<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Glacier Bancorp, Inc.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
[Glacier Bancorp, Inc. Letterhead]
________, 1998
Dear Fellow Stockholder:
You are cordially invited to attend the Annual Meeting ("Annual
Meeting") of Stockholders of Glacier Bancorp, Inc. ("Glacier"), a Delaware
corporation and bank holding company. The Annual Meeting will be held on
______________, _________ __, 1998, at _____ [a.m./p.m.] local time, at
________________________________, Montana.
The attached Notice of Annual Meeting and Prospectus/Proxy Statement
describes the formal business to be transacted at the Annual Meeting. At the
Annual Meeting, you will be asked to consider and vote upon the election of
directors as well as a proposal to approve the merger of Glacier with and into a
newly-created wholly-owned subsidiary corporation (the "Reorganization") in
order to increase the number of shares of capital stock available for issuance
and to resolve certain technical deficiencies in the three-for-two stock split
effected by Glacier in May 1997. The rights and preferences of the holders of
Glacier Common Stock will remain essentially unchanged, and it will not be
necessary for holders of Glacier Common Stock to exchange their existing stock
certificates.
THE BOARD OF DIRECTORS BELIEVES THAT THE REORGANIZATION IS IN THE BEST
INTERESTS OF GLACIER AND ITS STOCKHOLDERS, AND HAS UNANIMOUSLY APPROVED THE
REORGANIZATION. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE
REORGANIZATION.
The Board of Directors intends to proceed with the Reorganization only
if the Reorganization is approved by the affirmative vote of the holders of
two-thirds of the outstanding shares of Glacier Common Stock. We urge you to
review the attached Prospectus/Proxy Statement and to consider your vote
carefully. If you have any questions regarding this material in advance of the
Annual Meeting, please call Michael J. Blodnick, Glacier's Secretary, at (406)
756-4200.
IT IS VERY IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL
MEETING, REGARDLESS OF THE SIZE OF YOUR HOLDINGS, AND WHETHER YOU PLAN TO ATTEND
THE ANNUAL MEETING IN PERSON OR NOT. A FAILURE TO VOTE, EITHER BY NOT RETURNING
THE ENCLOSED PROXY OR BY CHECKING THE "ABSTAIN" BOX ON THE PROXY, WILL HAVE THE
SAME EFFECT AS A VOTE AGAINST ELECTION OF NOMINEES FOR DIRECTOR AND APPROVAL OF
THE REORGANIZATION. TO ASSURE THAT YOUR SHARES ARE REPRESENTED IN VOTING ON THIS
VERY IMPORTANT MATTER, PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY FORM IN
THE ENCLOSED POSTAGE-PREPAID ENVELOPE WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING. IF YOU DO ATTEND, YOU MAY (IF YOU WISH), REVOKE YOUR PROXY AND VOTE
YOUR SHARES IN PERSON AT THE ANNUAL MEETING.
Very truly yours,
John S. MacMillan
Chairman of the Board, President and
Chief Executive Officer
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY FORM
<PAGE> 3
GLACIER BANCORP, INC.
202 MAIN STREET
P.O. BOX 27
KALISPELL, MONTANA 59903-0027
(406) 756-4200
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON ________, 1998
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of
Glacier Bancorp, Inc. ("Glacier") will be held at the _________________________,
__________________________________, Montana, on ____________, ________, 1998, at
9:00 a.m., Mountain Daylight Time, for the following purposes:
1. ELECTION OF DIRECTORS. To elect three directors of Glacier for a
three-year term and until their successors are elected and have qualified;
2. APPROVAL OF REORGANIZATION. To consider and vote upon a proposal to
approve a merger (the "Reorganization") of Glacier with and into a newly-created
wholly-owned subsidiary corporation GB, Inc. ("GB") in order to increase the
number of shares of capital stock available for subsequent issuance and to
resolve certain technical deficiencies affecting the validity of certain of the
shares issued in the three-for-two stock split effected by Glacier in May 1997.
The Reorganization, as described in the accompanying Proxy Statement, is to be
effected pursuant to an Agreement and Plan of Merger dated as of March ___, 1998
(the "Merger Agreement") between Glacier and GB. The Merger Agreement
contemplates, among other things, that Glacier will merge with GB, with GB as
the surviving corporation. As a result of the Reorganization, (a) Glacier's
subsidiaries will become subsidiaries of GB and (b) each share of common stock,
par value $.01 per share, of Glacier will be converted into one share of common
stock, par value $.01 per share, of GB;
3. OTHER MATTERS. To transact such other business as may properly come
before the meeting or any adjournment thereof. Management is not aware of any
other such business.
The Board of Directors of Glacier has fixed ________, 1998 as the record
date for the determination of stockholders entitled to notice of and to vote at
the Annual Meeting. Only those stockholders of record as of the close of
business on that date will be entitled to vote at the Annual Meeting or at any
adjournment of such meeting.
By Order of the Board of Directors
Michael J. Blodnick
Secretary
_______, 1998
Kalispell, Montana
- - --------------------------------------------------------------------------------
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN TO
BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY
PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THIS MEETING, YOU MAY VOTE
EITHER IN PERSON OR BY YOUR PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN
WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
- - --------------------------------------------------------------------------------
<PAGE> 4
SUBJECT TO COMPLETION, DATED APRIL 24, 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROXY STATEMENT/PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
PRELIMINARY PROXY STATEMENT
GLACIER BANCORP, INC.
PROSPECTUS
GB, INC. COMMON STOCK (PAR VALUE $.01 PER SHARE)
This Prospectus/Proxy Statement is being furnished to holders of shares
of common stock, par value $.01 per share ("Glacier Common Stock"), of Glacier
Bancorp, Inc. ("Glacier"), a Delaware corporation and bank holding company, in
connection with the solicitation of proxies by the Board of Directors of Glacier
("Glacier Board") for use at the Annual Meeting of Glacier Stockholders (the
"Annual Meeting") to be held on ________________, 1998, at ______ [a.m./p.m.]
local time, at ____________________, ______________________, Montana and at any
adjournments or postponements of the Annual Meeting. This Prospectus/Proxy
Statement and the accompanying proxy forms are first being mailed to the
stockholders of Glacier on __________, 1998.
At the Annual Meeting, shareholders will be asked to consider and vote
upon the election of directors as well as a proposal to approve a merger (the
"Reorganization") of Glacier with and into GB, Inc., a newly-created Delaware
corporation and wholly-owned subsidiary of Glacier ("GB") in order to increase
the number of shares of capital stock available for issuance and to resolve
certain technical deficiencies affecting the validity of certain of the shares
issued in the three-for-two stock split effected by Glacier in May 1997 (the
"Stock Split"). The rights and preferences of the holders of Glacier Common
Stock will remain essentially unchanged, and it will not be necessary for
holders of Glacier Common Stock to exchange their existing stock certificates.
The Reorganization will be effected under the terms of a Plan and Agreement of
Merger dated as of ___________, 1998, between Glacier and GB (the "Merger
Agreement"). The Merger Agreement is hereby incorporated in this
Prospectus/Proxy Statement by reference. The Merger Agreement is attached to
this Prospectus/Proxy Statement as Appendix A.
This Prospectus/Proxy Statement also constitutes the Prospectus of GB
filed as part of a Registration Statement on Form S-4 ("Registration Statement")
with the Securities and Exchange Commission ("SEC") under the Securities Act of
1933, as amended ("1933 Act"), relating to the shares of common stock, par value
$.01 per share, of GB ("GB Common Stock") to be issued in the Reorganization.
When the Reorganization becomes effective, all outstanding shares of Glacier
Common Stock, including shares issued pursuant to the Stock Split (the "Stock
Split Shares") will be converted into shares of GB Common Stock. For a more
detailed discussion of the foregoing provisions, and a description of certain
other significant considerations in connection with the Reorganization, see
"PROPOSAL II: THE REORGANIZATION - Basic Terms of Merger"; and "- Exchange of
Stock Certificates."
THIS PROSPECTUS/PROXY STATEMENT DOES NOT COVER ANY RESALE OF THE
SECURITIES TO BE RECEIVED BY STOCKHOLDERS OF GLACIER UPON CONSUMMATION OF THE
REORGANIZATION, AND NO PERSON IS AUTHORIZED TO MAKE ANY USE OF THIS
PROSPECTUS/PROXY STATEMENT IN CONNECTION WITH ANY SUCH RESALE.
THE SHARES OF GB COMMON STOCK ISSUABLE IN THE REORGANIZATION ARE NOT
SAVINGS OR DEPOSIT ACCOUNTS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT
INSURED BY A BANK INSURANCE FUND OF THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY OR INSTRUMENTALITY.
<PAGE> 5
THE SHARES OF GB COMMON STOCK ISSUABLE IN THE REORGANIZATION HAVE NOT
BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The principal executive offices of Glacier and GB are located at 202
Main Street, P.O. Box 27, Kalispell, Montana 59903-0027. It is anticipated that
this Prospectus/Proxy Statement and the accompanying proxy will first be sent to
shareholders on or about May ___, 1998, together with a copy of Glacier's Annual
Report.
As a general matter, the presence in person or by proxy of holders of
record of a majority of the outstanding shares of Glacier Common Stock is
required to constitute a quorum for the transaction of business at the Annual
Meeting. However, due to certain technical deficiencies relating to the Stock
Split, the Chairman of the Glacier Board has indicated that he will request an
adjournment of the Annual Meeting absent the presence in person or by proxy of
the holders of record of two-thirds of the issued and outstanding shares of
Glacier Common Stock (including, for purposes of such calculation, the Stock
Split Shares). Abstentions and broker nonvotes are counted for purposes of
determining the presence of a quorum for the transaction of business at the
Annual Meeting.
If the accompanying form of proxy is properly executed and returned, the
shares represented thereby will be voted in accordance with the instructions
specified therein. In the absence of instructions to the contrary, such shares
will be voted "FOR" each of the proposals set forth therein. Any shareholder
executing a proxy has the power to revoke it at any time prior to the voting
thereof on any matter (without, however, affecting any vote taken prior to such
revocation) by delivering written notice to Michael J. Blodnick, Secretary of
Glacier, by executing another proxy dated as of a later date or by voting in
person at the Annual Meeting.
----------------
The date of this Prospectus/Proxy Statement is __________ ____, 1998.
<PAGE> 6
AVAILABLE INFORMATION
Glacier is subject to the information and reporting requirements of the
Securities Exchange Act of 1934, as amended (the "1934 Act"). In accordance with
the 1934 Act, Glacier files reports, proxy statements, and other information
with the SEC. Such reports, proxy statements, and other information filed by
Glacier may be inspected and copied at prescribed rates at the public reference
facilities maintained by the SEC at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the regional offices of the SEC
located at 7 World Trade Center, Thirteenth Floor, New York, New York 10048, and
at The Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such materials may also be obtained at prescribed rates from
the Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington,
D.C. 20549. Copies of materials filed by Glacier with the SEC may also be
obtained through the SEC's Internet address at http://www.sec.gov. In addition,
materials filed by Glacier are available for inspection at the offices of The
Nasdaq Stock Market, Inc. ("Nasdaq"), 1735 K Street, N.W., Washington, D.C.
20006. Following completion of the Reorganization, GB will file such reports and
other information as required under the 1934 Act and the rules of Nasdaq.
This Prospectus/Proxy Statement constitutes part of the Registration
Statement (File No. 333-___________) filed by GB with the SEC under the 1933
Act. This Prospectus/Proxy Statement omits certain information contained in the
Registration Statement in accordance with the rules and regulations of the SEC.
Reference is made hereby to the Registration Statement and related exhibits for
further information with respect to GB and Glacier. Statements contained herein
or in any document incorporated herein by reference as to the contents of any
contract or other document referred to herein or therein are not necessarily
complete, and in each instance, reference is made to the copy of such contract
or other document filed as an exhibit to the Registration Statement or such
other document incorporated herein by reference. Each such statement is
qualified in its entirety by such reference.
It is anticipated that, upon completion of the Reorganization, the GB
Common Stock will be quoted on the Nasdaq National Market under the current
ticker symbol "GBCI." At such time, the Glacier Common Stock will be withdrawn
from quotation on the Nasdaq National Market and from registration under Section
12 of the 1934 Act.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Glacier with the SEC under the 1934 Act
are incorporated by reference herein:
1. Glacier's Annual Report on Form 10-K for the year ended December 31,
1997 ("Glacier 1997 10-K"); and
2. Glacier's Current Report on Form 8-K dated March 6, 1998 ("Glacier
1998 8-K").
All documents filed by Glacier under Sections 13(a), 13(c), 14 and 15(d)
of the 1934 Act after the date hereof and before the Annual Meeting are
incorporated by reference herein and are a part hereof from each document's date
of filing. Any statement contained in a document incorporated by reference
herein as modified or superseded for purposes hereof to the extent that a
statement contained herein or in any other subsequently filed document that also
is incorporated by reference herein modifies or supersedes that statement. Any
statement so modified or superseded will not be deemed, except as so modified or
superseded, to constitute a part hereof.
-------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS/PROXY STATEMENT AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY GLACIER OR GB. THIS PROSPECTUS/PROXY STATEMENT DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, THE
SECURITIES OFFERED BY THIS PROSPECTUS/PROXY STATEMENT, OR THE SOLICITATION OF A
PROXY, IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER,
SOLICITATION OF AN OFFER, OR PROXY SOLICITATION.
<PAGE> 7
NEITHER THE DELIVERY OF THIS PROSPECTUS/PROXY STATEMENT NOR ANY
DISTRIBUTION OF THE SECURITIES OFFERED UNDER THE TERMS OF THIS PROSPECTUS/PROXY
STATEMENT SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS OF GB OR
GLACIER AND ANY OF THEIR RESPECTIVE SUBSIDIARIES SINCE THE DATE OF THIS
PROSPECTUS/PROXY STATEMENT OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE HEREOF.
FORWARD-LOOKING STATEMENTS
Certain information contained herein or incorporated herein by reference
contains forward-looking statements that involve a number of risks and
uncertainties. A number of factors could cause results to differ materially from
those anticipated by such forward-looking statements. These factors include, but
are not limited to, the competitive environment in the banking industry in
general and in Glacier's specific market areas, changes in prevailing interest
rates and the availability of financing, inflation, changes in costs of goods
and services, and economic conditions in general and in Glacier's specific
market areas. In addition, such forward-looking statements are necessarily
dependent upon assumptions (including but not limited to assumptions regarding
the application of tax or other laws to the Reorganization and other
transactions), estimates and data that may be incorrect or imprecise.
Accordingly, any forward-looking statements included herein or incorporated
herein by reference do not purport to be predictions of future events or
circumstances and may not be realized. Forward-looking statements contained
herein include statements relating to the management and business focus of GB
and Glacier following completion of the Reorganization and certain tax
consequences of the Reorganization, including statements in "PROPOSAL II: THE
REORGANIZATION - The Reorganization," "-Certain Federal Income Tax Consequences"
and "-Certain Information Regarding GB." Forward-looking statements included in
documents incorporated herein by reference are described in such documents.
<PAGE> 8
TABLE OF CONTENTS
<TABLE>
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GLOSSARY .........................................................................................G-1
SUMMARY 1
PROPOSAL I: ELECTION OF DIRECTORS..................................................................4
General.....................................................................................4
Information with Respect to Nominees for Director and Continuing Directors..................4
Stockholder Nominations.....................................................................6
Background of Directors.....................................................................6
Board Meetings and Committees...............................................................7
Compensation of Directors...................................................................7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT......................................8
Executive Officers who are not Directors....................................................8
Beneficial Owners...........................................................................8
Certain Transactions........................................................................9
EXECUTIVE COMPENSATION.............................................................................10
Option Grants in Last Fiscal Year..........................................................11
STOCK OPTION GRANTS IN LAST FISCAL YEAR............................................................11
Aggregated Option Exercises in Last Fiscal Year............................................11
Employment Agreements......................................................................12
Deferred Compensation Plan.................................................................12
Supplemental Executive Retirement Plan.....................................................12
1989 Incentive Stock Option Plan...........................................................12
1995 Employee Stock Option Plan............................................................13
Report of the Compensation Committee.......................................................13
PERFORMANCE GRAPH..................................................................................14
EMPLOYEE LOAN PROGRAM..............................................................................15
COMPLIANCE WITH SECTION 16(A) FILING REQUIREMENTS..................................................15
PROPOSAL II: THE REORGANIZATION...................................................................15
Background.................................................................................16
Reasons for the Reorganization.............................................................16
Recommendation of the Glacier Board of Directors...........................................17
Basic Terms of the Merger..................................................................17
Exchange of Stock Certificates.............................................................17
Conditions to the Reorganization; Regulatory Approvals.....................................17
Amendment or Termination of Merger Agreement...............................................18
Certain Federal Income Tax Consequences....................................................18
Accounting Treatment of Merger.............................................................18
Certain Information Regarding GB...........................................................19
GB Certificate of Incorporation and Bylaws.................................................19
Description of GB Capital Stock............................................................19
SUPERVISION AND REGULATION.........................................................................21
Introduction...............................................................................21
The Holding Company........................................................................21
</TABLE>
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<TABLE>
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General.............................................................................21
Bank Holding Company Structure......................................................21
Transactions with Affiliates........................................................22
Regulation of Management............................................................22
FIRREA..............................................................................22
Tie-In Arrangements.................................................................22
State Law Restrictions..............................................................22
Securities Registration and Reporting...............................................22
The Subsidiaries...........................................................................23
General.............................................................................23
Loans-to-One Borrower...............................................................23
FDIC Insurance......................................................................23
Capital Requirements................................................................24
Restrictions on Capital Distributions...............................................25
Federal Home Loan Bank System.......................................................25
Federal Reserve System..............................................................26
Recent Federal Legislation..........................................................26
CERTAIN LEGAL MATTERS..............................................................................26
OTHER MATTERS......................................................................................26
INDEPENDENT AUDITORS...............................................................................27
STOCKHOLDER PROPOSALS..............................................................................27
ANNUAL REPORTS.....................................................................................27
APPENDIX A - Plan and Agreement of Merger
APPENDIX B - Certificate of Incorporation of GB, Inc.
</TABLE>
ii
<PAGE> 10
GLOSSARY OF CERTAIN KEY TERMS
<TABLE>
<S> <C>
1933 ACT.................... The Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
1934 ACT.................... The Securities Exchange Act of 1934, as amended,
and related rules and regulations.
BHCA........................ Bank Holding Company Act of 1956, as amended.
