingent or otherwise)
that, individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect on it, except (i) as reflected in its Holding Company Financial
Reports prior to the date of this Plan and (ii) for commitments and obligations
made, or liabilities incurred, in the ordinary course of business consistent
with past practice since December 31, 1994. Since December 31, 1994, neither the
Company nor any of its Subsidiaries has incurred or paid any obligation or
liability (including any obligation or liability incurred in connection with any
acquisitions in which any form of direct financial assistance of the federal
government or any agency thereof has been provided to any Subsidiary) which,
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect on it.
(J) NO EVENTS. Except as Previously Disclosed on Schedule 4.1(J),
since December 31, 1994, no event has occurred that, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on it.
(K) PROPERTIES. Except as reserved against in its Holding Company
Financial Reports, the Company and each of its Subsidiaries have good and
marketable title, free and clear of all liens, encumbrances, charges, defaults,
or equities of any character, to all of the properties and assets, tangible and
intangible, reflected in its Holding Company Financial Reports as being owned by
the Company or its Subsidiaries as of the dates thereof other than those that,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect on it,
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<PAGE> 17
except those sold or otherwise disposed of in the ordinary course of business.
All buildings and all material fixtures, equipment, and other property and
assets that are held under leases or subleases by the Company or any of its
Subsidiaries are held under valid leases or subleases enforceable in accordance
with their respective terms, other than any such exceptions to validity or
enforceability that, individually or in the aggregate, are not reasonably likely
to have a Material Adverse Effect on it.
(L) LITIGATION; REGULATORY ACTION. Except as Previously Disclosed in
Schedule 4.1(L), no litigation, proceeding or controversy before any court or
governmental agency is pending that, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on the Company or any of its
Subsidiaries or that alleges claims under any fair lending law or other law
relating to discrimination, including the Equal Credit Opportunity Act, the Fair
Housing Act, the Community Reinvestment Act and the Home Mortgage Disclosure
Act, and, to the best of its knowledge, no such litigation, proceeding or
controversy has been threatened; and except as Previously Disclosed in Schedule
4.1(L), neither the Company nor any of its Subsidiaries or any of its or their
material properties or their officers, directors or controlling persons is a
party to or is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or similar
submission to, any Regulatory Authority, and neither the Company nor any of its
Subsidiaries has been advised by any of such Regulatory Authorities that such
authority is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum or understanding, commitment letter or similar submission.
(M) COMPLIANCE WITH LAWS. Except as Previously Disclosed in
Schedule 4.1(M), each of the Company and its Subsidiaries:
(1) has all permits, licenses, authorizations, orders
and approvals of, and has made all filings, applications and
registrations with, all Regulatory Authorities that are
required in order to permit it to own its businesses presently
conducted and that are material to the business of it and its
Subsidiaries taken as a whole; all such permits, licenses,
certificates of authority, orders and approvals are in full
force and effect and, to its best knowledge, no suspension or
cancellation of any of them is threatened; and all such
filings, applications and registrations are current;
(2) has received no notification or communication
from any Regulatory Authority or the staff thereof (i)
asserting that the Company or any of its Subsidiaries is not in
compliance with any of the statutes, regulations or ordinances
which such Regulatory Authority enforces, which, as a result of
such noncompliance in any such instance, individually or in the
aggregate, is reasonably likely to have a Material Adverse
Effect on the Company or its Subsidiaries, (ii) threatening to
revoke any license, franchise, permit or governmental
authorization, which revocation, individually or in the
aggregate, is reasonably likely to have a Material Adverse
Effect on the Company or its Subsidiaries, or (iii) requiring
any of the Company or its Subsidiaries (or any of its or their
officers, directors or controlling persons) to enter into a
cease and desist order, agreement or memorandum of
understanding (or requiring the board of directors thereof to
adopt any resolution or policy);
(3) is not required to give prior notice to any
federal banking or thrift agency of the proposed addition of an
individual to its board of directors or the employment of an
individual as a senior executive; and
(4) is in compliance in all material respects with
all fair lending laws or other laws relating to discrimination,
including the Equal Credit Opportunity Act, the Fair Housing
Act, the Community Reinvestment Act and the Home Mortgage
Disclosure Act.
(N) MATERIAL CONTRACTS. Except as Previously Disclosed in Schedule
4.1(N), none of the Company or its Subsidiaries, nor any of its respective
assets, businesses or operations, is a party to, or is bound or affected by, or
receives benefits under, any contract or agreement or amendment thereto that in
each case would be required to be filed as an exhibit to a Form 10-K filed by
the Company that has not been filed as an exhibit to the Company's Form 10-K
filed for the fiscal year ended December 31, 1994. Neither the Company nor any
of its Subsidiaries is in default under any contract, agreement, commitment,
arrangement, lease, insurance policy or other
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<PAGE> 18
instrument to which it is a party, by which its respective assets, business or
operations may be bound or affected, or under which it or any of its respective
assets, business or operations receives benefits, which default, individually or
in the aggregate, is reasonably likely to have a Material Adverse Effect on the
Company or its Subsidiaries, and there has not occurred any event that, with the
lapse of time or the giving of notice or both, would constitute such a default.
Except as Previously Disclosed in Schedule 4.1(N), neither the Company nor any
of its Subsidiaries is subject to or bound by any contract containing covenants
which limit the ability of the Company or any of its Subsidiaries to compete in
any line of business or with any person or which involve any restriction of
geographical area in which, or method by which, the Company or any of its
Subsidiaries may carry on its business (other than as may be required by law or
any applicable Regulatory Authority).
(O) REPORTS. Since January 1, 1991, each of the Company and its
Subsidiaries has filed all reports and statements, together with any amendments
required to be made with respect thereto, that it was required to file with (i)
the FDIC, (ii) the Department, (iii) the Federal Home Loan Bank and the Federal
Home Loan Bank System, and (iv) any other applicable Regulatory Authorities. As
of their respective dates (and without giving effect to any amendments or
modifications filed after the date of this Plan with respect to reports and
documents filed before the date of this Plan), each of such reports and
documents, including the financial statements, exhibits and schedules thereto,
complied in all material respects with all of the statutes, rules and
regulations enforced or promulgated by the Regulatory Authority with which they
were filed and did not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
(P) NO BROKERS. All negotiations relative to this Plan and the
transactions contemplated hereby have been carried on by it directly with the
other Parties and no action has been taken by it that would give rise to any
valid claim against any Party for a brokerage commission, finder's fee or other
like payment (except for a fee to be paid by the Company to Columbia Financial
Advisors, Inc.).
(Q) EMPLOYEE BENEFIT PLANS.
(1) Schedule 4.1(Q)(1) contains a complete list of
all bonus, deferred compensation, pension, retirement,
profit-sharing, thrift savings, employee stock ownership, stock
bonus, stock purchase restricted stock and stock option plans,
all employment or severance contracts, all medical, dental,
health and life insurance plans, all other employee benefit
plans, contracts or arrangements and any applicable "change of
control" or similar provisions in any plan, contract or
arrangement maintained or contributed to by the Company or any
of its Subsidiaries for the benefit of employees, former
employees, directors, former directors or their beneficiaries
(the "Compensation and Benefit Plans"). True and complete
copies of all Compensation and Benefit Plans of the Company and
its Subsidiaries, including any trust instruments and/or
insurance contracts, if any, forming a part thereof, and all
amendments thereto, have been supplied to the other Parties.
(2) All "employee benefit plans" within the meaning
Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), other than "multiemployer plans"
within the meaning of Section 3(37) of ERISA ("Multiemployer
Plans"), covering employees or former employees of the Company
and its Subsidiaries (the "ERISA Plans"), to the extent subject
to ERISA, are in substantial compliance with ERISA. Except as
Previously Disclosed in Schedule 4.1(Q)(2), each ERISA Plan
which is an "employee pension benefit plan" within the meaning
of Section 3(2) of ERISA ("Pension Plan") and which is intended
to be qualified under Section 401(a) of the Internal Revenue
Code of 1986 (as amended, the "Code") has received a favorable
determination letter from the Internal Revenue Service, and it
is not aware of any circumstances reasonably likely to result
in the revocation or denial of any such favorable determination
letter or the inability to receive such a favorable
determination letter. There is no material pending or, to its
knowledge, threatened litigation relating to the ERISA Plans.
Neither the Company nor any of its Subsidiaries has engaged in
a transaction with respect to any ERISA Plan that could subject
the Company or any of its Subsidiaries to a tax or penalty
imposed by either Section 4975 of the Code or Section 502(i) of
ERISA in an amount which would be material.
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<PAGE> 19
(3) No liability under Subtitle C or D of Title IV of
ERISA has been or is expected to be incurred by the Company or
any of its Subsidiaries with respect to any ongoing, frozen or
terminated "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained
by any of them, or the single-employer plan of any entity which
is considered one employer with the Company under Section
4001(a)(15) of ERISA or Section 414 of the Code (an "ERISA
Affiliate"). Neither the Company nor any of its Subsidiaries
presently contributes to a Multiemployer Plan, nor have they
contributed to such a plan within the past five calendar years.
No notice of a "reportable event," within the meaning of
Section 4043 of ERISA for which the 30-day reporting
requirement has not been waived, has been required to be filed
for any Pension Plan or by any ERISA Affiliate within the past
12-month period.
(4) All contributions required to be made under the
terms of any ERISA Plan have been timely made. Neither any
Pension Plan nor any single-employer plan of an ERISA Affiliate
has an "accumulated funding deficiency" (whether or not waived)
within the meaning of Section 412 of the Code or Section 302 of
ERISA. Neither the Company nor any of its Subsidiaries has
provided, or is required to provide, security to any Pension
Plan or to any single-employer plan of an ERISA Affiliate
pursuant to Section 401(a)(29) of the Code.
(5) Under each Pension Plan which is a single-
employer plan, as of the last day of the most recent plan year,
the actuarially determined present value of all "benefit
liabilities," within the meaning of Section 4001(a)(16) of
ERISA (as determined on the basis of the actuarial assumptions
contained in the plan's most recent actuarial valuation) did
not exceed the then current value of the assets of such plan,
and there has been no material change in the financial
condition of such plan since the last day of the most recent
plan year.
(6) Neither the Company nor any of its Subsidiaries
has any obligations for retiree health and life benefits under
any plan, except as set forth in Schedule 4.1(Q)(6). There are
no restrictions on the rights of the Company or any of its
Subsidiaries to amend or terminate any such plan without
incurring any liability thereunder.
(7) Except as Previously Disclosed in Schedule
4.1(Q)(7), neither the execution and delivery of this Plan nor
the consummation of the transactions contemplated hereby will
(i) result in any payment (including severance, unemployment
compensation, golden parachute or otherwise) becoming due to
any director or any employee of the Company or any of its
Subsidiaries under any Compensation and Benefit Plan or
otherwise from the Company or any of its Subsidiaries, (ii)
increase any benefits otherwise payable under any Compensation
and Benefit Plan, or (iii) result in any acceleration of the
time of payment or vesting of any such benefit.
(R) NO KNOWLEDGE. The Company and its Subsidiaries know of no
reason why the regulatory approvals referred to in Section 6.2 should not be
obtained.
