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): December 22, 1998
First Washington Bancorp, Inc.
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(Exact name of registrant as specified in its charter)
Washington 0-26584 91-1632900
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State or other jurisdiction Commission (I.R.S. Employer
of incorporation File Number Identification No.)
10 S. First Avenue, Walla Walla, Washington 99362
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number (including area code) (509) 527-3636
Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events
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On December 22, 1998, First Washington Bancorp, Inc. (the "Company") and
its wholly-owned subsidiary, First Savings Bank of Washington ("First
Savings") entered into an Agreement and Plan of Merger ("Agreement") with
Seaport Citizens' Bank ("Seaport"), pursuant to which the Company will acquire
all of the outstanding stock of Seaport. The Agreement provides that the Bank
common stock be converted into the right to receive from the Company, in cash,
without any interest thereon from the Effective Time until the time of
payment, an amount equal to $10,100,000.
Pursuant to the Agreement, Seaport has agreed to pay the Company a
termination fee of $500,000 in the event the Agreement is terminated under
certain conditions, including the acquisition by a third party of securities
representing 25% or more of the voting shares of Seaport or the agreement
between Seaport and a third party to engage in a merger or consolidation.
Consummation of the acquisition is subject to several conditions,
including receipt of applicable regulatory approval, completion of due
diligence by the Company and approval by Seaport's shareholders. For
information regarding the terms of the proposed transaction, reference is made
to the Agreement and the press release dated December 22, 1998 and December
28, 1998, respectively, which are attached hereto as Exhibits 2 and 99,
respectively, and incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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Exhibit
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2 Agreement and Plan of Merger dated as of December 22, 1998 by
and among First Washington Bancorp, Inc., First Savings Bank of
Washington and Seaport Citizens' Bank.
99 Press Release dated December 28, 1998.
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SIGNATURES
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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.
FIRST WASHINGTON BANCORP, INC.
DATE: January 7, 1999 By: /s/ Gary Sirmon
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Gary Sirmon
President
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Exhibit 2
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AGREEMENT AND PLAN OF MERGER
dated as of December 22, 1998
by and among
FIRST WASHINGTON BANCORP, INC.
and
FIRST SAVINGS BANK OF WASHINGTON
and
SEAPORT CITIZENS' BANK
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TABLE OF CONTENTS
Page
AGREEMENT AND PLAN OF MERGER . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1
DEFINITIONS
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2
THE MERGER AND RELATED MATTERS
2.1 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(a) Continuing Bank; Name . . . . . . . . . . . . . . . . . . 5
(b) Certificate of Incorporation and Bylaws . . . . . . . . . 5
(c) Effects of the Merger . . . . . . . . . . . . . . . . . . 5
(d) Transfer of Assets. . . . . . . . . . . . . . . . . . . . 5
(e) Assumption of Liabilities . . . . . . . . . . . . . . . . 5
2.2 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Conversion of Bank Common Stock. . . . . . . . . . . . . . . . 5
2.4 First Savings Common Stock . . . . . . . . . . . . . . . . . . 6
2.5 Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . 6
2.6 Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.7 Major Shareholder. . . . . . . . . . . . . . . . . . . . . . . 6
2.8 Tender of Bank Common Stock. . . . . . . . . . . . . . . . . . 6
2.9 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.10 Reservation of Right to Revise Transaction . . . . . . . . . . 8
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
3.1 Organization and Corporate Authority of Acquiror . . . . . . . 8
3.2 Organization and Qualification of First Savings. . . . . . . . 8
3.3 Authorization, Execution and Delivery; Merger Agreement
Not in Breach . . . . . . . . . . . . . . . . . . . . . . . . 8
3.4 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.5 Government Approvals . . . . . . . . . . . . . . . . . . . . . 9
3.6 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE BANK
4.1 Organization and Qualification of the Bank . . . . . . . . . . 9
4.2 Authorization, Execution and Delivery; Merger Agreement
Not in Breach . . . . . . . . . . . . . . . . . . . . . . . .10
(i)
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4.3 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . .10
4.4 Government and Other Approvals . . . . . . . . . . . . . . . .10
4.5 Compliance With Law. . . . . . . . . . . . . . . . . . . . . .11
4.6 Charter Documents. . . . . . . . . . . . . . . . . . . . . . .11
4.7 Financial Statements . . . . . . . . . . . . . . . . . . . . .11
4.8 Absence of Certain Changes . . . . . . . . . . . . . . . . . .11
4.9 Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . .12
4.10 Properties . . . . . . . . . . . . . . . . . . . . . . . . . .13
4.11 Condition of Fixed Assets and Equipment. . . . . . . . . . . .13
4.12 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . .13
4.13 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . .13
