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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
October 20, 1998
GLACIER BANCORP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
000-18911 81-0468393
(Commission File Number) IRS Employer Identification No.
P.O. Box 27
202 Main Street
Kalispell, MT 59903-0027
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: 406-756-4200
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ITEM 5 - OTHER EVENTS
On October 20, 1998, Glacier Bancorp, Inc., Kalispell, Montana
("Glacier") entered into a definitive agreement (the "Share Exchange Agreement")
with Big Sky Western Bank, a Montana commercial banking corporation ("Big Sky").
Under the terms of the Share Exchange Agreement, all of the outstanding shares
of Big Sky common stock will be exchanged for shares of Glacier common stock and
Big Sky will become a wholly-owned subsidiary of Glacier.
The Share Exchange Agreement provides that Big Sky's common stock will
be exchanged for up to 250,000 shares of Glacier common stock, as adjusted by
certain transaction and other expenses outlined in the Share Exchange Agreement.
The exact number of shares to be received by each Big Sky shareholder will be
determined by a fixed exchange ratio as set forth in the Share Exchange
Agreement.
Consummation of the share exchange is subject to several conditions,
including receipt of applicable regulatory approvals and approval by the
shareholders of Big Sky. For information regarding the terms of the proposed
transaction, reference is made to the Share Exchange Agreement and the press
release dated October 20, 1998, which are attached hereto as Exhibits 2, 99,
respectively, and incorporated herein by reference.
ITEM 7 - FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements - not applicable.
(b) Pro forma financial information - not applicable.
(c) Exhibits:
(2) Plan and Agreement of Share Exchange, dated as of
October 20, 1998
(99) Press Release issued by Glacier, dated October 20, 1998
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: October 20, 1998
GLACIER BANCORP, INC.
By: /s/ Michael J. Blodnick
---------------------------------
Michael J. Blodnick
President and Chief Executive
Officer
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EXHIBIT 2
EXECUTION COPY
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PLAN AND AGREEMENT OF SHARE EXCHANGE
BETWEEN
GLACIER BANCORP, INC.
AND
BIG SKY WESTERN BANK
================================================================================
DATED AS OF OCTOBER 20, 1998
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TABLE OF CONTENTS
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Page
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SECTION 1 TERMS OF TRANSACTION........................................................... 2
1.1 Transaction............................................................. 2
1.1.1 Events of Closing.............................................. 2
1.1.2 Effect on Glacier Common Stock................................. 2
1.2 Consideration........................................................... 2
1.2.1 Purchase Price................................................. 2
1.2.2 Exchange Ratio................................................. 3
1.2.4 Big Sky Expense Limitation..................................... 3
1.2.5 Change in Equity Capital....................................... 3
1.2.6 No Fractional Shares........................................... 3
1.2.7 Certificates................................................... 4
1.3 Payment to Dissenting Stockholders...................................... 5
1.4 Alternative Structures.................................................. 5
1.5 Letter of Transmittal................................................... 5
1.6 Undelivered Certificates................................................ 5
SECTION 2 CLOSING OF THE TRANSACTION..................................................... 5
2.1 Closing................................................................. 5
2.2 Events of Closing....................................................... 6
2.3 Place of Closing........................................................ 6
SECTION 3 REPRESENTATIONS AND WARRANTIES................................................. 6
3.1 Representations of Glacier and Big Sky.................................. 6
3.1.1 Corporate Organization and Qualification....................... 6
3.1.2 Subsidiaries................................................... 6
3.1.3 Capital Stock.................................................. 6
3.1.4 Corporate Authority............................................ 8
3.1.5 Reports and Financial Statements............................... 8
3.1.6 Absence of Certain Events and Changes.......................... 10
3.1.7 Material Agreements............................................ 10
3.1.8 Knowledge as to Conditions..................................... 10
3.1.9 Brokers and Finders............................................ 10
3.1.10 Year 2000 Compliance........................................... 11
3.2 Big Sky's Additional Representations.................................... 11
3.2.1 Loan and Lease Losses.......................................... 11
3.2.2 No Stock Option Plans.......................................... 11
3.2.3 Governmental Filings; No Violations............................ 11
3.2.4 Asset Classification........................................... 12
3.2.5 Investments.................................................... 12
3.2.6 Properties..................................................... 12
3.2.7 Anti-takeover Provisions....................................... 13
3.2.8 Compliance with Laws........................................... 13
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3.2.9 Litigation..................................................... 13
3.2.10 Taxes.......................................................... 14
3.2.11 Insurance...................................................... 14
3.2.12 Labor Matters.................................................. 15
3.2.13 Employee Benefits.............................................. 15
3.2.14 Environmental Matters.......................................... 16
3.3 Exceptions to Representations and Warranties............................ 17
3.3.1 Disclosure of Exceptions....................................... 17
3.3.2 Nature of Exceptions........................................... 17
SECTION 4 CONDUCT AND TRANSACTIONS BEFORE CLOSING........................................ 18
4.1 Conduct of Big Sky's Business Before Closing............................ 18
4.1.1 Availability of Big Sky's Books, Records and Properties........ 18
4.1.2 Ordinary and Usual Course...................................... 18
4.1.3 Conduct Regarding Representations and Warranties............... 20
4.1.4 Maintenance of Properties...................................... 20
4.1.5 Preservation of Business Organization.......................... 20
4.1.6 Senior Management.............................................. 20
4.1.7 Compensation and Employment Agreements......................... 20
4.1.8 Update of Financial Statements................................. 20
4.1.9 No Solicitation................................................ 20
4.1.10 Title Policies on Leased Property.............................. 21
4.1.11 Review of Loans................................................ 21
4.2 Registration Statement.................................................. 21
4.2.1 Preparation of Registration Statement.......................... 21
4.2.2 Submission to Stockholders..................................... 22
4.3 Accounting Treatment.................................................... 22
4.3.1 Pooling of Interests........................................... 22
4.3.2 Affiliate List................................................. 22
4.3.3 Restrictive Legends............................................ 23
4.3.4 Retention of Certificates...................................... 23
4.4 Submission to Regulatory Authorities.................................... 23
4.5 Announcements........................................................... 23
4.6 Consents................................................................ 23
4.7 Further Actions......................................................... 23
4.8 Notice.................................................................. 23
4.9 Confidentiality......................................................... 24
4.10 Update of Financial Statements.......................................... 24
4.11 Availability of Glacier's Books, Records and Properties................. 24
SECTION 5 APPROVALS AND CONDITIONS....................................................... 24
5.1 Required Approvals...................................................... 24
5.2 Conditions to Glacier's Obligations..................................... 24
5.2.1 Representations................................................ 24
5.2.2 Compliance..................................................... 25
5.2.3 Equity Capital Requirement..................................... 25
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5.2.4 Transaction Fees Statements.................................... 25
5.2.5 Audit Report................................................... 25
5.2.6 No Material Adverse Effect..................................... 25
5.2.7 Financial Condition............................................ 25
5.2.8 No Change in Loan Review....................................... 26
5.2.9 No Governmental Proceedings.................................... 26
5.2.10 Approval by Counsel............................................ 26
5.2.11 Receipt of Title Policy........................................ 26
5.2.12 Corporate and Stockholder Action............................... 26
5.2.13 Tax Opinion.................................................... 26
5.2.14 Opinion of Counsel............................................. 26
5.2.15 Cash Paid...................................................... 27
5.2.16 Affiliate Letters.............................................. 27
5.2.17 Registration Statement......................................... 27
5.2.18 Consents....................................................... 27
5.2.19 Updated Fairness Opinion....................................... 27
5.2.20 Accounting Treatment........................................... 27
5.2.21 Solicitation of Employees...................................... 27
5.2.22 Other Matters.................................................. 28
5.3 Conditions to Big Sky's Obligations..................................... 28
5.3.1 Representations................................................ 28
5.3.2 Compliance..................................................... 28
5.3.3 No Material Adverse Effect..................................... 28
5.3.4 No Governmental Proceedings.................................... 28
5.3.5 Corporate and Stockholder Action............................... 28
5.3.6 Tax Opinion.................................................... 28
5.3.7 Opinion of Counsel............................................. 28
5.3.8 Fairness Opinion............................................... 29
5.3.9 Cash Paid...................................................... 29
5.3.10 Registration Statement......................................... 29
SECTION 6 DIRECTORS, OFFICERS AND EMPLOYEES.............................................. 29
6.1 Directors............................................................... 29
6.2 Employment Agreement.................................................... 29
6.3 Employees............................................................... 29
6.4 Employee Benefit Issues................................................. 30
6.4.1 Comparability of Benefits...................................... 30
6.4.2 Termination and Transfer/Merger of Plans....................... 30
6.4.3 No Contract Created............................................ 30
SECTION 7 TERMINATION OF AGREEMENT AND ABANDONMENT OF TRANSACTION........................ 30
7.1 Termination by Reason of Lapse of Time.................................. 30
7.2 Other Grounds for Termination........................................... 30
7.2.1 Mutual Consent................................................. 30
7.2.2 Big Sky's Conditions Not Met................................... 30
7.2.3 Glacier's Conditions Not Met................................... 30
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7.2.4 Big Sky Fails to Recommend Stockholder Approval................ 30
7.2.5 Impracticability............................................... 31
7.3 Big Sky Termination Fee................................................. 31
7.4 Glacier Termination Fee................................................. 31
7.5 Cost Allocation Upon Termination........................................ 31
SECTION 8 MISCELLANEOUS.................................................................. 31
8.1 Notices................................................................. 31
8.2 Waivers and Extensions.................................................. 32
8.3 General Interpretation.................................................. 32
8.4 Construction and Execution in Counterparts.............................. 32
8.5 Survival of Representations and Covenants............................... 32
8.6 Attorneys' Fees and Costs............................................... 33
8.7 Arbitration............................................................. 33
8.8 Governing Law and Venue................................................. 33
8.9 Severability............................................................ 33
SECTION 9 AMENDMENTS..................................................................... 33
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EXHIBITS AND SCHEDULES:
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EXHIBIT A Form Affiliate Letter
TRANSITION PLAN SCHEDULE
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SCHEDULE 1 Exceptions to Representations
SCHEDULE 2 Glacier Stock Plans
SCHEDULE 3 Big Sky Stock Options
SCHEDULE 4 Big Sky's Convertible Securities
SCHEDULE 5 Material Contracts
SCHEDULE 6 Big Sky's Required Third Party Consents
SCHEDULE 7 Big Sky's Asset Classification List
SCHEDULE 8 Big Sky's Investments
SCHEDULE 9 Big Sky's Property Encumbrances
SCHEDULE 10 Big Sky's Real Property
SCHEDULE 11 Big Sky's Offices and Branches
SCHEDULE 12 Big Sky's Compliance with Laws
SCHEDULE 13 Big Sky's Litigation Disclosure
SCHEDULE 14 Big Sky's Insurance Policies
SCHEDULE 15 Big Sky's Employee Benefit Plans
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INDEX OF DEFINITIONS
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TERMS SECTION
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Agreement Intro. Paragraph
Acquisition Proposal 4.1.9
ASR 4.3.2
Asset Classification 3.2.4
BHCA Recital A
Big Sky Intro. Paragraph
Big Sky Common Stock 3.1.3(b)(1)
Big Sky Financial Statements 3.1.5(d)(4)
Closing 1.1.1
Company Common Stock 3.1.3(a)(1)
Compensation Plans 3.2.13(b)
Continuing Employees 6.3
Contracts 3.2.3(b)
Debentures 1.2.3
Determination Date Closing Price 1.2.3
Dissenting Shares 1.3
Effective Date 2.1
Employees 3.2.13(b)
Environmental Laws 3.2.14(a)(2)
ERISA 3.2.13(a)
Exchange Act 3.1.5(b)
Exchange Agent 1.2.7(a)
Exchange Ratio 1.2.2
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TERMS SECTION
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Executive Officer 3.1.8
Federal Reserve Board Recital D
Financial Statements 3.1.5(d)(1)
GAAP 3.1.5(d)
Glacier Intro. Paragraph
Glacier Common Stock 3.1.3(a)(1)
Glacier Financial Statements 3.1.5(d)(2)
Glacier Preferred Stock 3.1.3(a)(1)
Glacier Shares 1.2.2
Glacier Stock Plans 3.1.3(a)(2)
Governmental Entity 3.2.3(a)
Hazardous Substances 3.2.14(a)(3)
HOLA Recital A
Information Technology 3.1.10
IRC Recital H
Knowledge 3.2.14(a)
Liens 3.1.3(a)(5)
Material Adverse Effect 3.1.6
MBCA 1.1.1
OTS Recital D.4
Parties 1.2.3
Pension Plan 3.2.13(c)
Plan/Plans 3.2.13(a)
Prospectus/Proxy Statement 4.2.1(a)
</TABLE>
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TERMS SECTION
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Purchase Price 1.2.1
Registration Statement 4.2.1(a)
Regulatory Approvals Recital D
Reports 3.1.5(b)
SEC 3.1.5(a)
Securities Act 3.1.5(b)
Securities Laws 3.1.5(b)
Share Exchange Recital B
Subject Property 3.2.14(a)(1)
Subsequent Big Sky Financial Statements 3.1.5(d)(5)
Subsequent Glacier Financial Statements 3.1.5(d)(3)
Subsidiary/Subsidiaries 3.1.2
Tangible Equity Capital 5.2.3
Tax 3.2.10
Termination Date 2.1
Transaction 1.1
Transaction Fees 1.2.3
Year 2000 Compliance 3.1.10
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PLAN AND AGREEMENT OF SHARE EXCHANGE
BETWEEN
GLACIER BANCORP, INC.
AND
BIG SKY WESTERN BANK
This Plan and Agreement of Share Exchange ("Agreement"), dated as of
October 20, 1998, is between GLACIER BANCORP, INC. ("Glacier"), a Delaware
corporation and BIG SKY WESTERN BANK ("Big Sky"), a Montana commercial banking
corporation.