(S) LABOR AGREEMENTS. Neither the Company nor any of its Subsidiaries
is a party to or is bound by any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization, nor
is the Company or any of its Subsidiaries the subject of a proceeding asserting
that it or any such Subsidiary has committed an unfair labor practice (within
the meaning of the National Labor Relations Act) or seeking to compel it or such
Subsidiary to bargain with any labor organization as to wages and conditions of
employment, nor is there any strike or other labor dispute involving it or any
of its Subsidiaries, pending or, to the best of its knowledge, threatened, nor
is it aware of any activity involving its or any of the Subsidiaries' employees
seeking to certify a collective bargaining unit or engaging in any other
organization activity.
(T) ASSET CLASSIFICATION. The Company and its Subsidiaries have
Previously Disclosed in Schedule 4.1(T) a list, accurate and complete in all
material respects, of the aggregate amounts of loans, extensions of credit or
other assets of the Company and its Subsidiaries that have been classified by it
as of December 31, 1995 (the "Asset Classification"); and no amounts of loans,
extensions of credit or other assets that have been classified as of December
31, 1995 by any regulatory examiner as "Other Loans Specially Mentioned,"
"Substandard," "Doubtful" "Loss," or words of similar import are excluded from
the amounts disclosed in the Asset Classification,
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<PAGE> 20
other than amounts of loans, extensions of credit or other assets that were
charged off by the Company or any Subsidiary prior to December 31, 1995.
(U) ALLOWANCE FOR POSSIBLE LOAN LOSSES. The allowance for possible
loan losses shown on the consolidated balance sheets in the December 31, 1994
Holding Company Financial Reports of the Company was, and the allowance for
possible loan losses to be shown on subsequent Holding Company Financial Reports
of the Company will be, adequate in the opinion of the Board of Directors of the
Company to provide for possible losses, net of recoveries relating to loans
previously charged off, on loans outstanding (including accrued interest
receivable) as of the date thereof.
(V) INSURANCE. Each of the Company and its Subsidiaries has taken all
requisite action (including the making of claims and the giving of notices)
pursuant to its directors' and officers' liability insurance policy or policies
in order to preserve all rights thereunder with respect to all matters that are
known to the Company, except for such matters which, individually or in the
aggregate, are not reasonably likely to have a Material Adverse Effect on the
Company or its Subsidiaries. Set forth in Schedule 4.1(V) is a list of all
insurance policies maintained by or for the benefit of the Company or its
Subsidiaries or their respective directors, officers, employees or agents.
(W) AFFILIATES. Except as Previously Disclosed in Schedule 4.1(W), to
the best of the Company's knowledge, there is no person who, as of the date of
this Plan, may be deemed to be an "affiliate" of the Company as that term is
used in Rule 145 under the Securities Act.
(X) STATE TAKEOVER LAWS; ARTICLES OF INCORPORATION. The Company and
its Subsidiaries have taken all necessary action to exempt this Plan and the
Stock Option Agreement and the transactions contemplated hereby and thereby
from, and this Plan and the Stock Option Agreement and the transactions
contemplated hereby and thereby are exempt from (i) any applicable state
takeover laws, including, but not limited to, RCW Ch. 23B.19, and (ii) any
takeover-related provisions of the Company's and its Subsidiaries' Articles of
Incorporation.
(Y) NO FURTHER ACTION. The Company and its Subsidiaries have taken
all action so that the entering into of this Plan and the Stock Option
Agreement, and the consummation of the transactions contemplated hereby and
thereby (including the Mergers and the exercise of the Option) or any other
action or combination of actions, or any other transactions, contemplated hereby
or thereby do not and will not (i) require a vote of shareholders (other than as
set forth in Section 6.1), or (ii) result in the grant of any rights to any
person under the Articles of Incorporation, Charter or Bylaws of the Company or
any of its Subsidiaries or under any agreement to which the Company or any such
Subsidiaries is a party, or (iii) restrict or impair in any way the ability of
the other Parties to exercise the rights granted hereunder or under the Stock
Option Agreement.
(Z) ENVIRONMENTAL MATTERS.
(1) To the Company's knowledge, it and each of its
Subsidiaries, the Participation Facilities and the
Loan/Fiduciary Properties are, and have been, in compliance
with all Environmental Laws, except for instances of
noncompliance which are not reasonably likely, individually or
in the aggregate, to have a Material Adverse Effect on the
Company or its Subsidiaries.
(2) There is no proceeding pending or, to the
Company's knowledge, threatened before any court, governmental
agency or board or other forum in which the Company or any of
its Subsidiaries or any Participation Facility has been, or
with respect to threatened proceedings, reasonably would be
expected to be, named as a defendant or potentially responsible
party (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the
release or threatened release into the environment of any
Hazardous Material, whether or not occurring at or on a site
owned, leased or operated by the Company or any of its
Subsidiaries or any Participation Facility, except for such
proceedings pending or threatened that are not reasonably
likely, individually or in the aggregate, to have a Material
Adverse Effect on the Company or its Subsidiaries or have been
Previously Disclosed in Schedule 4.1(Z)(2).
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<PAGE> 21
(3) There is no proceeding pending or, to the
Company's knowledge, threatened before any court, governmental
agency or board or other forum in which any Loan/Fiduciary
Property (or the Company or any of its Subsidiaries in respect
of any Loan/Fiduciary Property) has been, or with respect to
threatened proceedings, reasonably would be expected to be,
named as a defendant or potentially responsible party (i) for
alleged noncompliance (including by any predecessor) with any
Environmental Law or (ii) relating to the release or threatened
release into the environment of any Hazardous Material, whether
or not occurring at or on a Loan/Fiduciary Property, except for
such proceedings pending or threatened that are not reasonably
likely, individually or in the aggregate, to have a Material
Adverse Effect on the Company or have been Previously Disclosed
in Schedule 4.1(Z)(3).
(4) To the Company's knowledge, there is no
reasonable basis for any proceeding of a type described in
subparagraphs (2) or (3) of this paragraph (Z), except as has
been Previously Disclosed in Schedule 4.1(Z)(4).
(5) To the Company's knowledge, during the period of
(i) ownership or operation by the Company or any of its
Subsidiaries of any of their respective current properties,
(ii) participation in the management of any Participation
Facility by the Company or any of its Subsidiaries, or (iii)
holding of a security or other interest in a Loan/Fiduciary
Property by the Company or any of its Subsidiaries, there have
been no releases of Hazardous Material in, on, under or
affecting any such property, Participation Facility or
Loan/Fiduciary Property, except for such releases that are not
reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect on the Company or its Subsidiaries or
have been Previously Disclosed in Schedule 4.1(Z)(5).
(6) To the Company's knowledge, prior to the period
of (i) ownership or operation by the Company or any of its
Subsidiaries of any of their respective current properties,
(ii) participation in the management of any Participation
Facility by the Company or any of its Subsidiaries, or (iii)
holding of a security or other interest in a Loan/Fiduciary
Property by the Company or any of its Subsidiaries, there were
no releases of Hazardous Material in, on, under or affecting
any such property, Participation Facility or Loan/Fiduciary
Property, except for such releases that are not reasonably
likely, individually or in the aggregate, to have a Material
Adverse Effect on the Company or its Subsidiaries or have been
Previously Disclosed in Schedule 4.1(Z)(6).
(AA) OPTION SHARES. The Option Shares, when issued upon exercise of
the Option, will be validly issued, fully paid and nonassessable and subject to
no preemptive rights.
(BB) TAX REPORTS. Except as Previously Disclosed in Schedule 4.1(BB),
(i) all reports and returns with respect to Taxes that are required to be filed
by or with respect to the Company or its Subsidiaries, including consolidated
federal income tax returns of the Company and its Subsidiaries (collectively,
the "Tax Returns"), have been duly filed, or requests for extensions have been
timely filed and have not expired, for periods ended on or prior to the most
recent fiscal year-end, except to the extent all such failures to file, taken
together, are not reasonably likely to have a Material Adverse Effect on the
Company or its Subsidiaries, and such Tax Returns were true, complete and
accurate in all material respects, (ii) all Taxes shown to be due on the Tax
Returns have been paid in full, (iii) the Tax Returns have been examined by the
Internal Revenue Service or the appropriate state, local or foreign taxing
authority or the period for assessment of the Taxes in respect of which such Tax
Returns were required to be filed has expired, (iv) all Taxes due with respect
to completed and settled examinations have been paid in full, (v) no issues have
been raised by the relevant taxing authority in connection with the examination
of any of the Tax Returns which are reasonably likely, individually or in the
aggregate, to result in a determination that would have a Material Adverse
Effect on the Company or its Subsidiaries, except as reserved against in the
Holding Company Financial Reports of the Company, and (vi) no waivers of
statutes of limitations (excluding such statutes that relate to years under
examination by the Internal Revenue Service) have been given by or requested
with respect to any Taxes of the Company or its Subsidiaries.
(CC) ACCURACY OF INFORMATION. The statements with respect to the
Company and its Subsidiaries contained in this Plan, the Stock Option
Agreement, the Schedules and any other written documents
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<PAGE> 22
executed and delivered by or on behalf of the Company or any other Party
pursuant to the terms of or relating to this Plan are true and correct in all
material respects, and such statements and documents do not omit any material
fact necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
(EE) DERIVATIVES CONTRACTS. None of the Company or its Subsidiaries
is a party to or has agreed to enter into a Derivatives Contract or owns
securities that are referred to as "structured notes" except for those
Derivatives Contracts and structured notes Previously Disclosed in Schedule
4.1(EE). Schedule 4.1(EE) includes a list of any assets of the Company or its
Subsidiaries that are pledged as security for each such Derivatives Contract.
(FF) ACCOUNTING CONTROLS. Each of the Company and its Subsidiaries
has devised and maintained systems of internal accounting controls sufficient to
provide reasonable assurances that (i) all material transactions are executed in
accordance with management's general or specific authorization, (ii) all
material transactions are recorded as necessary to permit the preparation of
financial statements in conformity with GAAP, and to maintain proper
accountability for items, (iii) access to the material property and assets of
the Company and its Subsidiaries is permitted only in accordance with
management's general or specific authorization, and (iv) the recorded
accountability for items is compared with the actual levels at reasonable
intervals and appropriate action is taken with respect to any differences.
(GG) COMMITMENTS AND CONTRACTS. Neither the Company nor any of its
Subsidiaries is a party or subject to any of the following (whether written or
oral, express or implied):
(1) except as Previously Disclosed in Schedule
4.1(GG), any employment contract or understanding (including
any understandings or obligations with respect to severance or
termination pay liabilities or fringe benefits) with any
present or former officer, director or employee (other than
those which are terminable at will by the Company or any such
Subsidiary without any obligation on the part of the Company or
any such Subsidiary to make any payment in connection with such
termination);
(2) except as Previously Disclosed in Schedule
4.1(GG), any real or personal property lease with annual rental
payments aggregating $10,000 or more; or
(3) except as Previously Disclosed in Schedule
4.1(GG), any material contract with any affiliate.
4.2. INTERWEST AND INTERWEST SAVINGS REPRESENTATIONS AND WARRANTIES.
Each of InterWest and InterWest Savings hereby represents and warrants to the
Company and the Banks as follows:
(A) RECITALS. The facts set forth in the Recitals of this Plan
with respect to InterWest and InterWest Savings are true and correct.
(B) ORGANIZATION, STANDING AND AUTHORITY. Each of InterWest and
InterWest Savings is duly qualified to do business and is in good standing in
the States of the United States and foreign jurisdictions where the failure to
be duly qualified, individually or in the aggregate, is reasonably likely to
have a Material Adverse Effect on it. Each of InterWest and its Subsidiaries has
in effect all federal state, local, and foreign governmental authorizations
necessary for it to own or lease its properties and assets and to carry on its
business as it is now conducted, the absence of which, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on InterWest.