4.14 Hazardous Materials. . . . . . . . . . . . . . . . . . . . . .14
4.15 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . .15
4.16 Labor and Employment Matters . . . . . . . . . . . . . . . . .15
4.17 Records and Documents. . . . . . . . . . . . . . . . . . . . .15
4.18 Capitalization of the Bank . . . . . . . . . . . . . . . . . .15
4.19 Sole Agreement . . . . . . . . . . . . . . . . . . . . . . . .16
4.20 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . .16
4.21 Absence of Undisclosed Liabilities . . . . . . . . . . . . . .16
4.22 Allowance for Loan Losses. . . . . . . . . . . . . . . . . . .16
4.23 Compliance with Laws . . . . . . . . . . . . . . . . . . . . .17
4.24 Absence of Regulatory Actions. . . . . . . . . . . . . . . . .17
4.25 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . .17
4.26 Material Contracts . . . . . . . . . . . . . . . . . . . . . .22
4.27 Material Contract Defaults . . . . . . . . . . . . . . . . . .23
4.28 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . .23
4.29 Statements True and Correct. . . . . . . . . . . . . . . . . .23
4.30 Brokers and Finders. . . . . . . . . . . . . . . . . . . . . .24
4.31 Derivatives Contracts; Structured Notes, Etc.. . . . . . . . .24
4.32 Year 2000 Issues . . . . . . . . . . . . . . . . . . . . . . .24
4.33 Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
ARTICLE 5
COVENANTS OF ACQUIROR
5.1 Regulatory Approvals . . . . . . . . . . . . . . . . . . . . .25
5.2 Preparation of Bank Proxy Statement. . . . . . . . . . . . . .25
5.3 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . .25
5.4 Reasonable Efforts to Close. . . . . . . . . . . . . . . . . .26
5.5 Indemnification and Insurance. . . . . . . . . . . . . . . . .26
ARTICLE 6
COVENANTS OF THE BANK
6.1 Shareholders Meeting . . . . . . . . . . . . . . . . . . . . .26
6.2 Conduct of Business -- Affirmative Covenants . . . . . . . . .27
6.3 Conduct of Business -- Negative Covenants. . . . . . . . . . .28
6.4 Conduct of Business -- Certain Actions . . . . . . . . . . . .30
6.5 Accruals and Reserves. . . . . . . . . . . . . . . . . . . . .31
6.6 Access; Information. . . . . . . . . . . . . . . . . . . . . .31
(ii)
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ARTICLE 7
CONDITIONS TO CLOSING
7.1 Conditions to the Obligations of Bank. . . . . . . . . . . . .31
(a) Performance . . . . . . . . . . . . . . . . . . . . . . .31
(b) Representations and Warranties. . . . . . . . . . . . . .31
(c) Documents . . . . . . . . . . . . . . . . . . . . . . . .31
(d) Opinion of Acquiror's and First Savings' Counsel. . . . .32
7.2 Conditions to the Obligations of Acquiror and First Savings. .32
(a) Performance . . . . . . . . . . . . . . . . . . . . . . .33
(b) Representations and Warranties. . . . . . . . . . . . . .33
(c) Documents . . . . . . . . . . . . . . . . . . . . . . . .33
(d) Destruction of Property . . . . . . . . . . . . . . . . .33
(e) Inspections Permitted . . . . . . . . . . . . . . . . . .33
(f) No Material Adverse Change. . . . . . . . . . . . . . . .33
(g) Opinion of the Bank's Counsel . . . . . . . . . . . . . .34
(h) Other Business Combinations, Etc. . . . . . . . . . . . .35
(i) Maintenance of Certain Covenants, Etc.. . . . . . . . . .35
(j) Dissenting Shares . . . . . . . . . . . . . . . . . . . .35
(k) Accruals and Reserves . . . . . . . . . . . . . . . . . .35
(l) Employment Agreements . . . . . . . . . . . . . . . . . .35
(m) Major Shareholders and Directors. . . . . . . . . . . . .35
7.3 Conditions to Obligations of All Parties . . . . . . . . . . .35
(a) No Pending or Threatened Claims . . . . . . . . . . . . .35
(b) Government Approvals and Acquiescence Obtained. . . . . .35
(c) Shareholder Vote. . . . . . . . . . . . . . . . . . . . .35
ARTICLE 8
TERMINATION
8.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . .36
8.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . .37
8.3 Termination Fee. . . . . . . . . . . . . . . . . . . . . . . .37
8.4 Acquiror Fee . . . . . . . . . . . . . . . . . . . . . . . . .38
ARTICLE 9
GENERAL PROVISIONS
9.1 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . .38
9.2 Assignability and Parties in Interest. . . . . . . . . . . . .39
9.3 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . .39
9.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . .39
9.5 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . .40
9.6 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . .40
9.7 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . .40
9.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . .40
9.9 Modifications, Amendments and Waivers. . . . . . . . . . . . .40
9.10 Interpretation . . . . . . . . . . . . . . . . . . . . . . . .40
9.11 Payment of Expenses. . . . . . . . . . . . . . . . . . . . . .40
(iii)
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9.12 Equitable Remedies . . . . . . . . . . . . . . . . . . . . . .41
9.13 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . .41
9.14 No Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . .41
9.15 Remedies Cumulative. . . . . . . . . . . . . . . . . . . . . .41
9.16 Non-Survival of Representations and Warranties . . . . . . . .41
Exhibit A Plan of Merger
Exhibit B Voting Agreement
Exhibit C Employment Agreement
(iv)
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Merger Agreement") is made and
entered into this 22nd day of December and between FIRST WASHINGTON BANCORP,
INC. ("Acquiror"), a corporation chartered and existing under the laws of the
State of Washington, FIRST SAVINGS BANK OF WASHINGTON, a state chartered
savings bank existing under the laws of the State of Washington ("First
Savings") and SEAPORT CITIZENS' BANK (the "Bank"), a commercial bank chartered
and existing under the laws of the State of Idaho.