PREAMBLE
The management and boards of directors of Glacier and Big Sky,
respectively, believe that the share exchange between Glacier and Big Sky, on
the terms and conditions set forth in this Agreement, is in the best interests
of Glacier's and Big Sky's stockholders.
RECITALS
A. THE PARTIES. Glacier is a corporation duly organized and validly
existing under Delaware law and is a registered bank holding company
under the Bank Holding Company Act of 1956, as amended ("BHCA").
Glacier's principal office is located in Kalispell, Montana. Glacier
owns (1) all of the outstanding common stock of Glacier Bank, First
Security Bank of Missoula, and Valley Bank of Helena; and (2) 94% and
98% of the outstanding common stock of Glacier Bank of Whitefish and
Glacier Bank of Eureka, respectively. Big Sky is a state-chartered
commercial banking corporation duly organized and validly existing
under Montana law with its principal office located in Big Sky,
Montana.
B. THE SHARE EXCHANGE. On the Effective Date, all of the outstanding
shares of Big Sky common stock will be exchanged for shares of Glacier
common stock, and Big Sky will become a wholly-owned subsidiary of
Glacier.
C. BOARD APPROVALS. Glacier's and Big Sky's respective boards of directors
have approved this Agreement and authorized its execution and delivery.
D. OTHER APPROVALS. The Share Exchange is subject to:
(a) satisfaction of the conditions described in this Agreement;
(b) approval by Big Sky's stockholders; and
(c) approval or acquiescence, as appropriate, by (a) the Board of
Governors of the Federal Reserve System ("Federal Reserve
Board") and (b) the State of Montana (collectively,
"Regulatory Approvals").
E. EMPLOYMENT AGREEMENT. Big Sky has entered into an employment agreement,
effective as of the Effective Date, with Michael F. Richards, Big Sky's
President.
F. DIRECTOR NONCOMPETITION AGREEMENT. Each Director of Big Sky's board of
directors has signed a Director Noncompetition Agreement. These
noncompetition agreements will take effect on the Effective Date.
1
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G. FAIRNESS OPINION. Big Sky has received from Professional Bank Services
and delivered to Glacier an opinion to the effect that the financial
terms of the Transaction are financially fair to Big Sky's
stockholders. As a condition to Closing of the Transaction,
Professional Bank Services will update this fairness opinion
immediately before Big Sky mails the Prospectus/Proxy Statement to its
stockholders and immediately before the Effective Date.
H. INTENTION OF THE PARTIES--ACCOUNTING AND TAX TREATMENT. The parties
intend the Share Exchange to qualify, for accounting purposes, as a
"pooling of interests." The parties intend the Share Exchange to
qualify, for federal income tax purposes, as a tax-free reorganization
under Section 368 of the Internal Revenue Code of 1986, as amended
("IRC").
AGREEMENT
Glacier and Big Sky agree as follows:
SECTION 1
TERMS OF TRANSACTION
1.1 TRANSACTION. Under and subject to this Agreement and the other
documents referred to in this Agreement, Glacier will acquire all of
the outstanding common stock shares of Big Sky ("Big Sky Common
Stock"). All outstanding shares of Big Sky Common Stock will be
exchanged for common stock shares of Glacier ("Glacier Common Stock").
The term "Transaction" means the Share Exchange transaction
contemplated by this Agreement, subject to any modifications Glacier
elects in accordance with Subsection 1.4.
1.1.1 EVENTS OF CLOSING. Closing of the Transaction will take place
in accordance with Section 2 ("Closing"). All shares, other
than Dissenting Shares, of Big Sky Common Stock issued and
outstanding immediately before Closing will be exchanged at
Closing for shares of Glacier Common Stock in accordance with
Subsection 1.2 and in accordance with the Montana Business
Corporation Act ("MBCA"), Part 8,Sections 35-1-814, et. seq.
by operation of law and without any further action required by
the holders of Big Sky Common Stock. At the time of Closing,
all then outstanding shares of Big Sky Common Stock will be
owned by Glacier. The Board of Directors of Big Sky
immediately after the Effective Date will consist of Big Sky's
directors immediately before the Share Exchange with the
addition of two additional directors designated by Glacier and
reasonably acceptable to Big Sky. These individuals will serve
on Big Sky's board of directors until the next annual meeting
of stockholders or until their successors have been elected
and qualified. Nothing in this Agreement is intended to
restrict any rights of Big Sky's stockholder and directors at
any time after the Effective Date to nominate, elect, select,
or remove directors.
1.1.2 EFFECT ON GLACIER COMMON STOCK. Glacier Common Stock shares
issued and outstanding immediately before the Effective Date
will remain outstanding and unchanged after the Share
Exchange.
1.2 CONSIDERATION.
1.2.1 PURCHASE PRICE. Except as otherwise provided in this
Subsection 1.2 and subject to Subsection 1.3, the aggregate
consideration Big Sky's stockholders will be entitled to
receive from Glacier in connection with the Transaction (the
"Purchase Price") will be 250,000 shares of Glacier Common
Stock.
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1.2.2 EXCHANGE RATIO. Subject to the conditions and limitations in
this Agreement, holders of Big Sky Common Stock will receive
Glacier Common Stock in exchange for their Big Sky Common
Stock. The number of Glacier Common Stock shares each holder
will receive in exchange for each Big Sky Common Stock share
he or she holds of record on the Effective Date will be
determined according to a ratio (the "Exchange Ratio")
computed as follows: the quotient of the Purchase Price
divided by the aggregate number of shares of Big Sky Common
Stock that on the Effective Date are issued and outstanding
(rounded to 2 decimals, rounding down if the third decimal is
four or less or up if it is five or more). The shares of
Glacier Common Stock to be issued to Big Sky Common
Stockholders under this Agreement in connection with the
Transaction are referred to as the "Glacier Shares."
1.2.3 CONVERTIBLE DEBENTURES. Big Sky currently has issued 7.5%
Convertible Debentures due December 31, 2001 in the aggregate
principal amount of $350,000 (the "Debentures"). If any of the
Debentures are not converted into Big Sky Common Stock prior
to the Effective Date, then before the Exchange Ratio is
calculated, the Purchase Price will be reduced by the number
of Glacier Common Stock Shares equal in value to the aggregate
principal amount of the Debentures which have not been
converted. For purposes of determining this reduction in the
Purchase Price, Glacier Common Stock shares will be valued at
the Determination Date Closing Price. "Determination Date
Closing Price" means the midpoint of the closing bid and ask
prices per share of Glacier Common Stock as reported on the
Nasdaq National Market or such successor exchange on which
Glacier Common Stock may then be traded (as reported in The
Wall Street Journal or, if not reported therein, in another
mutually agreed upon authoritative source) on the third
business day before the Effective Date. Glacier will cause to
be mailed to each Debenture holder a copy of the
Prospectus/Proxy Statement and will provide to each Debenture
holder, on or prior to the Effective Date, its written
assurance that it has assumed the obligation to deliver shares
of Glacier Common Stock as required pursuant to paragraph
4(d)(ii) of the Debentures if the Debentures remain
outstanding until their maturity.
1.2.4 BIG SKY EXPENSE LIMITATION. If Big Sky's Transaction Fees
exceed $100,000, then before the Exchange Ratio is calculated,
the Purchase Price will be reduced by the number of Glacier
Common Stock shares equal in value to the excess, based on the
Determination Date Closing Price. "Transaction Fees" means all
costs and expenses, not including the exercise of options,
incurred by Big Sky or owed or paid by Big Sky to third
parties in connection with the preparation, negotiation and
execution of this Agreement and related documents and the
consummation of the Transaction, including expenses incurred
by Big Sky in connection with obtaining approvals for the
Transaction from regulators and stockholders, expenses related
to the audits of the Big Sky Financial Statements required
under this Agreement and expenses related to obtaining a
fairness opinion from Professional Bank Services.
1.2.5 CHANGE IN EQUITY CAPITAL. If, after the date of this Agreement
but before the Effective Date, Glacier's or Big Sky's Common
Stock issued and outstanding increases or decreases in number
or is changed into or exchanged for a different kind or number
of securities, through a recapitalization, reclassification,
stock dividend, stock split, reverse stock split or other
similar change in capitalization (not including increases in
number due to issuances of shares upon exercise of any
outstanding options to purchase Glacier Common Stock shares)
of Glacier or Big Sky, as the case may be, then, as
appropriate, the parties will make the proportionate
adjustment to the Purchase Price.
1.2.6 NO FRACTIONAL SHARES. No fractional shares of Glacier
Corporation Common Stock will be issued. In lieu of fractional
shares, if any, each stockholder of Big Sky who is otherwise
entitled
3
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to receive a fractional share of Glacier Common Stock will
receive an amount of cash equal to the product of such
fraction times the Determination Date Closing Price. Such
fractional share interest will not include the right to vote
or receive dividends or any interest on dividends.
1.2.7 CERTIFICATES.
(a) Surrender of Certificates. Each certificate
evidencing Big Sky Common Stock shares (other than
Dissenting Shares) will, on and after the Effective
Date, be deemed for all corporate purposes to
represent and evidence only the right to receive a
certificate representing the Glacier Shares (or to
receive the cash for fractional shares) to which the
Big Sky Common Stock shares converted in accordance
with the provisions of this Subsection 1.2. Following
the Effective Date, Big Sky stockholders shall
exchange Big Sky Common Stock certificates by
surrendering them to the agent ("Exchange Agent")
designated by Glacier and Big Sky to effect the
exchange of Big Sky Common Stock certificates for
certificates representing Glacier Shares (or for cash
in lieu of fractional shares), in accordance with any
instructions provided by the Exchange Agent and
together with a properly completed and executed form
of transmittal letter. Until a holder's certificate
evidencing Big Sky Common Stock is so surrendered,
the holder will not be entitled to receive any
certificates evidencing Glacier Shares or cash in
lieu of fractional shares.
(b) Issuance of Certificates in Other Names. Any person
requesting that any certificate evidencing Glacier
Shares be issued in a name other than the name in
which the surrendered Big Sky Common Stock
certificate is registered, must: (1) establish to the
Exchange Agent's satisfaction the right to receive
the certificate evidencing Glacier Shares and (2)
either pay to the Exchange Agent any applicable
transfer or other taxes or establish to the Exchange
Agent's satisfaction that all applicable taxes have
been paid or are not required.
(c) Lost, Stolen, and Destroyed Certificates. The
Exchange Agent will be authorized to issue a
certificate representing Glacier Shares in exchange
for a Big Sky Common Stock certificate that has been
lost, stolen or destroyed, if the holder provides the
Exchange Agent with: (1) satisfactory evidence that
the holder owns Big Sky Common Stock and that the
certificate representing this ownership is lost,
stolen, or destroyed, (2) any appropriate affidavit
the Exchange Agent may require, and (3) any
indemnification assurances that the Exchange Agent
may require.
(d) Rights to Dividends and Distributions. After the
Effective Date, no holder of a certificate evidencing
Big Sky Common Stock shares will be entitled to
receive any dividends or other distributions
otherwise payable to holders of record of Glacier
Common Stock on any date after the Effective Date,
unless the holder (1) is entitled by this Agreement
to receive a certificate representing Glacier Shares
and (2) has surrendered in accordance with this
Agreement his or her Big Sky Common Stock
certificates (or has met the requirements of
Subsection 1.2.7((c)) above) in exchange for
certificates representing Glacier Shares. Surrender
of Big Sky Common Stock certificates will not deprive
the holder of any dividends or distributions that the
holder is entitled to receive as a record holder of
Big Sky Common Stock on a date before the Effective
Date. When the holder surrenders his or her
certificates, the holder will receive the amount,
without interest, of any cash dividends and any other
distributions
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distributed after the Effective Date on the whole
number of shares of Glacier Shares into which the
holder's Big Sky Common Stock was converted at the
Effective Date.
(e) Checks in Other Names. Any person requesting that a
check for cash in lieu of fractional shares be issued
in a name other than the name in which the Big Sky
Common Stock certificate surrendered in exchange for
the cash is registered, must establish to the
Exchange Agent's satisfaction the right to receive
this cash.
1.3 PAYMENT TO DISSENTING STOCKHOLDERS. For purposes of this Agreement,
"Dissenting Shares" means those shares of Big Sky Common Stock as to
which stockholders have properly taken all steps necessary to perfect
their dissenters' rights under MBCA Sections 35-1-826 through
35-1-839. Each outstanding Dissenting Share of Big Sky Common Stock
will be converted at Closing into the rights provided under those
sections of the MBCA.
1.4 ALTERNATIVE STRUCTURES. Subject to the conditions set forth below,
Glacier may in its sole discretion elect to consummate the Transaction
by means other than those specified in this Section 1. If Glacier so
elects, any means, procedures, or amendments necessary or desirable to
consummate the Transaction, in the opinion of Glacier's counsel, will
supersede any conflicting, undesirable or unnecessary provisions of
this Agreement. But, unless this Agreement is amended in accordance
with Section 9, the following conditions will apply: (1) the type and
amount of consideration set forth in Subsection 1.2 will not be
modified and (2) the tax consequences to Big Sky and its stockholders
will not be adversely affected. If Glacier elects an alternative
structure under this Subsection 1.4, Big Sky will cooperate with and
assist Glacier with the following: (1) any amendments to this Agreement
necessary or desirable in the opinion of Glacier's counsel and (2) the
preparation and filing of any applications, documents, instruments and
notices necessary or desirable, in the opinion of Glacier's counsel, to
effect the alternative structure and to obtain the necessary
stockholder; provided, however, that to the extent such alternative
structure results in Big Sky incurring costs and expenses totaling more
than $100,000, Glacier shall reimburse Big Sky for such additional
expenses and costs.