(C) SHARES. The outstanding shares of InterWest's capital stock are
validly issued and outstanding, fully paid and nonassessable, and subject to no
preemptive rights. Except as Previously Disclosed in Schedule 4.2(C), there are
no shares of capital stock or other equity securities of it or its Subsidiaries
outstanding and no outstanding Rights with respect thereto.
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<PAGE> 23
(D) CORPORATE POWER. Each of InterWest and InterWest Savings has
the corporate power and authority to carry on its business as it is now being
conducted and to own all its material properties and assets.
(E) CORPORATE AUTHORITY. Subject to any necessary receipt of
approval by its stockholders referred to in Section 6.1, this Plan, the Stock
Option Agreement and each of the Employment Agreements have been authorized by
all necessary corporate action of InterWest and InterWest Savings and each such
agreement is a valid and binding agreement of InterWest and InterWest Savings,
enforceable against InterWest and InterWest Savings in accordance with its
terms, subject to bankruptcy, insolvency and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
(F) NO DEFAULTS. Subject to the approval by its shareholders
referred to in Section 6.1, the required regulatory approvals referred to in
Section 6.1, and the required filings under federal and state securities laws,
and except as Previously Disclosed in Schedule 4.2(F), the execution, delivery
and performance of this Plan, and the Stock Option Agreement, and each of the
Employment Agreements and the consummation by InterWest and each of its
Subsidiaries that is a Party to the transactions contemplated hereby and
thereby, does not and will not (i) constitute a breach or violation of, or a
default under, any law, rule or regulation or any judgment, decree, order,
governmental permit or license, or agreement, indenture or instrument of
InterWest or of any of its Subsidiaries or to which InterWest or any of its
Subsidiaries or its or their properties is subject or bound, which breach,
violation or default is reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect on InterWest, (ii) constitute a breach or
violation of, or a default under, the Articles of Incorporation, Charter or
Bylaws of its or any of its Subsidiaries, or (iii) require any consent or
approval under any such law, rule, regulation, judgment, decree, order,
governmental permit or license or the consent or approval of any other party to
any such agreement, indenture or instrument, other than any such consent or
approval that, if not obtained, would not be reasonably likely, individually or
in the aggregate, to have a Material Adverse Effect on InterWest.
(G) FINANCIAL REPORTS. Except as Previously Disclosed in Schedule
4.2(G), in the case of InterWest, its Annual Report on Form 10-K for the fiscal
year ended September 30, 1995, and all other documents filed or to be filed
subsequent to September 30, 1995 under Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act, in the form filed with the SEC (in each such case, the
"InterWest Financial Reports"), did not and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of
the circumstances under which they were made, not misleading; and each of the
balance sheets in or incorporated by reference into the InterWest Financial
Reports (including the related notes and schedules thereto) fairly presents and
will fairly present the financial position of the entity or entities to which
it relates as of its date and each of the statements of income and changes in
stockholders' equity and cash flows or equivalent statements in the InterWest
Financial Reports (including any related notes and schedules thereto) fairly
presents and will fairly present the results of operations, changes in
stockholders' equity and changes in cash flows, as the case may be, of the
entity or entities to which it relates for the periods set forth therein, in
each case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except as may be noted
therein, subject to normal and recurring year-end audit adjustments in the case
of unaudited statements.
(H) NO EVENTS. Except as Previously Disclosed on Schedule 4.2(H),
since September 30, 1995, no event has occurred which is reasonably likely to
have a Material Adverse Effect on it.
(I) LITIGATION; REGULATORY ACTION. Except as Previously Disclosed
in Schedule 4.2(I), no litigation, proceeding or controversy before any court
or governmental agency is pending that, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on InterWest and its
Subsidiaries or that alleges claims under any fair lending law or other law
relating to discrimination, including the Equal Credit Opportunity Act, the
Fair Housing Act, the Community Reinvestment Act and the Home Mortgage
Disclosure Act, and, to the best of its knowledge, no such litigation,
proceeding or controversy has been threatened; and except as Previously
Disclosed in Schedule 4.2(I), neither InterWest nor any of its Subsidiaries or
any of its or their material properties or their officers, directors or
controlling persons is a party to or is subject to any order, decree,
agreement, memorandum of understanding or similar arrangement with, or a
commitment letter or similar submission to, any Regulatory Authority, and
neither InterWest nor any of its Subsidiaries has been advised by any of such
Regulatory Authorities that such authority is contemplating issuing or
requesting (or is considering the appropriateness of issuing
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<PAGE> 24
or requesting) any such order, decree, agreement, memorandum or understanding,
commitment letter or similar submission.
(J) REPORTS. Since September 30, 1995, each of InterWest and its
Subsidiaries has filed all reports and statements, together with any amendments
required to be made with respect thereto, that it was required to file with (i)
the FDIC, (ii) the Department, (iii) the Federal Home Loan Bank and the Federal
Home Loan Bank System, and (iii) any other applicable Regulatory Authorities.
As of their respective dates (and without giving effect to any amendments or
modifications filed after the date of this Plan with respect to reports and
documents filed before the date of this Plan), each of such reports and
documents, including the financial statements, exhibits and schedules thereto,
complied in all material respects with all of the statutes, rules and
regulations enforced or promulgated by the Regulatory Authority with which they
were filed and did not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
(K) ACCURACY OF INFORMATION. The statements with respect to
InterWest and its Subsidiaries contained in this Plan, the Stock Option
Agreement, the Schedules and any other written documents executed and delivered
by or on behalf of InterWest or any other Party pursuant to the terms of this
Plan are true and correct in all material respects, and such statements and
documents do not omit any material fact necessary to make the statements
contained therein, in light of the circumstances under which they were made,
not misleading.
(L) DERIVATIVES CONTRACTS. None of InterWest or its Subsidiaries
is a party to or has agreed to enter into a Derivatives Contract or owns
securities that are referred to as "structured notes" except for those
Derivatives Contracts and structured notes Previously Disclosed in Schedule
4.2(L). Schedule 4.2(L) includes a list of any assets of InterWest or its
Subsidiaries that are pledged as security for each such Derivatives Contract.
(M) ABSENCE OF UNDISCLOSED LIABILITIES. Neither InterWest nor any
of its Subsidiaries has any obligation or liability (contingent or otherwise)
that, individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect on it, except (i) as reflected the Interwest Financial Reports
prior to the date of this Plan and (ii) for commitments and obligations made,
or liabilities incurred, in the ordinary course of business consistent with
past practice since September 30, 1995. Since September 30, 1995, neither
InterWest nor any of its Subsidiaries has incurred or paid any obligation or
liability (including any obligation or liability incurred in connection with
any acquisitions in which any form of direct financial assistance of the
federal government or any agency thereof has been provided to any Subsidiary)
which, individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect on it.
ARTICLE V. COVENANTS
Each of the Company and the Banks hereby covenants to InterWest and
InterWest Savings, and each of InterWest and InterWest Savings hereby covenants
to the Company and the Banks, that:
5.1. BEST EFFORTS. Subject to the terms and conditions of this
Plan and to the exercise by its Board of Directors of such Board's fiduciary
duties, it shall use its best efforts in good faith to take, or cause to be
taken, all actions, and to do, or cause to be done, all things necessary,
proper or desirable, or advisable under applicable laws, so as to permit
consummation of the Mergers by June 30, 1996 and to otherwise enable
consummation of the transactions contemplated hereby and (in the case of the
Company and InterWest) by the Stock Option Agreement, and shall cooperate fully
with the other Parties to that end (it being understood that any amendments to
the Registration Statement or a resolicitation of proxies as a consequence of
an Acquisition Transaction in which InterWest or any of its subsidiaries is
involved shall not violate this covenant).
5.2. THE PROXY. In the case of the Company: it shall promptly
assist InterWest in the preparation of a proxy statement (the "Proxy
Statement") to be mailed to the holders of the Company Common Stock in
connection with the transactions contemplated hereby and to be filed by
InterWest in a registration statement (the "Registration Statement") with the
SEC as provided in Section 5.8, which shall conform to all applicable legal
requirements, and it shall call a special meeting (the "Meeting") of the
holders of Company Common Stock to be held as soon as practicable for purposes
of voting upon the transactions contemplated hereby and the Company shall
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<PAGE> 25
use its best efforts to solicit and obtain votes of the holders of Company
Common Stock in favor of the transactions contemplated hereby and, subject to
the exercise of its fiduciary duties, the Board of Directors of the Company
shall recommend approval of such transactions by such holders.
5.3. REGISTRATION STATEMENT COMPLIANCE WITH SECURITIES LAWS. When
the Registration Statement or any post-effective amendment or supplement
thereto shall become effective, and at all times subsequent to such
effectiveness, up to and including the date of the Meeting, such Registration
Statement, and all amendments or supplements thereto, with respect to all
information set forth therein furnished or to be furnished by or on behalf of
the Company relating to the Company or its Subsidiaries and by or on behalf of
InterWest relating to InterWest or its Subsidiaries, (i) will comply in all
material respects with the provisions of the Securities Act and any other
applicable statutory or regulatory requirements and (ii) will not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements contained therein not
misleading; provided, however, in no event shall any Party be liable for any
untrue statement of a material fact or omission to state a material fact in the
Registration Statement made in reliance upon, and in conformity with, written
information concerning another Party furnished by or on behalf of such other
Party specifically for use in the Registration Statement.
5.4. REGISTRATION STATEMENT EFFECTIVENESS. In the case of InterWest:
it will advise the Company, promptly after InterWest receives notice thereof, of
the time when the Registration Statement has become effective or any supplement
or amendment has been filed, of the issuance of any stop order or the suspension
of the qualification of the InterWest Common Stock for offering or sale in any
jurisdiction, of the initiation or threat of any proceeding for any such
purpose, or of any request by the SEC for the amendment or supplement of the
Registration Statement or for additional information.
5.5. PRESS RELEASES. The Company and the Banks will not, without
the prior approval of InterWest, and InterWest and InterWest Savings will not,
without the prior approval of the Company, issue any press release or written
statement for general circulation relating to the transactions contemplated
hereby, except as otherwise required by law.
5.6. ACCESS; INFORMATION.
(A) Upon reasonable notice, the Company and the Banks shall
afford InterWest and its officers, employees, counsel, accountants and other
authorized representatives, access, during normal business hours throughout the
period up to the Effective Date, to all of the properties, books, contracts,
commitments and records of the Company and its Subsidiaries and, during such
period, the Company and the Banks shall furnish promptly to InterWest (i) a copy
of each material report, schedule and other document filed by the Company and
its Subsidiaries with any Regulatory Authority and (ii) all other information
concerning the business, properties and personnel of the Company and its
Subsidiaries as InterWest may reasonably request, provided that no investigation
pursuant to this Section 5.6 shall affect or be deemed to modify or waive any
representation or warranty made by the Company or the Banks in this Plan or the
conditions to the obligations of the Company and the Banks to consummate the
transactions contemplated by this Plan; and
(B) InterWest will not use any information obtained pursuant
to this Section 5.6 for any purpose unrelated to the consummation of the
transactions contemplated by this Plan and, if this Plan is terminated, will
hold all confidential information and documents obtained pursuant to this
paragraph in confidence (as provided in Section 8.6) unless and until such time
as such information or documents become publicly available other than by reason
of any action or failure to act by InterWest or as it is advised by counsel that
any such information or document is required by law or applicable stock exchange
rule to be disclosed, and in the event of the termination of this Plan,
InterWest will, upon request by the Company, deliver to the Company all
documents so obtained by InterWest or destroy such documents and, in the case of
destruction, will certify such fact to the Company.