BOARD....................... Board of Directors.
CLOSING..................... The closing of the Reorganization as
contemplated in the Merger Agreement.
CODE........................ The Internal Revenue Code of 1986, as amended.
DGCL........................ Delaware General Corporation Law.
EFFECTIVE TIME.............. The date on which the closing of the
Reorganization will occur, as set forth in the
Merger Agreement.
FDIC........................ The Federal Deposit Insurance Corporation.
FRB......................... The Board of Governors of the Federal Reserve
System.
GAAP........................ Generally accepted accounting principles,
consistently applied.
GB.......................... GB, Inc., a Delaware corporation.
GLACIER..................... Glacier Bancorp, Inc., a Delaware corporation
and bank holding company.
GLACIER COMMON STOCK........ Glacier's Common Stock, par value $.01 per
share.
GLACIER FINANCIAL
STATEMENTS.................. Glacier's audited consolidated statements of
financial condition as of December 31, 1997 and
1996, and the related audited consolidated
statements of operations, cash flows and
stockholders' equity for each of the years in
the three-year period ended December 31, 1997,
included in the Glacier 1997 10-K and
incorporated by reference herein..
HOLA........................ Home Owner's Loan Act, as amended.
KPMG........................ KPMG Peat Marwick LLP, independent certified
public accountants.
REORGANIZATION.............. The merger of Glacier with and into GB in
accordance with the Merger Agreement.
MERGER AGREEMENT............ The Plan and Agreement of Merger, dated as of
March ___, 1998, between Glacier and GB.
PROSPECTUS/PROXY STATEMENT.. The Prospectus/Proxy Statement, contained in the
Registration Statement, and to be mailed to
Glacier's stockholders, together with any
amendments and supplements thereto.
REGISTRATION STATEMENT...... The Registration Statement on Form S-4, of which
this Prospectus/Proxy Statement forms a part,
filed with the SEC by GB under the 1933 Act, for
the purpose of registering the shares of GB
Common Stock to be issued in the Reorganization.
REGULATORY APPROVALS........ The required regulatory approvals of the
transaction by the FRB.
SEC......................... The Securities and Exchange Commission.
STATE BANKS................. Glacier Bank, Glacier Bank of Whitefish, Glacier
Bank of Eureka, and First Security Bank of
Missoula, Glacier's subsidiary banks.
</TABLE>
G-1
<PAGE> 11
SUMMARY
The following material summarizes certain information contained
elsewhere in this Prospectus/Proxy Statement. This summary is not intended to be
complete and is qualified by reference to the more detailed information
contained elsewhere in this Prospectus/Proxy Statement (including the
appendices). Capitalized terms used in this Prospectus/Proxy Statement, unless
the context otherwise requires, have the meanings ascribed to them in the
Glossary of Certain Key Terms inside the front cover. Additionally, terms used
principally in particular sections of this Prospectus/Proxy Statement are
defined in the sections where they are used.
ELECTION OF DIRECTORS Three persons have been nominated for
election as Directors of Glacier for terms
expiring at the annual meeting of
shareholders to be held in the year 2001
and until their successors are duly
elected and qualified. The nominees are
Allen J. Fetscher, John S. MacMillan and
F. Charles Mercord, each of whom currently
serves as a director. See "PROPOSAL I:
ELECTION OF DIRECTORS." If the
Reorganization is approved, the persons
serving as directors of Glacier will serve
as the directors of GB.
THE REORGANIZATION
Background Glacier has identified a concern that the
total number of issued and outstanding
shares of Glacier Common Stock may have
exceeded the number of shares of Common
Stock that the Glacier Board was
authorized to issue under the Glacier
Certificate. In addition, although the
Glacier Board approved the Stock Split,
Glacier inadvertently failed to obtain
shareholder approval of the Stock Split
and file the required certificate of
amendment to its Certificate of
Incorporation. See "PROPOSAL II: THE
REORGANIZATION - Background."
Reasons for the Merger Delaware counsel has advised Glacier that
it may resolve the technical deficiencies
that occurred in the Stock Split, as well
as issues relating to the validity of the
Stock Split Shares, by effecting the
Reorganization. See "PROPOSAL II: THE
REORGANIZATION - Reasons for the Merger."
Recommendation of the Board of
Directors THE GLACIER BOARD UNANIMOUSLY RECOMMENDS
THAT ITS STOCKHOLDERS VOTE FOR APPROVAL OF
THE REORGANIZATION AND MERGER AGREEMENT.
See "PROPOSAL II: THE REORGANIZATION -
Recommendation of the Board of Directors."
Basic Terms of the Merger The Merger Agreement provides, among other
things, that: (i) Glacier will be merged
with and into GB, with GB being the
surviving corporation; (ii) each share of
Glacier Common Stock outstanding
immediately prior to the Effective Time
(including the Stock Split) will
automatically be converted into one share
of GB Common Stock; (iii) the GB Common
Stock presently held by Glacier will
canceled; and (iv) GB will amend its
Certificate of Incorporation to change its
name to "Glacier Bancorp, Inc." See
"PROPOSAL II: THE REORGANIZATION - Basic
Terms of the Merger."
Exchange of Stock Certificates If the Reorganization is consummated, it
will not be necessary for holders of
Glacier Common Stock to exchange their
existing stock certificates for GB Common
Stock certificates. See "PROPOSAL II: THE
REORGANIZATION - Exchange of Stock
Certificates."
1
<PAGE> 12
Conditions to the Reorganization;
Regulatory Approvals The Glacier Board intends to proceed with
the Reorganization only if the
Reorganization is approved by the
affirmative vote of the holders of
two-thirds of the issued and outstanding
shares of Glacier Common Stock. An
application for a waiver from filing
requirements was filed with and received
from the FRB, whereby the FRB waived the
requirements to file a formal application.
See "PROPOSAL II: THE REORGANIZATION -
Conditions to the Reorganization;
Regulatory Approvals."
Amendment or Termination of the
Merger Agreement The Merger Agreement provides that Glacier
and GB may by written agreement amend the
Merger Agreement at any time prior the
Effective Time, and that the Merger
Agreement may be terminated and abandoned
at any time by mutual consent of the
Boards of Directors of Glacier and GB. See
"PROPOSAL II: THE REORGANIZATION -
Amendment or Termination of the Merger
Agreement."
Certain Federal Income Tax
Consequences Glacier will receive an opinion from its
special counsel, Duane, Morris & Heckscher
LLP, to the effect that for federal income
tax purposes: (i) no gain or loss will be
recognized by Glacier as a result of the
merger; (ii) no gain or loss should be
recognized by holders of Glacier Common
Stock pursuant to the Merger; (iii) the
tax basis of the GB Common Stock received
by a holder of Glacier Common Stock
pursuant to the Merger should be the same
as the tax basis of such holder's Glacier
Common Stock exchanged therefor; and (iv)
the holding period of the GB Common Stock
received by a holder of Glacier Common
Stock pursuant to the Merger should
include the holding period of such
holder's Glacier Common Stock exchanged
therefor.
The Internal Revenue Service may take the
position, however, that holders who
received or purchased shares that were
issued in, or subsequent to, the Stock
Split did not have a beneficial ownership
interest in Glacier until the Merger was
consummated and, as a result, the holding
period in the GB shares received in the
Merger would not begin until the date that
the Merger was consummated. Duane, Morris
& Heckscher LLP does not agree with this
position. In rendering its opinion, Duane,
Morris & Heckscher LLP has concluded that
a holder of Glacier Common Stock should
have a beneficial ownership interest in
Glacier to the extent of the holder's
shares of Glacier Common Stock,
notwithstanding any Delaware state law
deficiencies that may exist as to shares
issued in, or subsequent to, the Stock
Split.
HOLDERS OF GLACIER COMMON STOCK ARE URGED
TO CONSULT THEIR OWN TAX ADVISORS AS TO
THE PARTICULAR TAX CONSEQUENCES OF THE
MERGER TO THEM, INCLUDING THE EFFECT OF
STATE AND LOCAL TAXES. SEE "PROPOSAL II:
THE REORGANIZATION - CERTAIN FEDERAL
INCOME TAX CONSEQUENCES."
Accounting Treatment of the
Reorganization The Reorganization will be accounted for
as a combination of entities under common
control. See "PROPOSAL II: THE
REORGANIZATION - Accounting Treatment of
the Reorganization."
2
<PAGE> 13
Certain Information Regarding
GB; GB Certificate of
Incorporation and Bylaws As of the Effective Time, the directors
and officers of Glacier immediately prior
to the Effective Time shall be the
directors and officers of GB. Upon
consummation of the Reorganization, in
accordance with the terms of the Merger
Agreement, GB will assume Glacier's
obligations under Glacier's stock plans
and will assume as plan sponsor the
employee benefit plans currently sponsored
by Glacier. GB has made application to
Nasdaq to list the GB Common Stock on the
Nasdaq National Market, and GB will be
identified on the Nasdaq National Market
by Glacier's current symbol, "GBCI".
Davidson Trust Company, the Transfer Agent
and Registrar of Glacier's Common Stock,
will serve in the same capacities for the
GB Common Stock.
The Certificate of Incorporation of GB is
identical in all material respects to the
Certificate of Incorporation of Glacier
(the "Company Articles"), except with
respect to the number of shares of GB's
authorized capital stock. From and after
the Effective Time, the Bylaws of Glacier
as in effect immediately prior to the
Effective Time shall be the bylaws of GB.
See "PROPOSAL II: THE REORGANIZATION -
Certain Information Regarding GB" and " -
GB Certificate of Incorporation and
Bylaws."
Description of GB Capital Stock GB's authorized capital stock consists of
15,000,000 shares of common stock, par
value $.01 per share, and 1,000,000 shares
of preferred stock, par value $.01 per
share. Except with respect to the number
of authorized shares, the capital stock of
GB and the rights and preferences of the
holders thereof are identical to the
capital stock of Glacier. See "PROPOSAL
II: THE REORGANIZATION - Description of GB
Capital Stock."
3
<PAGE> 14
PROPOSAL I: ELECTION OF DIRECTORS
GENERAL
The Certificate of Incorporation of Glacier provides that the Board of
Directors shall be divided into three classes as nearly equal in number as
possible, and that the members of each class shall be elected for terms of three
years and until their successors are elected and qualified, with one of the
three classes of directors to be elected each year. The Bylaws provide that
there shall be a minimum of seven (7) and a maximum of twelve (12) directors,
the exact number to be determined by resolution of the Board. The Bylaws further
allow that by resolution, the Board may be increased or decreased within the
minimum and maximum limits. The number of directors set by the Board is nine.
At the Annual Meeting, stockholders of Glacier will be asked to elect
three directors of Glacier for a three-year term expiring in 2001 and until
their successors are elected and qualified. The three nominees for election as
directors who were selected by the Nominating Committee of the Board of
Directors are Allen J. Fetscher, John S. MacMillan and F. Charles Mercord, each
of whom currently serve as directors of Glacier. There are no arrangements or
understandings between the persons named and any other person pursuant to which
such person was selected as a nominee for election as a director at the Annual
Meeting, and no director or nominee for director is related to any other
director or executive officer of Glacier by blood, marriage or adoption.
If any person named as nominee should be unable or unwilling to stand
for election at the time of the Annual Meeting, the proxies will nominate and
vote for any replacement nominee or nominees recommended by the Board of
Directors of Glacier. At this time, the Board of Directors knows of no reason
why any of the nominees may not be able to serve as a director if elected. The
election of each of the nominees as a director requires the affirmative vote of
a majority of the outstanding shares of Glacier Common Stock.
THE BOARD OF DIRECTORS OF GLACIER RECOMMENDS A VOTE FOR ELECTION OF THE
NOMINEES FOR DIRECTOR.
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR AND CONTINUING DIRECTORS
The following table sets forth certain information with respect to the
nominees for director for a three-year term expiring in 2001 and the continuing
directors of Glacier. The table includes (i) principal occupations during the
past five years; (ii) the term of office; and (iii) the number and percentage of
shares of Glacier Common Stock beneficially owned by each individual on January
1, 1998. Where beneficial ownership is less than one percent of all outstanding
shares, the percentage is not reflected in the table.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
AGE AS OF BENEFICIAL OWNERSHIP
JANUARY 1, DIRECTOR TERM OF COMMON STOCK AS OF
NAME 1998 POSITION SINCE EXPIRES JANUARY 1, 1998(1)
---- ---------- -------- -------- ------- ---------------------
<S> <C> <C> <C> <C>
NOMINEES FOR DIRECTOR
Allen J. Fetscher 53 Director 1996 1998 141,882(2.07%)(2)
John S. MacMillan 61 Chairman, 1977 1998 182,465(2.66%)(3)
President and
Chief Executive
Officer
F. Charles Mercord 66 Director 1975 1998 139,943(2.04%)(4)
</TABLE>
4
<PAGE> 15
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
AGE AS OF BENEFICIAL OWNERSHIP
JANUARY 1, DIRECTOR TERM OF COMMON STOCK AS OF
NAME 1998 POSITION SINCE EXPIRES JANUARY 1, 1998(1)
---- ---------- -------- -------- ------- ---------------------
<S> <C> <C> <C> <C>
CONTINUING DIRECTORS
Michael J. Blodnick 45 Director, 1993 1999 90,661(1.32%)(5)
Executive Vice
President and
Secretary
Darrel R. Martin 73 Director 1979 1999 114,358(1.71%)(6)
Harold A. Tutvedt 68 Director 1983 1999 117,587(1.72%)(7)
William L. Bouchee 56 Director 1996 2000 136,200(1.99%)
L. Peter Larson 59 Director 1985 2000 239,664(3.50%)
Everit A. Sliter 58 Director 1973 2000 166,488(2.43%)(8)
</TABLE>
(1) Pursuant to rules promulgated by the SEC under the Exchange Act, an
individual is considered to beneficially own shares of Common Stock if he
or she has or shares: (1) voting power, which includes the power to vote,
or direct the voting of the shares; or (2) investment power, which
includes the power to dispose, or direct the disposition of the shares.
Unless otherwise indicated, the individual has sole voting and sole
investment power with respect to such holdings. Stock Split Shares are
included in the number of issued and outstanding shares of Glacier Common
Stock for the purposes of all calculations herein.
(2) Includes 36,153 shares owned by Mr. Fetscher's wife; 29,078 considered
beneficially held as Trustee for shares held in a trust for the benefit of
Mr. Fetscher's minor children; and 38,658 held by a family corporation, of
which Mr. Fetscher is a principal and 1,840 shares options.
(3) Includes 18,645 shares owned jointly with Mr. MacMillan's wife; 36,543
owned by Mr. MacMillan's wife; 45,546 shares held for Mr. MacMillan's
account in Glacier's Pension and Profit Sharing Plans; 2,206 held in an
IRA account for the benefit of Mr. MacMillan; and 12,766 shares which may
be acquired within 60 days by the exercise of stock options.
(4) Includes 90,642 shares held in an IRA for the benefit of Mr. Mercord;
26,119 shares owned by Mr. Mercord's wife; and 13,282 shares which could
be acquired by the exercise of stock options.
(5) Includes 34,184 shares held jointly with Mr. Blodnick's wife; 34,812
shares owned by Mr. Blodnick's wife; 1,204 shares which Mr. Blodnick is
custodian for his children; 7,595 shares held for Mr. Blodnick's account
in Glacier's Pension and Profit Sharing Plans; and 12,866 shares which
could be acquired within 60 days by the exercise of stock options.
(6) Includes 45,523 shares owned by Mr. Martin's wife; 2,967 in an IRA account
for the benefit of Mr. Martin; and 13,282 shares which could be acquired
within 60 days by the exercise of stock options.
(7) Includes 63,056 shares owned jointly with Mr. Tutvedt's wife, 2,668 shares
owned by Mr. Tutvedt's wife; 33,624 held jointly with brother; 2,838
shares held in an IRA account for the benefit of Mr. Tutvedt; 7,119 shares
held jointly by Mr. Tutvedt's wife and daughter; and 8,282 shares which
could be acquired within 60 days by the exercise of stock options.
5
<PAGE> 16
(8) Includes 65,670 shares held jointly with Mr. Sliter's wife; 20,983 shares
owned by Mr. Sliter's wife; 18,738 shares owned by Mr. Sliter's children;
34,154 shares held in an IRA account for the benefit of Mr. Sliter; 3,338
shares held in Glacier's SEP; and 13,282 shares which could be acquired
within 60 days by the exercise of stock options.
STOCKHOLDER NOMINATIONS
Section 4.15 of Glacier's Bylaws governs nominations for election to the
Board of Directors and requires all nominations by stockholders to be made in
compliance with the notice provisions in that section. Written notice of a
stockholder nomination for an election to be held at an annual meeting must be
given either by personal delivery or by United States mail, postage prepaid to
the Secretary of Glacier not later than sixty days prior to the anniversary date
of the mailing of proxy materials by Glacier in connection with the immediately
preceding annual meeting. Each such notice shall set forth: (a) the name and
address of the stockholder who intends to make the nomination and of the person
or persons to be nominated; (b) a representation that the stockholder is a
holder of record of stock of Glacier entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to nominate the person or
persons specified in the notice; (c) a description of all arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder; (d) such other information
regarding each nominee proposed by such stockholder as would be required to be
included in a proxy statement filed pursuant to the proxy rules of the SEC; and
(e) the consent of each nominee to serve as a director of Glacier if so elected.
The presiding officer of the meeting may refuse to acknowledge the nomination of
any person not made in compliance with the foregoing procedures. Glacier did not
receive any stockholder nominations for director in connection with the upcoming
Annual Meeting.
BACKGROUND OF DIRECTORS
MICHAEL J. BLODNICK is the Executive Vice President and Secretary of
Glacier; the President and a director of Glacier Bank, a subsidiary of Glacier,
Glacier Bank of Whitefish, a subsidiary of Glacier ("GBW"); Executive Vice
President of Glacier Bank of Eureka, a subsidiary of Glacier ("GBE"); and a
director of First Security Bank of Missoula, a subsidiary of Glacier ("FSB").
Mr. Blodnick has been employed by Glacier Bank since 1978.
WILLIAM L. BOUCHEE has served as the President and Chief Executive
Officer of FSB since 1991. Mr. Bouchee is also a director of FSB and was
appointed to the Board of Directors of Glacier and Glacier Bank in December
1996.
ALLEN J. FETSCHER was appointed to the Board of Directors of Glacier and
Glacier Bank in December 1996. Mr. Fetscher also serves as the Chairman of FSB.