RECITALS
A. Acquiror, First Savings and the Bank, on the terms and conditions
hereinafter set forth, desire to effect an acquisition transaction pursuant to
which Acquiror will acquire for cash all of the shares of Bank Common Stock
(as hereinafter defined) outstanding at the Effective Time (as hereinafter
defined) at a purchase price per share equal to the amount set forth in
Section 2.3(a) hereof.
B. To effect the acquisition, the Bank shall be merged with and into
First Savings (the "Merger") pursuant to the Plan of Merger substantially in
the form attached hereto as Exhibit A. First Savings will be the continuing
financial institution (the "Continuing Bank").
C. The parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger.
D. Concurrently with the execution and delivery of this Merger
Agreement, and as an inducement to Acquiror's willingness to enter into this
Merger Agreement, each member of the Board of Directors of the Bank has
entered into an agreement with Acquiror pursuant to which, among other things,
they have agreed to vote in favor of approval of the transactions contemplated
by this Merger Agreement at the Shareholders Meeting (as hereinafter defined).
E. The respective Boards of Directors of Acquiror, First Savings and
the Bank have duly approved this Merger Agreement and have duly authorized its
execution and delivery.
NOW THEREFORE, in consideration of the foregoing premises and the mutual
representations, warranties, covenants and agreements herein contained and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Parties agree as follows:
AGREEMENT
ARTICLE 1
DEFINITIONS
1.1 Definitions. As used in this Merger Agreement, the following terms
have the definitions indicated:
"Affiliate" of a party means any person, partnership, corporation,
association or other legal entity directly or indirectly controlling,
controlled by or under common control, with that party.
"Acquiror" shall mean First Washington Bancorp, Inc., a bank holding
company having its principal place of business in Walla Walla, Washington,
that is incorporated under the laws of the State of Washington.
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"Acquiror Due Diligence Review" shall have the meaning assigned to
such term in Section 8.1(j) of this Merger Agreement.
"Acquiror Due Diligence Review Period" shall have meaning assigned
to such term in Section 8.1(j) of this Merger Agreement.
"Acquiror Fee" shall have the meaning assigned to such term in
Section 8.4 of this Merger Agreement.
"Acquiror Option" shall mean an option to acquire shares of Acquiror
Common Stock.
"Acquisition Proposal" shall have the meaning assigned to such term
in Section 6.4 of this Merger Agreement.
"Applicable Environmental Laws" shall have the meaning assigned to
such term in Section 4.14(a) of this Merger Agreement.
"Balance Sheet Date" shall have the meaning assigned to such term in
Section 4.8 of this Merger Agreement.
"Bank" shall mean Seaport Citizens' Bank, a commercial bank
chartered and existing under the laws of the State of Idaho.
"Bank Common Stock" has the meaning assigned to such terms in
Section 2.3(a) of this Merger Agreement.
"Bank Financial Statements" shall have the meaning assigned to such
term in Section 4.7 of this Merger Agreement.
"Bank Option" shall mean an option granted by the Bank to purchase
shares of Bank Common Stock.
"Bank Shareholders" shall mean the holders of the Bank Common Stock.
"BHCA" shall mean the Bank Holding Company Act.
"CERCLA" shall have the meaning set forth in Section 4.14(a) of this
Merger Agreement.
"Certificate" shall have the meaning assigned to such term in
Section 2.8 of this Merger Agreement.
"Closing" shall have the meaning assigned to such term in Section
2.9 of this Merger Agreement.
"Closing Date" shall have the meaning assigned to such term in
Section 2.9 of this Merger Agreement.
"Continuing Bank" shall mean First Savings as the financial
institution resulting from the consummation of the Merger as set forth in
Section 2.1(a) of this Merger Agreement.
"Deposits" shall mean all deposits (including, but not limited to,
certificates of deposit, savings accounts, NOW accounts and checking accounts)
of the Bank.
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"Derivatives Contract" shall have the meaning assigned to such term
in Section 4.31 of this Merger Agreement.
"Dissenting Shares" shall have the meaning assigned to such term in
Section 2.5 of this Merger Agreement.
"Effective Date of the Merger" shall mean that date on which the
Effective Time shall have occurred.
"Effective Time" shall have the meaning assigned in Section 2.2 of
this Merger Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"FDIC" means the Federal Deposit Insurance Corporation, or any
successor thereto.
"First Savings" shall mean First Savings Bank of Washington, a state
chartered savings bank existing under the laws of the State of Washington.
"FRB" shall mean the Board of Governors of the Federal Reserve
System.
"GAAP" shall mean generally accepted accounting principles,
consistently applied.
"Government Approvals" shall have the meaning assigned to such term
in Section 3.5 of this Merger Agreement.
"Hazardous Substances" shall have the meaning set forth in Section
4.14(a) of this Merger Agreement.
"Idaho Department" shall mean the Department of Finance of the State
of Idaho.
"Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended.
"Loan Property" shall have the meaning assigned to such term in
Section 4.14(a) of this Merger Agreement.
"Merger" shall, as described in Section 2.1 of this Merger
Agreement, mean the merger of the Bank with and into First Savings, which
shall survive the Merger as the Continuing Bank.
"Merger Agreement" means this Agreement and Plan of Merger together
with the Plan of Merger (Exhibit A) and all Exhibits and Schedules annexed to,
and incorporated by specific reference as a part of, this Merger Agreement.