1.5 LETTER OF TRANSMITTAL. Glacier will prepare a transmittal letter form
reasonably acceptable to Big Sky for use by stockholders holding Big
Sky Common Stock. Certificates representing shares of Big Sky Common
Stock must be delivered for payment in the manner provided in the
transmittal letter form. On or about the Effective Date, Glacier will
mail the transmittal letter form to Big Sky stockholders.
1.6 UNDELIVERED CERTIFICATES. If outstanding certificates for Big Sky
Common Stock are not surrendered or the payment for them is not claimed
before those payments would escheat or become the property of any
governmental unit or agency, the unclaimed items will, to the extent
permitted by abandoned property or any other applicable law, become the
property of Glacier (and to the extent not in its possession will be
paid over to Glacier), free and clear of all claims or interests of any
person previously entitled to such items. But, neither Glacier nor Big
Sky will be liable to any holder of Big Sky Common Stock for any amount
paid to any governmental unit or agency having jurisdiction over any
such unclaimed items under the abandoned property or other applicable
law of the jurisdiction, and Glacier will pay no interest on amounts
owed to stockholders for shares of Big Sky Common Stock.
SECTION 2
CLOSING OF THE TRANSACTION
2.1 CLOSING. Closing will occur on the Effective Date. If Closing does not
occur on or before June 30, 1999 ("Termination Date"), either Glacier
or Big Sky may terminate this Agreement in accordance with
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Section 7. Unless Glacier and Big Sky agree upon a later date, the
Effective Date will be a date mutually acceptable to Glacier and Big
Sky within 30 calendar days after the following:
(a) each condition precedent set forth in Section 5 has been
either fulfilled or waived; and
(b) each approval required by Section 5 has been granted, and all
applicable waiting periods have expired.
2.2 EVENTS OF CLOSING. On the Effective Date, all properly executed
documents required by this Agreement will be delivered to the proper
party in form consistent with this Agreement. If any party fails to
deliver a required document on the Effective Date or otherwise defaults
under this Agreement on or before the Effective Date, then the
Transaction will not occur unless the adversely affected party waives
the default.
2.3 PLACE OF CLOSING. Unless Glacier and Big Sky agree otherwise, Closing
will occur on the Effective Date at Glacier's main office, 202 Main
Street, Kalispell, Montana.
SECTION 3
REPRESENTATIONS
3.1 REPRESENTATIONS OF GLACIER AND BIG SKY. Subject to Subsection 3.3 and
except as expressly set forth in Schedule 1, Glacier represents to Big
Sky, and Big Sky represents to Glacier, the following:
3.1.1 CORPORATE ORGANIZATION AND QUALIFICATION.
(a) It is a corporation duly organized and validly
existing under the state laws of either Montana or
Delaware (as applicable), and its activities do not
require it to be qualified in any jurisdiction other
than Montana.
(b) It has the requisite corporate power and authority to
own or lease its properties and assets and to carry
on its businesses as they are now being conducted.
(c) It has made available to the other party to this
Agreement a complete and correct copy of its
certificate or articles of incorporation and bylaws,
each as amended to date and currently in full force
and effect.
3.1.2 SUBSIDIARIES. With respect to Big Sky only, it has no
Subsidiaries as of the date of this Agreement. A company is
considered to be a "Subsidiary" of a party if that party or
any of its Subsidiaries (individually or together with the
party) directly or indirectly owns, controls, or has the
ability to exercise 50% or more of the voting power of such
company. In this Agreement, the term "Subsidiary" with respect
to a party means any corporation, partnership, financial
institution, trust company, or other entity owned or
controlled by that party or any of its subsidiaries or
affiliates (or owned or controlled by that party together with
one or more of its subsidiaries or affiliates).
3.1.3 CAPITAL STOCK.
(a) Glacier. Glacier represents:
(1) as of the date of this Agreement, Glacier's
authorized capital stock consists of 16
million shares divided into two classes: (i)
15 million shares of common stock, par value
$.01 per share ("Company Common Stock"),
8,335,485 shares
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of which are issued and outstanding and (ii)
1 million shares of blank-check preferred
stock, par value $.01 per share, none of
which is outstanding ("Glacier Preferred
Stock");
(2) options or rights to acquire not more than
an aggregate of 494,744 Company Common Stock
shares (subject to adjustment on the terms
set forth in the Glacier Stock Plans) are
outstanding under the stock option plans
listed in Schedule 2 ("Glacier Stock
Plans");
(3) No Company Common Stock shares are reserved
for issuance, other than the shares reserved
for issuance under the Glacier Stock Plans,
and Glacier has no shares of Glacier
Preferred Stock reserved for issuance;
(4) all outstanding shares of Company Common
Stock have been duly authorized and validly
issued and are fully paid and nonassessable;
(5) all outstanding shares of capital stock of
each of Glacier's Subsidiaries owned by
Glacier or a Subsidiary of Glacier have been
duly authorized and validly issued and are
fully paid and nonassessable, except to the
extent any assessment is required under
federal law, and are owned by Glacier or a
Subsidiary of Glacier free and clear of all
liens, pledges, security interests, claims,
proxies, preemptive or subscriptive rights
or other encumbrances or restrictions of any
kind (collectively, "Liens"); and
(6) except as set forth in this Agreement or in
the Glacier Stock Plans, there are no
preemptive rights or any outstanding
subscriptions, options, warrants, rights,
convertible securities, or other agreements
or commitments of Glacier or any of its
Subsidiaries of any character relating to
the issued or unissued capital stock or
other equity securities of Glacier
(including those relating to the issuance,
sale, purchase, redemption, conversion,
exchange, registration, voting or transfer
of such stock or securities).
(b) Big Sky. Big Sky represents:
(1) as of the date this Agreement, Big Sky's
authorized capital stock consists of 22,900
shares of common stock, $40 par value per
share ("Big Sky Common Stock"), 20,400
shares of which are issued and outstanding
and 2,500 of which are reserved for issuance
pursuant to the Debentures;
(2) no options or rights to acquire Big Sky
Common Stock shares are outstanding, except
as expressly set forth in Schedule 3;
(3) Except as expressly set forth in Schedule 4,
Big Sky does not have any stock option
plans, employee stock purchase plans, or
other plans or agreements providing for the
grant of options or other rights to acquire
Big Sky Common Stock shares, and no Big Sky
Common Stock shares are reserved for
issuance, except as expressly set forth in
Schedule 3;
(4) all outstanding Big Sky Common Stock shares
have been duly authorized and validly issued
and are fully paid and nonassessable;
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(5) There are no preemptive rights or any
outstanding subscriptions, options,
warrants, rights, convertible securities, or
other agreements or commitments of Big Sky
of any character relating to the issued or
unissued capital stock or other equity
securities of Big Sky (including those
relating to the issuance, sale, purchase,
redemption, conversion, exchange,
registration, voting or transfer of such
stock or securities), except as expressly
set forth in Schedules 3 and 4.
3.1.4 CORPORATE AUTHORITY.
(a) It has the requisite corporate power and authority
and has taken all corporate action necessary in order
to execute and deliver this Agreement and to complete
the Transaction, subject (in Big Sky's case) only to
the approval by Big Sky's stockholders of the plan of
Share Exchange contained in this Agreement to the
extent required by MBCA Section 35-1-815.
(b) This Agreement is a valid and legally binding
agreement of it, enforceable in accordance with the
terms of this Agreement.
3.1.5 REPORTS AND FINANCIAL STATEMENTS.
(a) Filing of Reports. Since January 1, 1995, it and each
of its Subsidiaries (if any) has filed all reports
and statements, together with any required amendments
to these reports and statements, that it was required
to file with (1) the Securities and Exchange
Commission ("SEC"), (2) the Federal Reserve Board,
(3) the FDIC, and (4) any other applicable federal or
state banking, insurance, securities, or other
regulatory authorities. Each of these reports and
statements, including the related financial
statements and exhibits, complied (or will comply, in
the case of reports or statements filed after the
date of this Agreement) as to form in all material
respects with all applicable statutes, rules and
regulations as of their respective dates (and, in the
case of reports or statements filed before the date
of this Agreement, without giving effect to any
amendments or modifications filed after the date of
this Agreement).
(b) Delivery to Other Party of Reports. It has delivered
to the other party a copy of each registration
statement, offering circular, report, definitive
proxy statement or information statement under the
Securities Act of 1933, as amended, ("Securities
Act"), the Securities Exchange Act of 1934, as
amended, ("Exchange Act"), and state securities and
"Blue Sky" laws (collectively, the "Securities Laws")
filed, used or circulated by it with respect to
periods since January 1, 1995, through the date of
this Agreement. It will promptly deliver to the other
party each such registration statement, offering
circular, report, definitive proxy statement or
information statement filed, used or circulated after
the date of this Agreement (collectively, its
"Reports"), each in the form (including related
exhibits and amendments) filed with the SEC (or if
not so filed, in the form used or circulated).
(c) Compliance with Securities Laws. As of their
respective dates (and without giving effect to any
amendments or modifications filed after the date of
this Agreement), each of the Reports, including the
related financial statements, exhibits and schedules,
filed, used or circulated before the date of this
Agreement complied (and each of the Reports filed
after the date of this Agreement, will comply) in all
material respects with applicable Securities Laws,
and did not (or in the case of reports, statements,
or circulars
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filed after the date of this Agreement, will not)
contain any untrue statement of a material fact or
omit to state a material fact required to be stated
therein or necessary to make the statements made
therein, in light of the circumstances under which
they were made, not misleading.
(d) Financial Statements. Each of its balance sheets
included in the Financial Statements fairly presents
(or, in the case of Financial Statements for periods
ending on a date following the date of this
Agreement, will fairly present) the consolidated
financial position of it and its Subsidiaries as of
the date of the balance sheet. Each of the
consolidated statements of income, cash flows and
stockholders' equity included in the Financial
Statements fairly presents (or, in the case of
Financial Statements for periods ending on a date
following the date of this Agreement, will fairly
present) the consolidated results of operations,
retained earnings and cash flows, as the case may be,
of it and its Subsidiaries for the periods set forth
in these statements (subject, in the case of
unaudited statements, to normal year-end audit
adjustments), in each case in accordance with
generally accepted accounting principles,
consistently applied ("GAAP"), except as may be noted
in these statements.
(1) "Financial Statements" means: (i) in
Glacier's case, the Glacier Financial
Statements (or for periods ending on a date
following the date of this Agreement, the
Subsequent Glacier Financial Statements);
and (ii) in Big Sky's case, the Big Sky
Financial Statements (or for periods ending
on a date following the date of this
Agreement, the Subsequent Big Sky Financial
Statements).
(2) "Glacier Financial Statements" means
Glacier's (i) audited consolidated
statements of financial condition as of
December 31, 1997 and 1996, and the related
audited statements of income, cashflows and
changes in stockholders' equity for each of
the years ended December 31, 1997 and 1996;
and (ii) unaudited consolidated statements
of financial condition as of the end of each
fiscal quarter following December 31, 1997
but preceding the date of this Agreement,
and the related unaudited statements of
income, cashflows and changes in
stockholders' equity for each such quarter.
(3) "Subsequent Glacier Financial Statements"
means balance sheets and related statements
of income and stockholders' equity for each
of the fiscal quarters ending after the date
of this Agreement and before Closing.
(4) "Big Sky Financial Statements" means (i) Big
Sky's statements of financial condition as
of December 31, 1997 (unaudited as of
execution of this Agreement, audited as of
three days before Glacier files the
Registration Statement with the SEC) and as
of December 31, 1996 and 1995 (unaudited),
and the related statements of income,
cashflows and changes in stockholders'
equity for each of the years ended December
31, 1997 (unaudited as of execution of this
Agreement, audited as of three days before
Glacier files the Registration Statement
with the SEC) and December 31, 1996 and 1995
(unaudited); and (ii) Big Sky's unaudited
statements of financial condition as of the
end of each fiscal quarter following
December 31, 1997 but preceding the date of
this Agreement,
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and the related unaudited statements of
income, cashflows and changes in
stockholders' equity for each such quarter.
(5) "Subsequent Big Sky Financial Statements"
means (i) unaudited balance sheets and
related statements of income and
stockholders' equity for each of Big Sky's
fiscal quarters ending after the date of
this Agreement and before Closing, and (ii)
[if the Transaction does not close before
February 15, 1999], Big Sky's audited
statements of financial condition as of
December 31, 1998, and the related audited
statements of income, cashflows, and changes
in stockholders' equity for the year ended
December 31, 1998.
3.1.6 ABSENCE OF CERTAIN EVENTS AND CHANGES. Except as disclosed in
its Financial Statements and Reports, since December 31, 1997:
(1) it and its Subsidiaries have conducted their respective
businesses only in the ordinary and usual course of the
businesses and (2) no change or development or combination of
changes or developments has occurred that, individually or in
the aggregate, is reasonably likely to result in a Material
Adverse Effect with respect to it or its Subsidiaries. For
purposes of this Agreement, "Material Adverse Effect" with
respect to any corporation means an effect that: (1) is
materially adverse to the business, financial condition,
results of operations or prospects of the corporation and its
Subsidiaries taken as a whole; (2) significantly and adversely
affects the ability of the corporation to consummate the
transactions contemplated by this Agreement by the Termination
Date or to perform its material obligations under this
Agreement; or (3) enables any persons to prevent the
consummation by the Termination Date of the transactions
contemplated by this Agreement. No Material Adverse Effect
will be deemed to have occurred on the basis of any effect
resulting from actions or omissions of the corporation taken
with the explicit prior consent of the other party to this
Agreement.
3.1.7 MATERIAL AGREEMENTS.
(a) Except for the Glacier Stock Plans (in Glacier's
case) and arrangements made after the date and in
accordance with the terms of this Agreement, it and
its Subsidiaries are not bound by any material
contract (as defined in Item 601(b)(10) of Regulation
S-K under the Securities Act) that: (1) is to be
performed after the date of this Agreement and (2)
has not been filed with or incorporated by reference
in its Reports or set forth in Schedule 5.