5.7. ACQUISITION PROPOSALS. In the case of the Company: Without
the prior written consent of InterWest, the Company shall not, and it shall
cause its Subsidiaries not to, solicit, initiate or encourage inquiries or
proposals with respect to, or, except as required by the fiduciary duties of
the Board of Directors of the Company (as advised in writing by its outside
counsel), furnish any nonpublic information relating to or participate in any
negotiations or discussions concerning, any acquisition or purchase of all or a
substantial portion of the assets of,
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<PAGE> 26
or a substantial equity interest in, the Company or any of its Subsidiaries or
any merger or other business combination with the Company or any of its
Subsidiaries other than as contemplated by this Plan; it shall instruct its and
its Subsidiaries' officers, directors, agents, advisors and affiliates to
refrain from doing any of the foregoing; and it shall notify InterWest
immediately if any such inquiries or proposals are received by, or any such
negotiations or discussions are sought to be initiated with, the Company or any
of its Subsidiaries.
5.8. REGISTRATION STATEMENT PREPARATION; REGULATORY APPLICATIONS
PREPARATION. In the case of InterWest: InterWest shall, as promptly as
practicable following the date of this Plan, prepare and file the Registration
Statement with the SEC and InterWest shall use its best efforts to cause the
Registration Statement to be declared effective as soon as practicable after
the filing thereof. InterWest shall, as promptly as practicable following the
date of this Plan, prepare and file all necessary notices or applications with
the FDIC, the Federal Reserve Board, and the Department.
5.9. BLUE-SKY FILINGS. In the case of InterWest: InterWest shall
use its best efforts to obtain, prior to the effective date of the Registration
Statement, all necessary state securities laws or "blue sky" permits and
approvals, provided that InterWest shall not be required by virtue thereof to
submit to general jurisdiction in any state.
5.10. AFFILIATE AGREEMENTS. In the case of the Company: The Company
will use its best efforts to induce each person who may be deemed to be an
"affiliate" of the Company for purposes of Rule 145 under the Securities Act to
execute and deliver to InterWest on or before the mailing of the Proxy
Statement for the Meeting an agreement in the form attached hereto as Exhibit C
restricting the disposition of such affiliate's shares of the Company Common
Stock and the shares of InterWest Common Stock to be received by such person in
exchange for such person's shares of Company Common Stock. In the case of
InterWest: InterWest agrees to use its best efforts to maintain the
availability of Rule 145 for use by such "affiliates".
5.11. CERTAIN POLICIES OF THE COMPANY AND THE BANKS. In the case of
each of the Company and the Banks: Each shall, at InterWest's request: (i)
modify and change its loan, litigation and other reserve and real estate
valuation policies and practices (including loan classifications and levels of
reserves), and (ii) generally conform its operating, lending and compliance
policies and procedures, immediately prior to the Effective Date so as to be
consistent on a mutually satisfactory basis with those of InterWest and GAAP;
provided, however, that prior to any such modification or change, InterWest
shall certify that the conditions to the obligation of InterWest under Section
6.1 and 6.2 to consummate the transactions contemplated hereby, other than the
condition set forth in Section 6.1(G) have been satisfied or waived. The
Company's and the Banks' representations, warranties and covenants contained in
this Plan shall not be deemed to be untrue or breached in any respect for any
purpose as a consequence of any modifications or changes undertaken solely on
account of this Section 5.11.
5.12. STATE TAKEOVER LAW. In the case of the Company: The Company
shall not take any action that would cause the transactions contemplated by
this Plan or the Stock Option Agreement to be subject to any applicable state
takeover statute and the Company shall take all necessary steps to exempt (or
ensure the continued exemption of) the transactions contemplated by this Plan
and the Stock Option Agreement from, or, if necessary, challenge the validity
or applicability of, any applicable state takeover law.
5.13. NO RIGHTS TRIGGERED. In the case of the Company: Except for
those consents of third parties Previously Disclosed on Schedule 4.1(G) the
Company shall take all necessary steps to ensure that the entering into of this
Plan and the Stock Option Agreement and the consummation of the transactions
contemplated hereby and thereby (including the Mergers and the exercise of the
Option) and any other action or combination of actions, or any other
transactions contemplated hereby or thereby, do not and will not (i) result in
the grant of any rights to any person under the Articles of Incorporation or
Bylaws of the Company or under any agreement to which the Company or any of its
Subsidiaries is a party or (ii) restrict or impair in any way the ability of
InterWest or InterWest Savings to exercise the rights granted hereunder or
under the Stock Option Agreement.
5.14. SHARES LISTED. In the case of InterWest: InterWest shall use
its best efforts to cause to be listed, prior to the Effective Date, on the
Nasdaq National Market upon official notice of issuance the shares of InterWest
Common Stock to be issued to the holders of Company Common Stock.
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<PAGE> 27
5.15. REGULATORY APPLICATIONS. In the case of each of InterWest and
InterWest Savings each shall: (i) promptly prepare and submit applications to
the appropriate Regulatory Authorities for approval of the Merger, and (ii)
promptly make all other appropriate filings to secure all other approvals,
consents and rulings which are necessary for the consummation of the Mergers by
InterWest and InterWest Savings.
5.16. REGULATORY DIVESTITURES. In the case of the Company:
Effective on or before the Effective Date, the Company shall cease engaging in
such activities as InterWest shall advise the Company in writing are not
permitted to be engaged in by InterWest under applicable law following the
Effective Date and, to the extent required by any Regulatory Authority as a
condition of approval of the transactions contemplated by this Plan, the
Company shall divest any Subsidiary engaged in activities or holding assets
that are impermissible for InterWest or InterWest Savings, on terms and
conditions agreed to by InterWest; provided, however, that prior to taking such
action, InterWest shall certify that the conditions to the obligations of
InterWest under Sections 6.1 and 6.2 to consummate the transactions
contemplated hereby, other than the condition set forth in Section 6.1(G), have
been satisfied or waived.
5.17. CURRENT INFORMATION.
(A) During the period from the date of this Plan to the Effective
Date, each of the Company and InterWest shall, and shall cause its
representatives to, confer on a regular and frequent basis with representatives
of the other.
(B) Each of the Company and InterWest shall promptly notify the
other of (i) any material change in the business or operations of it or its
Subsidiaries, (ii) any material complaints, investigations or hearings (or
communications indicating that the same may be contemplated) of any Regulatory
Authority relating to it or its Subsidiaries, (iii) the initiation or threat of
material litigation involving or relating to it or its Subsidiaries, or (iv)
any event or condition that might reasonably be expected to cause any of its
representations or warranties set forth herein not to be true and correct in
all material respects as of the Effective Date or prevent it or its
Subsidiaries from fulfilling its or their obligations hereunder.
5.18. INDEMNIFICATION.
(A) For a period of five years from and after the Effective Date,
InterWest shall indemnify, defend and hold harmless the present and former
directors, officers and employees of the Company and its Subsidiaries (each, an
"Indemnified Party") against all costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, and
arising out of matters existing or occurring at or prior to the Effective Date
(including the transactions contemplated by this Plan and the Stock Option
Agreement), whether asserted or claimed prior to, at or after the Effective
Date, to the fullest extent that the Company would have been permitted under
Washington law and its articles of incorporation or bylaws in effect on the
date of this Plan to indemnify such person (and InterWest will also advance
expenses as incurred to the fullest extent permitted under applicable law so
long as the person to whom expenses are advanced provides an undertaking to
repay such advances within a reasonable period of time if it is ultimately
determined that Washington law does not allow for such indemnification).
InterWest further agrees to review obtaining directors' and officers' liability
insurance for the board of directors and officers of InterWest.
(B) Any Indemnified Party wishing to claim indemnification under
paragraph (A) of this Section 5.18, upon learning of such claim, action, suit,
proceeding or investigation, shall promptly notify InterWest thereof; provided,
that the failure so to notify shall not affect the obligations of InterWest
under paragraph (A) of this Section 5.18 (unless such failure materially and
adversely increases InterWest's liability under such paragraph (A)). In the
event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Date), (i) InterWest shall have the right
to assume the defense thereof and InterWest shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; provided, however, that InterWest shall be obligated
pursuant to this paragraph (B) to pay for only one firm of counsel for all
Indemnified Parties in any jurisdiction for any single action, suit or
proceeding, (ii) the Indemnified Parties will cooperate in the defense of any
such matter, and (iii) InterWest shall not be liable for any settlement
effected without its prior written consent.
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<PAGE> 28
(C) If InterWest or any of its successors or assigns shall consolidate
with or merge into any other entity and shall not be the continuing or surviving
entity of such consolidation or merger or shall transfer all or substantially
all of its assets to any entity, then and in each case, proper provision shall
be made so that the successors and assigns of InterWest shall assume the
obligations set forth in this Section 5.18.
(D) InterWest shall pay all expenses, including attorneys' fees, that
may be incurred by any Indemnified Party in enforcing the indemnity and other
obligations provided for in this Section 5.18. The rights of each Indemnified
Party hereunder shall be in addition to any other rights such Indemnified Party
may have under the articles of incorporation or bylaws of the Company or under
applicable Washington law.
5.19. INTERWEST PROXY STATEMENT; SHAREHOLDER APPROVAL. InterWest
shall call a meeting of shareholders to be held as soon as reasonably
practicable after the date of the Plan for the purpose of approving the Plan,
and such other related matters as it deems appropriate. In connection with
such meeting of shareholders, (i) InterWest shall prepare a proxy statement to
be filed with the SEC and with any other appropriate Regulatory Authorities and
shall mail or cause to be mailed such proxy statement to the InterWest
shareholders and shall provide the Company with the opportunity to review and
comment on the proxy statement, (ii) the Company shall furnish to InterWest all
information concerning the Company and the Banks as InterWest may reasonably
request in connection with the preparation of the proxy statement, (iii) the
Board of Directors of InterWest shall recommend, subject to compliance with
their legal and fiduciary duties as advised in writing by counsel, to the
InterWest shareholders the approval of the Plan, and (iv) InterWest shall use
its best efforts, subject to compliance with its legal and fiduciary duties as
advised in writing by counsel, to obtain the approval of InterWest
shareholders.
5.20. OTHER EMPLOYMENT AGREEMENTS. Prior to the Effective Date,
InterWest Savings shall offer to employ Scott Southwick, Marla Chase and Mark
Rasmussen following the Effective Date upon the terms and conditions of the
Employment Agreement substantially in the form attached hereto as Exhibit F at
an annual base salary not less than such officers received from the Company and
the Banks prior to the Effective Date.
ARTICLE VI. CONDITIONS TO CONSUMMATION OF THE MERGERS
6.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
obligations of each Party to consummate the transactions contemplated by this
Plan is subject to the written waiver by such Party or the fulfillment on or
prior to the Effective Date of each of the following conditions:
(A) SHAREHOLDER VOTES. This Plan shall have been duly approved by
the affirmative vote of the holders of at least two- thirds of the outstanding
shares of Company Common Stock and the holders of at least a majority of the
outstanding shares of InterWest Common Stock, in each case in accordance with
applicable law and the articles and bylaws of the Company and InterWest,
respectively.