"Officer" shall have the meaning set forth in Section 4.8(k) of this
Merger Agreement.
"Parties" shall mean the Bank, Acquiror and First Savings
collectively; Bank on the one hand, or Acquiror and First Savings on the other
hand, may sometimes be referred to as a "Party."
"Paying Agent" shall have the meaning assigned to such term in
Section 2.8 of this Merger Agreement.
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"Pension Plan" shall mean any employee pension benefit plan as such
term is defined in Section 3(2) of ERISA which is maintained by the referenced
Party.
"Person" shall mean any natural person, fiduciary, corporation,
partnership, joint venture, association, business trust or any other entity of
any kind.
"Plan of Merger" shall mean the Plan of Merger substantially in the
form of Exhibit A hereto to be executed by authorized representatives of Bank
and Acquiror and filed with the Secretary of State of the State of Idaho along
with the Articles of Merger in accordance with Idaho law and with the
Secretary of State of the State of Washington in accordance with Washington
law and providing for the Merger of the Bank with and into First Savings as
contemplated by Section 2.1 of this Merger Agreement.
"Property" shall have the meaning assigned to such term in Section
4.14(a) of this Merger Agreement.
"Proxy Statement" shall mean the proxy statement to be used by the
Bank to solicit proxies with a view to securing the approval of the Bank
Shareholders of this Merger Agreement and the Plan of Merger.
"Realty" means the real property of the Bank owned or leased by the
Bank.
"Records" means all available records, minutes of meetings of the
Board of Directors, committees and shareholders of the Bank, original
instruments and other documentation, pertaining to the Bank, the Bank's assets
(including plans and specifications relating to the Realty), and liabilities,
the Bank Common Stock, the Deposits and the loans, and all other business and
financial records which are necessary or customary for use in the conduct of
the Bank's business by Acquiror and the Bank on and after the Effective Time
as it was conducted prior to the Closing Date.
"Regulatory Authorities" shall mean, collectively, the Department of
Justice, the FRB, the FDIC, the SEC, the Washington Department, Idaho
Department or any other state or federal governmental or quasi-governmental
entity which has, or may hereafter have, jurisdiction over any of the
transactions described in this Merger Agreement.
"Release" shall have the meaning assigned to such term in Section
4.14(b)(i) of this Merger Agreement.
"SEC" shall mean the Securities and Exchange Commission, or any
successor thereto.
"Securities Laws" shall mean the Securities Act of 1933, as amended
("1933 Act"), the Securities Exchange Act of 1934, as amended, ("1934 Act"),
the Investment Company Act of 1940, as amended, the Investment Advisers Act of
1940, as amended, the Trust Indenture Act of 1939, as amended, and the rules
and regulations of the SEC promulgated thereunder, as well as any similar
state securities laws and any similar rules and regulations promulgated by the
applicable federal bank Regulatory Authorities.
"Shareholders Meeting" shall mean the special meeting of the Bank
Shareholders to be held pursuant to Section 6.1 of this Merger Agreement,
including any adjournment or adjournments thereof.
"WBCA" shall mean the Washington Business Corporation Act.
"Washington Department" shall mean the Department of Financial
Institutions of the State of Washington.
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ARTICLE 2
THE MERGER AND RELATED MATTERS
2.1 Merger. Subject to the terms and conditions of this Merger
Agreement, and pursuant to the provisions of the WBCA, the Idaho Code, the
BHCA and the rules and regulations promulgated thereunder, at the Effective
Time (as hereinafter defined):
(a) Continuing Bank; Name. The Bank shall be merged with and
into First Savings pursuant to the terms and conditions set forth herein and
pursuant to the Plan of Merger attached hereto as Exhibit A. Upon
consummation of the Merger, the separate existence of the Bank shall cease and
First Savings shall continue as the Continuing Bank. The name of the
Continuing Bank, shall by virtue of the Merger remain "First Savings Bank of
Washington." Subsequent to the Merger, the Bank, at the discretion of
management of First Savings, will be operated as the Seaport Citizens'
division of First Savings.
(b) Articles of Incorporation and Bylaws; Officers and
Directors. The articles of incorporation and bylaws of First Savings, in
effect immediately prior to the Effective Time, shall become the articles of
incorporation and bylaws of the Continuing Bank. The directors and officers
of First Savings in office immediately prior to the Merger becoming effective
shall be the directors and officers of the Continuing Bank, together with such
additional directors and officers as may thereafter be elected, who shall hold
office until such time as their successors are elected and qualified.
(c) Effects of the Merger. The separate existence of Bank
shall cease, and Bank shall be merged with and into First Savings which, as
the Continuing Bank, shall thereupon and thereafter possess all of the assets,
rights, privileges, appointments, powers, licenses, permits and franchises of
the two merged corporations, whether of a public or a private nature, and
shall be subject to all of the liabilities, restrictions, disabilities and
duties of both First Savings and the Bank.
(d) Transfer of Assets. All rights, assets, licenses,
permits, franchises and interests of First Savings and Bank in and to every
type of property, whether real, personal, or mixed, whether tangible or
intangible, shall be deemed to be vested in First Savings as the Continuing
Bank by virtue of the Merger becoming effective and without any deed or other
instrument or act of transfer whatsoever.