Mr. Fetscher is the President of Fetscher's Inc. He is also the Vice President
of American Public Land Exchange Co., Inc. and the owner of Associated Agency, a
company involved in real estate.
L. PETER LARSON has been the President of American Timber Company since
1978 and also serves as a director of Glacier Bank and GBE. Mr. Larson is also
President and CEO of L. Peter Larson Co. and Glacier Gold Compost, as well as a
Partner and CEO of American Stud Co. and Larson and Sparkling Co.
JOHN S. MACMILLAN, who joined Glacier Bank in 1967, has been Chairman,
President and Chief Executive Officer of Glacier since January 1, 1993 and is
also Chairman of each of Glacier Bank, GBW and GBE and a director of FSB. Prior
to that he served as President and Chief Executive Officer of Glacier Bank from
January 1993 to January 1997, President and Chief Operating Officer of Glacier
Bank from 1989 to January 1993, and as Executive Vice President of Glacier Bank
from 1979 to 1989.
DARREL R. MARTIN is a retired independent businessman. Mr. Martin is
also a director of Glacier Bank and also serves on the Board of Directors of
Winter Sports, Inc.
F. CHARLES MERCORD served as President and Managing Officer of Glacier
Bank from 1977 to 1989 and as Chairman and Chief Executive Officer of Glacier
Bank from 1989 until December 1992. He also served as Chairman and Chief
Executive Officer of Glacier from 1990 until December 1992. Mr. Mercord, who
joined Glacier Bank in 1961, is also a director of Glacier Bank.
EVERIT A. SLITER has been a partner of Jordahl & Sliter, a certified
public accounting firm since 1965 and is also a director of Glacier Bank.
HAROLD A. TUTVEDT is the owner of Harold Tutvedt Farm and is also a
director of Glacier Bank.
6
<PAGE> 17
BOARD MEETINGS AND COMMITTEES
The Board of Directors of Glacier met 16 times during the year ended
December 31, 1997. Each of the present directors attended at least 75% of the
meetings of the Board of Directors held in 1997. The Board of Directors has
established standing committees of the Board of Directors that include an Audit
Committee and a Compensation Committee.
Each member of the Board of Directors of Glacier also currently serves
as a member of the Board of Directors of Glacier Bank, which meets monthly and
may have special meetings.
The Audit Committee consists of six non-employee members of the Board of
Directors of Glacier, whose members include: Messrs. Fetscher, Larson, Martin,
Mercord, Sliter (Chairman) and Tutvedt. The Audit Committee meets annually with
Glacier's independent auditor to review the audit and reports, and evaluate
internal controls, and at such other times as are necessary or appropriate. The
Audit Committee met eleven times during 1997.
The Compensation Committee consists of six non-employee members of the
Board of Directors of Glacier whose members include: Messrs. Fetscher, Larson,
Martin, Mercord, Sliter and Tutvedt (Chairman). The responsibilities of the
Compensation Committee include reviewing management compensation, investigating
new and different forms of compensation and making recommendations on
compensation to the Board of Directors. The Compensation Committee met three
times during 1997.
The Board of Directors of Glacier acts as The Nominating Committee for
selecting nominees for election as directors. The Nominating Committee met once
during 1997.
COMPENSATION OF DIRECTORS
Board Fees. Each director earns $1,350 per month for services as a
member of the Board of Directors of Glacier and Glacier Bank. However, directors
who are employed by Glacier receive no additional compensation for their
services as members of the Board.
Directors' Stock Option Plan. In 1994, the Board of Directors and
Shareholders of Glacier adopted the 1994 Directors' Stock Option Plan (the
"Plan") for outside directors. Under the Plan, 50,000 shares of Glacier Common
Stock were reserved for issuance upon the exercise of nonqualified stock options
granted to non-employee directors of Glacier and each Subsidiary Bank. Under the
Plan, each such director was granted an option to purchase 5,000 shares of
Glacier Common Stock at a per share price equal to the fair market value of a
share of such stock on the date of grant, which was $19.75 per share (in each
case as adjusted for subsequent stock dividends). Each option granted under the
Plan expires upon the earlier of five years following the date of grant or three
years following the date the optionee ceases to be a director, except in the
event of death, in which case the period is one year from the date of death. In
1997, options to purchase a total of 7,840 shares of Glacier's Common Stock were
granted to directors and 7,847 shares were issued pursuant to the exercise of
options.
7
<PAGE> 18
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following table sets forth information with respect to the executive
officers who are not directors or nominees for director of Glacier. All
executive officers are elected annually by the Board of Directors and serve at
the discretion of the Board of Directors.
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership of
Common Stock as of
Name and Age Position January 1, 1998(1)
- - ------------ -------- -----------------------
<S> <C> <C>
Joan L. Holling, 57 Senior Vice President and Assistant 63,912(2)
Secretary of Glacier and Glacier Bank;
employed since 1974
James H. Strosahl, 55 Senior Vice President and Chief 24,493(3)
Financial Officer of Glacier and
Glacier Bank; employed since 1993
Stephen J. Van Helden, 48 Treasurer of Glacier and Executive 85,084(4)
Vice President of Glacier Bank;
employed since 1974
Martin E. Gilman, 52 Senior Vice President of Glacier and 40,492(5)
Glacier Bank; employed since 1973
Directors and executive 1,546,196(22.58%)(6)
officers as a group (thirteen
(13) persons)
</TABLE>
- - ---------------------
(1) Stock Split Shares are included in the number of issued and outstanding
shares of Glacier Common Stock for the purposes of all calculations
herein.
(2) Includes 37,409 shares held jointly with Ms. Holling's husband, with whom
voting and dispositive power is shared; 11,148 shares held jointly in a
margin account with Ms. Holling's daughters; 6,078 shares held in
Glacier's Pension & Profit Sharing Plans; and 6,600 shares which could be
acquired within 60 days by the exercise of stock options.
(3) Includes 4,992 shares held jointly with Mr. Strosahl's wife with whom
voting and dispositive power is shared; 8,714 shares held in an IRA
account; and 6,600 shares which could be acquired within 60 days by the
exercise of stock options
(4) Includes 38,241 shares held jointly with Mr. Van Helden's wife with whom
voting and dispositive power is shared; 35,743 shares held in Glacier's
Pension and Profit Sharing Plans; 400 held by Mr. Van Helden's minor
children and 6,600 shares which could be acquired within 60 days by the
exercise of stock options.
(5) Includes 196 shares held jointly with Mr. Gilman's wife with whom voting
and dispositive power is shared; 33,765 shares held in Glacier's Pension
and Profit Sharing Plans; 3,561 shares held by a family corporation, of
which Mr. Gilman is a principal; and 2,970 shares which could be acquired
within 60 days by the exercise of stock options.
(6) Includes 85,604 shares which could be acquired within 60 days from the
Voting Record Date by all officers and directors as a group (thirteen
persons) by the exercise of stock options granted pursuant to Glacier's
stock option plans.
BENEFICIAL OWNERS
The following table includes information concerning the only persons or
entities, including any "group" as that term is used in Section 13(d) (3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), who or which
was known to Glacier to be the beneficial owner of more than 5% of the issued
and outstanding Common Stock on the Voting Record Date.
8
<PAGE> 19
<TABLE>
<CAPTION>
Amount and Nature
Name and Address of of Beneficial
Beneficial Owner Ownership(1) Percent of Class
- - ------------------- ----------------- ----------------
<S> <C> <C>
T. Rowe Price Associates, Inc. 562,500(2) 8.2%
100 E. Pratt Street
Baltimore, Maryland 21202
</TABLE>
(1) Pursuant to rules promulgated by the Securities and Exchange Commission
("SEC") under the Exchange Act, a person or entity is considered to
beneficially own shares if the person or entity has or shares (i) voting
power, which includes the power to vote or to direct the voting of the
shares, or (ii) investment power, which includes the power to dispose or
direct the disposition of the shares. Stock Split Shares are included in
the number of issued and outstanding shares of Glacier Common Stock for
the purposes of all calculations herein.
(2) Based on an amended Schedule 13G filed under the Exchange Act. These
securities are owned by various individual and institutional investors
including the T. Rowe Price Small Cap Fund, Inc., (which owns 352,700
shares, representing 5.1% of the outstanding shares), which T. Rowe Price
Associates, Inc. ("Price Associates") serves as investment adviser with
power to direct investments and/or sole power to vote the securities. For
purposes of the reporting requirements of the Exchange Act, Price
Associates is deemed to be a beneficial owner of such securities; however,
Price Associates expressly disclaims that it is, in fact, the beneficial
owner of such securities.
CERTAIN TRANSACTIONS
Jordahl & Sliter, a certified public accounting firm in which Everit A.
Sliter is a partner, performs tax services for Glacier in the ordinary course of
business. Glacier believes that these services have been provided on terms which
are no less favorable than which could have been obtained in dealings with
non-affiliates and that any future transactions will be conducted on such basis.
9
<PAGE> 20
EXECUTIVE COMPENSATION
The following table sets forth a summary of certain information
concerning the compensation awarded to or paid by Glacier for the year ended
December 31, 1997 for services rendered in all capacities during the last three
fiscal years to the Chief Executive Officer and the most highly compensated
executive officers of Glacier whose total compensation during the last fiscal
year exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
============================================================================================================
Long Term
Annual Compensation Compensation
------------------------------------- -------------------
Awards Payouts
---------- -------
Securities
Name and Other Annual Underlying LTIP All Other
Principal Position Year Salary(1) Bonus(2) Compensation(3) Options Payouts Compensation(4)(5)
- - ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
John S. MacMillan 1997 $189,616 $ 80,000 0 8,475 0 $46,426
President and Chief 1996 179,615 110,000 0 6,523 0 23,588
Executive Officer 1995 170,000 100,000 0 0 0 39,770
- - ------------------------------------------------------------------------------------------------------------
Michael J. Blodnick 1997 $164,423 $50,000 0 8,475 0 $41,707
Executive Vice 1996 148,846 75,000 0 6,523 0 20,857
President and 1995 119,135 60,000 0 0 0 23,338
Secretary
- - ------------------------------------------------------------------------------------------------------------
William L. Bouchee 1997 $106,692 $18,739 0 0 0 $19,211
President, First
Security Bank
- - ------------------------------------------------------------------------------------------------------------
James H. Strosahl 1997 $76,729 $28,000 0 5,650 $16,825
Senior Vice 1996 69,934 32,500 0 4,440 0 13,905
President Chief 1995 63,655 25,000 0 0 0 11,440
Financial Officer
- - ------------------------------------------------------------------------------------------------------------
Stephen J. Van Helden 1997 $84,938 $30,000 0 8,475 0 $17,146
Senior Vice President 1996 77,346 40,000 0 4,400 0 17,362
Treasurer 1995 70,722 35,000 0 0 0 13,674
============================================================================================================
</TABLE>
- - ---------------
(1) Includes $87,404, $10,000, and $7,000 deferred by Messrs. MacMillan,
Blodnick and Strosahl, respectively, pursuant to Glacier's Deferred
Compensation Plan.
(2) Does not include amounts attributable to miscellaneous benefits received
by executive officers, including the use of Company-owned automobiles and
the payment of certain club dues. In the opinion of management of Glacier
the costs to Glacier of providing such benefits to any individual
executive officer during the year ended December 31, 1997 did not exceed
the lesser of $50,000 or 10% of the total of annual salary and bonus
reported for the individual.
(3) Includes awards granted pursuant to Glacier's 1989 Incentive Stock Option
Plan.
(4) Includes amounts allocated or paid by Glacier during the year ended
December 31, 1997 on behalf of Messrs. MacMillan, Blodnick, Bouchee,
Strosahl, and Van Helden pursuant to Glacier's noncontributory defined
contribution "Money Purchase" Pension Plan, Profit Sharing and SERP/401(k)
Plan in the amounts of $42,916, $40,837, $17,772, $15,880, and $16,725,
respectively.
(5) Includes life insurance premiums paid by Glacier during the year ended
December 31, 1997 on behalf of Messrs. MacMillan, Blodnick, Bouchee,
Strosahl, and Van Helden in the amounts of $3,510, $870, $1,439, $945, and
$421, respectively.
10
<PAGE> 21
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning individual
grants of stock options pursuant to Glacier's stock option plans awarded to the
named executive officers during the year ended December 31, 1997.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
================================================================================================
Potential Realizable
Value
at Assumed Annual
Individual Grants Rates
of Stock Price
Appreciation
for Option Term(3)
- - ------------------------------------------------------------------------------------------------
Number of
Securities % of Total
Underlying Options
Options Granted Exercise Expiration
Name Granted (1) to Employees Price(2) Date 5% 10%
- - ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
John S. MacMillan 8,475 5.3% $16.00 1-29-02 $37,460 $82,800
- - ------------------------------------------------------------------------------------------------
Michael J. Blodnick 8,475 5.3% $16.00 1-29-02 $37,460 $82,800
- - ------------------------------------------------------------------------------------------------
William L. Bouchee 8,475 5.3% $16.00 1-29-02 $37,460 $82,800
- - ------------------------------------------------------------------------------------------------
James H. Strosahl 5,650 3.5% $16.00 1-29-02 $24,793 $55,200
- - ------------------------------------------------------------------------------------------------
Stephen J. Van 8,475 5.3% $16.00 1-29-02 $37,460 $82,800
Helden
================================================================================================
</TABLE>
- - ---------------
(1) The options were granted on January 29, 1997 and vest over two years from
the date of grant.
(2) The exercise price was based on the market price of Glacier Common Stock
on the date of grant.
(3) The potential realizable value portion of the foregoing table illustrates
values that might be realized upon exercise of the options immediately
prior to the expiration of their term based upon the assumed compounded
rates of appreciation in the value of Glacier Common Stock as specified in
the table over the term of the options. These amounts do not take into
account provisions of the options providing for termination of the option
following termination of employment or nontransferability.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
The following table sets forth certain information concerning exercises
of stock options pursuant to Glacier's stock option plans by the named executive
officers during the year ended December 31, 1997 and stock options held at year
end.
<TABLE>
<CAPTION>
===============================================================================================
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR END OPTION VALUES
- - -----------------------------------------------------------------------------------------------
Number of Value of
Shares Unexercised Unexercised Options at
Acquired Options at Year End Year End(1)
on Value ------------------------ --------------------------
Name Exercise Realized Exercisable Unexercisabl Exercisable Unexercisable
- - -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
John S. MacMillan 7,000 $51,270 2,983 18,262 $40,606 $184,461
- - -----------------------------------------------------------------------------------------------
Michael J. Blodnick 6,900 $70,109 3,083 18,262 $41,967 $184,461
- - -----------------------------------------------------------------------------------------------
William L. Bouchee 0 0 6,891 13,644 $165,384 $191,856
- - -----------------------------------------------------------------------------------------------
James H. Strosahl 4,991 $55,089 0 12,250 $0 $123,790
- - -----------------------------------------------------------------------------------------------
Stephen J. Van Helden 2,489 $29,520 0 15,075 $0 $146,406
===============================================================================================
</TABLE>
11
<PAGE> 22
(1) The average of the high and low sales prices of a share of Common Stock as
reported on the Nasdaq National Market on December 31, 1997 was $24.00.
EMPLOYMENT AGREEMENTS
On October 28, 1994, Glacier and Glacier Bank, following approval of the
Board of Directors, entered into an employment agreement (the "Agreement") with
Mr. MacMillan. The Agreement, which replaces Mr. MacMillan's prior employment
agreement with Glacier, terminates annually on March 15th (the anniversary date)
and is renewable on an annual basis on the anniversary date, and each
anniversary date thereafter, upon recommendation of the Board of Directors,
unless certain advance notice is given, or upon a change in control (as
defined), in which case the Agreement is automatically extended for an
additional 3 years. Under the Agreement, Mr. MacMillan is entitled to receive a
minimum annual base salary (currently $200,000), which may be adjusted, as
appropriate, by the Compensation Committee. The Agreement provides that,
subsequent to a change in control, if Mr. MacMillan is discharged otherwise than
for cause (as defined) or resigns for good reason, e.g., a significant
diminution of responsibility or adverse change in working conditions, then he is
entitled to his full compensation for three years.
Glacier and Glacier Bank entered into agreements with each of Messrs.
Blodnick, Strosahl and Van Helden. These agreements are for an initial one year
term, which is extended each year for an additional year upon the review and
approval of the Boards of Directors of Glacier and Glacier Bank, and provides
for severance benefits payable to Messrs. Blodnick, Strosahl and Van Helden if
either parties are improperly terminated or voluntarily terminates his or her
employment for good reason following a change in control of Glacier. Messrs.
Blodnick, Strosahl and Van Helden are entitled to receive annual salaries,
(currently $167,000, $84,700, and $89,476, respectively), which may be adjusted,
as appropriate, by the Compensation Committee. In the event of termination after
a change in control, as defined in the agreement, Mr. Blodnick would be entitled
to receive three times his annual compensation, payable over 36 months, and each
of Messrs. Strosahl and Van Helden would be entitled to receive two times his
annual compensation payable over 24 months.
On August 9, 1996, First Security entered into a three-year employment
agreement with Mr. Bouchee that provides for severance benefits payable to Mr.
Bouchee if he should be improperly terminated or voluntarily terminates his
employment for good reason following a change in control. Mr. Bouchee is
entitled to receive an annual salary, (currently $128,256), which may be
adjusted, as appropriate, by the Compensation Committee. In the event of
termination after a change in control, as defined in the agreement, Mr. Bouchee
would be entitled to receive an amount equal to one year's annual compensation,
payable in one lump sum, and certain other benefits for a year following
termination.
DEFERRED COMPENSATION PLAN
In December, 1995, the Board of Directors adopted a Deferred
Compensation Plan ("DCP") for directors and certain officers and key employees,
as designated by resolution of the Board of Directors. The DCP generally
provides for the deferral of certain taxable income earned by participants in
the DCP. Non-employee directors may elect to have any portion of his or her
director's fees deferred. Designated officers or key employees may elect to
defer annually under the DCP up to 25% of his or her salary to be earned in the
calendar year, and up to 100% of any cash bonuses.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
In December, 1995, the Board of Directors adopted a nonqualified and
nonfunded Supplemental Executive Retirement Plan ("SERP") for senior executive
officers. The SERP is intended to supplement payments due to participants upon
retirement under Glacier's other qualified plans. The SERP generally provides
that Glacier will credit qualified participants' account on an annual basis, an
amount equal to employer contributions that would have otherwise been allocated
to the executive's accounts under the tax-qualified plans were it not for
limitations imposed by the Internal Revenue Service, or participation in the
deferred compensation plan. Messrs. MacMillan, Blodnick and Strosahl are the
only participants in the SERP. Messrs. MacMillan, Blodnick and Strosahl received
an allocation under the plan in the amounts of $22,416, $20,337, and $1,787
respectively, for the fiscal year 1997.