(B) REGULATORY APPROVALS. Procurement by the Parties of all necessary
regulatory consents and approvals by the appropriate Regulatory Authorities and
the expiration of any waiting periods relating thereto; provided, however, that
no such approval or consent shall have imposed any condition or requirement
that, in the opinion of InterWest, would deprive InterWest of the material
economic or business benefits of the transactions contemplated by this Plan.
(C) NO INJUNCTION. There shall not be in effect any order, decree
or injunction of any court or agency of competent jurisdiction that enjoins or
prohibits consummation of any of the transactions contemplated hereby.
(D) EFFECTIVE REGISTRATION STATEMENT. The Registration Statement
shall have become effective and no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC or any other
Regulatory Authority.
(E) BLUE-SKY PERMITS. InterWest shall have received all state
securities laws and "blue sky" permits necessary to consummate the Corporate
Merger.
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<PAGE> 29
(F) TAX OPINION. InterWest and the Company shall have received an
opinion from Breyer & Aguggia to the effect that (i) the Corporate Merger
constitutes a reorganization under Section 368 of the Code and (ii) no gain or
loss will be recognized by stockholders of the Company who receive shares of
InterWest Common Stock in exchange for their shares of the Company Common
Stock, except that gain or loss may be recognized as to cash received in lieu
of fractional share interests, and, in rendering their opinion, Breyer &
Aguggia may require and rely upon representations contained in certificates of
officers of InterWest, the Company and others.
(G) NASDAQ LISTING. The shares of InterWest Common Stock to be issued
pursuant to this Plan shall have been approved for listing on the Nasdaq
National Market subject only to official notice of issuance.
(H) EMPLOYMENT CONTRACTS. The Employment Agreements attached as
Exhibits D and E shall have been duly executed and delivered by all parties to
such agreements.
6.2. CONDITIONS TO OBLIGATIONS OF INTERWEST. The obligations of
InterWest and InterWest Savings to consummate the transactions contemplated by
this Plan also is subject to the written waiver by InterWest or the fulfillment
on or prior to the Effective Date of each of the following conditions:
(A) LEGAL OPINION. InterWest shall have received an opinion, dated
the Effective Date, of Graham & Dunn, counsel for the Company and the Banks, in
form reasonably satisfactory to InterWest, which shall cover the matters
contained in Exhibit G.
(B) OFFICERS' CERTIFICATE. (i) Each of the representations and
warranties contained herein of the Company and the Banks shall be true and
correct as of the date of this Plan and upon the Effective Date with the same
effect as though all such representations and warranties had been made on the
Effective Date, except for any such representations and warranties that
specifically relate to an earlier date, which shall be true and correct as of
such earlier date and except as otherwise provided in Section 5.11 and (ii) each
and all of the agreements and covenants of the Company and the Banks to be
performed and complied with pursuant to this Plan on or prior to the Effective
Date shall have been duly performed and complied with in all material respects,
and InterWest and InterWest Savings shall have received a certificate signed by
the Chief Executive Officers and the Chief Financial Officers of the Company and
the Banks dated the Effective Date, to such effect.
(C) DELOITTE & TOUCHE LETTERS. InterWest shall have received from
Deloitte & Touche LLP a letter, dated the date of or shortly prior to (i) the
mailing of the Proxy Statement and (ii) the Effective Date, in form and
substance satisfactory to InterWest, with respect to the Company's consolidated
financial position and results of operations, which letters shall be based upon
"agreed upon procedures" undertaken by such firm.
(D) RECEIPT OF AFFILIATE AGREEMENTS. InterWest shall have received
from each affiliate of the Company the agreement referred to in Section 5.10.
(E) ADVERSE CHANGE. During the period from December 31, 1994 to
the Effective Date, there shall not have been any material adverse change in
the financial position or results of operations of the Company or the Banks nor
shall the Company or the Banks have sustained any loss or damage to its
properties, whether or not insured, that materially affects its ability to
conduct its business; and InterWest shall have received a certificate dated the
Effective Date signed by the Chief Executive Officers of the Company and the
Banks to such effect.
(F) DISSENTERS' RIGHTS. The number of shares of Company Common
Stock for which cash is to be paid because dissenters' rights of appraisal
under the Appraisal Laws shall have been effectively preserved as of the
Effective Date or because of the payment of cash in lieu of fractional shares
of InterWest Common Stock shall not exceed in the aggregate ten percent of the
outstanding shares of Company Common Stock.
(G) POOLING LETTERS. InterWest shall have received a letter dated
as of the Effective Date, in form and substance acceptable to InterWest, from
Ernst & Young LLP and Central shall have received a letter dated as of the
Effective Date from Deloitte & Touche LLP, in form and substance acceptable to
InterWest, to the effect that the Merger will qualify for pooling-of- interests
accounting treatment.
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<PAGE> 30
6.3. CONDITIONS TO OBLIGATIONS OF COMPANY AND BANKS. The obligations
of the Company and the Banks to consummate the transactions contemplated by this
Plan also are subject to the written waiver by the Company and the Banks or the
fulfillment on or prior to the Effective Date of each of the following
conditions:
(A) LEGAL OPINION. The Company and the Banks shall have received an
opinion, dated the Effective Date, of Breyer & Aguggia, special counsel for
InterWest, in form reasonably satisfactory to the Company, which shall cover the
matters contained in Exhibit H.
(B) OFFICER'S CERTIFICATE. (i) Each of the representations and
warranties contained herein of InterWest and InterWest Savings shall be true
and correct as of the date of this Plan and upon the Effective Date with the
same effect as though all such representations and warranties had been made on
the Effective Date, except for any such representations and warranties that
specifically relate to an earlier date, which shall be true and correct as of
such earlier date, and (ii) each and all of the agreements and covenants of
InterWest and InterWest Savings to be performed and complied with pursuant to
this Plan on or prior to the Effective Date shall have been duly performed and
complied with in all material respects, and the Company and the Banks shall
have received a certificate signed by an executive officer of each of InterWest
and InterWest Savings dated the Effective Date, to such effect.
(C) ADVERSE CHANGE. During the period from September 30, 1995 to
the Effective Date, there shall not have been any material adverse change in
the financial position or results of operations of the InterWest and InterWest
Savings nor shall InterWest or InterWest Savings have sustained any loss or
damage to its properties, whether or not insured, that materially affects its
ability to conduct its business; and InterWest shall have received a
certificate dated the Effective Date signed by the Chief Executive Officers of
InterWest and InterWest Savings to such effect.
VII. TERMINATION
This Plan may be terminated prior to the Effective Date, either before
or after receipt of required stockholder approvals:
7.1 MUTUAL CONSENT. By the mutual consent of InterWest and the
Company, if the Board of Directors of each so determines by vote of a majority
of the members of its entire board.
7.2 BREACH. By InterWest or the Company, if its Board of Directors
so determines by vote of a majority of the members of its entire Board, in the
event of (i) a material breach by the other party of any representation or
warranty contained herein, which breach cannot be or has not been cured within
thirty (30) days after the giving of written notice to the breaching party of
such breach, or (ii) a breach by the other party of any of the material
covenants or agreements contained herein, which breach cannot be or has not been
cured within thirty (30) days after the giving of written notice to the
breaching party of such breach.
7.3 DELAY. By InterWest or the Company, if its Board of Directors
so determines by vote of a majority of the members of its entire Board, in the
event that the Corporate Merger is not consummated by September 30, 1996.
7.4 NO STOCKHOLDER APPROVAL. By InterWest or the Company, if its
Board of Directors so determines by a vote of a majority of the members of its
entire Board, in the event that any stockholder approval contemplated by
Section 6.1 is not obtained at the Meeting, including any adjournment or
adjournments thereof.
7.5 INTERWEST COMMON STOCK PRICE. By the Company, within five
Business Days after the end of the ten trading day period used to determine the
InterWest Price, if the InterWest Price is less than $17.00 and InterWest, in
its sole discretion, does not elect by written notice to the Company to adjust
the Exchange Ratio so that the InterWest Price multiplied by the Exchange Ratio
equals $28.90.
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<PAGE> 31
7.6 CONSEQUENCES OF TERMINATION.
(A) GENERAL CONSEQUENCES. Subject to subsection (B) of this Section
7.6, in the event of the termination or abandonment of this Plan pursuant to the
provisions of Sections 7.1 through 7.5, this Plan shall become void and have no
force or effect, without any liability on the part of the Parties or any of
their respective directors or officers or shareholders with respect to this
Plan.
(B) OTHER CONSEQUENCES. Notwithstanding anything in this Plan to
the contrary, no termination of this Plan will relieve any Party of any
liability for breach of this Plan or for any misrepresentation under this Plan
or be deemed to constitute a waiver of any remedy available for such breach or
misrepresentation. In any action or proceeding in connection with such breach
or misrepresentation, the prevailing party will be entitled to reasonable
attorneys' fees and expenses.
ARTICLE VIII OTHER MATTERS
8.1. SURVIVAL. Only those agreements and covenants in this Plan
that by their express terms apply in whole or in part after the Effective Date
shall survive the Effective Date. All other representations, warranties, and
covenants shall be deemed only to be conditions of the Mergers and shall not
survive the Effective Date. If the Mergers are abandoned and this Plan is
terminated, the provisions of Article VII shall apply and the agreements of the
Parties in Sections 5.6(B), 8.5 and 8.6 shall survive such abandonment and
termination.
8.2. WAIVER; AMENDMENT. Prior to the Effective Date, any provision
of this Plan may be (i) waived in writing by the Party benefitted by the
provision, or (ii) amended or modified at any time (including the structure of
the transactions contemplated hereby) by an agreement in writing among the
Parties approved by their respective Boards of Directors and executed in the
same manner as this Plan, except that, after the vote by the stockholders of
the Company, the consideration to be received by the stockholders of the
Company for each share of Company Common Stock shall not thereby be altered.
Nothing contained in this Section 8.2 is intended to modify InterWest's rights
pursuant to Section 2.7.
8.3. COUNTERPARTS. This Plan may be executed in one or more
counterparts, each of which shall be deemed to constitute an original. This
Plan shall become effective when one counterpart has been signed by each Party.
8.4. GOVERNING LAW. This Plan shall be governed by, and interpreted
in accordance with, the laws of the State of Washington, except as federal law
may be applicable.
8.5. EXPENSES. Each Party will bear all expenses incurred by it in
connection with this Plan and the transactions contemplated hereby, except
printing expenses which shall be shared equally between the Company and
InterWest.
8.6. CONFIDENTIALITY. Except as otherwise provided in Section 5.6(B),
each of the Parties and their respective agents, attorneys and accountants will
maintain the confidentiality of all information provided in connection herewith
which has not been publicly disclosed.
8.7. NOTICES. All notices, requests and other communications
hereunder to a Party shall be in writing and shall be deemed to have been duly
given when delivered by hand, telegram or telex (confirmed in writing) to such
Party at its address set forth below or such other address as such Party may
specify by notice to the Parties.
If to InterWest or InterWest Savings to:
InterWest Bancorp, Inc.
1259 West Pioneer Way
Oak Harbor, Washington 98277
Attn: Stephen Walden, President
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<PAGE> 32
Copies to:
Edward C. Beeksma
Zylstra, Beeksma, Waller and Skinner
3101-300 Avenue West
Oak Harbor, Washington 98277
John F. Breyer, Jr.