(b) Neither it nor any of its Subsidiaries is in default
under any contract, agreement, commitment,
arrangement, lease, insurance policy, or other
instrument.
3.1.8 KNOWLEDGE AS TO CONDITIONS. Its President, Chief Executive
Officer, and Chief Financial Officer (collectively, "Executive
Officers") know of no reason the Regulatory Approvals and, to
the extent necessary, any other approvals, authorizations,
filings, registrations, and notices should not be obtained
without the imposition of any condition or restriction that is
reasonably likely to have a Material Adverse Effect with
respect to it, its Subsidiaries, or the Continuing
Corporation, or the opinion of the tax experts referred to in
Subsection 5.2.13.
3.1.9 BROKERS AND FINDERS. Neither it, its Subsidiaries, nor any of
their respective officers, directors or employees has employed
any broker or finder or incurred any liability for any
brokerage fees, commissions or finder's fees in connection
with the transactions contemplated in this Agreement,
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except for payments made by Big Sky to Professional Bank
Services pursuant to their brokerage agreement.
3.1.10 YEAR 2000 COMPLIANCE. It is in full compliance with all
applicable regulatory requirements, guidelines and timetables
regarding systems assessment, systems testing, third-party
assessment, and other matters related to preparation for Year
2000 Compliance. Based on its assessment and testing conducted
to date, it is not aware of anything that cause it to believe
that (1) it will fail in any material way not to timely
achieve Year 2000 Compliance, or (2) expenses related to
achieving Year 2000 Compliance will have a material effect on
its operations or financial condition. For purposes of this
Agreement, "Year 2000 Compliance" means that its Information
Technology will be capable of use prior to, during, and after
the calendar year 2000 A.D., and that the Information
Technology used during each such time period will accurately
receive, provide and process date/time data (including, but
not limited to, calculating, comparing and sequencing) from,
into and between the twentieth and twenty-first centuries,
including the years 1999 and 2000, and leap year calculations
and will not malfunction, cease to function, or provide
invalid or incorrect results as a result of date/time data.
For purposes of this Agreement, "Information Technology"
includes computer software, computer firmware, computer
hardware (whether general or specific purpose) or other
similar or related automated or computerized items that are
used or relied on by it in the conduct of its business.
3.2 BIG SKY'S ADDITIONAL REPRESENTATIONS. Subject to Subsection 3.3 and
except as expressly set forth in Schedule 1, Big Sky represents to
Glacier, the following:
3.2.1 LOAN AND LEASE LOSSES. Its Executive Officers know of no
reason why the allowance for loan and lease losses shown in
the balance sheets included in the Financial Statements for
the periods ended December 31, 1997, March 31, 1998, June 30,
1998, and September 30, 1998, was not adequate as of those
dates, respectively, to provide for estimable and probable
losses, net of recoveries relating to loans not previously
charged off, inherent in its loan portfolio.
3.2.2 NO STOCK OPTION PLANS. It has not adopted any stock option
plans or granted any options or rights to acquire any shares
of Big Sky Common Stock, except as expressly set forth in
Schedules 3 and 4.
3.2.3 GOVERNMENTAL FILINGS; NO VIOLATIONS.
(a) Filings. Other than the Regulatory Approvals and
other than as required under the Securities Act, the
Exchange Act, and state securities and "Blue Sky"
laws, no notices, reports or other filings are
required to be made by it with, nor are any consents,
registrations, approvals, permits or authorizations
required to be obtained by it from, any governmental
or regulatory authority, agency, court, commission or
other entity, domestic or foreign ("Governmental
Entity"), in connection with the execution, delivery
or performance of this Agreement by it and the
consummation by it of the Transaction.
(b) Violations. The execution, delivery and performance
of this Agreement does not and will not, and the
consummation by it of the Transaction will not,
constitute or result in: (1) a breach or violation
of, or a default under, its articles of incorporation
or bylaws; (2) a breach or violation of, or a default
under, or the acceleration of or the creation of a
Lien (with or without the giving of notice, the lapse
of time or both) under, any provision of any
agreement, lease, contract, note, mortgage,
indenture, arrangement or other obligation
("Contracts") of it; or (3) a violation of any law,
rule, ordinance or regulation
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or judgment, decree, order, award, or governmental or
non-governmental permit or license to which it is
subject; or (4) any change in the rights or
obligations of any party under any of the Contracts.
Schedule 6 contains a list of all consents it must
obtain from third parties under any Contracts before
consummation of the Transaction.
3.2.4 ASSET CLASSIFICATION.
(a) Schedule 7 sets forth a list, accurate and complete
as of September 30, 1998, except as otherwise
expressly noted in Schedule 7, and separated by
category of classification or criticism ("Asset
Classification"), of the aggregate amounts of loans,
extensions of credit and other assets of it that have
been criticized or classified by any Governmental
Entity, by any outside auditor, or by any internal
audit.
(b) Except as shown on Schedule 7, no amounts of loans,
extensions of credit or other assets that have been
classified or criticized by any representative of any
Governmental Entity as "Other Assets Especially
Mentioned," "Substandard," "Doubtful," "Loss" or
words of similar effect are excluded from the amounts
disclosed in the Asset Classification, other than
amounts of loans, extensions of credit or other
assets that were paid off or charged off by it before
the date of this Agreement.
3.2.5 INVESTMENTS. Schedule 8 lists all investments (except
investments in securities issued by federal state or local
government or any subdivision or agency thereof) made by it in
an amount greater than $25,000 or which represent an ownership
interest of more than 5% in any corporation, company,
partnership, or other entity. All investments comply with all
applicable laws and regulations.
3.2.6 PROPERTIES.
(a) Except as disclosed or reserved against in its
Financial Statements or in Schedule 9, it has good
and marketable title, free and clear of all Liens
(other than Liens for current taxes not yet
delinquent or pledges to secure deposits) to all of
the properties and assets, tangible or intangible,
reflected in its Reports as being owned or leased by
it as of the date of this Agreement.
(b) To the knowledge of its Executive Officers, all
buildings and all fixtures, equipment and other
property and assets that are material to its business
and are held under leases or subleases by it are held
under valid leases or subleases, enforceable in
accordance with their respective terms (except as may
be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting
creditors' rights generally or by general equity
principles). Schedule 10 lists all real property
which it owns or leases.
(c) Schedule 11 lists all its existing branches and
offices and all new branches or offices it has
applied to establish or purchase, along with the cost
to establish or purchase those branches.
(d) It has provided to Glacier a copy of the existing
title policy held in its files on unimproved real
estate it owns in Bozeman, Montana, and no
exceptions, reservations, or encumbrances have arisen
or been created since the date of issuance of that
policy. At Closing and upon Glacier's request, Big
Sky will provide Glacier with update endorsements,
dated as of the Effective Date, to such title policy.
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3.2.7 ANTI-TAKEOVER PROVISIONS. It has taken all necessary action to
exempt the Transaction and this Agreement from (a) all
applicable Montana State law anti-takeover provisions, if any,
and (b) any takeover-related provisions of its articles of
incorporation or bylaws.
3.2.8 COMPLIANCE WITH LAWS. Except as disclosed in Schedule 12, Big
Sky:
(a) is in material compliance, in the conduct of its
business, with all applicable federal, state, local,
and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders or decrees, including the
Bank Secrecy Act, the Truth in Lending Act, the Equal
Credit Opportunity Act, the Fair Housing Act, the
Community Reinvestment Act, the Home Mortgage
Disclosure Act and all applicable fair lending laws
or other laws relating to discrimination;
(b) has all permits, licenses, certificates of authority,
orders, and approvals of, and has made all filings,
applications, and registrations with, federal, state,
local, and foreign governmental or regulatory bodies
(including the Federal Reserve) that are required in
order to permit it to carry on its business as it is
presently conducted;
(c) has received since January 1, 1995, no notification
or communication from any Governmental Entity
(including any bank, insurance and securities
regulatory authorities) or its staff (1) asserting a
failure to comply with any of the statutes,
regulations or ordinances that such Governmental
Entity enforces, (2) threatening to revoke any
license, franchise, permit or governmental
authorization, or (3) threatening or contemplating
revocation or limitation of, or that would have the
effect of revoking or limiting, FDIC deposit
insurance (nor, to the knowledge of its Executive
Officers, do any grounds for any of the foregoing
exist); and
(d) is not required to notify any federal banking agency
before adding directors to its board of directors or
employing senior executives.
3.2.9 LITIGATION. Except as disclosed in its Financial Statements or
in Schedule 13, before the date of this Agreement:
(a) no criminal or administrative investigations or
hearings, before or by any Governmental Entity, or
civil, criminal or administrative actions, suits,
claims or proceedings, before or by any person
(including any Governmental Entity) are pending or,
to the knowledge of its Executive Officers,
threatened, against it (including under the Truth in
Lending Act, the Equal Credit Opportunity Act, the
Fair Housing Act, the Community Reinvestment Act, the
Home Mortgage Disclosure Act, or any other fair
lending law or other law relating to discrimination);
and
(b) neither it (nor any officer, director, controlling
person or property of it) is a party to or is subject
to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a
commitment letter or similar submission to, any
Governmental Entity charged with the supervision or
regulation of depository institutions or engaged in
the insurance of deposits (including the FDIC) or the
supervision or regulation of it, and it has not has
been advised by any such Governmental Entity that
such Governmental Entity is contemplating issuing or
requesting (or is considering the appropriateness of
issuing or requesting) any such order, decree,
agreement, memorandum of understanding, commitment
letter or similar submission.
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3.2.10 TAXES. For purposes of this Subsection 3.2.10, "Tax" includes
any tax or similar governmental charge, impost, or levy
(including income taxes, franchise taxes, transfer taxes or
fees, stamp taxes, sales taxes, use taxes, excise taxes, ad
valorem taxes, withholding taxes, worker's compensation,
payroll taxes, unemployment insurance, social security,
minimum taxes, or windfall profits taxes), together with any
related liabilities, penalties, fines, additions to tax, or
interest, imposed by the United States or any state, county,
provincial, local or foreign government or subdivision or
agency of the United States.
(a) All federal, state and local Tax returns, including
all information returns, it is required to file have
been timely filed or requests for extensions have
been timely filed. If any extensions were filed, they
have been or will be granted by Closing and will not
have expired. All filed returns are complete and
accurate in all material respects.
(b) Except as disclosed in its Financial Statements:
(1) all taxes attributable to it that are or
were due or payable (without regard to
whether such taxes have been assessed) have
been paid in full or have been adequately
provided for in its Financial Statements in
accordance with GAAP;
(2) adequate provision in accordance with GAAP
has been made in its Financial Statements
relating to all Taxes for the periods
covered by such Financial Statements that
were not yet due and payable as of the date
of this Agreement, regardless of whether the
liability for such Taxes is disputed;
(3) as of the date of this Agreement and except
as disclosed in its Financial Statements,
there is no outstanding audit examination,
deficiency, refund litigation or outstanding
waiver or agreement extending the applicable
statute of limitations for the assessment or
collection of any Taxes for any period with
respect to any of its Taxes;
(4) all Taxes with respect to completed and
settled examinations or concluded litigation
relating to it have been paid in full or
have been recorded on its Financial
Statements (in accordance with GAAP);
(5) it is not a party to a Tax sharing or
similar agreement or any agreement under
which it has indemnified any other party
with respect to Taxes; and
(6) the proper and accurate amounts have been
withheld from all employees (and timely paid
to the appropriate Governmental Entity or
set aside in an account for these purposes)
for all periods through the Effective Date
in compliance with all Tax withholding
provisions of applicable federal, state,
local and foreign laws (including income,
social security and employment tax
withholding for all types of compensation).
3.2.11 INSURANCE. It has taken all requisite action (including the
making of claims and the giving of notices) under its
directors' and officers' liability insurance policy or
policies in order to preserve all rights under such policies
with respect to all matters known to it (other than matters
arising in connection with, and the transactions contemplated
by, this Agreement). Schedule 14 lists all directors' and
officers' liability insurance policies and other insurance
policies it maintains.
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3.2.12 LABOR MATTERS. It is not a party to, or is not bound by, any
collective bargaining agreement, contract or other agreement
or understanding with any labor union or labor organization.
It is not the subject of any proceeding: (1) asserting that it
has committed an unfair labor practice or (2) seeking to
compel it to bargain with any labor organization as to wages
or conditions of employment. No strike involving it is pending
or, to the knowledge of its Executive Officers, threatened.
Its Executive Officers are not aware of any activity involving
its employees seeking to certify a collective bargaining unit
or engaging in any other organizational activity.
3.2.13 EMPLOYEE BENEFITS.
(a) For purposes of this Agreement, "Plan" or "Plans",
individually or collectively, means any "employee
benefit plan," as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974,
("ERISA"), as amended, maintained by Big Sky. Big Sky
is not now nor has it ever been a contributing
employer to or sponsor of a multi-employer plan or a
single employer plan subject to Title IV of ERISA.
(b) Schedule 15 sets forth a list, as of the date of this
Agreement, of (1) all Plans, stock purchase plans,
restricted stock and stock option plans, and other
deferred compensation arrangements, (2) all other
material employee benefit plans that cover employees
or former employees of Big Sky (its "Compensation
Plans"). True and complete copies of the Compensation
Plans (and, as applicable, copies of summary plan
descriptions, annual reports on Form 5500, actuarial
reports and reports under Financial Accounting
Standards Board Statement No. 106 relating to such
Compensation Plans) covering current or former
employees or directors of Big Sky (its "Employees"),
including Plans and related amendments, have been
made available to Glacier.
(c) All Plans (other than "multi-employer plans" within
the meaning of ERISA Sections 3(37) or 4001(a)(3)),
to the extent subject to ERISA, are in substantial
compliance with ERISA. Each Plan that is an "employee
pension benefit plan" within the meaning of ERISA
Section 3(2) ("Pension Plan") and that is intended to
be qualified under IRC Section 401(a), has received a
favorable determination letter from the Internal
Revenue Service, and it is not aware of any
circumstances likely to result in revocation of any
such favorable determination letter. No litigation
relating to Plans is pending or, to the knowledge of
its Executive Officers, threatened. Big Sky has not
engaged in a transaction with respect to any Plan
that could subject it to a Tax or penalty imposed by
either IRC Section 4975 or ERISA Section 502(i).