1989 INCENTIVE STOCK OPTION PLAN
In 1989, the Board of Glacier's predecessor adopted and the shareholders
approved the 1989 Incentive Stock Option Plan (the "1989 Plan") which authorized
the grant and issuance of 316,151 shares of Common Stock (as adjusted for
subsequent stock splits and dividends) to key employees of Glacier. The 1989
Plan provides for the grant of both Non-Statutory and
12
<PAGE> 23
Incentive Stock Options which are exercisable for 5 years from the date of
grant. At December 31, 1997, all options to purchase shares under the 1989 Plan
have been granted and no shares remain available for future grants. The 1989
Plan was supplemented by the 1995 Employee Stock Option Plan as described below.
1995 EMPLOYEE STOCK OPTION PLAN
At the 1995 Annual Meeting, the shareholders adopted the 1995 Employee
Stock Option Plan (the "1995 Plan"). The 1995 Plan is administered by the Board
of Directors (or a Committee appointed by the Board). It allows additional stock
options to be granted to key employees of Glacier in any combination up to an
aggregate of 279,768 shares of Glacier Common Stock, subject to appropriate
adjustments for any stock splits, stock dividends, or other changes in the
capitalization of Glacier. The 1995 Plan provides for the issuance of options
which qualify as "incentive stock options" within the meaning of Section 422 of
the Internal Revenue Code of 1986, and nonqualified stock options.
As of December 31, 1997, options to purchase an aggregate of 200,117
shares (as adopted) have been granted, no shares have been issued pursuant to
the exercise of stock options and 261,500 shares remain available for further
grant.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors of Glacier is
composed of Committee Chairperson Harold Tutvedt, Everit A. Sliter, Darrel R.
Martin, F. Charles Mercord, L. Peter Larson and Allen J. Fetscher.
Glacier, acting through the Committee, believes compensation of its
Executives and other key personnel should reflect and support the goals and
strategies of Glacier.
The Committee's objectives in determining executive compensation are to
attract, reward and retain key executive officers; and to motivate executive
officers to perform to the best of their abilities and to achieve short-term and
long-term corporate objectives that will contribute to the overall goal of
enhancing stockholder value. To further these objectives, the Committee has
adopted the following policies:
o Glacier will compensate competitively with the practices of peer
groups, and like performing financial companies;
o Performance at the corporate, subsidiary and individual executive
officer level will determine a significant portion of compensation;
with due regard to financial performance relative to peer groups;
o The attainment of realizable but challenging objectives will
determine performance-based compensation; and
o Glacier will encourage executive officers to hold substantial,
long-term equity stakes in Glacier so that the interest of executive
officers will coincide with the interest of stockholders -
accordingly stock options will constitute a significant portion of
compensation.
Elements of Glacier's compensation of executive officers are: (1) Base
salary and bonuses, (2) Incentive compensation in the form of stock options
granted under Glacier's 1995 Incentive Stock Option Plan, (3) Salary Deferral
Plan, and (4) Other compensation and employee benefits generally available to
all employees of Glacier, such as health, life and long term disability
insurance and employee contributions under Glacier's 401-K and Pension Plans.
The Committee believes Glacier's goals are best supported by attracting
and retaining well-qualified executive officers and other personnel through
competitive compensation arrangements, with emphasis on rewards for outstanding
contributions to Glacier's success, with a special emphasis on aligning the
interests of executive officers and other personnel with those of Glacier's
shareholders.
EXECUTIVE COMPENSATION COMMITTEE
Harold Tutvedt (Chairperson) o Everit A. Sliter o Darrel R. Martin
F. Charles Mercord o Allen J. Fetscher o L. Peter Larson
13
<PAGE> 24
PERFORMANCE GRAPH
The following graph compares the yearly cumulative total return of the
Common Stock over a five-year measurement period with (i) the yearly cumulative
total return on the stocks included in the Standard & Poor's ("S&P") 500
Composite Index (ii) the SNL Bank Index comprised of banks between $500M-$1B;
and (iii) the yearly cumulative total return on the stocks included in the
Montgomery Securities' Western Bank Monitor Industry Proxy Index. All of these
cumulative returns are computed assuming the reinvestment of dividends at the
frequency with which dividends were paid during the applicable years.
-----------------------------------------------------------
GLACIER BANCORP STOCK PRICE PERFORMANCE
-----------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDING
------------------------------------------------------------------------
INDEX 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
- - -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
GLACIER BANCORP, INC. $100.00 $120.37 $108.06 $150.44 $206.13 $323.75
S&P 500 $100.00 $110.08 $111.53 $153.44 $188.52 $251.44
SNL $500M-$1B BANK INDEX $100.00 $125.46 $133.93 $177.82 $222.29 $361.35
WESTERN BANK MONITOR $100.00 $120.33 $124.32 $177.53 $220.20 $403.99
</TABLE>
14
<PAGE> 25
EMPLOYEE LOAN PROGRAM
Federal regulations require that all loans or extensions of credit to
executive officers and directors of Glacier and the State Banks must be made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other nonaffiliated
persons and must not involve more than the normal risk of repayment or present
other unfavorable features. The regulations authorize that a bank may make
extensions of credit pursuant to a benefit or compensation program that (i) is
available to all employees of the bank or its affiliates; and (ii) does not give
preference to any insider over other employees of the bank or its affiliates.
The regulations govern the amount of credit that a bank may extend to an
insider, and, in those instances where the loan exceeds the allowed limit,
requires that (i) the loan be approved by a majority of the board of directors;
and (ii) the insider abstain from participating directly or indirectly in the
voting.
Glacier has adopted an Employee Loan Program, providing that loans be
made to executive officers and directors and all other employees of Glacier and
its subsidiaries on equal terms. Set forth below is certain information as of
December 31, 1997 relating to loans which, in the aggregate, exceed $60,000 and
which were made on preferential terms, as explained above, to executive officers
and directors of Glacier. All loans are secured by real estate, except as noted.
The table does not include loans which have been made on the same terms,
including interest rates and collateral, as those made to non-affiliated parties
and which in the opinion of management do not involve more than the normal risk
of repayment or present other unfavorable features.
<TABLE>
<CAPTION>
Largest Aggregate
Amount during
Nature of January 1, 1997
Transaction to Balance at Interest Note Rate at
Name and December 31, December 31, Rate to December 31,
Indebtedness 1997 1997 Employee 1997
- - ------------------ ----------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C>
F. Charles Mercord First Mortgage on 150,000 147,338 5.74%(1) 6.875%
primary residence
Everit A. Sliter, First Mortgage on 91,510 86,427 5.70%(1) 8.30%
Director primary residence
James H. Strosahl, First Mortgage on 175,000 168,029 5.74%(1) 7.91%
Senior Vice President primary residence
and CFO
Stephen J. Van Helden, First Mortgage on 150,579 148,115 5.70%(1) 7.79%
Treasurer primary residence
</TABLE>
- - ----------------
(1) This reflects borrowing to finance home improvements or to purchase homes
and is 1% above Glacier Bank's cost of money.
COMPLIANCE WITH SECTION 16(a) FILING REQUIREMENTS
Section 16(a) of 1934 Act, as amended, ("Section 16(a)") requires that
all executive officers and directors of Glacier and all persons who beneficially
own more than 10 percent of Glacier's Common Stock file reports with the SEC
with respect to beneficial ownership of Glacier's securities. Glacier has
adopted procedures to assist its directors and executive officers in complying
with the Section 16(a) filings.
Based solely upon Glacier's review of the copies of the filings which it
received with respect to the fiscal year ended December 31, 1997, or written
representations from certain reporting persons, Glacier believes that all
reporting persons made all filings required by Section 16(a) on a timely basis,
except that Mr. Blodnick inadvertently failed to file a Form 5 to report a gift
of 75 shares in October 1996. A subsequent Form 5 has been filed to report this
transaction.
PROPOSAL II: THE REORGANIZATION
The following description of the material aspects of the Reorganization
does not purport to be complete and is qualified in its entirety by reference to
the Merger Agreement. Glacier stockholders are being asked to approve the
Reorganization in accordance with the terms of the Merger Agreement, and are
urged to read the Merger Agreement carefully.
15
<PAGE> 26
BACKGROUND
On April 23, 1997, the Glacier Board declared the Stock Split, effective
as of May 23, 1997, and resolved to pay all fractional shares resulting from
that Stock Split in cash. In reliance upon the Glacier Board's approval of the
Stock Split, but without obtaining approval of the holders of Glacier Common
Stock, Glacier delivered to each of its shareholders of record on May 9, 1997,
an additional stock certificate representing the Stock Split Shares and paid
cash to each shareholder in lieu of any fractional shares.
After the Stock Split and in the normal course of its business, Glacier
issued additional shares of Glacier Common Stock to certain stock option holders
under Glacier's employee and director stock option plans who had exercised
options. Since May 9, 1997, approximately 64,000 shares of Glacier Common Stock
have been issued by Glacier as a result of the exercises of these options (the
"Option Shares"). As a result of the Stock Split and the issuance of the Option
Shares, Glacier had issued approximately 6,864,000 shares of Glacier Common
Stock as of February 28, 1998.
On December 30, 1997, Glacier publicly announced an agreement to acquire
Valley Bank of Helena ("VB"), a subsidiary of HUB Financial Corporation ("HUB")
and operate VB as a wholly-owned subsidiary of Glacier. Because HUB does not own
100% of the outstanding shares of VB's common stock, the acquisition of VB will
be accomplished by merging HUB into Glacier, followed by a share exchange with
VB (the "Acquisition"). To effect the Acquisition, Glacier will be required to
issue approximately 620,000 shares of Glacier Common Stock.
In February of 1998, while preparing its 1997 annual franchise tax
report for filing with the Secretary of State of Delaware (the "Delaware
Secretary"), Glacier identified for the first time a concern that the total
number of issued and outstanding shares of Glacier Common Stock may have
exceeded the number of shares of Common Stock that the Glacier Board was
authorized to issue under the Glacier Certificate. After identifying this
concern, the Glacier Board retained Delaware counsel to assist it in determining
an appropriate course of corrective action.
After examining the circumstances surrounding the Stock Split, Delaware
counsel confirmed that certain technical deficiencies occurred with the Stock
Split. Glacier has been advised by Delaware counsel that, under Delaware law, a
reclassification of the capital stock of a corporation, such as the Stock Split,
requires the approval of both the board of directors and shareholders and,
thereafter, the corporation must file a certificate of amendment to its
Certificate of Incorporation with the Delaware Secretary. Although the Glacier
Board approved the Stock Split, Glacier inadvertently failed to obtain
shareholder approval of the Stock Split and file the required certificate of
amendment. Delaware counsel has advised the Glacier Board that, as a result of
these technical deficiencies, a substantial question exists under Delaware law
concerning the effectiveness of the Stock Split and the validity of the Stock
Split Shares and the Option Shares.
REASONS FOR THE REORGANIZATION
Delaware counsel has advised Glacier that it may resolve the technical
deficiencies that occurred in the Stock Split, as well as issues relating to the
validity of the Stock Split Shares and the Option Shares, by effecting the
Reorganization. Delaware counsel also has advised Glacier that the shares of GB
Common Stock issued and outstanding immediately after the effective time of the
Reorganization will be validly issued. Finally, Delaware counsel has advised
Glacier that, if Glacier consummates the Reorganization, it will not be
necessary for Glacier to amend its certificate of incorporation prior to the
Acquisition to authorize the issuance of additional shares of Glacier Common
Stock.
The Glacier Board confirms the importance of removing any uncertainty
regarding the number of outstanding shares of Glacier Common Stock or the
validity of any such shares. In addition, the Glacier Board recognizes that the
Reorganization, by eliminating the need to call and hold an additional
shareholders' meeting for the sole purpose of authorizing an increase in the
authorized number of shares of Glacier Common Stock, will save Glacier the time
and expense associated with such a meeting. For these reasons, the Glacier Board
has voted unanimously in favor of approving the Reorganization.
The Glacier Board also determined that it was appropriate to file a
declaratory judgment action in the Court of Chancery of Delaware. Delaware
counsel filed such an action on March 9, 1998, seeking a declaration that the
Reorganization is in compliance with Delaware law and that the shares of GB
Common Stock issued to the former holders of Glacier Common Stock, including to
the holders of the Stock Split Shares and the Option Shares, in connection with
such Reorganization are validly issued.
16
<PAGE> 27
RECOMMENDATION OF THE GLACIER BOARD OF DIRECTORS
THE GLACIER BOARD UNANIMOUSLY RECOMMENDS THAT ITS STOCKHOLDERS VOTE FOR
APPROVAL OF THE REORGANIZATION AND MERGER AGREEMENT.
BASIC TERMS OF THE MERGER
The following is a summary of certain provisions of the Merger
Agreement, a copy of which is attached hereto as Appendix A and incorporated
herein by reference. The summary is qualified in its entirety by reference to
the complete text of the Merger Agreement, which provides, among other things,
that:
(i) Glacier will be merged with and into GB, with GB being the surviving
corporation;
(ii) each share of Glacier Common Stock outstanding immediately prior to
the Effective Time (including the Stock Split) will automatically be converted
into one share of GB Common Stock;
(iii) the GB Common Stock presently held by Glacier will canceled; and
(iv) GB will amend its Certificate of Incorporation to change its name
to "Glacier Bancorp, Inc."
As a result of the Reorganization, Glacier will cease to have a separate
existence and GB shall continue its existence as a Delaware corporation and
shall conduct its business under the name "Glacier Bancorp, Inc." GB will
succeed to all the rights, duties and obligations of Glacier.
The Merger Agreement provides that Glacier and GB may by written
agreement amend the Merger Agreement at any time prior the Effective Time, and
that the Merger Agreement may be terminated and abandoned at any time by mutual
consent of the Boards of Directors of Glacier and GB.
EXCHANGE OF STOCK CERTIFICATES
IF THE REORGANIZATION IS CONSUMMATED, IT WILL NOT BE NECESSARY FOR
HOLDERS OF GLACIER COMMON STOCK TO EXCHANGE THEIR EXISTING STOCK CERTIFICATES
FOR GB COMMON STOCK CERTIFICATES. Holders of Glacier Common Stock automatically
will become holders of GB Common Stock, and their stock certificates
automatically will represent shares of GB Common Stock.
CONDITIONS TO THE REORGANIZATION; REGULATORY APPROVALS
Consummation of the Reorganization is subject to various conditions. No
assurance can be provided as to whether these conditions will be satisfied or
waived by the appropriate party. Accordingly, there can be no assurance that the
Reorganization will be completed.
The Reorganization can occur only if the holders of the shares of
Glacier Common Stock approve the transaction. In accordance with Glacier's
Certificate of Incorporation and the Delaware General Corporation Law ("DGCL"),
approval of the Reorganization requires the affirmative vote of the holders of a
majority of the issued and outstanding shares of Glacier Common Stock. However,
due to certain technical deficiencies relating to the Stock Split, the Glacier
Board intends to proceed with the Reorganization only if the Reorganization is
approved by the affirmative vote of the holders of two-thirds of the issued and
outstanding shares of Glacier Common Stock. In the event Glacier's shareholders
do not approve the Reorganization, the Merger Agreement may be terminated by the
Glacier Board. Glacier applied for and received a waiver from the FRB whereby
the FRB approved proceeding with the Reorganization and waived all requirements
for the filing of a formal application.
Certain conditions must be satisfied or events must occur before the
parties will be obligated to complete the Reorganization. Each party's
obligations under the Merger Agreement are conditioned on satisfaction by the
other parties of their conditions. Some of these conditions are as follows: (a)
any obligations to be performed prior to the Effective Time by either party
under the Merger Agreement have been performed in all material respects; (b)
each party's stockholders have approved the Reorganization; and (c) all required
regulatory or third-party consents or approvals have been received. Either
Glacier or GB may waive any of the other party's conditions, except those that
are required by law (such as receipt of regulatory and stockholder approval.
17
<PAGE> 28
AMENDMENT OR TERMINATION OF MERGER AGREEMENT
The Merger Agreement may be amended or supplemented at any time by
written agreement of the parties, whether before or after the Meeting. To the
extent permitted under applicable law, the parties may make any amendment or
supplement without further approval of Glacier's stockholders, except amendments
which would reduce the amount or change the form of consideration Glacier's
stockholders will receive in the Reorganization.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING DISCUSSION IS BASED UPON THE OPINION OF DUANE, MORRIS &
HECKSCHER LLP, SPECIAL COUNSEL FOR GLACIER. THE DISCUSSION IS BASED UPON THE
CODE, TREASURY REGULATIONS THEREUNDER AND ADMINISTRATIVE RULINGS AND COURT
DECISIONS AS OF THE DATE HEREOF. ALL OF THE FOREGOING ARE SUBJECT TO CHANGE, AND
ANY SUCH CHANGE COULD AFFECT THE CONTINUING VALIDITY OF THE DISCUSSION. THE
DISCUSSION DOES NOT ADDRESS THE TAX CONSEQUENCES THAT MAY BE RELEVANT TO A
PARTICULAR SHAREHOLDER SUBJECT TO SPECIAL TREATMENT UNDER CERTAIN FEDERAL INCOME
TAX LAWS, SUCH AS DEALERS IN SECURITIES, BANKS, INSURANCE COMPANIES, TAX-EXEMPT
ORGANIZATIONS, NON-UNITED STATES PERSONS AND SHAREHOLDERS WHO ACQUIRED GLACIER
COMMON STOCK PURSUANT TO THE EXERCISE OF OPTIONS OR OTHERWISE AS COMPENSATION,
NOR ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCALITY OR FOREIGN
JURISDICTION.
Glacier will receive an opinion from its special counsel, Duane, Morris
& Heckscher LLP, to the effect that for federal income tax purposes: (i) no gain
or loss will be recognized by Glacier as a result of the Merger; (ii) no gain or
loss should be recognized by holders of Glacier Common Stock on the receipt of
GB Common Stock in exchange for their Glacier Common Stock pursuant to the
Merger; (iii) the tax basis of the GB Common Stock received by a holder of
Glacier Common Stock pursuant to the Merger should be the same as the tax basis
of such holder's Glacier Common Stock exchanged therefor; and (iv) the holding
period of the GB Common Stock received by a holder of Glacier Common Stock
pursuant to the Merger should include the holding period of such holder's
Glacier Common Stock exchanged therefor. The opinion will be based on
assumptions, representations made by officers of Glacier to Duane, Morris &
Heckscher LLP and will contain qualifications appropriate to its subject matter.