(e) Assumption of Liabilities. The Continuing Bank shall
become and be liable for all debts, liabilities, obligations and contracts of
First Savings as well as those of the Bank, whether the same shall be matured
or unmatured; whether accrued, absolute, contingent or otherwise; and whether
or not reflected or reserved against in the balance sheets, other financial
statements, books of account or records of First Savings or the Bank.
2.2 Effective Time. As soon as practicable after each of the
conditions set forth in Article 7 hereof have been satisfied or waived, the
Parties will file, or cause to be filed, with the Secretary of State of the
State of Washington and the Secretary of State of the State of Idaho such
articles of merger and plan of merger as they may deem necessary or
appropriate for the Merger which articles of merger shall be in the form
required by and executed in accordance with the applicable provisions of the
WBCA and the Idaho Code. The Merger shall become effective at such time as
may be specified in such articles of merger and certificate of merger (the
"Effective Time").
2.3 Conversion of Bank Common Stock. At the Effective Time:
(a) All shares of common stock of the Bank, $10.00 value per
share ("Bank Common Stock"), issued and outstanding immediately prior to the
Effective Time (except for Dissenting Shares, as defined herein) shall, by
virtue of the Merger and without any action on the part of the holder thereof,
be converted into the right to receive from Acquiror in cash, without any
interest thereon from the Effective Time until the time of payment,
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an amount equal to $10,100,000. In the event that the Closing occurs between
May 1, 1999 and May 31, 1999, then the consideration to be received by the
shareholders of the Bank shall be increased by one-half of the normal earnings
from operations of the Bank during the month of May 1999. In the event that
the Closing occurs after June 1, 1999 but before June 30, 1999, the
consideration to be received by the shareholders of the Bank shall be
increased by the normal earnings from operations of the Bank during the month
of June 1999.
Notwithstanding any other provision of this Merger Agreement, any shares
of Bank Common Stock issued and outstanding immediately prior to the Effective
Time which are then owned beneficially or of record by Acquiror, Bank or by
any direct or indirect Subsidiary of any of them or are held in the treasury
of Bank shall, by virtue of the Merger, be canceled without payment of any
consideration therefor and without any conversion thereof.
(b) The holders of certificates representing shares of Bank
Common Stock shall cease to have any rights as stockholders of the Bank,
except such rights, if any, as they may have pursuant to the Idaho Code.
Except as provided above, until certificates representing shares of Bank
Common Stock are surrendered for exchange, each such certificate shall, after
the Effective Time, represent for all purposes only the right to receive the
amount of consideration into which their shares of Bank Common Stock shall
have been converted by the Merger as provided above.
(c) The stock transfer books of the Bank shall be closed and
no transfer of shares of Bank Common Stock shall be made thereafter.
2.4 First Savings Common Stock. At the Effective Time, the shares
of First Savings Common Stock issued and outstanding immediately prior to the
Effective Time shall, on and after the Effective Time, remain issued and
outstanding as shares of First Savings Common Stock.
2.5 Dissenting Shares. Any shares of Bank Common Stock held by a
holder who dissents from the Merger in accordance with Idaho Law and becomes
entitled to obtain payment for the fair value of such shares of Bank Common
Stock pursuant to the applicable provisions of the Idaho Code shall be herein
called "Dissenting Shares." Notwithstanding any other provision of this
Merger Agreement, any Dissenting Shares shall not, after the Effective Time,
be entitled to vote for any purpose or receive any dividends or other
distributions and shall be entitled only to such rights as are afforded in
respect of Dissenting Shares pursuant to the provisions of Idaho Code
30-1-1301 et seq.
2.6 Options. There are no shares of Bank Common Stock issuable
upon exercise of Bank Options as of the date hereof or as of the Effective
Date.
2.7 Major Shareholder. As used in this Merger Agreement, the term
"Major Shareholders" shall mean any person who as of the date hereof owns or
controls more than five percent of the issued and outstanding shares of the
Bank Common Stock. Simultaneous with the execution and delivery of this
Merger Agreement, each major Shareholder and director of the Bank will execute
and deliver to Acquiror a Voting Agreement in the form attached hereto as
Exhibit B.
2.8 Tender of Bank Common Stock.
(a) As soon as practicable after the Effective Time, each
holder of record of certificates formerly representing shares of Bank Common
Stock (the "Certificates") shall be instructed to tender such Certificates to
the Paying Agent pursuant to a letter of transmittal that Acquiror shall
deliver or cause to be delivered to such holder. Such letter of transmittal
shall specify that risk of loss and title to Certificates shall pass only upon
acceptance of such Certificates by the Paying Agent.
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(b) After the Effective Time, each holder of a Certificate
that surrenders such Certificate to the Paying Agent will, upon acceptance
thereof by the Paying Agent, be entitled to the consideration payable in
respect of the shares represented thereby.
(c) The Paying Agent shall accept Certificates upon compliance
with such reasonable terms and conditions as Acquiror or the Paying Agent may
impose to effect an orderly exchange thereof in accordance with customary
exchange practices. Certificates shall be appropriately endorsed or
accompanied by such instruments of transfer as Acquiror or the Paying Agent
may reasonably require in accordance with customary and prudent exchange
procedures.
(d) Each outstanding Certificate, other than those
representing Dissenting Shares, shall until duly surrendered to Acquiror or
the Paying Agent be deemed to evidence the right to receive the consideration.