Breyer & Aguggia
1300 I Street, N.W.
Suite 470 East
Washington, D.C. 20005
If to the Company or the Banks to:
Central Bancorporation
301 N. Chelan
Wenatchee, Washington 98801
Attn: Gary M. Bolyard
Copies to:
Stephen M. Klein
Graham & Dunn
33rd Floor
1420 Fifth Avenue
Seattle, Washington 98101
8.8. ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. This Plan
and the Stock Option Agreement together represent the entire understanding of
the Parties with reference to the transactions contemplated hereby and thereby
and supersede any and all other oral or written agreements previously made.
Nothing in this Plan or the Stock Option Agreement, expressed or implied, is
intended to confer upon any person, other than the Parties or their respective
successors, any rights, remedies, obligations or liabilities under or by reason
of this Plan or the Stock Option Agreement.
8.9. BENEFIT PLANS. Upon consummation of the Corporate Merger, all
employees of the Company and its Subsidiaries shall be deemed as at-will
employees of InterWest and its Subsidiaries except for those employees who are
parties to the Employment Agreements. From and after the Effective Date,
employees of the Company and its Subsidiaries shall be generally entitled to
participate in the pension, benefit and similar plans on substantially the same
terms and conditions as employees of InterWest and its Subsidiaries. For the
purpose of determining eligibility to participate in such plans and the vesting
of benefits under such plans (but not for the accrual of benefits under such
plans), InterWest shall give effect to years of service with the Company or the
Company's Subsidiaries, as the case may be, as if such service were with
InterWest or its Subsidiaries. InterWest shall use its best efforts to
facilitate the rollover of the 401(k) plan maintained by the Company into the
401(k) plan maintained by InterWest Savings.
8.10. HEADINGS. The headings contained in this Plan are for reference
purposes only and are not part of this Plan.
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<PAGE> 33
IN WITNESS WHEREOF, the Parties have caused this instrument to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
INTERWEST BANCORP, INC.
By:
--------------------------------
NAME:
TITLE:
INTERWEST SAVINGS BANK
By:
--------------------------------
NAME:
TITLE:
CENTRAL BANCORPORATION
By:
--------------------------------
NAME:
TITLE:
CENTRAL WASHINGTON BANK
By:
--------------------------------
NAME:
TITLE:
NORTH CENTRAL WASHINGTON BANK
By:
--------------------------------
NAME:
TITLE:
- 29 -
<PAGE> 1
EXHIBIT 10
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of January 10, 1996 (the
"Agreement"), by and between Central Bancorporation, a Washington corporation
("Issuer"), and InterWest Bancorp, Inc., a Washington corporation ("Grantee").
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Mergers dated as of January 10, 1996 (the "Plan"), providing for, among other
things, the merger of Issuer with and into Grantee, with Grantee as the
surviving corporation; and
WHEREAS, as a condition and inducement to Grantee's execution of the
Plan, Grantee has required that Issuer agree, and Issuer has agreed, to grant
Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Plan, and intending to be legally bound hereby, Issuer and Grantee agree as
follows:
1. DEFINED TERMS. Capitalized terms which are used but not defined
herein shall have the meanings ascribed to such terms in the Plan.
2. GRANT OF OPTION. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase up to 201,898 shares (as adjusted as set forth herein, the "Option
Shares", which shall include the Option Shares before and after any transfer of
such Option Shares) of common stock, par value $1.67 per share ("Issuer Common
Stock"), of Issuer at a purchase price per Option Share (the "Purchase Price")
equal to $26.00.
3. EXERCISE OF OPTION.
(a) Provided that (i) Grantee or Holder (as defined below), as
applicable, shall not be in material breach of the agreements or covenants
contained in this Agreement or the Plan, and (ii) no preliminary or permanent
injunction or other order against the delivery of shares covered by the Option
issued by any court of competent jurisdiction in the United States shall be in
effect, the Holder may exercise the Option, in whole or in part, at any time
and from time to time following the occurrence of a Purchase Event (as
hereinafter defined); PROVIDED that the Option shall terminate and be of no
further force and effect upon the earliest to occur of (A) the Effective Date,
(B) termination of the Plan by Issuer in accordance with the terms thereof
prior to the occurrence of a Purchase Event or a Preliminary Purchase Event (as
hereinafter defined) (an "Issuer Termination"), (C) 15 months after the
termination of the Plan by Issuer in accordance with the terms thereof other
than pursuant to an Issuer Termination, and (D) 15 months after the termination
of the Plan by Grantee in accordance with the terms thereof; PROVIDED,
HOWEVER, that any purchase of shares upon exercise of the Option shall be
subject to compliance with applicable law, including, without limitation, the
Bank Holding Company Act of 1956, as amended (the "BHC Act"). The term "Holder"
shall mean the holder or holders of the Option from time to time, and which
initially is Grantee.
(b) As used herein, a "Purchase Event" means any of the following
events:
(i) Without Grantee's prior written consent, Issuer shall have
authorized, recommended, publicly proposed or publicly announced an
intention to authorize, recommend or propose, or entered into an
agreement with any person (other than Grantee or any subsidiary of
Grantee) to effect an Acquisition Transaction. As used herein, the
term "Acquisition Transaction" shall mean (A) a merger, consolidation
or similar transaction involving Issuer or any of its significant
subsidiaries, (B) the disposition, by sale, lease, exchange or
otherwise, of assets or deposits of Issuer or any of its significant
subsidiaries representing in
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<PAGE> 2
either case 20% or more of the consolidated assets or deposits of
Issuer and its subsidiaries, or (C) the issuance, sale or other
disposition of (including by way of merger, consolidation, share
exchange or any similar transaction) securities representing 20% or
more of the voting power of Issuer or any of its significant
subsidiaries other than the issuance of Issuer Common Stock upon the
exercise of outstanding options or the conversion of outstanding
convertible securities of Issuer; or
(ii) any person (other than Grantee or any subsidiary of Grantee)
shall have acquired beneficial ownership (as such term is defined in
Rule 13d-3 promulgated under the Exchange Act) of or the right to
acquire beneficial ownership of, or any "group" (as such term is
defined under the Exchange Act) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of,
15% or more (or if such person or group is the beneficial owner of 15%
or more on the date hereof, such person or group acquires an
additional 5% or more) of the voting power of Issuer or any of its
significant subsidiaries.
(c) As used herein, a "Preliminary Purchase Event" means any of the
following events:
(i) any person (other than Grantee or any subsidiary of
Grantee) shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act) or shall have filed a registration statement
under the Securities Act with respect to, a tender offer or exchange
offer to purchase any shares of Issuer Common Stock such that, upon
consummation of such offer, such person would own or control 20% or
more of the then outstanding shares of Issuer Common Stock (such an
offer being referred to herein as a "Tender Offer" or an "Exchange
Offer," respectively); or
(ii) the holders of Issuer Common Stock shall not have
approved the Plan at the Meeting, the Meeting shall not have been held
or shall have been canceled prior to termination of the Plan, or
Issuer's Board of Directors shall have withdrawn or modified in a
manner adverse to Grantee the recommendation of Issuer's Board of
Directors with respect to the Plan, in each case after it shall have
been publicly announced that any person (other than Grantee or any
subsidiary of Grantee) shall have (A) made a proposal to engage in an
Acquisition Transaction, or (B) commenced a Tender Offer or filed a
registration statement under the Securities Act with respect to an
Exchange Offer; or
(iii) any person, other than Grantee or any subsidiary of
Grantee, shall have made a bona fide proposal to Issuer or its
stockholders by public announcement, or written communication that is
or becomes the subject of public disclosure, to engage in an
Acquisition Transaction; or
(iv) after a bona fide proposal is made by a third party to
Issuer or its stockholders to engage in an Acquisition Transaction,
Issuer shall have breached any covenant or obligation contained in the
Plan and such breach would entitle Grantee to terminate the Plan under
Section 7.1(b) thereof (without regard to the cure period provided for
therein unless such cure is promptly effected without jeopardizing
consummation of the Mergers pursuant to the terms of the Plan); or
(v) any person, other than Grantee or any subsidiary of
Grantee, other than in connection with a transaction to which Grantee
has given its prior written consent, shall have filed an application
or notice with the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board"), or other federal or state bank
regulatory authority, for approval to engage in an Acquisition
Transaction.
As used in this Agreement, "person" shall have the meaning specified
in Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(d) Issuer shall notify Grantee promptly in writing of the occurrence
of any Preliminary Purchase Event or Purchase Event (in either case, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of Holder to exercise the Option.
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<PAGE> 3
(e) In the event Holder wishes to exercise the Option, it shall
send to Issuer a written notice (the date of which being herein referred to as
the "Notice Date") specifying (i) the total number of Option Shares it intends
to purchase pursuant to such exercise, and (ii) a place and date not earlier
than three business days nor later than 15 business days from the Notice Date
for the closing (the "Closing") of such purchase (the "Closing Date");
PROVIDED, HOWEVER, if any required application for listing such shares on the
NASDAQ National Market System has not been approved by the date so specified,
such date shall be extended for a period not to exceed 21 days from the Notice
Date. If prior notification to or approval of the Federal Reserve Board or any
other regulatory authority is required in connection with such purchase, Issuer
shall cooperate with the Holder in the filing of the required notice of
application for approval and the obtaining of such approval and the Closing
shall occur immediately following such regulatory approvals (and any mandatory
waiting periods). Any exercise of the Option shall be deemed to occur on the
Notice Date relating thereto.
4. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account designated by
Issuer, an amount equal to the Purchase Price multiplied by the number of
Option Shares to be purchased on such Closing Date, and (ii) present and
surrender this Agreement to the Issuer at the address of the Issuer specified
in subsection (f) of Section 11 hereof.
(b) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in subsection (a) of
this Section 4, (i) Issuer shall deliver to Holder (A) a certificate or
certificates representing the Option Shares to be purchased at such Closing,
which Option Shares shall be free and clear of all liens, claims, charges and
encumbrances of any kind whatsoever and subject to no preemptive rights, and (B)
if the Option is exercised in part only, an executed new agreement with the same
terms as this Agreement evidencing the right to purchase the balance of the
shares of Issuer Common Stock purchasable hereunder, and (ii) Holder shall
deliver to Issuer a letter agreeing that Holder shall not offer to sell or
otherwise dispose of such Option Shares in violation of applicable federal and
state law or of the provisions of this Agreement.
(c) In addition to any other legend that is required by applicable
law, certificates for the Option Shares delivered at each Closing shall be
endorsed with a restrictive legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF ___________ __,
1996. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT
CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that the above legend shall be removed by
delivery of substitute certificate(s) without such legend if Holder shall have
delivered to Issuer a copy of a letter from the staff of the SEC, or an opinion
of counsel in form and substance reasonably satisfactory to Issuer and its
counsel, to the effect that such legend is not required for purposes of the
Securities Act.
(d) Upon the giving by Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of Section 3 hereof,
the tender of the applicable purchase price in immediately available funds and
the tender of this Agreement to Issuer, Holder shall be deemed to be the holder
of record of the shares of Issuer Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of Issuer shall then be closed or
that certificates representing such shares of Issuer Common Stock shall not
then be actually delivered to Holder. Issuer shall pay all expenses, and any
and all United States federal, state, and local taxes and other charges that
may be payable in connection with the preparation, issuance and delivery of
stock certificates under this Section in the name of Holder or its assignee,
transferee, or designee.