The Internal Revenue Service may take the position, however, that
holders who received or purchased shares that were issued in, or subsequent to,
the Stock Split did not have a beneficial ownership interest in Glacier until
the Merger was consummated and, as a result, the holding period in the GB shares
received in the Merger would not begin until the date that the Merger was
consummated. Duane, Morris & Heckscher LLP does not agree with this position. In
rendering its opinion, Duane, Morris & Heckscher LLP has concluded that a holder
of Glacier Common Stock should have a beneficial ownership interest in Glacier
to the extent of the holder's shares of Glacier Common Stock, notwithstanding
any Delaware state law deficiencies that may exist as to shares issued in, or
subsequent to, the Stock Split.
No rulings have been requested from the Internal Revenue Service as to
the federal income tax consequences of the Merger, the Stock Split or issuance
of the Option Shares. The opinion of Duane, Morris & Heckscher LLP is not
binding on the Internal Revenue Service. Holders of Glacier Common Stock are
urged to consult their own tax advisors as to the particular tax consequences of
the Merger to them, including the effect of state and local taxes.
ACCOUNTING TREATMENT OF MERGER
The Reorganization will be accounted for as a combination of entities
under common control, which is similar to the pooling-of-interests method of
accounting. Essentially, the Reorganization will not affect the historical cost
or carrying value of Glacier's consolidated financial position or results of
operations.
18
<PAGE> 29
CERTAIN INFORMATION REGARDING GB
Management and Directors.
As of the Effective Time, the directors and officers of Glacier
immediately prior to the Effective Time shall be the directors and officers of
GB. To the extent that any of the directors or officers of GB are not directors
and officers of Glacier immediately prior to the Effective Time, such officers
and directors shall cease to be officers or directors, as the case may be, as of
the Effective Time.
Employee Stock Option and Benefit Plans.
Upon consummation of the Reorganization, in accordance with the terms of
the Merger Agreement, GB will assume Glacier's obligations under the 1995
Employee Stock Option Plan, the 1989 Stock Option Plan and the Employee Stock
Purchase Plan, and the rights to acquire shares of Glacier Common Stock under
such plans shall, upon consummation of the Reorganization, automatically be
converted into the right to acquire shares of GB Common Stock, subject to the
terms of each such plan and the agreements entered into pursuant to any such
plan. A vote in favor of the Reorganization, including the Reorganization, will
constitute approval of GB's assumption of Glacier's obligations under such
plans.
Upon consummation of the Reorganization, in accordance with the terms of
the Merger Agreement, GB will assume as plan sponsor Glacier's Deferred
Compensation Plan and Supplemental Executive Retirement Plan and all other
material employee benefit plans currently sponsored by Glacier. A vote in favor
of the Reorganization (including the Merger Agreement) will constitute approval
of GB's assumption of such plans.
Nasdaq National Market Listing.
GB has made application to Nasdaq to list the GB Common Stock on the
Nasdaq National Market. It is expected that such listing will become effective
at the Effective Time, subject to the rules of Nasdaq, and GB will be identified
on the Nasdaq National Market by Glacier's current symbol, "GBCI."
Transfer Agent and Registrar.
Davidson Trust, the Transfer Agent and Registrar of Glacier's Common
Stock, will serve in the same capacities for the GB Common Stock.
GB CERTIFICATE OF INCORPORATION AND BYLAWS
The Certificate of Incorporation of GB, a copy of which is attached as
Appendix C hereto, is identical in all material respects to the Articles of
Incorporation of Glacier (the "Company Articles"), except with respect to the
number of shares of GB's authorized capital stock. See "Description of GB
Capital Stock" below. In addition, immediately after the Effective Time, GB's
Certificate of Incorporation will be amended to provide that GB's name will be
changed to "Glacier Bancorp, Inc." GB's Certificate of Incorporation is attached
hereto as Appendix, and is hereby incorporated by reference.
From and after the Effective Time, until altered, amended or repealed in
accordance with applicable law, the Bylaws of Glacier as in effect immediately
prior to the Effective Time shall be the bylaws of GB.
DESCRIPTION OF GB CAPITAL STOCK
GB's authorized capital stock consists of 15,000,000 shares of common
stock, par value $.01 per share, and 1,000,000 shares of preferred stock, par
value $.01 per share. As of the date of this Prospectus/Proxy Statement, GB had
no shares of preferred stock issued. Like the Glacier Board prior to the Merger,
the GB Board is authorized, without further stockholder action, to issue
preferred stock shares with such designations, preferences and rights as the GB
Board may determine. Except with respect to the number of authorized shares, the
capital stock of GB and the rights and preferences of the holders thereof are
identical to the capital stock of Glacier.
19
<PAGE> 30
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE BY STOCKHOLDERS FOR
THE REORGANIZATION. THE BOARD OF DIRECTORS INTENDS TO PROCEED WITH THE
REORGANIZATION ONLY IF THE REORGANIZATION IS APPROVED BY THE VOTE OF THE HOLDERS
OF A TWO-THIRDS OF THE ISSUED AND OUTSTANDING GLACIER COMMON STOCK PRESENT IN
PERSON OR BY PROXY AT THE ANNUAL MEETING.
20
<PAGE> 31
SUPERVISION AND REGULATION
INTRODUCTION
The following generally refers to certain statutes and regulations
affecting the banking industry. These references provide brief summaries only
and are not intended to be complete. They are qualified in their entirety by the
referenced statutes and regulations. In addition, some statutes and regulations
may exist which apply to and regulate the banking industry, but are not
referenced below.
THE HOLDING COMPANY
GENERAL
Glacier is a bank holding company, due to its ownership of Glacier Bank,
Glacier Bank of Whitefish, Glacier Bank of Eureka, and First Security Bank of
Missoula, all of which are Montana-state chartered commercial banks, and all of
which are members of the Federal Reserve (collectively, the "State Banks").
Until recently, Glacier was also a savings and loan holding company within the
meaning of the Home Owners' Loan Act ("HOLA") prior to Glacier Bank's conversion
from a federal savings bank to a state-chartered commercial bank and, as such,
was registered with and subject to examination and supervision by the OTS. With
the enactment of the Economic Growth and Regulatory Paperwork Reduction Act of
1996 ("Economic Growth Act"), the OTS no longer supervises a holding company
like Glacier that is registered as a bank holding company. Accordingly, the BHCA
subjects Glacier and each of its subsidiaries to supervision and examination by
the FRB, and the bank holding companies file annual reports of their operations
with the FRB.
BANK HOLDING COMPANY STRUCTURE
In general, the BHCA limits bank holding company business to owning or
controlling banks and engaging in other banking-related activities. Certain
recent legislation designed to expand interstate branching and relax federal
restrictions on interstate banking may expand opportunities for bank holding
companies (see "Regulation of Banking Subsidiaries - Recent Federal Legislation
Interstate Banking and Branching" below). The Economic Growth Act has relaxed
certain BHCA restrictions on bank holding companies' engagement in permissible
nonbanking activities. However, the impact that this legislation may have on
Glacier and its subsidiaries is unclear at this time.
Bank holding companies must obtain the FRB's approval before they: (1)
acquire direct or indirect ownership or control of any voting shares of any bank
that results in total ownership or control, directly or indirectly, of more than
5% of the voting shares of such bank; (2) merge or consolidate with another bank
holding company; or (3) acquire substantially all of the assets of any
additional banks. Until late September of 1995, the BHCA also prohibited bank
holding companies from acquiring any such interest in any bank or bank holding
company located in a state other than the state in which bank holding company
was located, unless the laws of both states expressly authorized the
acquisition. Now, subject to certain state laws, such as age and contingency
laws, a bank holding company that is adequately capitalized and adequately
managed may acquire the assets of an out-of-state bank.
Control of Nonbanks. With certain exceptions, the BHCA also prohibits
bank holding companies from acquiring direct or indirect ownership or control of
voting shares in any company that is not a bank or a bank holding company unless
the FRB determines that the activities of such company are incidental to the
business of banking. When making this determinations, the FRB weighs the
expected benefit to the public, such as greater convenience, increased
competition or gains in efficiency, against the possible adverse effects, such
as undue concentration of resources, decreased or unfair competition, conflicts
of interest or unsound banking practices. The Economic Growth Act amended the
BHCA to eliminate the requirement that a bank holding company seek FRB approval
before engaging de novo in permissible nonbanking activities if the holding
company is well-capitalized and meets other criteria specified in the statute.
Control Transactions. The Change in Bank Control Act of 1978, as
amended, requires a person (or group of persons acting in concert) acquiring
"control" of a bank holding company to provide the FRB with 60 days' prior
written notice of the proposed acquisition. Following receipt of this notice,
the FRB has 60 days within which to issue a notice disapproving the proposed
acquisition, but the FRB may extend this time period for up to another 30 days.
An acquisition may be completed before expiration of the disapproval period if
the FRB issues written notice of its intent not to disapprove the transaction.
In addition, any "company" must obtain the FRB's approval before acquiring 25%
(5% if the "company" is a bank holding company) or more of the outstanding
shares or otherwise obtaining control over Glacier.
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TRANSACTIONS WITH AFFILIATES
Glacier and its subsidiaries are deemed affiliates within the meaning of
the Federal Reserve Act, and transactions between affiliates are subject to
certain restrictions. Accordingly, Glacier and its subsidiaries must comply with
Sections 23A and 23B of the Federal Reserve Act. Generally, Sections 23A and
23B: (1) limit the extent to which the financial institution or its subsidiaries
may engage in "covered transactions" with an affiliate, as defined, to an amount
equal to 10% of such institution's capital and surplus and an aggregate limit on
all such transactions with all affiliates to an amount equal to 20% of such
capital and surplus, and (2) require all transactions with an affiliate, whether
or not "covered transactions," to be on terms substantially the same, or at
least as favorable to the institution or subsidiary, as those provided to a
non-affiliate. The term "covered transaction" includes the making of loans,
purchase of assets, issuance of a guarantee and other similar types of
transactions.
REGULATION OF MANAGEMENT
Federal law: (1) sets forth the circumstances under which officers or
directors of a financial institution may be removed by the institution's federal
supervisory agency; (2) places restraints on lending by an institution to its
executive officers, directors, principal stockholders, and their related
interests; and (3) prohibits management personnel from serving as a director or
in other management positions with another financial institution which has
assets exceeding a specified amount or which has an office within a specified
geographic area.
FIRREA
The Financial Institution Reform, Recovery and Enforcement Act of 1989
("FIRREA") became effective on August 9, 1989. Among other things, this
far-reaching legislation (1) phased in significant increases in the FDIC
insurance premiums paid by commercial banks; (2) created two deposit insurance
pools within the FDIC, one to insure commercial bank and savings bank deposits
and the other to insure savings association deposits; (3) for the first time,
permitted bank holding companies to acquire healthy savings associations; (4)
permitted commercial banks that meet certain housing-related asset requirements
to secure advances and other federal services from their local Federal Home Loan
Banks; and (5) greatly enhanced the regulators' enforcement powers by removing
procedural barriers and sharply increasing the civil and criminal penalties for
violating statutes and regulations.
TIE-IN ARRANGEMENTS
Glacier and its subsidiaries cannot engage in certain tie-in
arrangements in connection with any extension of credit, sale or lease of
property or furnishing of services. For example, with certain exceptions,
neither Glacier nor any of its subsidiaries may condition an extension of credit
on either (1) a requirement that the customer obtain additional services
provided by it or (2) an agreement by the customer to refrain from obtaining
other services from a competitor.
In 1997, the FRB adopted significant amendments to its anti-tying rules
that: (1) removed FRB-imposed anti-tying restrictions on bank holding companies
and their non-bank subsidiaries; (2) allowed banks greater flexibility to
package products with their affiliates; and (3) established a safe harbor from
the trying restrictions for certain foreign transactions. These amendments were
designed to enhance competition in banking and nonbanking products and to allow
banks and their affiliates to provide more efficient, lower cost service to
their customers. However, the impact of the amendments on Glacier and its
subsidiaries is unclear at this time.
STATE LAW RESTRICTIONS
As a Delaware corporation, Glacier may be subject to certain limitations
and restrictions as provided under applicable Delaware corporate law. Each of
the State Banks, as Montana state-chartered commercial banks, are subject to
supervision and regulation by the Montana Department of Commerce's Banking and
Financial Institutions Division.
SECURITIES REGISTRATION AND REPORTING
The common stock of Glacier is registered as a class with the SEC under
the Securities Exchange Act of 1934 and thus is subject to the periodic
reporting and proxy solicitation requirements and the insider-trading
restrictions of that Act. The periodic reports, proxy statements, and other
information filed by Glacier under that Act can be inspected and copied at or
obtained from the Washington, D.C., office of the SEC. In addition, the
securities issued by Glacier are subject to the registration requirements of the
Securities Act of 1933 and applicable state securities laws unless exemptions
are available.
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THE SUBSIDIARIES
GENERAL
Applicable federal and state statutes and regulations governing a bank's
operations relate, among other matters, to capital requirements, required
reserves against deposits, investments, loans, legal lending limits, certain
interest rates payable, mergers and consolidations, borrowings, issuance of
securities, payment of dividends (see below), establishment of branches, and
dealings with affiliated persons. The FRB and the FDIC have authority to
prohibit banks under their supervision from engaging in what they consider to be
an unsafe and unsound practice in conducting their business.
Until December 18, 1997, two of Glacier's subsidiaries -- Glacier Bank
of Eureka and Glacier Bank of Whitefish -- were organized as national banking
associations and as such, were subject to primary regulation by the Office of
the Comptroller of the Currency ("OCC"). Additionally, until February 1, 1998,
Glacier Bank was organized as a federal savings bank, and as such was subject to
primary regulation by the Office of Thrift Supervision. All of these Glacier
subsidiaries have been converted to Montana state-charters and are members in
the Federal Reserve System. Accordingly, Glacier's subsidiaries, as well as VB,
are subject to extensive regulation and supervision by the Montana Department of
Commerce's Banking and Financial Institutions Division, and they are also
subject to regulation and examination by the FRB as a result of their membership
in the Federal Reserve System. VB is subject to regulation by the FDIC as a
state non-member commercial bank. The federal laws that apply to Glacier's
banking subsidiaries regulate, among other things, the scope of their business,
their investments, their reserves against deposits, the timing of the
availability of deposited funds and the nature and amount of and collateral for
loans. The laws and regulations governing Glacier's banking subsidiaries
generally have been promulgated to protect depositors and not to protect
stockholders of such institutions or their holding companies.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") requires federal banking regulators to adopt regulations in a number
of areas to ensure bank safety and soundness, including: internal controls;
credit underwriting; asset growth; management compensation; ratios of classified
assets to capital; and earnings. FDICIA also contains provisions which are
intended to change independent auditing requirements; restrict the activities of
state-chartered insured banks; amend various consumer banking laws; limit the
ability of "undercapitalized banks" to borrow from the FRB's discount window;
and require regulators to perform annual on-site bank examinations and set
standards for real estate lending. FDICIA recapitalized the Bank Insurance Fund
("BIF") and required the FDIC to maintain the BIF and the Savings Association
Fund ("SAIF") at 1.25% of insured deposits by increasing the deposit insurance
premiums as necessary to maintain such ratio. (See "FDIC Insurance" below).
LOANS-TO-ONE BORROWER
Each of Glacier's banking subsidiaries is subject to limitations on the
aggregate amount of loans that it can make to any one borrower, including
related entities. Applicable regulations generally limit loans-to-one borrower
to 15 to 20% of unimpaired capital and surplus. As of December 31, 1997, each of
Glacier's banking subsidiaries was in compliance with applicable loans-to-one
borrower requirements.
FDIC INSURANCE
Generally, customer deposit accounts in banks are insured by the FDIC
for up to a maximum amount of $100,000. The FDIC has adopted a risk-based
insurance assessment system under which depository institutions contribute funds
to the BIF and the SAIF based on their risk classification. The FDIC assigns
institutions a risk classification based on three capital groups and three
supervisory groups.
With the enactment of the Deposit Insurance Funds Act of 1996 ("Funds
Act"), a one-time assessment was imposed on institutions holding SAIF deposits
on March 31, 1995, in an amount necessary for SAIF to reach its 1.25 designated
reserve ratio. Because the deposits of Glacier Bank were insured by the SAIF
until the bank's recent conversion from a savings association to a state bank,
Glacier Bank paid that assessment. In addition to the one-time SAIF assessment,
for the three year period beginning in 1997, the Funds Act subjects BIF-insured
deposits to a Financing Corporation ("FICO") premium assessment on domestic
deposits at one-fifth the premium rate (approximately 1.3 basis points) imposed
on SAIF-insured deposits (approximately 6.5 basis points). In the year 2000,
BIF-insured institutions will be required to share in the payment of the FICO
obligations on a pro-rata basis with all thrift institutions, with annual
assessments expected to equal approximately 2.4 basis points until the year
2017, and to be phased out completely by 2019.
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Currently, institutions in the lowest risk category will continue to pay
no BIF premiums, and other institutions will be assessed based on a range of
rates, with those in the highest risk category paying 27 cents for every $100 of
BIF-insured deposits. Rates in the SAIF assessment schedule, previously ranging
from 4 to 31 basis points, have been adjusted by 4 basis points to a range of 1
to 27 basis points. The Funds Act provides for the merger of the BIF and SAIF on
January 1, 1999, only if no thrift institutions exist on that date.
The FDIC may terminate the deposit insurance of any insured depository
institution if it determines after a hearing that the institution has engaged or
is engaging in unsafe or unsound practices, is in an unsafe or unsound condition
to continue operations, or has violated any applicable law. The insurance may be
terminated permanently, if the institution has no tangible capital. If deposit
insurance is terminated, the accounts at the institution at the time of the
termination, less subsequent withdrawals, will continue to be insured for a
period of six months to two years, as determined by the FDIC.
CAPITAL REQUIREMENTS
Banks and Bank Holding Companies. The FRB, the FDIC, and the OCC
(collectively, the "Agencies") have established uniform capital requirements for
all commercial banks. Bank holding companies are also subject to certain minimum
capital requirements. A bank that does not achieve and maintain required capital
levels may be subject to supervisory action through the issuance of a capital
directive. In addition, banks must meet certain guidelines concerning the
maintenance of an adequate allowance for loan and lease losses.