(e) After the Effective Time, holders of Certificates shall
cease to have rights with respect to Bank Common Stock previously represented
by such Certificates, and their sole rights (other than the holders of
Certificates representing Dissenting Shares) shall be to exchange such
Certificates for the consideration. After the Effective Time, there shall be
no further transfer on the records of the Bank of Certificates, and if such
Certificates are presented to the Bank for transfer, they shall be canceled
against delivery of the consideration. Acquiror shall not be obligated to
deliver the consideration to any holder of Bank Common Stock until such holder
surrenders the Certificates as provided herein. Any shareholders of the Bank
who have not theretofore complied with this Section 2.8 shall thereafter look
only to Acquiror for payment of their consideration deliverable in respect of
each share of Bank Common Stock such stockholder holds as determined pursuant
to this Merger Agreement without any interest thereon. If outstanding
Certificates are not surrendered or the payment for them not claimed prior to
the date on which such payments would otherwise escheat to or become the
property of any governmental unit or agency, the unclaimed items shall, to the
extent permitted by abandoned property and any other applicable law, become
the property of Acquiror (and to the extent not in its possession shall be
paid over to it), free and clear of all claims or interest of any person
previously entitled to such claims. Neither the Paying Agent nor any party to
this Merger Agreement nor any affiliate thereof shall be liable to any holder
of Bank Common Stock represented by any Certificate for any consideration paid
to a public official pursuant to applicable abandoned property, escheat or
similar laws. Acquiror and the Paying Agent shall be entitled to rely upon
the stock transfer books of the Bank to establish the identity of those
persons entitled to receive the consideration, which books shall be conclusive
with respect thereto. In the event of a dispute with respect to ownership of
stock represented by any Certificate, Acquiror and the Paying Agent shall be
entitled to deposit any consideration in respect thereof in escrow with an
independent third party and thereafter be relieved with respect to any claims
thereto.
2.9 Closing. Subject to the provisions of Article 7 hereof, the
closing of the transactions contemplated by this Merger Agreement (the
"Closing") shall take place as soon as practicable after satisfaction or
waiver of all of the conditions to Closing, and shall be on such date, time
and location as is mutually agreed to by Acquiror and the Bank. At the
Closing the Parties shall use their respective best efforts to deliver the
certificates, letters and opinions which constitute conditions to effecting
the Merger and each Party will provide the other Parties with such proof or
indication of satisfaction of the conditions to the obligations of such other
Parties to consummate the Merger as such other Parties may reasonably require.
If all conditions to the obligations of each of the Parties shall have been
satisfied or lawfully waived by the Party entitled to the benefits thereof,
the Parties shall, at the Closing, duly execute the Plan of Merger for filing
with the Secretary of State of the State of Washington and the Secretary of
State of the State of Idaho and promptly thereafter shall take all steps
necessary or desirable to consummate the Merger in accordance with all
applicable laws, rules and regulations and the Plan of Merger which is
attached hereto as Exhibit A and incorporated by reference as part of this
Merger Agreement. The Parties shall thereupon take such other and further
actions as may be required by law or this Merger Agreement to consummate the
transactions contemplated herein. The date on which the Closing actually
occurs is herein referred to as the "Closing Date."
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2.10 Reservation of Right to Revise Transaction. Acquiror shall
have the unilateral right to revise the method of effecting the Merger in
order to achieve tax benefits or for any other reason which Acquiror may deem
advisable; provided, however, that Acquiror shall not have the right, without
the prior written approval of the Board of Directors of the Bank, and, if
required, the approval of the Bank Shareholders, to make any revision to the
structure of the Merger which changes the amount, kind, or time of payment of
the consideration by the Acquiror which the Bank Shareholders are entitled to
receive (determined in the manner provided in Section 2.3 of this Merger
Agreement). Acquiror may exercise this right of revision by giving written
notice thereof to the Bank in the manner provided in Section 9.1 of this
Merger Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND FIRST SAVINGS
Each of Acquiror and First Savings hereby represents and warrants to
the Bank as follows:
3.1 Organization and Corporate Authority of Acquiror. Acquiror is
a corporation duly incorporated and validly existing under the laws of the
State of Washington. Acquiror (i) has the requisite corporate power and
authority to own, operate and lease its material properties and carry on its
businesses as they are currently being conducted; (ii) is in good standing and
is duly qualified to do business in each jurisdiction where the character of
its properties owned or held under lease or the nature of its business makes
such qualification necessary and where the failure to so qualify would
individually or in the aggregate have a material adverse affect on the
condition (financial or otherwise), affairs, business, assets or prospects of
Acquiror and; (iii) has in effect all federal, state, local and foreign
governmental authorizations, permits and licenses necessary for it to own or
lease its properties and assets and to carry on its businesses as they are
currently being conducted. The Articles of Incorporation and Bylaws of
Acquiror, as amended to date, are in full force and effect as of the date of
this Merger Agreement.