(d) All material contributions that it is or was required
to make under the terms of any Plans have been timely
made or have been reflected in its Financial
Statements. None of its Plans has an "accumulated
funding deficiency" (whether or not waived) within
the meaning of IRC Section 412 or ERISA Section 302.
It has not provided, or is required to provide,
security to any Pension Plan under IRC Section
401(a)(29), IRC Section 412(f)(3), or ERISA Sections
306, 307 or 4204.
(e) Except as disclosed in its Financial Statements, it
does not have any obligations for retiree health and
life benefits.
(f) No restrictions exist on its rights to amend or
terminate any Plan without incurring liability under
the Plan in addition to normal liabilities for
benefits.
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(g) Except as disclosed in its Financial Statements or as
provided in a Schedule to this Agreement, the
transactions contemplated by this Agreement and the
Stock Plans will not result in: (1) vesting,
acceleration, or increase of any amounts payable
under any Compensation Plan, (2) any material
increase in benefits under any Compensation Plan or
(3) payment of any severance or similar compensation
under any Compensation Plan.
3.2.14 ENVIRONMENTAL MATTERS.
(a) For purposes of this Subsection 3.2.14, the following
definitions apply:
(1) "Subject Property" with respect to a party
means (i) all real property at which the
businesses of Big Sky has been conducted,
and any property where under any
Environmental Law it is deemed to be the
owner or operator of the property; (ii) any
facility in which it participates in the
management, including participating in the
management of the owner or operator of the
property; and (iii) all other real property
that it, for purposes of any Environmental
Law, otherwise could be deemed to be an
owner or operator of or as otherwise having
control over.
(2) "Environmental Laws" means any federal,
state, local or foreign law, regulation,
agency policy, order, decree, judgment,
judicial opinion, or any agreement with any
Governmental Entity, presently in effect or
subsequently adopted relating to: (i) the
manufacture, generation, transport, use,
treatment, storage, recycling, disposal,
release, threatened release or presence of
Hazardous Substances, or (ii) the
preservation, restoration or protection of
the environment, natural resources or human
health.
(3) "Hazardous Substances" means any hazardous
or toxic substance, material or waste that
is regulated by any local governmental
authority, any state government or the
United States Government, including any
material or substance that is (a) defined as
a "hazardous substance" in 42 USC Section
9601(14), (b) defined as a "pollutant or
contaminant" in 42 USC Section 9604(a)(2),
or (c) defined as a "hazardous waste" in 42
USC Section 6903(5).
(4) "Knowledge," with respect to a particular
fact, means that (i) a person is actually
aware of such fact or (ii) a prudent person
could be expected to discover or otherwise
become aware of such fact or other matter in
the course of conducting a reasonably
comprehensive investigation concerning the
existence of such fact.
(b) To the Knowledge of its Executive Officers, it and
the Subject Property are, and have been, in
compliance with all applicable Environmental Laws,
and no circumstances exist that with the passage of
time or the giving of notice would be reasonably
likely to result in noncompliance with such
Environmental Laws.
(c) To the Knowledge of its Executive Officers, none of
the following, and no reasonable basis for any of the
following, exists: pending or threatened claims,
actions, investigations, notices of non-compliance,
information requests or notices of potential
responsibility or proceedings involving it or any
Subject Property, relating to:
(1) an asserted liability of Big Sky or any
prior owner, occupier or user of Subject
Property under any applicable Environmental
Law or the terms and conditions of
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any permit, license, authority, settlement,
agreement, decree or other obligation
arising under any applicable Environmental
Law;
(2) the handling, storage, use, transportation,
removal or disposal of Hazardous Substances;
(3) the actual or threatened discharge, release
or emission of Hazardous Substances from, on
or under or within Subject Property into the
air, water, surface water, ground water,
land surface or subsurface strata; or
(4) personal injuries or damage to property
related to or arising out of exposure to
Hazardous Substances.
(d) To the Knowledge of its Executive Officers, (i) no
storage tanks underground or otherwise are present on
the Subject Property or, if present, none of such
tanks are leaking and each of them is in full
compliance with all applicable Environmental Laws;
(ii) it does not own, possess or control any PCBs,
PCB-contaminated fluids, wastes or equipment, or any
material amount of asbestos or asbestos-containing
material, and (iii) no Hazardous Substances have been
used, handled, stored, discharged, released or
emitted, or are threatened to be discharged, released
or emitted, at or on any Subject Property, except for
those types and quantities of Hazardous Substances
typically used in an office environment and that have
not created conditions requiring remediation under
any applicable Environmental Law.
(e) Except for the investigation or monitoring by the
Environmental Protection Agency or similar state
agencies in the ordinary course, no part of the
Subject Property has been or is scheduled for
investigation or monitoring under any applicable
Environmental Law.
3.3 EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES.
3.3.1 DISCLOSURE OF EXCEPTIONS. Each exception set forth in a
Schedule is disclosed only for purposes of the representations
and warranties referenced in that exception; but the following
conditions apply:
(a) no exception is required to be set forth in a
Schedule if its absence would not result in the
related representation or warranty being found untrue
or incorrect under the standard established by
Subsection 3.3.2; and
(b) the mere inclusion of an exception in a Schedule is
not an admission by a party that such exception
represents a material fact, material set of facts, or
material event or would result in a Material Adverse
Effect with respect to that party.
3.3.2 NATURE OF EXCEPTIONS. No representation or warranty contained
in Subsections 3.1 or 3.2 will be found untrue or incorrect
and no party to this Agreement will have breached a
representation or warranty due to the following: the existence
of any fact, set of facts, or event, if the fact or event
individually or taken together with other facts or events
would not, or, in the case of Subsection 3.2.9, is not
reasonably likely to, have a Material Adverse Effect with
respect to such party.
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SECTION 4
CONDUCT AND TRANSACTIONS
BEFORE CLOSING
4.1 CONDUCT OF BIG SKY'S BUSINESS BEFORE CLOSING. Before Closing, Big Sky
promises as follows:
4.1.1 AVAILABILITY OF BIG SKY'S BOOKS, RECORDS AND PROPERTIES.
(a) Big Sky will make its books, records, properties,
contracts and documents available at all reasonable
times to Glacier and its counsel, accountants and
other representatives. These items will be open for
inspection, audit and direct verification of: (1)
loan or deposit balances, (2) collateral receipts and
(3) any other transactions or documentation Glacier
may find reasonably relevant to the Transaction. Big
Sky will cooperate fully in any such inspection,
audit, or direct verification procedures, and Big Sky
will make available all information reasonably
required by or on behalf of Glacier.
(b) At Glacier's request, Big Sky will request any third
parties involved in the preparation or review of (1)
Big Sky Financial Statements, (2) Subsequent Big Sky
Financial Statements, or (3) any audits of Big Sky's
operations, loan portfolios or other assets, to
disclose to Glacier the work papers or any similar
materials related to these items.
4.1.2 ORDINARY AND USUAL COURSE. Big Sky will conduct business only
in the ordinary and usual course and, without the prior
written consent of Glacier, will not do any of the following:
(a) effect any stock split or other recapitalization with
respect to Big Sky Common Stock or issue, pledge,
redeem, or encumber in any way any shares of Big
Sky's capital stock; or grant any option or other
right to shares of Big Sky's capital stock;
(b) declare or pay any dividend, or make any other
distribution, either directly or indirectly, with
respect to Big Sky Common Stock; provided, however,
that if the Closing occurs after December 31, 1998,
Big Sky will be permitted to declare and pay a
dividend consistent with its prior year-end practices
so long as it does not affect the treatment of the
Share Exchange as a "pooling of interests" for
accounting purposes;
(c) acquire, sell, transfer, assign, encumber or
otherwise dispose of assets or make any commitment
with respect to its assets other than in the ordinary
and usual course of business;
(d) solicit or accept deposit accounts of a different
type from accounts previously accepted by it or at
rates materially in excess of rates previously paid
by it, except to reflect changes in prevailing
interest rates, or incur any indebtedness greater
than $25,000 (except for borrowings from the Federal
Home Loan Bank in the ordinary course of business and
consistent with past practices);
(e) acquire an ownership interest or a leasehold interest
in any Property or any other real property, whether
by foreclosure or otherwise, without: (1) making an
appropriate environmental evaluation in advance of
obtaining the interest and providing the evaluation
to Glacier and (2) providing Glacier with at least 30
days' advance written notice before it acquires the
interest;
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(f) enter into or recommend the adoption by Big Sky's
stockholders of any agreement involving a possible
merger or other business combination or asset sale by
Big Sky not involving the Transaction;
(g) enter into, renew, or terminate any contracts
(including real property leases and data or item
processing agreements) with or for a term of one-year
or more, except for its contracts of deposit and
agreements to lend money not otherwise restricted
under this Agreement and (1) entered into in the
ordinary course of business, (2) consistent with past
practices, and (3) providing for not less (in the
case of loans) or more (in the case of deposits) than
prevailing market rates of interest;
(h) enter into or amend any contract (other than
contracts for deposits or agreements to lend money
not otherwise restricted by this Agreement) calling
for a payment by it of more than $25,000, unless the
contract may be terminated without cause or penalty
upon 30 days notice or less;
(i) enter into any personal services contract with any
person or firm, except contracts, agreements, or
arrangements for legal, accounting, investment
advisory, or tax services entered into directly to
facilitate the Transaction;
(j) (1) sell any securities, whether held for investment
or sale, other than in the ordinary course of
business or sell any securities, whether held for
investment or sale, even in the ordinary course of
business, if the aggregate gain realized from all
sales after the date of this Agreement would be more
than $25,000 or (2) transfer any investment
securities between portfolios of securities available
for sale and portfolios of securities to be held to
maturity;
(k) amend its articles of incorporation, bylaws, or other
formation agreements, or convert its charter or form
of entity;
(l) implement or adopt any material changes in its
operations, policies, or procedures, including loan
loss reserve policies, unless the changes are
requested by Glacier or are necessary or advisable,
on the advice of legal counsel, to comply with
applicable laws, regulations, or regulatory policies;
(m) implement or adopt any change in its accounting
principles, practices or methods, other than as may
be required (1) by GAAP, (2) for tax purposes, or (3)
to take advantage of any beneficial tax or accounting
methods;
(n) increase the number of full-time or equivalent
employees of Big Sky above 20;
(o) other than in accordance with binding commitments
existing on the date of this Agreement, make any
capital expenditures in excess of $10,000 per project
or related series of projects or $25,000 in the
aggregate, except for expenses reasonably related to
completion of the Transaction, which expenses may not
exceed $100,000; or
(p) enter into any other transaction or make any
expenditure other than in the ordinary and usual
course of its business and made or entered into in a
manner consistent with its well-established practices
or as required by this Agreement.
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4.1.3 CONDUCT REGARDING REPRESENTATIONS AND WARRANTIES. Big Sky will
not do or cause to be done anything that would cause any
representation or warranty in Subsection 3.1 or 3.2 to be
untrue in any material respect at Closing, except as otherwise
contemplated or required by this Agreement or consented to in
writing by Glacier.
4.1.4 MAINTENANCE OF PROPERTIES. Big Sky will maintain its
properties and equipment (and related insurance or its
equivalent) in accordance with good business practice.
4.1.5 PRESERVATION OF BUSINESS ORGANIZATION. Big Sky will use all
reasonable efforts to:
(a) preserve its business organization;
(b) retain the services of present management; and
(c) preserve the goodwill of suppliers, customers and
others with whom it has business relationships.
4.1.6 SENIOR MANAGEMENT. Big Sky will obtain Glacier's approval
before making any change, including hiring of replacements,
with respect to present management personnel having the rank
of vice-president or higher.
4.1.7 COMPENSATION AND EMPLOYMENT AGREEMENTS. Big Sky will not
permit any increase in the current or deferred compensation
payable or to become payable by Big Sky to any of its
directors, officers, employees, agents, or consultants other
than normal increments in compensation in accordance with Big
Sky's past practices with respect to the timing and amounts of
such increments. Without the prior written approval of
Glacier, Big Sky will not commit to, execute or deliver any
employment agreement with any party not terminable upon two
weeks' notice and without expense.
4.1.8 UPDATE OF FINANCIAL STATEMENTS. Big Sky will promptly deliver
its Financial Statements to Glacier. Big Sky will deliver
Subsequent Big Sky Financial Statements to Glacier by the
earlier of: (1) 5 days after Big Sky has prepared and issued
them or (2) 60 days after year-end for year-end statements and
30 days after the end of the quarter for quarterly statements.
The Subsequent Big Sky Financial Statements:
(a) will be prepared from the books and records of Big
Sky;
(b) will present fairly the financial position and
operating results of Big Sky at the times indicated
and for the periods covered;
(c) will be prepared in accordance with GAAP (except for
the absence of notes) and with the regulations
promulgated by applicable regulatory authorities, to
the extent then applicable, subject to normal
year-end adjustments; and
(d) will reflect all Big Sky's liabilities, contingent or
otherwise, on the respective dates and for the
respective periods covered, except for liabilities:
(1) not required to be so reflected in accordance
with GAAP or (2) not significant in amount.
4.1.9 NO SOLICITATION.
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(a) Neither Big Sky nor any of its officers or directors,
directly or indirectly, will solicit, encourage,
entertain, or facilitate any other proposals or
inquiries for an acquisition of the shares or assets
of Big Sky or enter into discussions concerning any
such acquisition ("Acquisition Proposal"), except as
otherwise required to comply with the fiduciary
responsibilities of Big Sky's board of directors. No
such party will make available to any person not
affiliated with Big Sky or Glacier any information
about its business or organization that is not either
routinely made available to the public generally or
required by law.