The Agencies' "risk-based" capital guidelines make regulatory capital
requirements more sensitive to differences in risk profiles among banking
organizations, take off-balance sheet exposures into explicit account in
assessing capital adequacy, and minimize disincentives to holding liquid,
low-risk assets. The current guidelines require banks to achieve a minimum total
risk-based capital ratio of 8% and a minimum Tier 1 risk-based capital ratio of
4%. Tier 1 capital includes common stockholders' equity, qualifying perpetual
preferred stock, and minority interests in equity accounts of consolidated
subsidiaries, but excludes goodwill and most other intangibles. Tier 2 capital
includes the excess of any preferred stock not included in the Tier 1 capital,
mandatory convertible securities, subordinated debt and general reserves for
loan and lease losses up to 1.25% of risk-weighted assets.
The Agencies also have adopted leverage ratio standards that require
commercial banks to maintain a minimum ratio of core capital to total assets
("Leverage Ratio") of 3%. Any institution operating at or near this level should
have well-diversified risk, and in general, be a strong banking organization
without any supervisory, financial or operational weaknesses or deficiencies.
Institutions experiencing or anticipating significant growth would be expected
to maintain capital ratios, including tangible capital positions, well above the
minimum levels (e.g., an additional cushion of at least 100 to 200 basis points,
depending upon the particular circumstances and risk profile).
The minimum ratio of total capital to risk-adjusted assets required by
the FRB for bank holding companies is 8%. At least one-half of the total capital
must be Tier 1 capital; the remainder may consist of Tier 2 capital. Bank
holding companies are also subject to minimum Leverage Ratio guidelines. These
guidelines provide for a minimum Leverage Ratio of 3% for bank holding companies
meeting certain specified criteria, including achievement of the highest
supervisory rating. All other bank holding companies are required to maintain a
Leverage Ratio which is at least 100 to 200 basis points higher (4 to 5%). These
guidelines provide that banking organizations experiencing internal growth or
making acquisitions are expected to maintain strong capital positions
substantially above the minimum supervisory levels, without significant reliance
on intangible assets.
Interest-Rate-Risk ("IRR") Component. FDICIA requires the Agencies to
revise their respective risk-based capital standards to ensure that they take
adequate account of interest-rate risk ("IRR"), concentration of credit risk and
the risks of nontraditional activities, as well as reflect the actual
performance and expected risk of loss on multi-family residential loans.
When evaluating the capital adequacy of a bank, examiners from the
Agencies consider exposure to declines in the economic value of a bank's capital
due to changes in interest rates. A bank may be required to hold additional
capital for IRR if it has significant exposure or a weak interest rate risk
management process. In addition, the Agencies have amended their respective
risk-based capital standards to incorporate a measure for market risk to cover
all positions located in an institution's trading account and foreign exchange
and commodity positions wherever located. The rule effectively requires banks
and bank holding companies with significant exposure to market risk to measure
that risk using their own internal value-at-risk model, subject to the
parameters of the rule, and to hold a sufficient amount of capital to support
the institution's risk exposure. Institutions subject to this rule must have
been in compliance with it by January 1, 1998. The rule applies to any bank or
bank holding company, regardless of size, whose trading activity equals 10% or
more of its total assets, or whose trading activity equals
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$1 billion or more. The Agencies may require an institution not otherwise
subject to the rule to comply with it for safety and soundness reasons and also
may exempt an institution otherwise subject to the rule from compliance under
certain circumstances.
Prompt Corrective Action. Under FDICIA, each federal banking agency must
implement a system of prompt corrective action for institutions that it
regulates. In September 1992, the Agencies adopted substantially similar
regulations, which became effective on December 19, 1992, intended to implement
this prompt corrective action system. Under the regulations, an institution is
deemed to be (1) "well capitalized" if it has a total risk-based capital ratio
of 10% or more, a Tier I risk-based capital ratio of 6% or more, a Tier I
leverage capital ratio of 5% or more and is not subject to specified
requirements to meet and maintain a specific capital level for any capital
measure; (2) "adequately capitalized" if it has a total risk-based capital ratio
of 8% or more, a Tier I risk-based capital ratio of 4% or more, a Tier I
leverage capital ratio of 4% or more (3% under certain circumstances) and does
not meet the definition of "well capitalized;" (3) "undercapitalized" if it has
a total risk-based capital ratio of under 8%, a Tier I risk-based capital ratio
of under 4% and a Tier I leverage capital ratio of under 4% (3% under certain
circumstances); (4) "significantly undercapitalized" if it has a total
risk-based capital ratio of under 6%, a Tier I risk-based capital ratio of under
3%, a Tier I leverage capital ratio of under 3%; and (5) "critically
undercapitalized" if it has a ratio of tangible equity to total assets of 2% or
less.
Increasingly severe restrictions are imposed on the payment of dividends
and management fees, asset growth and other aspects of the operations of
institutions that fall below the category of "adequately capitalized."
Undercapitalized institutions must develop and implement capital plans
acceptable to the appropriate federal regulatory agency. Such plans must require
any company that controls an undercapitalized institution to provide certain
guarantees that the institution will comply with the plan until it is
"adequately capitalized". As of December 31, 1997, none of the State Banks were
subject to any regulatory order, agreement, or directive to meet and maintain a
specific capital level for any capital measure.
RESTRICTIONS ON CAPITAL DISTRIBUTIONS
Dividends paid to Glacier by its banking subsidiaries are a material
source of Glacier's cash flow. Various federal and state statutory provisions
limit the amount of dividends Glacier's banking subsidiaries are permitted to
pay to Glacier without regulatory approval. FRB policy further limits the
circumstances under which bank holding companies may declare dividends.
If, in the opinion of the applicable federal banking agency, a
depository institution under its jurisdiction is engaged in or is about to
engage in an unsafe or unsound practice (which, depending on the financial
condition of the institution, may include the payment of dividends), the agency
may require, after notice and hearing, that such institution cease and desist
from such practice. In addition, the FRB and the FDIC have issued policy
statements which provide that insured banks and bank holding companies should
generally pay dividends only out of current operating earnings.
The State Banks. Montana law imposes the following limitations on the
payment of dividends by Montana state banks: (1) until the bank's surplus fund
is equal to 50% of its paid-up capital stock, no dividends may be declared
unless at least 25% of bank's net earnings for the dividend period have been
carried to the surplus account, and (2) a bank must give notice to the Banking
and Financial Institutions Division before declaring a dividend larger than the
previous two years' net earnings.
FEDERAL HOME LOAN BANK SYSTEM
All of Glacier's banking subsidiaries are members of the FHLB of
Seattle, which is one of the 13 regional FHLBs that administer the home
financing credit function of savings associations. Each FHLB serves as a reserve
or central bank for its members within its assigned region. It is funded
primarily from proceeds derived from the sale of consolidated obligations of the
FHLB System. It makes loans to members (i.e., advances) in accordance with
policies and procedures established by the Board of Directors of the FHLB.
As members, the respective banking subsidiaries of Glacier must purchase
and maintain stock in the FHLB of Seattle in an amount equal to at least 1% of
its aggregate unpaid residential mortgage loans, home purchase contracts or
similar obligations at the beginning of each year. On December 31, 1997,
Glacier's banking subsidiaries had $10.3 million in FHLB stock, which was
sufficient to comply with this requirement.
The FHLBs must provide funds for the resolution of troubled savings
associations and contribute to affordable housing programs through direct loans
or interest subsidies on advances targeted for community investment in low- and
moderate-income housing projects. These contributions have adversely affected
the level of FHLB dividends paid and could continue to do so in the future.
These contributions also could have an adverse effect on the value of FHLB stock
in the future. Dividends paid by the
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FHLB of Seattle to Glacier's banking subsidiaries for the years ended December
31, 1997, 1996 and 1995, totaled $739,000, $620,000 and $425,000, respectively.
FEDERAL RESERVE SYSTEM
The FRB requires all depository institutions to maintain reserves
against their transaction accounts (primarily checking accounts) and
non-personal time deposits. Currently, reserves of 3% must be maintained against
total transaction accounts of $49.8 million or less (after a $4.2 million
exemption), and an initial reserve of 10% (subject to adjustment by the FRB to a
level between 8% and 14%) must be maintained against that portion of total
transaction accounts in excess of such amount. On December 31, 1997, each of
Glacier's banking subsidiaries was in compliance with applicable requirements.
The balances maintained to meet the reserve requirements imposed by the
FRB may be used to satisfy applicable liquidity requirements. Because required
reserves must be maintained in the form of vault cash or a non-interest-bearing
account at a Federal Reserve Bank, the effect of this reserve requirement is to
reduce the earning assets of Glacier's banking subsidiaries.
RECENT FEDERAL LEGISLATION
Interstate Banking and Branching. The Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994 ("Interstate Act") permits nationwide
interstate banking and branching. This legislation generally authorizes
interstate branching and relaxes federal law restrictions on interstate banking.
These new interstate banking and branching powers have been phased in and
individual states may "opt out" of certain of these provisions. Accordingly,
states have been able to enact "opting-in" legislation that (1) permits
interstate mergers within their own borders before June 1, 1997, and (2) permits
out-of-state banks to establish de novo branches within the state. Subject to
certain state laws, such as age and contingency laws, bank holding companies may
purchase banks in any state. Additionally, subject to such state laws, beginning
June 1, 1997, banks have been permitted to merge with banks in any other state
as long as the home state of neither merging bank has "opted out." The
Interstate Act requires regulators to consult with community organizations
before permitting an interstate institution to close a branch in a low-income
area.
As of March 20, 1997, Montana has "opted-out" of the Interstate Act and
prohibited in-state banks from merging with out-of-state banks if the merger
would be effective on or before September 30, 2001. Montana law generally
authorizes the acquisition of an in-state bank by an out-of-state bank holding
company through the acquisition of a financial institution if the in-state bank
being acquired has been in existence for at least 5 years prior to the
acquisition. Banks, bank holding companies, and their respective subsidiaries
cannot acquire control of a bank located in Montana if, after the acquisition,
the acquiring institution, together with its affiliates, would directly or
indirectly control more than 22% of the total deposits of insured depository
institutions and credit unions located in Montana.
At this time, the full impact that the Interstate Act might have on
Glacier and its subsidiaries is impossible to predict.
CERTAIN LEGAL MATTERS
The validity of the GB Common Stock to be issued in the Reorganization
will be passed upon for Glacier by its Delaware counsel, Duane, Morris &
Hecksher LLP, Wilmington, Delaware. Duane, Morris & Heckscher LLP will also give
an opinion concerning certain tax matters related to the Reorganization.
OTHER MATTERS
Management is not aware of any business to come before the Annual
Meeting other than those matters described in this Proxy Statement. However, if
any other matters should properly come before the Annual Meeting, it is intended
that the proxies solicited hereby will be voted with respect to those other
matters in accordance with the judgment of the persons voting the proxies.
The cost of soliciting proxies on behalf of the Board of Directors for
the Annual Meeting will be borne by Glacier. In addition to solicitation by
mail, directors, officers and employees of Glacier may solicit proxies from the
stockholders of Glacier personally or by telephone or telegram. Brokerage
houses, nominees, fiduciaries and other custodians will be requested by Glacier
to forward soliciting materials to beneficial owners and to obtain proxies from
such beneficial owners and Glacier will reimburse such holders for their
reasonable out-of-pocket expenses in doing so.
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INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, independent auditors, performed the audit of the
consolidated financial statements for Glacier and the State Banks, for the year
ended December 31, 1997. Representatives of KPMG Peat Marwick LLP will be
present at the Annual Meeting, and will have the opportunity to make a statement
if they so desire. They also will be available to respond to appropriate
questions.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder wishes to have included in the proxy
solicitation materials to be used in connection with the 1999 Annual Meeting of
Stockholders of Glacier must be received at the main office of Glacier no later
than November 30, 1998. If such proposal is in compliance with all of the
requirements of Rule 14a-8 of the Exchange Act, it will be included in the Proxy
Statement and set forth on the form of proxy issued for the next Annual Meeting
Of Stockholders. It is urged that any such proposals be sent by certified mail,
return receipt requested.
ANNUAL REPORTS
Stockholders of Glacier as of the record date for the Annual Meeting are
being forwarded a copy of Glacier's Annual Report to Stockholders for the year
ended December 31, 1997 ("Annual Report"). The Annual Report is not a part of
the proxy solicitation materials for the Annual Meeting.
UPON RECEIPT OF A WRITTEN REQUEST, GLACIER WILL FURNISH TO ANY
STOCKHOLDER WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON FORM 10-K FILED WITH
THE SEC UNDER THE EXCHANGE ACT FOR THE YEAR ENDED DECEMBER 31, 1997. UPON
WRITTEN REQUEST AND A PAYMENT OF A COPYING CHARGE OF 10 CENTS PER PAGE, GLACIER
WILL FURNISH TO ANY SUCH STOCKHOLDER A COPY OF THE EXHIBITS TO THE ANNUAL REPORT
ON FORM 10-K. SUCH WRITTEN REQUESTS SHOULD BE DIRECTED TO GLACIER BANCORP, INC.,
202 MAIN STREET, KALISPELL, MONTANA 59903, ATTENTION: CORPORATE SECRETARY. THE
ANNUAL REPORT ON FORM 10-K IS NOT A PART OF THE PROXY SOLICITATION MATERIALS FOR
THE ANNUAL MEETING.
May ___, 1998 BY ORDER OF THE BOARD OF DIRECTORS
Michael J. Blodnick, Secretary
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APPENDIX A
PLAN AND AGREEMENT OF MERGER
BETWEEN
GLACIER BANCORP, INC.
AND
GB, INC.
THIS PLAN AND AGREEMENT OF MERGER (the "Agreement") is entered into as
of the 25th of March, 1998, by and between Glacier Bancorp, Inc., a Delaware
corporation ("Glacier"), and GB, Inc., a Delaware corporation ("GB").
W I T N E S E T H:
WHEREAS, Glacier is a corporation duly organized and validly existing
under the laws of the State of Delaware having an authorized capital stock of
six million (6,000,000) shares of common stock, par value $.01 per share
("Glacier Common Stock") and one million (1,000,000) shares of preferred stock,
par value $.01 per share ("Glacier Preferred Stock");
WHEREAS, GB is a corporation duly organized and validly existing under
the laws of the State of Delaware having an authorized capital stock of fifteen
million (15,000,000) shares of common stock, par value $.01 per share ("GB
Common Stock"), and one million (1,000,000) shares of preferred stock, par value
$.01 per share ("GB Preferred Stock");
-1-
<PAGE> 39
WHEREAS, at a meeting of the Board of Directors of Glacier (the
"Glacier Board") held on April 23, 1997, the Glacier Board declared a
three-for-two stock split of the issued and outstanding shares of Glacier Common
Stock (the "Stock Split") and, thereafter, Glacier delivered an additional
Glacier Common Stock certificate to each shareholder of record, which
certificate represented one additional share of Glacier Common Stock for every
two shares of Glacier Common Stock held by such stockholder as of May 9, 1997
(the "Stock Split Shares");
WHEREAS, since the Stock Split, Glacier has issued, from time to time,
additional shares of Glacier Common Stock in connection with the exercise of
option rights by certain option holders;
WHEREAS, Glacier recently discovered certain technical deficiencies in
the Stock Split;
WHEREAS, Glacier has been advised by Delaware counsel that the merger
of Glacier with and into GB, as provided for herein (the "Merger"), would
resolve such technical deficiencies in the Stock Split;
WHEREAS, the Glacier Board and the Board of Directors of GB deem it
advisable and in the best interests of each such corporation that the Merger be
consummated in accordance with the provisions of the General Corporation Law of
the State of Delaware (the "DGCL") and upon the terms and subject to the
conditions hereinafter set forth; and
WHEREAS, the Boards of Directors of Glacier and GB, by appropriate
resolutions, duly authorized, have approved and adopted this Agreement and
directed that it be
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submitted to the shareholders of each such corporation for adoption.
NOW, THEREFORE, in consideration of the mutual covenants, agreements
and provisions herein contained, the parties hereto agree as follows:
ARTICLE I
The Merger
1.1 Merger of Glacier with and into GB. In accordance with the
provisions of this Agreement and the DGCL at the Effective Time (as defined in
Section 1.4 hereof) Glacier shall be merged with and into GB, which shall be the
surviving entity (hereinafter sometimes referred to as the "Surviving Entity").
After the Effective Time, GB shall continue its existence as a Delaware
corporation and shall conduct its business under the name of "Glacier Bancorp,
Inc." At the Effective Time, the separate existence of Glacier shall cease.
1.2 Effect of the Merger.
(a) At the Effective Time, GB shall thereupon and thereafter possess
all the estates, rights, privileges, powers, franchises, patents, trademarks,
licenses, registrations and other assets of every kind and description of both
Glacier and GB, and be subject to all the restrictions, disabilities and duties
of both Glacier and GB; and all the rights, privileges, powers and franchises of
both Glacier and GB, and all the property, real, personal and mixed, and all
debts due to both Glacier and GB, and all other things in action belonging to
either Glacier and GB shall be vested in GB; and all property, rights,
privileges, powers, franchises, patents, trademarks, licenses, registrations and
other assets of every kind and description of Glacier, and all and every other
interest of Glacier, shall be thereafter as effectually the property of GB as
they
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were of Glacier, and the title to any real estate vested in Glacier by deed or
otherwise shall not revert or in any way be impaired by reason of the Merger;
but all rights of creditors and all liens upon any property of Glacier shall be
preserved unimpaired, and all debts, liabilities and duties of Glacier shall
thenceforth attach to GB and may be enforced against it to the same extent as if
said debts, liabilities and duties had been incurred or contracted by it.
(b) From and after the Effective Time and until further amended in
accordance with the DGCL, the Certificate of Incorporation of GB as in effect
immediately prior to the Effective Time shall continue to be the Certificate of
Incorporation of the Surviving Entity as the entity surviving the Merger,
provided that, as of and after the Effective Time, Article 1 of said Certificate
of Incorporation of GB shall be amended in its entirety to read as follows:
ARTICLE 1. NAME. The name of the corporation is Glacier Bancorp, Inc.
(hereinafter referred to as the "Corporation").