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<PAGE> 4
(e) Issuer agrees (i) that it shall at all times maintain, free
from preemptive rights, sufficient authorized but unissued or treasury shares
of Issuer Common Stock so that the Option may be exercised without additional
authorization of Issuer Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Issuer Common
Stock, (ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer, (iii) promptly to take all action as may from time to time be required
(including (A) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. Section 18a and regulations
promulgated thereunder and (B) in the event, under the BHC Act, or the Change
in Bank Control Act of 1978, as amended, or a state banking law, prior approval
of or notice to the Federal Reserve Board or to any state regulatory authority
is necessary before the Option may be exercised, cooperating fully with Holder
in preparing such applications or notices and providing such information to the
Federal Reserve Board or such state regulatory authority as they may require)
in order to permit Holder to exercise the Option and Issuer duly and
effectively to issue shares of the Issuer Common Stock pursuant hereto, and
(iv) promptly to take all action provided herein to protect the rights of
Holder against dilution.
5. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby represents
and warrants to Grantee (and Holder, if different than Grantee) as follows:
(a) Due Authorization. Issuer has all requisite corporate power and
authority to enter into this Agreement and, subject to any approvals or consents
referred to herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Issuer. This Agreement has been duly executed
and delivered by Issuer.
(b) Authorized Stock. Issuer has taken all necessary corporate and
other action to authorize and reserve and to permit it to issue, and, at all
times from the date hereof until the obligation to deliver Issuer Common Stock
upon the exercise of the Option terminates, will have reserved for issuance,
upon exercise of the Option, the number of shares of Issuer Common Stock
necessary for Holder to exercise the Option, and Issuer will take all necessary
corporate action to authorize and reserve for issuance all additional shares of
Issuer Common Stock or other securities which may be issued pursuant to Section
7 upon exercise of the Option. The shares of Issuer Common Stock to be issued
upon due exercise of the Option, including all additional shares of Issuer
Common Stock or other securities which may be issuable pursuant to Section 7,
upon issuance pursuant hereto, shall be duly and validly issued, fully paid and
nonassessable, and shall be delivered free and clear of all liens, claims,
charges and encumbrances of any kind or nature whatsoever, including any
preemptive rights of any stockholder of Issuer.
6. REPRESENTATIONS AND WARRANTIES OF GRANTEE. Grantee hereby
represents and warrants to Issuer that:
(a) Due Authorization. Grantee has all requisite corporate power
and authority to enter into this Agreement and, subject to any approvals or
consents referred to herein, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Grantee. This Agreement has been duly executed
and delivered by Grantee.
(b) Purchase not for Distribution. This Option is not being, and
any Option Shares or other securities acquired by Grantee upon exercise of the
Option will not be, acquired with a view to the public distribution thereof and
will not be transferred or otherwise disposed of except in a transaction
registered or exempt from registration under the Securities Act.
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<PAGE> 5
7. ADJUSTMENT UPON CHANGES IN ISSUER CAPITALIZATION, ETC.
(a) In the event of any change in Issuer Common Stock by reason of
a stock dividend, stock split, split-up, recapitalization, combination,
exchange of shares or similar transaction, the type and number of shares or
securities subject to the Option, and the Purchase Price therefor, shall be
adjusted appropriately, and proper provision shall be made in the agreements
governing such transaction so that Holder shall receive, upon exercise of the
Option, the number and class of shares or other securities or property that
Holder would have received in respect of Issuer Common Stock if the Option had
been exercised immediately prior to such event, or the record date therefor, as
applicable. If any additional shares of Issuer Common Stock are issued after
the date of this Agreement (other than pursuant to an event described in the
first sentence of this subsection (a), upon exercise of any option to purchase
Issuer Common Stock outstanding on the date hereof or upon conversion into
Issuer Common Stock of any convertible security of Issuer outstanding on the
date hereof), the number of shares of Issuer Common Stock subject to the Option
shall be adjusted so that, after such issuance, it, together with any shares of
Issuer Common Stock previously issued pursuant hereto, equals 19.9% of the
number of shares of Issuer Common Stock then issued and outstanding, without
giving effect to any shares subject to or issued pursuant to the Option. No
provision of this Section 7 shall be deemed to affect or change, or constitute
authorization for any violation of, any of the covenants or representations in
the Plan.
(b) In the event that Issuer shall enter in an agreement (i) to
consolidate with or merge into any person, other than Grantee or one of its
subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Grantee or one
of its subsidiaries, to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the then
outstanding shares of Issuer Common Stock shall be changed into or exchanged
for stock or other securities of Issuer or any other person or cash or any
other property or the outstanding shares of Issuer Common Stock immediately
prior to such merger shall after such merger represent less than 50% of the
outstanding shares and share equivalents of the merged company, or (iii) to
sell or otherwise transfer all or substantially all of its assets to any
person, other than Grantee or one of its subsidiaries, then, and in each such
case, the agreement governing such transaction shall make proper provisions so
that the Option shall, upon the consummation of any such transaction and upon
the terms and conditions set forth herein, be converted into, or exchanged for,
an option (the "Substitute Option"), at the election of Holder, of either (x)
the Acquiring Corporation (as hereinafter defined), (y) any person that
controls the Acquiring Corporation, or (z) in the case of a merger described in
clause (ii), Issuer (such person being referred to as "Substitute Option
Issuer").
(c) The Substitute Option shall have the same terms as the Option,
provided, that, if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as possible
and in no event less advantageous to Holder. Substitute Option Issuer shall
also enter into an agreement with Holder in substantially the same form as this
Agreement, which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock (as hereinafter defined) as is equal to the
Assigned Value (as hereinafter defined) multiplied by the number of shares of
Issuer Common Stock for which the Option was theretofore exercisable, divided
by the Average Price (as hereinafter defined). The exercise price of Substitute
Option per share of Substitute Common Stock (the "Substitute Option Price")
shall then be equal to the Option Price multiplied by a fraction in which the
numerator is the number of shares of Issuer Common Stock for which the Option
was theretofore exercisable and the denominator is the number of shares of the
Substitute Common Stock for which the Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger in which Issuer is the
continuing or surviving person, or (iii)
5
<PAGE> 6
the transferee of all or substantially all of Issuer's assets (or
a substantial part of the assets of its subsidiaries taken as a
whole).
(2) "Substitute Common Stock" shall mean the common stock issued
by Substitute Option Issuer upon exercise of the Substitute
Option.
(3) "Assigned Value" shall mean the highest of (x) the price per
share of Issuer Common Stock at which a Tender Offer or an
Exchange Offer therefor has been made, (y) the price per share of
Issuer Common Stock to be paid by any third party pursuant to an
agreement with Issuer, and (z) the highest per share closing price
for shares of Issuer Common Stock within the six-month period
immediately preceding the consolidation, merger, or sale in
question. In the event that a Tender Offer or an Exchange Offer is
made for Issuer Common Stock or an agreement is entered into for a
merger or consolidation involving consideration other than cash,
the value of the securities or other property issuable or
deliverable in exchange for Issuer Common Stock shall be
determined by a nationally recognized investment banking firm
selected by Holder or Owner, as the case may be (and if there are
both a Holder and an Owner, the Holder).
(4) "Average Price" shall mean the average closing price per
share of Substitute Common Stock for the one year immediately
preceding the consolidation, merger, or sale in question, but in
no event higher than the closing price of the shares of Substitute
Common Stock on the day preceding such consolidation, merger or
sale; provided that if Issuer is the issuer of the Substitute
Option, the Average Price shall be computed with respect to a
share of common stock issued by Issuer, the person merging into
Issuer or by any company which controls such person, as Holder may
elect.
(f) In no event, pursuant to any of the foregoing paragraphs, shall
the Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than 19.9% of the aggregate of the shares of Substitute Common Stock
but for the limitation in the first sentence of this subsection (f), Substitute
Option Issuer shall make a cash payment to Holder equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in the
first sentence of this subsection (f) over (ii) the value of the Substitute
Option after giving effect to the limitation in the first sentence of this
subsection (f). This difference in value shall be determined by a
nationally-recognized investment banking firm selected by Holder.
(g) Issuer shall not enter into any transaction described in
subsection (b) of this Section 7 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder and take all other actions that may be necessary so that the
provisions of this Section 7 are given full force and effect (including, without
limitation, any action that may be necessary so that the holders of the other
shares of common stock issued by Substitute Option Issuer are not entitled to
exercise any rights by reason of the issuance or exercise of the Substitute
Option and the shares of Substitute Common Stock are otherwise in no way
distinguishable from or have lesser economic value (other than any dimunition in
value resulting from the fact that the Substitute Common Stock are restricted
securities, as defined in Rule 144 under the Securities Act) than other shares
of common stock issued by Substitute Option Issuer).
8. REGISTRATION RIGHTS.
(a) Demand Registration Rights. Issuer shall, subject to the
conditions of subparagraph (c) below, if requested by any Holder or Owner, as
applicable, including Grantee and any permitted transferee ("Selling
Shareholder"), as expeditiously as possible prepare and file a registration
statement under the Securities Act if such
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<PAGE> 7
registration is necessary in order to permit the sale or other disposition of
any or all shares of Issuer Common Stock or other securities that have been
acquired by or are issuable to the Selling Shareholder upon exercise of the
Option in accordance with the intended method of sale or other disposition
stated by the Selling Shareholder in such request, including without limitation
a "shelf" registration statement under Rule 415 under the Securities Act or any
successor provision, and Issuer shall use its best efforts to qualify such
shares or other securities for sale under any applicable state securities laws.
Grantee shall have the right to demand no more than two registrations pursuant
to this paragraph. If requested by Grantee in connection with any such
registration, Issuer and Grantee shall provide each other with representatives,
warranties, indemnities and other agreements customarily given in connection
with such registration. If requested by Grantee in connection with any such
registration, Issuer and Grantee shall become party to any underwriting
agreement relating to the sale of the Option Shares, but only to the extent of
obligating themselves in respect of representations, warranties, indemnities
and other agreement customarily included in such underwriting agreements.
(b) Additional Registration Rights. If Issuer at any time after
the exercise of the Option proposes to register any shares of Issuer Common
Stock under the Securities Act in connection with an underwritten public
offering of such Issuer Common Stock, Issuer will promptly give written notice
to the Selling Shareholders of its intention to do so and, upon the written
request of any Selling Shareholder given within 30 days after receipt of any
such notice (which request shall specify the number of shares of Issuer Common
Stock intended to be included in such underwritten public offering by the
Selling Shareholder), Issuer will cause all such shares for which a Selling
Shareholder requests participation in such registration, to be so registered
and included in such underwritten public offering; PROVIDED, HOWEVER, that
Issuer may elect to not cause any such shares to be so registered (i) if the
underwriters in good faith object for valid business reasons, or (ii) in the
case of a registration solely to implement an employee benefit plan or a
registration filed on Form S-4; PROVIDED, FURTHER, HOWEVER, that such election
pursuant to (i) may only be made two times. If some but not all the shares of
Issuer Common Stock, with respect to which Issuer shall have received requests
for registration pursuant to this subsection (b) shall be excluded from such
registration, Issuer shall make appropriate allocation of shares to be
registered among the Selling Shareholders desiring to register their shares pro
rata in the proportion that the number of shares requested to be registered by
each such Selling Shareholder bears to the total number of shares requested to
be registered by all such Selling Shareholders then desiring to have Issuer
Common Stock registered for sale.