(b) If (1) an Acquisition Proposal occurs prior to the
Termination Date, (2) the approval of the Big Sky
shareholders contemplated in this Agreement is not
obtained at the special meeting of Big Sky's
shareholders, and (3) prior to April 15, 2000, a
third party acquires control of Big Sky by merger,
purchase of assets, acquisition of stock or
otherwise, then unless the representations and
warranties of Glacier in this Agreement were false in
any material respect as of the date of Big Sky's
special meeting of shareholders or Glacier was in
material default of its covenants in this Agreement
as of such date, Big Sky will promptly pay to Glacier
the amount of $400,000. For the purposes of this
paragraph, a third party will be deemed to have
acquired control of Big Sky when the third party
possesses, directly or indirectly, the power to
direct or cause the direction of the management and
policies of Big Sky, whether through the ownership of
voting interests, by contract, or otherwise.
4.1.10 TITLE POLICIES ON LEASED PROPERTY. At Glacier's request, Big
Sky will provide Glacier with leasehold title reports issued
by a title insurance company reasonably satisfactory to
Glacier. These title reports must show unencumbered leasehold
interest in all real property leased by Big Sky, and these
title reports may contain only such exceptions, reservations,
and encumbrances as may be consented to in writing by Glacier,
which consent Glacier may not unreasonably withhold.
4.1.11 REVIEW OF LOANS. Big Sky will permit Glacier to conduct an
examination of its loans to determine credit quality and the
adequacy of its allowance for loan losses. Glacier will have
continued access to Big Sky's loans through Closing to update
the examination. At Glacier's reasonable request, Big Sky will
provide Glacier with current reports updating the information
set forth in Schedule 7.
4.2 REGISTRATION STATEMENT.
4.2.1 PREPARATION OF REGISTRATION STATEMENT.
(a) A Registration Statement on Form S-4 ("Registration
Statement") will be filed by Glacier with the SEC
under the Securities Act for registration of the
Glacier Shares, and the parties will prepare a
related prospectus/proxy statement ("Prospectus/Proxy
Statement") to be mailed together with any amendments
and supplements to Big Sky's stockholders.
(b) The parties will cooperate with each other in
preparing the Registration Statement and
Prospectus/Proxy Statement, and will use their best
efforts to: (1) file the Registration Statement with
the SEC within 60 days following the date on which
this Agreement is executed, and (2) obtain the
clearance of the SEC, any appropriate state
securities
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regulators and any other required regulatory
approvals, to issue the Prospectus/Proxy Statement.
(c) Nothing will be included in the Registration
Statement or the Prospectus/Proxy Statement or any
proxy solicitation materials with respect to any
party to this Agreement unless approved by that
party, which approval will not be unreasonably
withheld.
(d) Glacier will pay all costs associated with the
preparation by Glacier's counsel and the filing of
the Registration Statement. Big Sky will pay all
costs associated with the review and preparation by
Big Sky's counsel of the Registration Statement and
the Prospectus/Proxy. Big Sky will pay the costs
associated with the printing and mailing of the
Prospectus/Proxy Statement to its stockholders and
any other direct costs incurred by it in connection
with the Prospectus/Proxy Statement.
4.2.2 SUBMISSION TO STOCKHOLDERS.
(a) Glacier and Big Sky will submit the Prospectus/Proxy
Statement to, and will use their best efforts in good
faith to obtain the prompt approval of the
Prospectus/Proxy Statement by, all applicable
regulatory authorities. The parties will provide each
other with copies of such submissions for review.
(b) Big Sky will promptly take the actions necessary in
accordance with applicable law and its Articles of
Incorporation and Bylaws to convene a stockholders'
meeting to consider the approval of this Agreement
and to authorize the transactions contemplated by
this Agreement. This stockholders' meeting will be
held on the earliest practical date after the date
the Prospectus/Proxy Statement may first be sent to
Big Sky's stockholders without objection by
applicable governmental authorities; but Big Sky will
have at least 20 business days to solicit proxies.
Except as otherwise required to comply with the
fiduciary responsibilities of its board of directors,
Big Sky's board of directors and officers will
recommend approval of the Transaction to Big Sky's
stockholders.
4.3 ACCOUNTING TREATMENT.
4.3.1 POOLING OF INTERESTS. The parties intend the Merger to be
treated as a "pooling of interests" for accounting purposes.
From the date of this Agreement through the Effective Date,
neither Glacier nor Big Sky nor any of their respective
Subsidiaries or other affiliates (a) will knowingly take any
action or enter into any contract, agreement, commitment or
arrangement that would jeopardize the treatment of the Merger
as a "pooling of interests;" or (b) will knowingly fail to
take any action that would preserve the treatment of the
Merger as a "pooling of interests." No action or omission by
either party will constitute a breach of this Subsection 4.3.1
if the action is permitted or required under this Agreement or
is made with the other party's written consent, or is required
by applicable laws or regulations.
4.3.2 AFFILIATE LIST. Certain persons may be deemed "affiliates" of
Big Sky under Securities Act Rule 145, the SEC's Accounting
Series Releases ("ASR") 130 and 135, or other rules and
releases related to "pooling of interests" accounting
treatment. Within thirty days following the date this
Agreement is signed, Big Sky will deliver to Glacier, after
consultation with legal counsel, a list of names and addresses
of Big Sky's "affiliates" with respect to the Transaction
within the meaning of Rule 145 or ASR 130 and 135. By the
Effective Date, Big Sky will deliver, or cause to be
delivered, to Glacier a letter from each of these
"affiliates," and any additional person who
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becomes an "affiliate" before the Effective Date and after the
date of the list, dated as of the date of its delivery and in
the form attached as Exhibit A.
4.3.3 RESTRICTIVE LEGENDS. Glacier will place a restrictive legend
on all certificates representing Glacier Shares to be received
by an "affiliate," so as to preclude their transfer or
disposition in violation of the affiliate letters. Glacier
will also instruct its transfer agent not to permit the
transfer of those shares, and to take any other steps
reasonably necessary to ensure compliance with the Securities
Act Rule 145 or the SEC's ASR 130 and 135 or other rules and
releases related to "pooling of interests" accounting
treatment.
4.3.4 RETENTION OF CERTIFICATES. Except as otherwise permitted in
Exhibit A, by a date at least 30 days before the Effective
Date, all stock certificates evidencing ownership of Big Sky
Common Stock by "affiliates" will be delivered to Big Sky. Big
Sky (before the Effective Date) and Glacier (after the
Effective Date) will retain those certificates, and
subsequently the certificates representing Glacier shares for
which they are exchanged, until financial results covering at
least 30 days of combined operations following the Effective
Date have been published, at which time the certificates will
be released.
4.4 SUBMISSION TO REGULATORY AUTHORITIES. Representatives of Glacier, at
Glacier's expense, will prepare and file with applicable regulatory
agencies, applications for approvals, waivers or other actions their
counsel finds necessary or desirable in order to consummate the
Transaction. Glacier will provide copies of these applications for Big
Sky's review. These applications and filings are expected to include:
(a) an application to the Federal Reserve; and
(b) any filings required under the MBCA or the Montana Bank Act;
4.5 ANNOUNCEMENTS. The parties will cooperate and consult with each other
in the development and distribution of all news releases and other
public information disclosures with respect to this Agreement or the
Transaction, unless otherwise required by law.
4.6 CONSENTS. Glacier and Big Sky will use their best efforts to obtain the
consent or approval of any person, organization or other entity whose
consent or approval is required in order to consummate the Transaction.
4.7 FURTHER ACTIONS. Glacier and Big Sky, respectively, in the name and on
behalf of those respective parties, will use their best efforts in good
faith to make all such arrangements, do or cause to be done all such
acts and things, and execute and deliver all such certificates and
other instruments and documents as may be reasonably necessary or
appropriate in order to consummate the Transaction as promptly as
practicable.
4.8 NOTICE. Big Sky will provide Glacier with prompt written notice of the
following:
(a) any events, individually or in the aggregate, that could have
a Material Adverse Effect with respect to Big Sky;
(b) the commencement of any proceeding against Big Sky, or any of
its affiliates, by or before any court or governmental agency
that, individually or in the aggregate, might have a Material
Adverse Effect with respect to Big Sky; or
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(c) any acquisition of an ownership or leasehold interest in real
property, other than an acquisition in good faith of real
property to satisfy a debt previously contracted for.
4.9 CONFIDENTIALITY. Glacier and Big Sky each will hold in confidence all
nonpublic information obtained from the other in connection with the
Transaction, other than information that: (1) is required by law to be
disclosed; (2) is otherwise available on a nonconfidential basis; (3)
has become public without fault of the disclosing party; or (4) is
necessary to the defense of one of the parties in a legal or
administrative action brought against that party by the other party. If
the Transaction is not completed, Glacier and Big Sky will: (1) each
return to the others all confidential documents obtained from them and
(2) not use any nonpublic information obtained under this Agreement or
in connection with the Transaction.
4.10 UPDATE OF FINANCIAL STATEMENTS. Glacier will promptly deliver its
Financial Statements to Big Sky. Glacier will deliver Subsequent
Glacier Financial Statements to Big Sky by the earlier of: (1) 5 days
after Glacier prepares and issues them or (2) 60 days after year-end
for year-end statements and 30 days after the end of the quarter for
quarterly statements. The Subsequent Glacier Financial Statements will:
(a) be prepared from the books and records of Glacier;
(b) present fairly the financial position and operating results of
Glacier at the times indicated and for the periods covered;
(c) be prepared in accordance with GAAP (except for the absence of
notes) and with the regulations promulgated by applicable
regulatory authorities, to the extent then applicable, subject
to normal year-end adjustments; and
(d) reflect all liabilities, contingent or otherwise, of Glacier
on the respective dates and for the respective periods
covered, except for liabilities not required to be so
reflected in accordance with GAAP or not significant in
amount.
4.11 AVAILABILITY OF GLACIER'S BOOKS, RECORDS AND PROPERTIES. Glacier will
make available to Big Sky true and correct copies of its Certificate of
Incorporation and Bylaws. At Big Sky's reasonable request, Glacier will
also provide Big Sky with copies of: (1) reports filed with the SEC or
banking regulators, (2) Glacier's stock option plans, and (3) any other
information that the parties agree upon.
SECTION 5
APPROVALS AND CONDITIONS
5.1 REQUIRED APPROVALS. The obligations of the parties to this Agreement
are subject to the approval of the Agreement and the Transaction by all
appropriate regulatory agencies having jurisdiction with respect to the
Transaction.
5.2 CONDITIONS TO GLACIER'S OBLIGATIONS. All Glacier's obligations under
this Agreement are subject to satisfaction of the following conditions
at or before Closing:
5.2.1 REPRESENTATIONS. Big Sky's representations in this Agreement
and in any certificate or other instrument delivered in
connection with this Agreement are true and correct in all
material respects at Closing (except (i) the representations
in Subsections 3.2.8(a) and 3.2.14, which representations are
true in all respects at Closing; and (ii) to the extent that
the representations expressly relate to an earlier date, in
which case they are true in all material respects as of that
earlier date). These representations have the same force and
effect as if they had been made at Closing. Big Sky has
delivered to Glacier its certificate, executed by a duly
authorized officer of
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Big Sky and dated as of Closing, stating that these
representations comply with this Subsection 5.2.1.
5.2.2 COMPLIANCE. Big Sky has performed and complied with all
material terms, covenants and conditions of this Agreement.
Big Sky has delivered to Glacier its certificate, executed by
a duly authorized officer of Big Sky and dated as of Closing,
stating that Big Sky is in compliance with this Subsection
5.2.2.
5.2.3 EQUITY CAPITAL REQUIREMENT. The Tangible Equity Capital,
determined in accordance with GAAP, of Big Sky as of the
Effective Date is at least $2.9 million (not including capital
from the conversion of Debentures). Big Sky's certificate
referred to in Subsection 5.2.2 must confirm that this
condition is satisfied. Tangible Equity Capital means common
stock, paid in capital, retained earnings, plus (or minus) net
unrealized gain (or loss) on available for sale securities and
minus goodwill and any other intangible assets.
5.2.4 TRANSACTION FEES STATEMENTS. Big Sky has delivered to Glacier
a statement, in a form reasonably satisfactory to Glacier,
from each third party to whom Big Sky has paid or owes
Transaction Fees. Each statement must set forth the total
costs and expenses paid or owing to the third party in
connection with the Transaction's consummation. Big Sky has
delivered to Glacier its certificate, executed by a duly
authorized officer of Big Sky and dated as of Closing, stating
the total Transaction Fees incurred by Big Sky and certifying
that Big Sky is in compliance with Subsection 1.2.3 and this
Subsection 5.2.4.
5.2.5 AUDIT REPORT. Big Sky has delivered (no later than three days
before Glacier filed the Registration Statement with the SEC)
to Glacier the completed and certified audit report of KPMG
Peat Marwick LLP, its independent certified public
accountants, with respect to Big Sky's statements of financial
condition as of December 31, 1997 (audited) and 1996
(unaudited), and the related statements of income, cashflows
and changes in stockholders' equity for both of the years
ended December 31, 1997 (audited) and 1996 (unaudited).
5.2.6 NO MATERIAL ADVERSE EFFECT. No damage, destruction, or loss
(whether or not covered by insurance) or other event or
sequence of events has occurred which, individually or in the
aggregate, has had or potentially may have a Material Adverse
Effect with respect to Big Sky. Big Sky's certificate referred
to in Subsection 5.2.1 states that the conditions identified
in this Subsection 5.2.6 are satisfied.