(c) From and after the Effective Time and until altered, amended or
repealed in accordance with applicable law, the Bylaws of Glacier as in effect
immediately prior to the Effective Time shall continue to be the Bylaws of the
Surviving Entity as the entity surviving the Merger.
(d) From and after the Effective Time, the directors and officers of
Glacier shall be the directors and officers of the Surviving Entity and the
directors and officers of GB, to the extent that they are not directors and
officers of Glacier at the Effective Time, shall cease to be directors and
officers at and after the Effective Time.
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(e) As a result of the Merger, GB will succeed to all of the rights,
duties and obligations of Glacier. The obligations of Glacier, which will be
assumed by GB, include, but are not limited to, its obligations as a
shareholder, its obligations to customers (of whatever nature), its obligations
(directly or through its subsidiaries) toward any third party, and any other
obligations of Glacier that may exist. GB and Glacier will take any such further
actions, if any, and execute such further documents, if any, as may be necessary
to legally effectuate the above-mentioned transfer of rights and obligations.
(f) GB will account for the Merger as a transfer at book value, take a
carry over basis in the assets transferred and recognize no gain on the
transaction.
1.3 Additional Actions. If, at any time after the Effective Time, GB
shall consider or be advised that any further assignments or assurances in law
or any other acts are necessary or desirable (a) to vest, perfect or confirm, of
record or otherwise, in GB, title to and possession of any property or right of
Glacier acquired or to be acquired by reason of, in connection with, or as a
result of the Merger, or (b) otherwise to carry out the purposes of this
Agreement, Glacier and its respective officers and directors shall be deemed to
have granted to GB an irrevocable power of attorney to execute and deliver all
such proper deeds, assignments and assurances in law and to do all acts
necessary or proper to vest, perfect or confirm title to and possession of such
property or rights in GB and otherwise to carry out the purposes of this
Agreement; and the directors and officers of GB are fully authorized in the name
of Glacier or otherwise to take any and all such action.
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1.4 Effective Time. The Merger shall be effective when a certificate
of merger is duly filed with the Office of the Secretary of State of the State
of Delaware or, if the Certificate of Merger specifies a later effective time,
at such later time as may be specified in the certificate of merger (the
"Effective Time").
ARTICLE II
Conversion of Securities
2.1 Glacier Common Stock. At the Effective Time, each issued and
outstanding share of Glacier Common Stock, including the Stock Split Shares, by
virtue of the Merger and without any action on the part of GB or Glacier, shall
be converted into one (1) fully paid and nonassessable share of GB Common Stock.
2.2 Glacier Treasury Shares. At the Effective Time, each share of
Glacier Common Stock and Glacier Preferred Stock held in the treasury of
Glacier, if any, shall be deemed canceled and shall cease to exist.
2.3 GB Common Stock. At the Effective Time, each issued and
outstanding share of GB Common Stock shall be deemed canceled and shall
thereafter be held in the treasury of GB.
2.4 Stock Certificates. After the Effective Time of the Merger, each
holder of a certificate representing shares of Glacier Common Stock may, at such
holder's option, surrender the same to GB or its exchange agent, if any (the
"Exchange Agent"), and exchange such certificate for a new certificate
representing the number of shares of GB Common Stock into which the surrendered
shares were converted as herein provided. Unless and until so
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surrendered, each outstanding certificate theretofore representing shares of
Glacier Common Stock shall be deemed for all purposes to represent the number of
whole shares of GB Common Stock into which such shares of Glacier Common Stock
were converted in the Merger. The registered owner on the books and records of
GB or the Exchange Agent, if any, of any such outstanding certificate shall,
until such certificate shall have been surrendered for transfer or conversion or
otherwise accounted for to GB or the Exchange Agent, if any, have and be
entitled to exercise any voting and other rights with respect to and to receive
dividends and other distributions upon the shares of Common Stock of GB
represented by such outstanding certificate as provided above. If any
certificate for shares of GB stock is to be issued in a name other than that in
which the certificate surrendered in exchange therefor is registered, it shall
be a condition of issuance thereof that the certificate so surrendered shall be
properly endorsed and otherwise in proper form for transfer, that such transfer
otherwise be proper and that the person requesting such transfer pay to GB or
the Exchange Agent, if any, any transfer or other taxes payable by reason of
issuance of such new certificate in a name other than that of the registered
holder of the certificate surrendered or establish to the satisfaction of GB
that such tax has been paid or is not payable.
2.5 Option and Benefit Plans. At the Effective Time, GB shall assume
and continue the Glacier stock option plans, as well as any other employee
benefit plans of Glacier. Each outstanding and unexercised option, or other
right to purchase, or security convertible into, Glacier Common Stock shall
become an option, or right to purchase, or a security convertible into GB Common
Stock on the basis of one (1) share of GB Common stock for each share of
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Glacier Common Stock issuable pursuant to any such option, or stock purchase
right or convertible security, on the same terms and conditions and at an
exercise or conversion price per share equal to the exercise or conversion price
per share applicable to any such Glacier option, stock purchase right or other
convertible security at the Effective Time. There are no options, purchase
rights for or securities convertible into any class of Glacier Preferred Stock.
GB shall reserve an appropriate number of shares of GB Common Stock for issuance
upon the exercise of options, stock purchase rights and convertible securities.
2.6 Abandoned Property/Escheat. Notwithstanding the foregoing, neither
GB, nor Glacier, nor any other party shall be liable to any holder of shares of
capital stock of Glacier, of whatever class, for any amount paid to a public
official pursuant to any applicable abandoned property, escheat or other law.
ARTICLE III
Representations and Warranties of Glacier
Glacier, for the purpose of inducing GB to enter into this Agreement,
represents and warrants as follows:
3.1 Incorporation. Glacier is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
3.2 Capitalization. The authorized capital stock of Glacier consists
of six million (6,000,000) shares of Glacier Common Stock and one million
(1,000,000) shares of Glacier Preferred Stock.
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3.3 Due Authorization of Agreement; No Conflict With Other Agreements.
Glacier has full power and authority and has taken all necessary action to
execute, deliver and consummate this Agreement, and to perform all the terms and
conditions hereof. This Agreement is a valid and binding obligation of Glacier
enforceable against Glacier in accordance with its terms, except as the
enforceability hereof may be limited by bankruptcy, insolvency or other laws of
general application relating to or affecting the enforcement of creditors'
rights or by general principles of equity limiting the availability of equitable
remedies. The execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby and the fulfillment of and compliance with the
terms and provisions hereof do not and will not (i) violate any provision of law
or administrative regulation or any judicial or administrative order, award,
judgment or decree applicable to Glacier, (ii) conflict with, result in a breach
of or constitute a default under the Certificate of Incorporation or Bylaws of
Glacier, (iii) conflict with, result in a breach of or constitute a default
under or accelerate or permit the acceleration of the performance required by,
any agreement or instrument to which Glacier is a party or by which Glacier is
bound, (iv) result in the creation of any lien, charge or encumbrance upon any
of the assets of Glacier under any such agreement or instrument, or (v)
terminate or give any party thereto the right to terminate any such agreement or
instrument. Any consents, waivers, approvals, authorizations or order required
for the authorization, execution and delivery of this Agreement and the
consummation by Glacier of the transactions contemplated hereby have been and
will be obtained by Glacier prior to the closing date and true, correct and
complete copies of each thereof furnished to GB.
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3.4 Continuing Effect of Representations and Warranties. All
representations and warranties of Glacier contained herein shall be true and
correct as of the Effective Time as though made at such time.
ARTICLE IV
Representations and Warranties of GB
GB, for the purpose of inducing Glacier to enter into this Agreement,
represents and warrants as follows:
4.1 Incorporation. GB is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
4.2 Capitalization. The authorized capital stock of GB consists of
fifteen million (15,000,000) shares of GB Common Stock and one million
(1,000,000) shares of GB Preferred Stock.
4.3 Due Authorization of Agreement; No Conflict With Other Agreements.
GB has full power and authority and has taken all necessary action to execute,
deliver and consummate this Agreement, and to perform all the terms and
conditions hereof. This Agreement is a valid and binding obligation of GB
enforceable against GB in accordance with its terms, except as the
enforceability hereof may be limited by bankruptcy, insolvency or other laws of
general application relating to or affecting the enforcement of creditors'
rights or by general principles of equity limiting the availability of equitable
remedies. The execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby and the fulfillment of and compliance with the
terms and provisions hereof do not and will not (i) violate any provision
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of law or administrative regulation or any judicial or administrative order,
award, judgment or decree applicable to GB, (ii) conflict with, result in a
breach of or constitute a default under the Certificate of Incorporation or
Bylaws of GB, (iii) conflict with, result in a breach of or constitute a default
under or accelerate or permit the acceleration of the performance required by,
any agreement or instrument to which GB is a party or by which GB is bound, (iv)
result in the creation of any lien, charge or encumbrance upon any of the assets
of GB under any such agreement or instrument, or (v) terminate or give any party
thereto the right to terminate any such agreement or instrument. Any consents,
waivers, approvals, authorizations or orders required for the authorization,
execution and delivery of this Agreement and the consummation by GB of the
transactions contemplated hereby have been and will be obtained by GB prior to
the closing date and true, correct and complete copies of each thereof furnished
to Glacier.
4.4 Continuing Effect of Representations and Warranties. All
representations and warranties of GB contained herein shall be true and correct
as of the Effective Time as though made at such time.
ARTICLE V
Conditions
5.1 Conditions to Obligations of Glacier. The obligation of Glacier to
consummate the Merger is subject to the fulfillment, prior to or at the
Effective Time, subject to the provisions of Section 6.2, of each of the
following conditions:
(a) Shareholder Approval. In addition to any vote required by law
or by the Certificate of Incorporation or Bylaws of Glacier, this Agreement
shall have been
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approved by the affirmative vote of the holders of at least two-thirds of the
outstanding shares of Common Stock, including the Stock Split Shares.
(b) Consents. All consents, authorizations, orders or approvals
of any governmental commission, board, other regulatory body or any third party
required in connection with the execution, delivery and performance of this
Agreement shall have been obtained.
(c) Satisfaction of Conditions. Any obligations of GB to be
performed pursuant to this Agreement prior to the Effective Time shall have been
performed in all material respects.
5.2 Conditions to Obligations of GB. The obligation of GB to
consummate the Merger is subject to the fulfillment, prior to or at the
Effective Time, subject to the provisions of Section 6.2, of each of the
following conditions:
(a) Shareholder Approval. This Agreement shall have been approved
by the affirmative vote of the sole stockholder of GB.
(b) Consents. All consents, authorizations, orders or approvals
of any governmental commission, board, other regulatory body or any third party
required in connection with the execution, delivery and performance of this
Agreement shall have been obtained.
(c) Satisfaction of Conditions. Any obligations of Glacier to be
performed pursuant to this Agreement prior to the Effective Time shall have been
performed in all material respects.
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ARTICLE VI
Miscellaneous
6.1 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one agreement.
6.2 Waiver. Any party may, at its option, extend the time for
performance of any of the obligations or acts of any other party and may waive
in writing any or all of the conditions contained herein to which its
obligations hereunder are subject or compliance by other parties with any other
matter in this Agreement.
6.3 Governing Law. This Agreement shall be governed in all respects,
including, but not limited to, validity, interpretation, effect and performance,
by the internal laws of the State of Delaware, excluding the effects of any
principles of conflicts of law which may otherwise be applicable.
6.4 Amendment. This Agreement may be amended at any time by the Boards
of Directors of Glacier and GB, either prior to or after approval of the Merger
by the stockholders of Glacier and GB, to the fullest extent permitted by law
and at any time upon the action of the Boards of Directors and stockholders of
Glacier and GB, by an amendment duly executed by the parties hereto at any time
prior to the Effective Time.
6.5 Termination.
(a) This Agreement may be terminated and the Merger abandoned at
any time prior to the Effective Time (i) by the mutual consent of the Boards of
Directors of
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Glacier and GB, or (ii) by the Glacier Board, if the approval of this Agreement
by the holders of at least two-thirds of the outstanding shares of Glacier
Common Stock, including the Stock Split Shares, shall not have been obtained.
(b) The filing of this Agreement or a Certificate of Merger with
the Secretary of State of the State of Delaware pursuant to Section 1.4 hereof
shall constitute certification that this Agreement of Merger has not theretofore
been terminated. If terminated as provided in this Section 6.5, this Agreement
shall forthwith become wholly void and of no further force or effect.
[ REMAINDER OF PAGE INTENTIONALLY LEFT BLANK ]
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IN WITNESS WHEREOF, Glacier and GB, pursuant to authority duly granted
by their respective Boards of Directors, have caused this Plan and Agreement of
Merger to be executed on their behalf by their respective officers.
Attest: GLACIER BANCORP, INC.
By: /s/ Michael J. Blodnick By: /s/ John S. MacMillan
------------------------------- -------------------------------
Name: Name:
Title: Secretary Title: President
Attest: GB, INC.
By: /s/ Michael J. Blodnick By: /s/ John S. MacMillan
------------------------------- -------------------------------
Name: Name:
Title: Secretary Title: President
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APPENDIX B
CERTIFICATE OF INCORPORATION OF
GB, INC.
ARTICLE 1. NAME. The name of the corporation is GB, Inc. (hereinafter
referred to as the "Corporation").
ARTICLE 2. REGISTERED OFFICE AND REGISTERED AGENT. The address of the
registered office of the Corporation in the State of Delaware is 1209 Orange
Street, in the City of Wilmington, County of New Castle. The name of the
registered agent at such address is The Corporation Trust Company.
ARTICLE 3. NATURE OF BUSINESS. The purpose of the Corporation is to
engage in any lawful act or activity for which a corporation may be organized
under the General Corporation Law of the State of Delaware.
ARTICLE 4. CAPITAL STOCK. The total number of shares of capital stock
which the Corporation has authority to issue is 16,000,000, of which 1,000,000
shall be serial preferred stock, $.01 par value per share (hereinafter the
"Preferred Stock"), and 15,000,000 shall be common stock, par value $.01 per
share (hereinafter the "Common Stock").
The Board of Directors is hereby expressly authorized, by resolution
or resolutions to provide, out of the unissued shares of Preferred Stock, for
series of Preferred Stock. Before any shares of any such series are issued, the
Board of Directors shall fix, and hereby is expressly empowered to fix, by
resolution or resolutions, the following provisions of the shares thereof:
(a) the designation of such series, the number of shares to
constitute such series and the stated value thereof if different from the par
value thereof;
(b) whether the shares of such series shall have voting rights,
in addition to any voting rights provided by law, and, if so, the terms of such
voting rights, which may be general or limited;
(c) the dividends, if any, payable on such series, whether any
such dividends shall be cumulative, and, if so, from what dates, the conditions
and dates upon which such dividends shall be payable, the preference or relation
which such dividends shall bear to the dividends payable on any shares of stock
of any other class or any other series of this class;
(d) whether the shares of such series shall be subject to
redemption by the Corporation, and, if so, the times, prices and other
conditions of such redemption;
(e) the amount or amounts payable upon shares of such series
upon, and the rights of the holders of such series in, the voluntary or
involuntary liquidation, dissolution or winding up, or upon any distribution of
the assets, of the Corporation;
<PAGE> 54
(f) whether the shares of such series shall be subject to the
operation of a retirement or sinking fund and, if so, the extent to and manner
in which any such retirement or sinking fund shall be applied to the purchase or
redemption of the shares of such series for retirement or other corporate
purposes and the terms and provisions relative to the operation thereof;
(g) whether the shares of such series shall be convertible into,
or exchangeable for, shares of stock of any other class or any other series of
this class or any other securities, and, if so, the price or prices or the rate
or rates of conversion or exchange and the method, if any, of adjusting the
same, and any other terms and conditions of conversion or exchange;
(h) the limitations and restrictions, if any, to be effective
while any shares of such series are outstanding upon the payment of dividends or
the making of other distributions on, and upon the purchase, redemption or other
acquisition by the Corporation of, the Common Stock or shares of stock of any
other class or any other series of this class;
(i) the conditions or restrictions, if any, upon the creation of
indebtedness of the Corporation or upon the issue of any additional stock,
including additional shares of such series or of any other series of this class
or of any other class; and
(j) any other powers, preferences and relative, participating,
optional and other special rights, and any qualifications, limitations and
restrictions thereof.
The powers, preferences and relative, participating, optional and
other special rights, of each series of Preferred Stock, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of any and
all other series at any time outstanding. All shares of any one series of
Preferred Stock shall be identical in all respects with all other shares of such
series, except that shares of any one series issued at different times may
differ as to the dates from which dividends thereon shall accrue and/or be
cumulative.
ARTICLE 5. INCORPORATOR. The name and mailing address of the sole
incorporator is as follows:
Name Address
Glacier Bank 202 Main Street
Kalispell, Montana 59901
ARTICLE 6. PREEMPTIVE RIGHTS. No holder of the capital stock of the
Corporation shall be entitled as such, as a matter of right, to subscribe for or
purchase any part of any new or additional issue of stock of any class
whatsoever of the Corporation, or of securities convertible into stock of any
class whatsoever, whether now or hereafter authorized, or whether issued for
cash or other consideration or by way of a dividend.
<PAGE> 55
ARTICLE 7. DIRECTORS. The business and affairs of the Corporation
shall be managed by or under the direction of a Board of Directors. Except as
otherwise fixed pursuant to the provisions of Article 4 hereof relating to the
rights of the holders of any class or series of stock having a preference over
the Common Stock as to dividends or upon liquidation to elect additional
directors, the number of directors shall be determined as stated in the
Corporation's Bylaws, as may be amended from time to time.
A. Classification and Term. The Board of Directors, other than those
who may be elected by the holders of any class or series of stock having
preference over the Common Stock as to dividends or upon liquidation, shall be
divided into three classes as nearly equal in number as possible, with one class
to be elected annually. The term of office of the initial directors shall be as
follows: the term of directors of the first class shall expire at the first
annual meeting of stockholders after the effective date of this Certificate of
Incorporation; the term of office of the directors of the second class shall
expire at the second annual meeting of stockholders after the effective date of
this Certificate of Incorporation; and the term of office of the third class
shall expire at the third annual meeting of stockholders after the effective
date of this Certificate of Incorporation; and, as to directors of each class,
when their respective successors are elected and qualified. At each annual
meeting of stockholders, directors elected to succeed those whose terms are
expiring shall be elected for a term of office to expire at the third succeeding
annual meeting of stockholders and when their respective successors are elected
and qualified. Stockholders of the Corporation shall not be permitted to
cumulate their votes for the election of directors.