(c) Conditions to Required Registration. Issuer shall use all
reasonable efforts to cause each registration statement referred to in
subparagraph (a) above to become effective and to obtain all consents or
waivers of other parties which are required therefor and to keep such
registration statement effective, PROVIDED, HOWEVER, that Issuer may delay any
registration of Option Shares required pursuant to subparagraph (a) above for a
period not exceeding 180 days provided Issuer shall in good faith determine
that any such registration would adversely affect an offering or contemplated
offering of other securities by Issuer, and Issuer shall not be required to
register Option Shares under the Securities Act pursuant to subsection (a)
above:
(i) prior to the earliest of (a) termination of the Plan pursuant
to Article VII thereof, (b) failure to obtain the requisite stockholder
approval pursuant to Section 6.1.(A) of the Plan, and (c) a Purchase Event or a
Preliminary Purchase Event;
(ii) on more than one occasion during any calendar year;
(iii) within 90 days after the effective date of a registration
referred to in subsection (b) above pursuant to which the Selling Shareholder
or Selling Shareholders concerned were afforded the opportunity to register
such shares under the Securities Act and such shares were registered as
requested; and
(iv) unless a request therefor is made to Issuer by Selling
Shareholders that hold at least 25% or more of the aggregate number of Option
Shares (including shares of Issuer Common Stock issuable upon exercise of the
Option) then outstanding.
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<PAGE> 8
In addition to the foregoing, Issuer shall not be required to maintain
the effectiveness of any registration statement after the expiration of nine
months from the effective date of such registration statement. Issuer shall use
all reasonable efforts to make any filings, and take all steps, under all
applicable state securities laws to the extent necessary to permit the sale or
other disposition of the Option Shares so registered in accordance with the
intended method of distribution for such shares, PROVIDED, HOWEVER, that Issuer
shall not be required to consent to general jurisdiction or qualify to do
business in any state where it is not otherwise required to so consent to such
jurisdiction or to so qualify to do business.
(d) Expenses. Except where applicable state law prohibits such
payments, Issuer will pay all expenses (including without limitation
registration fees, qualification fees, blue sky fees and expenses (including
the fees and expenses of counsel), legal expenses, including the reasonable
fees and expenses of one counsel to the holders whose Option Shares are being
registered, printing expenses and the costs of special audits or "cold comfort"
letters, expenses of underwriters, excluding discounts and commissions but
including liability insurance if Issuer so desires or the underwriters so
require, and the reasonable fees and expenses of any necessary special experts)
in connection with each registration pursuant to subsection (a) or (b) above
(including the related offerings and sales by holders of Option Shares) and all
other qualifications, notifications or exemptions pursuant to subsection (a) or
(b) above.
(e) Miscellaneous Reporting. Issuer shall comply with all reporting
requirements and will do all such other things as may be necessary to permit the
expeditious sale at any time of any Option Shares by the Selling Shareholders
thereof in accordance with and to the extent permitted by any rule or regulation
promulgated by the SEC from time to time, including, without limitation, Rule
144A. Issuer shall at its expense provide the Selling Shareholders with any
information necessary in connection with the completion and filing of any
reports or forms required to be filed by them under the Securities Act or the
Exchange Act, or required pursuant to any state securities laws or the rules of
any stock exchange.
(f) Issuer Taxes. Issuer will pay all stamp taxes in connection
with the issuance and the sale of the Option Shares and in connection with the
exercise of the Option, and will save the Selling Shareholders harmless,
without limitation as to time, against any and all liabilities, with respect to
all such taxes.
9. QUOTATION; LISTING. If Issuer Common Stock or any other securities
to be acquired in connection with the exercise of the Option are then authorized
for quotation or trading or listing on the NASDAQ National Market or any
securities exchange, Issuer, upon the request of Holder, will promptly file an
application, if required, to authorize for quotation or trading or listing the
shares of Issuer Common Stock or other securities to be acquired upon exercise
of the Option on the NASDAQ National Market or such other securities exchange
and will use its best efforts to obtain approval, if required, of such quotation
or listing as soon as practicable.
10. DIVISION OF OPTION. This Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option of Holder, upon
presentation and surrender of this Agreement at the principal office of Issuer
for other Agreements providing for Options of different denominations entitling
the holder thereof to purchase in the aggregate the same number of shares of
Issuer Common Stock purchasable hereunder. The terms "Agreement" and "Option"
as used herein include any other Agreements and related Options for which this
Agreement (and the Option granted hereby) may be exchanged. Upon receipt by
Issuer of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Agreement, if mutilated, Issuer will execute and deliver a
new Agreement of like tenor and date. Any such new Agreement executed and
delivered shall constitute an additional contractual obligation on the part of
Issuer, whether or not the Agreement so lost, stolen, destroyed or mutilated
shall at any time be enforceable by anyone.
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<PAGE> 9
11. MISCELLANEOUS.
(a) Expenses. Each of the parties hereto shall bear and pay all
costs and expenses incurred by it or on its behalf in connection with the
transactions contemplated hereunder, including fees and expenses of its own
financial consultants, investment bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may be
waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(c) Entire Agreement: no Third-party Beneficiary; Severability.
This Agreement, together with the Plan and the other documents and instruments
referred to herein and therein, between Grantee and Issuer (a) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof
and (b) is not intended to confer upon any person other than the parties hereto
(other than any transferees of the Option Shares or any permitted transferee of
this Agreement pursuant to subsection (h) of this Section 14) any rights or
remedies hereunder. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or a federal or state
regulatory agency to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
If for any reason such court or regulatory agency determines that the Option
does not permit Holder or Owner to acquire, or does not require Issuer to
repurchase, the full number of shares of Issuer Common Stock as provided in
Section 3 (as adjusted pursuant to Section 7), it is the express intention of
Issuer to allow Holder or Owner to acquire or to require Issuer to repurchase
such lesser number of shares as may be permissible without any amendment or
modification hereof.
(d) Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of Washington without regard to any
applicable conflicts of law rules.
(e) Descriptive Headings. The descriptive headings contained herein
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(with confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
if to Grantee: InterWest Bancorp, Inc.
1259 West Pioneer Way
Oak Harbor, Washington 98277
Attn: Stephen M. Walden
with a copy to: Edward C. Beeksma
Zylstra, Beeksma, Waller and Skinner
3101-300 Avenue West
Oak Harbor, Washington 98277
and to: John F. Breyer, Jr.
Breyer & Aguggia
1300 I Street
Suite 470 East
Washington, D.C. 20005
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<PAGE> 10
if to Issuer to: Central Bancorporation
301 N. Chelan
Wenatchee, Washington 98801
with a copy to: Stephen M. Klein
Graham & Dunn
33rd Floor
1420 Fifth Avenue
Seattle, Washington 98101
(g) Counterparts. This Agreement and any amendments hereto may be
executed in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed, it
being understood that both parties need not sign the same counterpart.
(h) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other party, except that Holder may assign this
Agreement to a wholly-owned subsidiary of Holder and Holder may assign its
rights hereunder in whole or in part after the occurrence of a Purchase Event.
Subject to the preceding sentence, this Agreement shall be binding upon, inure
to the benefit of and be enforceable by the parties and their respective
successors and assigns.
(i) Further Assurances. In the event of any exercise of the Option by
the Holder, Issuer and the Holder shall execute and deliver all other documents
and instruments and take all other action that may be reasonably necessary in
order to consummate the transactions provided for by such exercise.
(j) Specific Performance. The parties hereto agree that this
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such equitable relief and that this provision is without
prejudice to any other rights that the parties hereto may have for any failure
to perform this Agreement.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
CENTRAL BANCORPORATION
By:
-------------------------------------
NAME: ____________________
TITLE: PRESIDENT AND CHIEF
EXECUTIVE OFFICER
INTERWEST BANCORP, INC.
By:
------------------------------------
NAME: STEPHEN M. WALDEN
TITLE: PRESIDENT AND CHIEF
EXECUTIVE OFFICER
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EXHIBIT 99
FOR IMMEDIATE RELEASE
For more information contact:
Glenn Mouw, Executive Vice President/Chief Financial Officer
(360) 679-4181
Don Piercy, Vice President/Marketing Director (360) 679-4181
INTERWEST BANCORP AGREES TO ACQUIRE CENTRAL BANCORPORATION
Oak Harbor, WA - January 11, 1996 (NASDAQ: IWBK)
InterWest Bancorp today announced the signing of a definitive agreement to
acquire Central Bancorporation of Wenatchee, Washington. This move signals a
focused commitment to commercial banking and strengthens Interwest's presence in
Central Washington.
Central Bancorporation, which operates Central Washington Bank and North Central
Washington Bank with 10 offices in Chelan, Douglas and Okanogan Counties, had
assets of $203.4 million and equity of $15.9 million on December 31, 1995. As an
integral part of the merger, the commercial banking operations of Central
Bancorporation will play a prominent role in providing the expertise to expand
InterWest's business lending to complement its consumer banking presence.
Under the terms of the proposed agreement, the merger is expected to be
accounted for as a pooling transaction. Based on Wednesday's closing price of
$203/8 for InterWest stock, the exchange ratio would be 1.67 and would equate to
$34.00 in market value per share. If InterWest stock is above $20.00 per share
at closing, the exchange ratio will fluctuate from 1.70 to 1.41. Should
InterWest stock close between $17.00 and $20.00 per share, the exchange ratio
would be fixed at 1.70.
Central Bancorporation has also granted an option to InterWest, under certain
circumstances, to purchase up to 19.9% of Central Bancorporation's outstanding
common stock.
The transaction has been unanimously approved by the Boards of Directors of both
companies. It is anticipated that the merger will be completed by the end of the
second quarter of 1996, following the approval of applicable regulatory
authorities and the shareholders of Central and InterWest.
"It is the intent of our strategic plan to further diversify into commercial
banking activities enhancing the long-term profitability and value of our
company," said Stephen M. Walden, InterWest's President and CEO. "The merger
with Central Bancorporation will provide us with a proven vehicle to effectively
enter the commercial banking arena in Central and Western Washington," added
Walden.
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"The combination of these two successful organizations will provide expanded
products and services to our customers, while maintaining the community banking
orientation which has been the foundation of our growth and success," stated
Gary M. Bolyard, President and CEO of Central Bancorporation, who will become
Vice Chairman/Commercial Banking of InterWest.
"After we receive regulatory approval, our bank will continue to serve our
customers and communities under the Central Washington Bank name. Customers of
any branch will be able to conduct all their financial business at any location
further identified with an InterWest affiliate logo. Our shareholders should
benefit from the active trading of InterWest's stock and the potential for
further in-market acquisitions of other community banks located in
non-metropolitan cities," added Bolyard.
Central Bancorporation has a strong and consistent record of earnings. During
1995 Central Bancorporation earned $2.6 million, representing a 1.28% return on
assets and a 17.6% return on equity. On 12/31/95 Central Bancorporation had
non-performing assets of $228,000 or 0.11% of assets and loan loss reserves of
$1.8 million, or 1.3% of net loans.
InterWest Bank was founded in 1957 and continues to pursue its strategic plan to
diversify. It offers a full range of non-traditional financial products through
InterWest Financial Services, insurance products through InterWest Agency, Inc.
and recently acquired Cornerstone Northwest Mortgage. The combined entity will
have forty-two offices, assets exceeding $1.5 billion, and will operate in
thirteen counties throughout Central and Western Washington.
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