5.2.7 FINANCIAL CONDITION. The following are true, and Big Sky's
certificate referred to in Section 5.2.1 confirms the truth of
the following:
(a) Big Sky's allowance for possible loan and lease
losses at Closing was and is adequate to absorb the
anticipated loan and lease losses (taking into
account any recommendations made by Big Sky's
certified public accountants);
(b) the reserves set aside for the contingent liabilities
reflected in the Subsequent Big Sky Financial
Statements are adequate to absorb all reasonably
anticipated losses;
(c) Big Sky's deposits at Closing total at least $28
million; and
(d) Big Sky has provided Glacier with the audited Big Sky
Financial Statements required by this Agreement, and
the audit has revealed no required adjustment to
previously
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unaudited Big Sky Financial Statements that would
have a Material Adverse Effect upon Big Sky.
5.2.8 NO CHANGE IN LOAN REVIEW. Big Sky has provided to Glacier the
reports reasonably requested by Glacier under Subsection
4.1.11, and neither these reports nor any examinations
conducted by Glacier under Subsection 4.1.11 reveal a material
adverse change in either: (1) the information set forth in
Schedule 7 or (2) information revealed during Glacier's
previous examinations of Big Sky's loans.
5.2.9 NO GOVERNMENTAL PROCEEDINGS. No action or proceeding has been
commenced or threatened by any governmental agency to restrain
or prohibit or invalidate the Transaction.
5.2.10 APPROVAL BY COUNSEL. All actions, proceedings, instruments,
and documents required in connection with this Agreement, the
Transaction, and all other related legal matters have been
approved by Glacier's counsel.
5.2.11 RECEIPT OF TITLE POLICY. Glacier has received all title
insurance reports requested under Subsection 4.1.10 and the
update endorsement required by Subsection 3.2.6.
5.2.12 CORPORATE AND STOCKHOLDER ACTION. Big Sky's board of directors
and stockholders, respectively, have approved the Transaction.
5.2.13 TAX OPINION. Glacier has, at Glacier's expense, obtained from
Graham & Dunn, P.C. and delivered to Big Sky, an opinion
addressed to Big Sky and in form and substance reasonably
satisfactory to Big Sky and its counsel, to the effect that
consummation of the Transaction will not result in a taxable
event for Big Sky or Glacier, and otherwise will have each of
the effects specified below:
(a) The Transaction will qualify as a reorganization
within the meaning of IRC Section 368(a)(1)(B).
(b) Under IRC Section 354(a)(i), Big Sky's stockholders
who, in accordance with Section 1, exchange their Big
Sky Common Stock shares solely for Glacier Common
Stock shares will not recognize gain or loss on the
exchange.
(c) Cash payments to Big Sky's stockholders in lieu of a
fractional share of Glacier Common Stock will be
treated as distributions in redemption of the
fractional share interest, subject to the limitations
of IRC Section 302.
5.2.14 OPINION OF COUNSEL. Big Sky has obtained from Crowley,
Haughey, Hanson, Toole & Dietrich, P.L.L.P., and delivered to
Glacier an opinion of counsel, addressed to Glacier, to the
effect that:
(a) Big Sky is a Montana state-chartered commercial bank
validly existing and in good standing under Montana
law;
(b) Big Sky has the corporate power and authority to
execute, deliver, and perform this Agreement;
(c) the execution, delivery, and performance of this
Agreement have been duly authorized by all necessary
corporate action on the part of Big Sky, and this
Agreement constitutes Big Sky's legal, binding, and
valid obligation, enforceable in accordance with its
terms,
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except to the extent that enforcement (but not
validity) may be limited by bankruptcy, insolvency,
reorganization, moratorium, or similar laws generally
affecting the enforcement of the rights of creditors
and by generally applicable principles of equity;
(d) all issued and outstanding shares of Big Sky's
capital stock have been duly authorized and are
validly issued, fully paid, non-assessable, free of
preemptive or similar rights arising by operation of
law or otherwise, and have been issued in compliance
with all applicable federal and applicable state
securities laws;
(e) No options or other rights to acquire Big Sky Common
Stock are outstanding other than as expressly set
forth in Schedule 4, and Big Sky does not have any
stock option or other plans or agreements granting
options or other rights to acquire Big Sky Common
Stock; and
(f) execution of this Agreement and consummation of the
Transaction will not violate Big Sky's articles of
incorporation or bylaws or the terms of any material
contract or other obligation entered into before the
date of this opinion.
5.2.15 CASH PAID. The aggregate of the cash paid for fractional
shares and Dissenting Shares to holders of Big Sky Common
Stock under this Agreement and applicable law will not exceed
10% of the cash value of the Purchase Price, as it may be
adjusted under this Agreement. The cash value of the purchase
price will be determined using the Determination Date Closing
Price.
5.2.16 AFFILIATE LETTERS. Glacier has received the affiliate list and
letters specified in 4.3.2.
5.2.17 REGISTRATION STATEMENT. The Registration Statement, as it may
have been amended, required in connection with the Glacier
shares to be issued to stockholders under 1.2, and as
described in 4.2, has become effective, and no stop order
suspending the effectiveness of such Registration Statement
has been issued or remains in effect, and no proceedings for
that purpose have been initiated or threatened by the SEC the
basis for which still exists.
5.2.18 CONSENTS. Big Sky has obtained the consents as indicated in
Schedule 6.
5.2.19 UPDATED FAIRNESS OPINION. Big Sky has provided to Glacier
copies of Professional Bank Services' updated fairness opinion
issued by Professional Bank Services to Big Sky, dated
immediately before Big Sky mails the Prospectus/Proxy
Statement to its stockholders and dated as of or immediately
before the Effective Date, to the effect that the financial
terms of the Transaction are financially fair to Big Sky's
stockholders.
5.2.20 ACCOUNTING TREATMENT. It has been determined to Glacier's
satisfaction that the Transaction will be treated for
accounting purposes as a "pooling of interests" in accordance
with APB Opinion No. 16, and Glacier has received a letter to
this effect from KPMG Peat Marwick LLP, certified public
accountants.
5.2.21 SOLICITATION OF EMPLOYEES. Neither any member of Big Sky's
board of directors nor any entity with which any such director
is affiliated has solicited any employee of Big Sky or Glacier
with the intention of causing the employee to terminate her
employment with Big Sky or Glacier, as the case may be.
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5.2.22 OTHER MATTERS. Glacier has received any other opinions,
certificates, and documents that Glacier reasonably requests
in connection with this Agreement and the Transaction.
5.3 CONDITIONS TO BIG SKY'S OBLIGATIONS. All Big Sky's obligations under
this Agreement are subject to satisfaction of the following conditions
at or before Closing:
5.3.1 REPRESENTATIONS. Glacier's representations and warranties in
this Agreement and in any certificate or other instrument
delivered in connection with this Agreement are true and
correct in all material respects at Closing (except to the
extent that they expressly relate to an earlier date, in which
case they are true in all material respects as of that earlier
date). These representations and warranties have the same
force and effect as if they had been made at Closing. Glacier
has delivered to Big Sky its certificate, executed by a duly
authorized officer of Glacier and dated as of Closing, stating
that these representations and warranties comply with this
Subsection 5.3.1.
5.3.2 COMPLIANCE. Glacier has performed and complied in all material
respects with all terms, covenants and conditions of this
Agreement. Glacier has delivered to Big Sky its certificate,
executed by a duly authorized officer of Glacier and dated as
of Closing, stating that Glacier is in compliance with this
Subsection 5.3.2.
5.3.3 NO MATERIAL ADVERSE EFFECT. No damage, destruction, loss or
other event or sequence of events has occurred which,
individually or in the aggregate, has had or potentially may
have a Material Adverse Effect with respect to Glacier.
Glacier's certificate referred to in Subsection 5.3.1 states
that the conditions identified in this Subsection 5.3.3 are
satisfied.
5.3.4 NO GOVERNMENTAL PROCEEDINGS. No action or proceeding has been
commenced or threatened by any governmental agency to
restrain, prohibit or invalidate the Transaction.
5.3.5 CORPORATE AND STOCKHOLDER ACTION. Glacier's board of directors
and Big Sky's stockholders have each approved the Transaction.
5.3.6 TAX OPINION. The tax opinion specified in Subsection 5.2.13
has been delivered to Big Sky.
5.3.7 OPINION OF COUNSEL. Glacier has obtained from Graham & Dunn,
P.C. and delivered to Big Sky an opinion, addressed to Big
Sky, to the effect that:
(a) Glacier is a corporation validly existing and in good
standing under Delaware law;
(b) Glacier has the corporate power and authority to
execute, deliver, and perform this Agreement;
(c) the execution, delivery, and performance of this
Agreement have been duly authorized by all necessary
corporate action on Glacier's part, and this
Agreement constitutes Glacier's legal, binding, and
valid obligation, enforceable in accordance with its
terms, except to the extent that enforcement (but not
validity) may be limited by bankruptcy, insolvency,
reorganization, moratorium, or similar laws generally
affecting the enforcement of the rights of creditors
and by generally applicable principles of equity;
(d) the Glacier Shares have been duly authorized and,
when issued as contemplated by this Agreement, will
be validly issued, fully paid and nonassessable;
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(e) the Registration Statement became effective under the
Securities Act on ____________, 1998, and, to the
best of counsel's knowledge, no stop order suspending
the effectiveness of such Registration Statement has
been issued and no proceedings for that purpose have
been instituted or threatened by the Securities and
Exchange Commission;
(f) execution of this Agreement and consummation of the
Transaction will not violate Glacier's articles of
incorporation or bylaws; and
(g) Counsel's opinion will be governed by and interpreted
in accordance with the Legal Opinion Accord of the
ABA section of Business Law (1991), together with the
related commentary, as published in The Business
Lawyer, Volume 47, No. 1, and any amendments or
modifications thereto.
5.3.8 FAIRNESS OPINION. Big Sky has received from Professional Bank
Services the updated fairness opinions, dated immediately
before Big Sky mails the Prospectus/Proxy Statement to its
stockholders and an updated fairness opinion dated as of or
immediately before the Effective Date, each to the effect that
the financial terms of the Transaction are financially fair to
Big Sky's stockholders.
5.3.9 CASH PAID. The aggregate of the cash paid to holders of Big
Sky Common Stock under this Agreement and applicable law will
not exceed 10% of the Purchase Price, as it may be adjusted
under this Agreement.
5.3.10 REGISTRATION STATEMENT. The Registration Statement, as it may
have been amended, required in connection with the Glacier
shares to be issued to stockholders under Subsection 1.2, and
as described in Subsection 4.2, has become effective, and no
stop order suspending the effectiveness of such Registration
Statement has been issued or remains in effect, and no
proceedings for that purpose have been initiated or threatened
by the SEC the basis for which still exists.
SECTION 6
DIRECTORS, OFFICERS AND EMPLOYEES
6.1 DIRECTORS. As a condition to the execution of this Agreement, each
member of Big Sky's board of directors has entered into a written
noncompetition agreement with Glacier and Big Sky on or before the date
this Agreement is signed. These noncompetition agreements will take
effect on the Effective Date.
6.2 EMPLOYMENT AGREEMENT. As a condition to the execution of this
Agreement, Glacier has entered into an employment agreement, effective
as of the Effective Date, with Michael F. Richards, Big Sky's
President. As part of the employment agreement, Mr. Richards waives all
rights he may have under any previous employment agreements with Big
Sky.
6.3 EMPLOYEES. Glacier presently intends to allow Big Sky's employees who
are employed with Big Sky following the Transaction ("Continuing
Employees") to participate in certain employee benefit plans in which
employees of Glacier currently participate. Glacier intends to grant
Continuing Employees credit for prior service with Big Sky for purposes
of determining eligibility and vesting, but Continuing Employees will
not receive this credit for purposes of determining benefit accruals.
Benefits for Continuing Employees will begin accruing under Glacier's
plans as soon as practicable after Closing. This expression of intent
is not a contract with Big Sky's employees and will not be construed to
create a contract or employment right with Big Sky's employees.
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6.4 EMPLOYEE BENEFIT ISSUES.
6.4.1 COMPARABILITY OF BENEFITS. Glacier confirms to Big Sky its
present intention to provide Continuing Employees with
employee benefit programs which, in the aggregate, are
generally competitive with employee benefit programs offered
by financial institutions of comparable size located in
Glacier's market area.
6.4.2 TERMINATION AND TRANSFER/MERGER OF PLANS. As soon as
practicable after Closing, all employee benefit plans of Big
Sky will be terminated and the interests of Continuing
Employees in those plans will be transferred or merged into
Glacier's employee benefit plans.
6.4.3 NO CONTRACT CREATED. Nothing in this Agreement gives any
employee of Big Sky a right to continuing employment.
SECTION 7
TERMINATION OF AGREEMENT AND
ABANDONMENT OF TRANSACTION
7.1 TERMINATION BY REASON OF LAPSE OF TIME. If Closing does not occur
before the Termination Date, either Glacier or Big Sky may terminate
this Agreement and the Transaction if all of the following conditions
are present:
(a) the terminating party's board of directors decides to
terminate by a majority vote of its members;
(b) the terminating party delivers to the other party written
notice that its board of directors has voted in favor of
termination; and
(c) the failure to consummate the Transaction by the Termination
Date is not due to a breach by the party seeking termination
of any of its obligations, covenants, or representations in
this Agreement.
7.2 OTHER GROUNDS FOR TERMINATION. This Agreement and the Transaction may
be terminated at any time before Closing (whether before or after
applicable approval of this Agreement by Big Sky's stockholders, unless
otherwise provided) as follows:
7.2.1 MUTUAL CONSENT. By mutual consent of Big Sky and Glacier, if
the boards of directors of each party agrees to terminate by a
majority vote of its members.
7.2.2 BIG SKY'S CONDITIONS NOT MET. By Glacier's board of directors
if, by June 30, 1999, any condition set forth in Subsections
5.1 or 5.2 has not been satisfied.
7.2.3 GLACIER'S CONDITIONS NOT MET. By Big Sky's board of directors
if, by June 30, 1999, any condition set forth in Subsections
5.1 or 5.3 has not been satisfied.