3.2 Organization and Qualification of First Savings. First Savings
is a Washington-chartered savings bank, duly organized, validly existing and
in good standing under the laws of the State of Washington and engages only in
activities (and holds properties only of the types) permitted by Washington
law and the rules and regulations promulgated by the Washington Department
thereunder or the FDIC for insured depository institutions. First Savings (a)
has all requisite corporate power and authority to own, operate and lease its
properties and to carry on its business as it is currently being conducted
(including all requisite authority to operate branches in the State of
Washington) and (b) is in good standing and is duly qualified to do business
in each jurisdiction where the character of its properties owned or held under
lease or the nature of its business makes such qualification necessary and
where the failure to so qualify would individually or in the aggregate have a
material adverse effect on the condition (financial or otherwise), affairs,
business, assets or prospects of First Savings and all Acquiror Subsidiaries,
taken as a whole. First Savings' deposit accounts are insured by the Savings
Association Insurance Fund as administered by the FDIC to the fullest extent
permitted under applicable law.
3.3 Authorization, Execution and Delivery; Merger Agreement Not in
Breach.
(a) Acquiror and First Savings have all requisite corporate
power and authority to execute and deliver this Merger Agreement and to
consummate the transactions contemplated hereby. This Merger Agreement, and
all other agreements and instruments contemplated to be executed in connection
herewith by Acquiror and First Savings, have been (or upon execution will have
been) duly executed and delivered by Acquiror and First Savings, have been (or
upon execution will have been) effectively authorized by all necessary action,
corporate or otherwise, and no other corporate proceedings on the part of
Acquiror and First Savings are (or will be) necessary to authorize such
execution and delivery, and, subject to receipt of any required Government
Approvals, constitute (or upon execution will constitute) legal, valid and
enforceable obligations of Acquiror and First Savings, subject, as to
enforceability, to applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally, and to the application of equitable principles and judicial
discretion.
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(b) The execution and delivery of this Merger Agreement, the
consummation of the transactions contemplated hereby and the fulfillment of
the terms hereof will not result in a breach of any of the terms or provisions
of, or constitute a default under (or an event which, with the passage of time
or the giving of notice or both, would constitute a default under), or
conflict with, or permit the acceleration of any obligation under, (i) any
material mortgage, lease, covenant, agreement, indenture or other instrument
to which Acquiror and First Savings are a party or by which Acquiror or First
Savings or their respective property or any of their respective assets are
bound, (ii) the Articles of Incorporation or Bylaws of Acquiror and First
Savings, (iii) any material judgment, decree, order or award of any court,
governmental body or arbitrator by which Acquiror and First Savings are bound,
or (iv) any material permit, concession, grant, franchise, license, law,
statute, ordinance, rule or regulation applicable to Acquiror and First
Savings or their respective properties; or result in the creation of any lien,
claim, security interest, encumbrance, charge, restriction or right of any
third party of any kind whatsoever upon the property or assets of Acquiror and
First Savings, except that the Government Approvals shall be required in order
for Acquiror and First Savings to consummate the Merger.
3.4 No Legal Bar. Neither Acquiror nor First Savings is a party
to, subject to or bound by any agreement, judgment, order, writ, prohibition,
injunction or decree of any court or other governmental body of competent
jurisdiction which would prevent the execution of this Merger Agreement by
Acquiror or First Savings, its delivery to the Bank or (upon receipt of
Governmental Approvals) the consummation of the transactions contemplated
hereby, and no action or proceeding is pending or threatened against Acquiror
or First Savings in which the validity of this Merger Agreement, any of the
transactions contemplated hereby or any action which has been taken by any of
the Parties in connection herewith or in connection with any of the
transactions contemplated hereby is at issue.
3.5 Government Approvals. No consent, approval, order or
authorization of, or registration, declaration or filing with, any federal,
state or local governmental authority is required to be made or obtained by
Acquiror or First Savings in connection with the execution and delivery of
this Merger Agreement or the consummation of the transactions contemplated
hereby by Acquiror or First Savings, except for the prior approval of the FRB,
the FDIC, the Washington Department and such other agencies as may have
jurisdiction (collectively, the "Government Approvals"). Acquiror and First
Savings are not aware of any facts, circumstances or reasons why such
Government Approvals should not be forthcoming or which would prevent or
hinder such approvals from being obtained.
3.6 Disclosure. The information concerning, and the
representations or warranties made by Acquiror and First Savings as set forth
in this Merger Agreement, or in any document, statement, certificate or other
writing furnished or to be furnished by Acquiror and First Savings to Bank
pursuant hereto, do not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated herein or
therein which is necessary to make the statements and facts contained herein
or therein, in light of the circumstances under which they were or are made,
not false or misleading. Copies of all documents heretofore or hereafter
delivered or made available to Bank by Acquiror and First Savings pursuant
hereto were complete and accurate copies of such documents.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE BANK
The Bank hereby represents and warrants to Acquiror as follows:
4.1 Organization and Qualification of the Bank. The Bank is an
Idaho-chartered bank, duly incorporated, validly existing and in good standing
under the laws of the State of Idaho and engages only in activities (and holds
properties only of the types) permitted by Idaho law and the rules and
regulations promulgated by the Idaho Department thereunder or the FDIC for
insured depository institutions. The Bank (a) has all requisite corporate
power and authority to own, operate and lease its properties and to carry on
its business as it is currently being conducted (including all requisite
authority to operate its branches) and (b) is in good standing and is duly
qualified to do business in each jurisdiction where the character of its
properties owned or held under lease or the nature of its business makes
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such qualification necessary and where the failure to so qualify would
individually or in the aggregate have a material adverse effect on the
condition (financial or otherwise), affairs, business, assets or prospects of
the Bank. The Bank's deposit accounts are insured by the Bank Insurance Fund
as administered by the FDIC to the fullest extent permitted under applicable
law. There are no direct or indirect subsidiaries of the Bank.