B. Vacancies. Except as otherwise fixed pursuant to the provisions of
Article 4 hereof relating to the rights of the holders of any class or series of
stock having a preference over the Common Stock as to dividends or upon
liquidation to elect directors, any vacancy occurring in the Board of Directors,
including any vacancy created by reason of an increase in the number of
directors, may be filled by a majority vote of the directors then in office,
whether or not a quorum is present, or by a sole remaining director, and any
director so chosen shall hold office for the remainder of the term to which the
director has been selected and until such director's successor shall have been
elected and qualified. When the number of directors is changed, the Board of
Directors shall determine the class or classes to which the increased or
decreased number of directors shall be apportioned; provided that no decrease in
the number of directors shall shorten the term of any incumbent director.
C. Removal. Subject to the rights of any class or series of stock
having preference over the Common Stock as to dividends or upon liquidation to
elect directors, any director (including persons elected by directors to fill
vacancies in the Board of Directors) may be removed from office only with cause
by an affirmative vote of not less than a majority of the votes eligible to be
cast by stockholders at a duly constituted meeting of stockholders called
expressly for such purpose.
ARTICLE 8. LIABILITY OF DIRECTORS AND OFFICERS. The personal liability
of the directors and officers of the Corporation for monetary damages shall be
eliminated to the fullest extent permitted by the General Corporation Law of the
State of Delaware as it exists on the
<PAGE> 56
effective date of this Certificate of Incorporation or as such law may be
thereafter in effect. No amendment, modification or repeal of this Article 8
shall adversely affect the rights provided hereby with respect to any claim,
issue or matter in any proceeding that is based in any respect on any alleged
action or failure to act prior to such amendment, modification or repeal.
ARTICLE 9. CERTAIN BUSINESS COMBINATIONS.
9.1 VOTE REQUIRED FOR CERTAIN BUSINESS COMBINATIONS.
A. Higher Vote for Certain Business Combinations. In addition to any
affirmative vote required by law, any other provision of this Certificate of
Incorporation, the Bylaws of the Corporation, any agreement with a national
securities exchange or otherwise, and except as otherwise expressly provided in
Article 9.2 of this Article 9:
(1) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with (i) any Interested Stockholder (as
hereinafter defined) or (ii) any other corporation (whether or not itself an
Interested Stockholder) which is, or after such merger or consolidation would
be, an Affiliate (as hereinafter defined) of an Interested Stockholder; or
(2) any sale, lease, license, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a series of transactions)
to or with any Interested Stockholder or any Affiliate of any Interested
Stockholder of any assets of the Corporation or any Subsidiary having an
aggregate Fair Market Value (as hereinafter defined) of $500,000 or more; or
(3) the issuance or transfer by the Corporation or any Subsidiary
(in one transaction or a series of transactions) of any securities of the
Corporation or any Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder;
(4) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of an Interested
Stockholder or any Affiliate of any Interested Stockholder; or
(5) any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any other
transaction (whether or not with or into or otherwise involving an Interested
Stockholder) which has the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class of equity or
convertible securities of the Corporation or any Subsidiary which is directly or
indirectly owned by any Interested Stockholder or any Affiliate of any
Interested Stockholder; shall require the affirmative vote of the holders of at
least 80% of the voting power of the then outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of directors (the
"Voting Stock"), voting together as a single class (it being understood that for
purposes of this Article 9, each share of the Voting Stock shall have the number
of votes granted to it pursuant to Article 4 of this Certificate of
Incorporation). Such affirmative vote shall be required notwithstanding that no
vote may be required, or that a lesser percentage may be specified, by law, any
other provision of this Certificate of Incorporation, the Bylaws of the
Corporation, any agreement with any national securities exchange or otherwise.
<PAGE> 57
B. Definition of "Business Combination." The term "Business
Combination" as used in this Article 9 shall mean any transaction which is
referred to in any one or more of clauses (1) through (5) of paragraph A of this
Article 9.1.
9.2 WHEN HIGHER VOTE IS NOT REQUIRED.
The provisions of Article 9.1 shall not be applicable to any
particular Business Combination, and such Business Combination shall require
only such affirmative vote as may be required by law, any other provision of
this Certificate of Incorporation, the Bylaws of the Corporation, any agreement
with a national securities exchange or otherwise, if all of the conditions
specified in either of the following paragraphs A or B are met:
A. Approval by Disinterested Directors. The Business Combination shall
have been approved by a majority of the Disinterested Directors (as hereinafter
defined).
B. Price and Procedural Requirements. All of the following conditions
shall have been met:
(1) The aggregate amount of the cash and the Fair Market Value as
of the consummation of the Business Combination of consideration other than cash
to be received per share by holders of Common Stock in such Business Combination
shall be at least equal to the higher of the following:
(a) (if applicable) the highest per share price (including
any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by
the Interested Stockholder for any shares of Common Stock acquired by it (i)
within the five-year period immediately prior to the first public announcement
of the terms of the proposed Business Combination (the "Announcement Date") or
(ii) in the transaction in which it became an Interested Stockholder, whichever
is higher; and
(b) the Fair Market Value per share of Common Stock on the
Announcement Date or on the date on which the Interested Stockholder became an
Interested Stockholder (such latter date is referred to in this Article 9 as the
"Determination Date"), whichever is higher.
(2) The aggregate amount of the cash and the Fair Market Value as
of the date of the consummation of the Business Combination of consideration
other than cash to be received per share by holders of shares of any other class
of outstanding Voting Stock shall be at least equal to the highest of the
following (it being intended that the requirements of this clause (2) shall be
required to be met with respect to every class of outstanding Voting Stock,
whether or not the Interested Stockholder has previously acquired any shares of
a particular class of Voting Stock):
<PAGE> 58
(a) (if applicable) the highest per share price (including
any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by
the Interested Stockholder for any shares of such class of Voting Stock acquired
by it (i) within the five-year period immediately prior to the Announcement Date
or (ii) in the transaction in which it became an Interested Stockholder,
whichever is higher;
(b) the Fair Market Value per share of such class of Voting
Stock on the Announcement Date or on the Determination Date, whichever is
higher; and
(c) (if applicable) the highest preferential amount per
share to which the holders of shares of such class of Voting Stock are entitled
in the event of any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary.
(3) The consideration to be received by holders of a particular
class of outstanding Voting Stock (including Common Stock) shall be in cash or
in the same form as the Interested Stockholder has previously paid for shares of
such class of Voting Stock. If the Interested Stockholder has paid for shares of
any class of Voting Stock with varying forms of consideration, the form of
consideration for such class of Voting Stock shall be either cash or the form
used to acquire the largest number of shares of such class of Voting Stock
previously acquired by it. The price determined in accordance with clauses (1)
and (2) of this paragraph (B) shall be subject to appropriate adjustment in the
event of any stock dividend, stock split, combination of shares or similar
event.
(4) After such Interested Stockholder has proposed such a
Business Combination and prior to the consummation of such Business Combination;
(a) except as approved by a majority of the Disinterested Directors, there shall
have been no failure to declare and pay at the regular date therefor any full
quarterly dividends (whether or not cumulative) on the outstanding Preferred
Stock of the Corporation; (b) there shall have been (i) no reduction in the
quarterly rate of dividends paid on the Common Stock (except as necessary to
reflect any subdivision of the Common Stock), except as approved by a majority
of the Disinterested Directors, and (ii) an increase in such quarterly rate of
dividends paid on such Common Stock as necessary to reflect any reclassification
(including any reverse stock split), recapitalization, reorganization or any
similar transaction which has the effect of reducing the number of outstanding
shares of the Common Stock, unless the failure so to increase such annual rate
is approved by a majority of the Disinterested Directors; and (c) such
Interested Stockholder shall not have become the beneficial owner of any
additional shares of Voting Stock except as part of the transaction which
results in such Interested Stockholder becoming an Interested Stockholder.
(5) A proxy or information statement describing the proposed
Business Combination and complying with the requirements of the Securities
Exchange Act of 1934, as amended (or any subsequent provisions replacing such)
(hereinafter referred to as the "Act"), and the rules and regulations of the
Securities and Exchange Commission thereunder shall be mailed to the
stockholders of the Corporation at least 30 days prior to the consummation of
such Business Combination (whether or not such proxy or information statement is
required to be mailed pursuant to the Act.)
<PAGE> 59
(6) The holders of all outstanding shares of Voting Stock not
beneficially owned by the Interested Stockholder prior to the consummation of
any Business Combination shall be entitled to receive in such Business
Combination cash or other consideration for their shares of such Voting Stock in
compliance with clauses (1), (2) and (3) of paragraph B of this Article 9.2
(provided, however, that the failure of any such holders who are exercising
their statutory rights to dissent from such Business Combination and receive
payment of the fair value of their shares to exchange their shares in such
Business Combination shall not be deemed to have prevented the condition set
forth in this clause (6) from being satisfied).
9.3 CERTAIN DEFINITIONS.
For the purposes of this Article 9 the following shall be deemed to
have the meanings specified below:
A. The term "person" shall mean any individual, firm, corporation or
other entity.
B. The term "Interested Stockholder" shall mean any person (other than
the Corporation or any Subsidiary) who or which:
(1) is the beneficial owner, directly or indirectly, of more than
10% of the voting power of the then outstanding Voting Stock; or
(2) is an Affiliate of the Corporation and at any time within the
five-year period immediately prior to the date in question was the beneficial
owner, directly or indirectly, of 10% or more of the voting power of the then
outstanding Voting Stock; or
(3) is an assignee of or has otherwise succeeded to any shares of
Voting Stock which were at any time within the five-year period immediately
prior to the date in question beneficially owned by an Interested Stockholder,
if such assignment or succession shall have occurred in the course of a
transaction or series of transactions not involving a public offering within the
meaning of the Securities Act of 1933, as amended (or any subsequent provisions
replacing such).
C. A person shall be deemed a "beneficial owner" of any Voting Stock:
(1) which such person or any of its Affiliates or Associates (as
hereinafter defined) beneficially owns, directly or indirectly; or
(2) which such person or any of its Affiliates or Associates has
(a) the right to acquire (whether such right is exercisable immediately or only
after the passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (b) the right to vote pursuant to any
agreement, arrangement or understanding; or
<PAGE> 60
(3) which is beneficially owned, directly or indirectly, by any
other person with which such person or any of its Affiliates or Associates has
any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of Voting Stock.
D. For the purpose of determining whether a person is an Interested
Stockholder pursuant to paragraph B of this Article 9.3, the number of shares of
Voting Stock deemed to be outstanding shall include shares deemed owned through
application of paragraph C of this Article 9.3 but shall not include any other
shares of Voting Stock which may be issuable pursuant to any agreement,
arrangement or understanding, or upon exercise of conversion rights, warrants or
options, or otherwise.
E. The terms "Affiliate" or "Associate" shall have the respective
meanings ascribed to such terms in rule 12b-2 of the General Rules and
Regulations under the Act, as in effect on the effective date of this
Certificate of Incorporation.
F. The term "Subsidiary" shall mean any corporation of which a
majority of any class of equity security is owned, directly or indirectly, by
the Corporation; provided, however, that for the purposes of the definition of
Interested Stockholder set forth in paragraph B of this Article 9.3, the term
"Subsidiary" shall mean only a corporation of which a majority of each class of
equity security is owned, directly or indirectly, by the Corporation.
G. The term "Fair Market Value" shall mean: (1) in the case of stock,
the highest closing sale price during the 30-day period immediately preceding
the date in question of a share of such stock on the Composite Tape for New York
Stock Exchange-Listed Stocks, or, if such stock is not quoted on the Composite
Tape, on the New York Stock Exchange, or if such stock is not listed on such
Exchange, on the principal United States securities exchange registered under
the Act on which such stock is listed or, if such stock is not listed on any
such exchange, the highest closing bid quotation with respect to a share of such
stock during the 30-day period preceding the date in question on the National
Association of Securities Dealers, Inc. Automated Quotations System or any
similar system then in use, or if no such quotations are available, the fair
market value on the date in question of a share of such stock as determined by a
majority of the Disinterested Directors in good faith, in each case with respect
to any class of such stock, appropriately adjusted for any dividend or
distribution in shares of such stock or any subdivision or reclassification of
outstanding shares of such stock into a greater number of shares of such stock
or any combination or reclassification of outstanding shares of such stock into
a smaller number of shares of such stock; and (2) in the case of property other
than cash or stock, the fair market value of such property on the date in
question as determined by a majority of the Disinterested Directors in good
faith.
H. In the event of any Business Combination in which the Corporation
is the survivor, the phrase "consideration other than cash to be received" as
used in clauses (1) and (2) of paragraph B of Article 9.2 shall include the
shares of Common Stock and/or the shares of any other eligible outstanding
Voting Stock retained by the holders of such shares.
<PAGE> 61
I. The term "Disinterested Director" shall mean any member of the
Board of Directors of the Corporation who is unaffiliated with the Interested
Stockholder and who was a member of the Board of Directors prior to the
Determination Date, and any successor of a Disinterested Director who is
unaffiliated with the Interested Stockholder and is recommended to succeed a
Disinterested Director by a majority of the total number of Disinterested
Directors then on the Board of Directors.
J. References to "highest per share price" shall in each case with
respect to any class of stock reflect an appropriate adjustment for any dividend
or distribution in shares of such stock or subdivision or reclassification of
outstanding shares of such stock into a greater number of shares of such stock
or any combination or reclassification of outstanding shares of such stock into
a smaller number of shares of such stock.
9.4 POWERS OF THE BOARD OF DIRECTORS.
A majority of the Board of Directors of the Corporation shall have the
power and duty to decide for the purpose of this Article 9, on the basis of
information known to them after reasonable inquiry, whether a person is an
Interested Stockholder. Once the Board of Directors has made a determination
pursuant to the preceding sentence that a person is an Interested Stockholder, a
majority of the number of Directors of the Corporation who would qualify as
Disinterested Directors shall have the power and duty to interpret all of the
terms and provisions of this Article 9, and to determine on the basis of
information known to them after reasonable inquiry all facts necessary to
ascertain compliance with this Article 9, including, without limitation: (A) the
number of shares of Voting Stock beneficially owned by any person, (B) whether a
person is an Affiliate or Associate of another, (C) whether the assets which are
the subject of any Business Combination have an aggregate Fair Market Value of
$500,000 or more and (D) whether all of the applicable conditions set forth in
paragraph B of Article 9.2 have been met with respect to any Business
Combination. Any determination pursuant to this Article 9.4 made in good faith
shall be binding and conclusive on all parties.
9.5 NO EFFECT ON FIDUCIARY OBLIGATIONS OF INTERESTED STOCKHOLDERS.
Nothing contained in this Article 9 shall be construed to relieve any
Interested Stockholder from any fiduciary obligation imposed by law.
9.6 AMENDMENT, REPEAL, ETC.
Notwithstanding any other provisions of this Certificate of
Incorporation or the Bylaws of the Corporation (and notwithstanding the fact
that a lesser percentage may be specified by this Certificate of Incorporation
or the Bylaws of the Corporation), the affirmative vote of the holders of 80% or
more of the outstanding Voting Stock, voting together as a single class, shall
be required to amend, repeal or adopt any provisions inconsistent with this
Article 9.
ARTICLE 10. AMENDMENT. The Corporation reserves the right to amend,
alter, change or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by law, and all rights
conferred upon stockholders herein are granted subject
<PAGE> 62
to this reservation. No amendment, addition, alteration, change or repeal of
this Certificate of Incorporation shall be made unless it is first approved by
the Board of Directors of the Corporation pursuant to a resolution adopted by
the affirmative vote of a majority of the directors then in office, and
thereafter is approved by the holders of a majority of the shares of the
Corporation entitled to vote generally in an election of directors, voting
together as a single class, as well as such additional vote of the Preferred
Stock as may be required by the provisions of any series thereof, provided that,
notwithstanding anything contained in this Certificate of Incorporation to the
contrary, Article 9 shall be amended in the manner specified in Article 9.6.
GLACIER BANK, being the sole Incorporator herein before named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, does make this Certificate, hereby declaring and certifying
that this is the Incorporator's act and deed and that the facts herein stated
are true, and accordingly has caused this Certificate to be signed on its behalf
by the undersigned, thereunto duly authorized, on the 24th day of March, 1998.
GLACIER BANK
By: /s/ John S. MacMillian
--------------------------------------
John S. MacMillan
President and Chief Operating Officer
<PAGE> 63
GLACIER BANCORP, INC.
PROXY
PLEASE SIGN AND RETURN IMMEDIATELY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John S. MacMillan and Michael J.
Blodnick and each of them (with full power to act alone), my Proxies, with full
power of substitution as Proxy, and hereby authorize Messrs. MacMillan and
Blodnick to represent and to vote, as designated below, all the shares of common
stock of Glacier Bancorp, Inc., held of record by the undersigned on
______________, 1998, at the Annual Meeting of Shareholders to be held on
___________, 1998, or any adjournment of such Meeting.
1. ELECTION OF DIRECTORS
A. I vote FOR all nominees listed below (except as marked to the
contrary below) [ ]
I WITHHOLD AUTHORITY to vote for any individual nominee whose name I
have struck a line through in the list below:
Allen J. Fetscher - John S. MacMillan - F. Charles Mercord
B. I WITHHOLD AUTHORITY to vote for all nominees listed above. [ ]
2. APPROVAL OF REORGANIZATION. To consider and vote on a proposal to
approve a merger of Glacier Bancorp, Inc. with and into a
newly-created, wholly owned subsidiary.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. WHATEVER OTHER BUSINESS may properly be brought before the Meeting or
any adjournment thereof.
THIS PROXY CONFERS AUTHORITY TO VOTE "FOR" AND WILL BE VOTED "FOR" THE
PROPOSALS LISTED UNLESS AUTHORITY IS WITHHELD OR A VOTE AGAINST OR AN
ABSTENTION IS SPECIFIED, IN WHICH CASE THIS PROXY WILL BE VOTED IN
ACCORDANCE WITH THE SPECIFICATION SO MADE.
Management knows of no other matters that may properly be, or which
are likely to be, brought before the Meeting. However, if any other matters are
properly presented at the Meeting, this Proxy will be voted in accordance with
the recommendations of management.
The Board of Directors recommends a vote "FOR" the listed proposals.
__________________ , 1998
________________________________________
________________________________________
________________________________________
WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE GIVE FULL TITLE. IF MORE THAN ONE
TRUSTEE, ALL SHOULD SIGN. ALL JOINT
OWNERS MUST SIGN.