7.2.4 BIG SKY FAILS TO RECOMMEND STOCKHOLDER APPROVAL. By Glacier's
board of directors before Big Sky's stockholders approve the
Transaction, if Big Sky's board of directors: (a) fails to
recommend to its stockholders the approval of the Transaction
or (b) modifies, withdraws or changes in a manner adverse to
Glacier its recommendation to stockholders to approve the
Transaction.
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7.2.5 IMPRACTICABILITY. By either Glacier or Big Sky, upon written
notice given to the other party, if the board of directors of
the party seeking termination under this Subsection 7.2.5 has
determined in its sole judgment, made in good faith and after
due consideration and consultation with counsel, that the
Transaction has become inadvisable or impracticable by reason
of the institution of litigation by the federal government or
the government of the State of Montana to restrain or
invalidate the Transaction or this Agreement.
7.3 BIG SKY TERMINATION FEE. Big Sky acknowledges that Glacier has incurred
expenses, direct and indirect, in negotiating and executing this
Agreement and in taking steps to effect the Transaction. Accordingly,
subject to Subsection 4.1.9, Big Sky will pay to Glacier $300,000, if
(1) this Agreement terminates because Big Sky does not use all
reasonable efforts to consummate the Transaction in accordance with the
terms of this Agreement; (2) Big Sky terminates this Agreement for any
reason other than the grounds for termination set forth in Subsections
7.1, 7.2.1, 7.2.3 or 7.2.5; or (3) Glacier terminates this Agreement
under Subsection 7.2.2 or 7.2.4. If this termination fee becomes
payable, it will be payable on Glacier's demand and must be paid by Big
Sky within 3 business days of the date Glacier makes the demand.
7.4 GLACIER TERMINATION FEE. Due to expenses, direct and indirect, incurred
by Big Sky in negotiating and executing this Agreement and in taking
steps to effect the Transaction, Glacier will pay to Big Sky $125,000
if (1) Glacier terminates this Agreement for any reason other than the
grounds for termination set forth in Subsections 7.1, 7.2.1, 7.2.2,
7.2.4 or 7.2.5 or (2) Big Sky terminates this Agreement under
Subsection 7.2.3 (other than for failure of a condition set forth in
5.1, 5.3.4, 5.3.6, 5.3.7, 5.3.9 and 5.3.10, unless the failure of any
of those conditions is due to Glacier's fault). If this termination fee
becomes payable, it will be payable on Big Sky's demand and must be
paid by Glacier within 3 business days of the date Big Sky makes the
demand.
7.5 COST ALLOCATION UPON TERMINATION. In connection with the termination of
this Agreement under this Subsection 7.5, except as provided in
Subsections 7.3 and 7.4, Glacier and Big Sky will each pay their own
out-of-pocket costs incurred in connection with this Agreement, and
will have no other liability to the other party.
SECTION 8
MISCELLANEOUS
8.1 NOTICES. Any notice, request, instruction or other document given under
this Agreement must be in writing and must either be delivered
personally or via facsimile transmission or be sent by registered or
certified mail, postage prepaid, and addressed as follows (or to any
other address or person representing any party as designated by that
party through written notice to the other party):
Glacier Glacier Bancorp, Inc.
P.O. Box 27
202 Main Street
Kalispell, MT 59903-0027
Attn: Michael J. Blodnick
with a copy to: Stephen M. Klein, Esq.
Graham & Dunn, P.C.
1420 Fifth Avenue, 33rd Floor
Seattle, WA 98101-2390
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Big Sky Big Sky Western Bank
P.O. Box 160489
135 Big Sky Road
Big Sky, MT 59716
Attn: Michael F. Richards
with a copy to: William D. Lamdin III, Esq.
Crowley, Haughey, Hanson, Toole
& Dietrich PLLP
490 North 31st Street
Billings, Montana 59101
8.2 WAIVERS AND EXTENSIONS. Subject to Section 9, Glacier or Big Sky may
grant waivers or extensions to the other party, but only through a
written instrument executed by the Chief Executive Officer or President
of the party granting the waiver or extension. Waivers or extensions
which do not comply with the preceding sentence are not effective. In
accordance with this Section 8, a party may extend the time for the
performance of any of the obligations or other acts of any other party,
and may waive:
(a) any inaccuracies of any other party in the representations and
warranties contained in this Agreement or in any document
delivered in connection with this Agreement;
(b) compliance with any of the covenants of any other party; and
(c) any other party's performance of any obligations under this
Agreement and any other condition precedent set out in Section
5.
8.3 GENERAL INTERPRETATION. Except as otherwise expressly provided in this
Agreement or unless the context clearly requires otherwise: (1) the
defined terms defined in this Agreement include the plural as well as
the singular and (2) references in this Agreement to Sections,
Subsections, Schedules, and Exhibits refer to Sections and Subsections
of and Schedules and Exhibits to this Agreement. Whenever the words
"include", "includes", or "including" are used in this Agreement, the
parties intend them to be interpreted as if they are followed by the
words "without limitation." All accounting terms used in this Agreement
that are not expressly defined in this Agreement have the respective
meanings given to them in accordance with GAAP.
8.4 CONSTRUCTION AND EXECUTION IN COUNTERPARTS. Except as otherwise
expressly provided in this Agreement, this Agreement: (1) contains the
parties' entire understanding, and no modification or amendment of its
terms or conditions will be effective unless in writing and signed by
the parties, or their respective duly authorized agents; (2) will not
be interpreted by reference to any of the titles or headings to the
Sections or Subsections, which have been inserted for convenience only
and are not deemed a substantive part of this Agreement; (3) includes
all amendments to this Agreement, each of which is made a part of this
Agreement by this reference; and (4) may be executed in one or more
counterparts, each of which will be deemed an original, but all of
which taken together will constitute one and the same document.
8.5 SURVIVAL OF REPRESENTATIONS AND COVENANTS. The representations and
covenants in this Agreement will not survive Closing or termination of
this Agreement, except that (1) Subsection 4.9 (confidentiality),
Subsection 7.3 (termination fee), and Subsection 7.5 (expense
allocation) will survive termination and Closing, and (2) the covenants
in this Agreement that impose duties or obligations on the parties
following Closing will survive Closing.
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8.6 ATTORNEYS' FEES AND COSTS. In the event of any dispute or litigation
with respect to the terms and conditions or enforcement of rights or
obligations arising by reason of this Agreement or the Transaction, the
prevailing party in any such litigation will be entitled to
reimbursement from the other party for its costs and expenses,
including reasonable judicial and extra-judicial attorneys' fees,
expenses and disbursements, and fees, costs and expenses relating to
any mediation or appeal.
8.7 ARBITRATION. At either party's request, the parties must submit any
dispute, controversy or claim arising out of or in connection with, or
relating to, this Agreement or any breach or alleged breach of this
Agreement, to arbitration under the American Arbitration Association's
rules then in effect (or under any other form of arbitration mutually
acceptable to the parties). A single arbitrator agreed on by the
parties will conduct the arbitration. If the parties cannot agree on a
single arbitrator, each party must select one arbitrator and those two
arbitrators will select a third arbitrator. This third arbitrator will
hear the dispute. The arbitrator's decision is final (except as
otherwise specifically provided by law) and binds the parties, and
either party may request any court having jurisdiction to enter a
judgment and to enforce the arbitrator's decision. The arbitrator will
provide the parties with a written decision naming the substantially
prevailing party in the action. This prevailing party is entitled to
reimbursement from the other party for its costs and expenses,
including reasonable attorneys' fees.
8.8 GOVERNING LAW AND VENUE. This Agreement will be governed by and
construed in accordance with Montana law, except to the extent that
certain matters may be governed by federal law. The parties must bring
any legal proceeding arising out of this Agreement in Flathead County,
Montana.
8.9 SEVERABILITY. If a court determines that any term of this Agreement is
invalid or unenforceable under applicable law, the remainder of this
Agreement is not affected, and each remaining term is valid and
enforceable to the fullest extent permitted by law.
SECTION 9
AMENDMENTS
At any time before the Effective Date, whether before or after the
parties have obtained any applicable stockholder approvals of the Transaction,
the boards of directors of Glacier and Big Sky may: (1) amend or modify this
Agreement or any attached Exhibit or Schedule and (2) grant waivers or time
extensions in accordance with Subsection 8.2. But, after Big Sky's stockholders
have approved this Agreement, the parties' boards of directors may not without
Big Sky stockholder approval amend or waive any provision of this Agreement if
the amendment or waiver would reduce the amount or change the form of
consideration Big Sky stockholders will receive in the Transaction. All
amendments, modifications, extensions and waivers must be in writing and signed
by the party agreeing to the amendment, modification, extension or waiver.
Failure by any party to insist on strict compliance by the other party with any
of its obligations, agreements or conditions under this Agreement, does not,
without a writing, operate as a waiver or estoppel with respect to that or any
other obligation, agreement, or condition.
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Signed as of October 20, 1998:
GLACIER BANCORP, INC.
By /s/ Michael J. Blodnick
----------------------------------
Name: Michael J. Blodnick
Title: President and CEO
BIG SKY WESTERN BANK
By /s/ Robert L. Kester
----------------------------------
Name: Robert L. Kester
Title: Chairman and CEO
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STATE OF MONTANA )
) ss.
COUNTY OF FLATHEAD )
On this 20th day of October, 1998, before me personally appeared
Michael J. Blodnick, to me known to be the President and Chief Executive Officer
of GLACIER BANCORP, INC., the corporation that executed the foregoing
instrument, who acknowledged said instrument to be the free and voluntary act
and deed of said corporation, for the uses and purposes mentioned there, and who
stated on oath that he was authorized to execute said instrument, and that the
seal affixed (if any) was the official seal of said corporation.
IN WITNESS OF THE FOREGOING, I have set my hand and official seal to
this document as of the day and year first written above.
/s/
____________________________________
NOTARY PUBLIC in and for the State
of Montana, residing
at_________________________________.
Title:_____________________________.
My commission expires:_____________.
STATE OF MONTANA )
) ss.
COUNTY OF GALLATIN )
On this 20th day of October, 1998, before me personally appeared Robert
L. Kester, to me known to be the Chairman and CEO of BIG SKY WESTERN BANK, the
corporation that executed the foregoing instrument, who acknowledged said
instrument to be the free and voluntary act and deed of said corporation, for
the uses and purposes mentioned there, and who stated on oath that he was
authorized to execute said instrument, and that the seal affixed (if any) was
the official seal of said corporation.
IN WITNESS OF THE FOREGOING, I have set my hand and official seal to
this document as of the day and year first written above.
/s/
____________________________________
NOTARY PUBLIC in and for the State
of Montana, residing
at_________________________________.
Title:_____________________________.
My commission expires:_____________.
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<PAGE> 1
EXHIBIT 99
GLACIER BANCORP, INC. AND BIG SKY WESTERN BANK TO MERGE
Glacier Bancorp, Inc. today announced the signing of a definitive
agreement to acquire Big Sky Western Bank. Big Sky Western Bank is a commercial
bank with approximately $40 million in assets and two banking offices in Big Sky
and Bozeman, Montana. Glacier is a bank holding company based in Kalispell,
Montana with approximately $670 million in assets and 21 banking offices in 14
Montana communities.
The combination of Glacier Bancorp and Big Sky Western Bank will create
a banking institution with over $710 million in assets, $515 million in loans,
and $72 million in shareholders' equity. The resulting bank group will have 23
offices in 16 Montana communities. Following the combination, Big Sky, like
Glacier's other subsidiaries, will retain its autonomy and local decision making
authority, which both entities believe will allow for greater responsiveness to
the needs of the community. The Bank will continue operating as "Big Sky Western
Bank" and existing management and employees will be retained.
"We are very pleased and excited to have Big Sky join our
organization," said Mick Blodnick, President and CEO of Glacier. "It has a
strong management team, an outstanding community service philosophy, and a
growing market position. We believe this acquisition significantly enhances our
banking franchise by giving us access to another rapidly growing market area in
Montana." Glacier recently announced the completion of the acquisition of Valley
Bank of Helena, which augmented Glacier's presence in Helena, the State's
Capital. "The Big Sky transaction not only represents our first entry into the
Gallatin County market, it also strengthens our position as a leading Montana
banking organization," noted Blodnick. Robert Kester, Chairman, and Michael F.
Richards, President of Big Sky Western Bank, noted that the combination will
benefit Big Sky's customers, employees, shareholders and communities. "This
transaction will allow Big Sky to partner with a quality financial institution
that is committed to effectively serving its customers and communities. Our
customers will continue to enjoy local service, while accessing a broader array
of products and services. Moreover, our shareholders will benefit from owning
Glacier common stock, a publicly traded security with an excellent track record
of performance." said Mr. Richards.
Terms of the Combination
Under the terms of the definitive agreement, Glacier will issue up to
250,000 shares of its common stock to security holders of Big Sky in exchange
for a 100% ownership in the bank. Based on Tuesday's closing price of $20.25 per
share, security holders of Big Sky could receive stock of Glacier worth
approximately $5 million. After the transaction, Glacier will have a market
capitalization of $171.7 million, making it the largest publicly traded banking
institution headquartered in Montana, based upon market capitalization.
<PAGE> 2
Financial Performance
Glacier Bancorp is one of only a handful of financial institutions
nationwide to receive an A+ rating from Standard & Poor's rating service. Since
going public in 1984, Glacier's shareholders have enjoyed a compound annual
return exceeding 25%. As of June 30, 1998 and including the recent acquisition
of Valley Bank of Helena, Glacier had total assets of $670 million, with over
$495 million in loans and $69 million in shareholders' equity. Big Sky Western
Bank has produced strong and consistent growth over the past several years. Over
the last three calendar years, assets, loans and deposits have increased at
compound annual rates of 32%, 29% and 31%, respectively. As of September 30,
1998, Big Sky had total assets of $40 million, with over $20 million in loans
and $3 million in shareholders' equity.
Glacier Bancorp, Inc.