4.2 Authorization, Execution and Delivery; Merger Agreement Not in
Breach.
(a) The Bank has all requisite corporate power and authority
to execute and deliver this Merger Agreement and the Plan of Merger and to
consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Merger Agreement and the Plan of Merger and the
consummation of the proposed transaction have been duly authorized by the
Board of Directors of the Bank and, except for the approval of the Bank
Shareholders, no other corporate proceedings on the part of the Bank is
necessary to authorize the execution and delivery of this Merger Agreement and
the Plan of Merger and the consummation of the transactions contemplated
hereby and thereby. This Merger Agreement and all other agreements and
instruments herein contemplated to be executed and delivered by the Bank have
been (or upon execution and delivery will have been) duly executed and
delivered by the Bank and (subject to any requisite shareholder approval and
Government Approvals hereof) constitute (or upon execution and delivery will
constitute) legal, valid and enforceable obligations of the Bank, subject, as
to enforceability, to applicable bankruptcy, insolvency, receivership,
conservatorship, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and to the application of equitable
principles and judicial discretion.
(b) The execution and delivery of this Merger Agreement, the
consummation of the transactions contemplated hereby, and the fulfillment of
the terms hereof and thereof will not result in a violation or breach of any
of the terms or provisions of, or constitute a default under (or an event
which, with the passage of time or the giving of notice, or both, would
constitute a default under), or conflict with, or permit the acceleration of,
any obligation under (i) any mortgage, lease, covenant, agreement, indenture
or other instrument to which the Bank is a party or by which the Bank is
bound, (ii) the Articles of Incorporation or Bylaws of the Bank, (iii) any
judgment, decree, order, regulatory letter of understanding or award of any
court, governmental body, authority or arbitrator or, (iv) (subject to the
receipt of the Government Approvals) any permit, concession, grant, franchise,
license, law, statute, ordinance, rule or regulation applicable to the Bank or
the properties of any of them; or result in the creation of any lien, claim,
security interest, encumbrance, charge, restriction or right of any third
party of any kind whatsoever upon the properties or assets of the Bank.
4.3 No Legal Bar. The Bank is not a party to, or subject to, or
bound by, any agreement or judgment, order, letter of understanding, writ,
prohibition, injunction or decree of any court or other governmental authority
or body, or any law which would prevent the execution of this Merger Agreement
or the Plan of Merger by the Bank, the delivery thereof to Acquiror and First
Savings, or (upon receipt of Government Approvals) the consummation of the
transactions contemplated hereby and thereby, and no action or proceeding is
pending against the Bank in which the validity of this Merger Agreement, the
transactions contemplated hereby or any action which has been taken by any of
the Parties in connection herewith or in connection with the transactions
contemplated hereby is at issue.
4.4 Government and Other Approvals. Except for the Government and
Landlord Approvals described in Section 3.5, no consent, approval, order or
authorization of, or registration, declaration or filing with, any federal,
state or local governmental authority is required to be made or obtained by
the Bank in connection with the execution and delivery of this Merger
Agreement or the consummation of the transactions contemplated by this Merger
Agreement nor is any consent or approval required from any landlord, licensor
or other non-governmental party which has granted rights to the Bank in order
to avoid forfeiture or impairment of such rights. The Bank is not aware of
any facts, circumstances or reasons why such Government Approvals should not
be forthcoming or which would prevent or hinder such approvals from being
obtained.
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4.5 Compliance With Law. The Bank holds all licenses, franchises,
permits and authorizations necessary for them to own or lease their respective
properties and assets and for the lawful conduct of their respective
businesses, as they are presently conducted, and the Bank has complied in all
material respects with all applicable statutes, laws, ordinances, rules and
regulations of all federal, state and local governmental bodies, agencies and
subdivisions having, asserting or claiming jurisdiction over the Bank's
properties or over any other part of the Bank's assets, liabilities or
operations. The benefits of all of such licenses, franchises, permits and
authorizations are in full force and effect and, to the best knowledge of the
Bank, may continue to be enjoyed by the Bank subsequent to the Closing of the
transactions contemplated herein without any consent or approval. The Bank
has not received notice of any proceeding for the suspension or revocation of
any such license, franchise, permit, or authorization and no such proceeding
is pending or has been threatened by any governmental authority.
4.6 Charter Documents. Included in Schedule 4.6 hereto are true
and correct copies of the Articles of Incorporation and Bylaws of the Bank.
The Articles of Incorporation and Bylaws of the Bank, as amended to date, are
in full force and effect.
4.7 Financial Statements.
(a) Attached as Schedule 4.7(a) hereto are true copies of the
consolidated balance sheets of the Bank as of December 31, 1997 and 1996, and
the related consolidated statements of income and changes in stockholders'
equity of the Bank for the years ended December 31, 1997, 1996 and 1995 ("Bank
Financial Statements"). Such financial statements (i) were prepared from the
books and records of the Bank, which are complete and accurate in all material
respects and have been maintained in accordance with good business practices;
(ii) were prepared in accordance with GAAP; (iii) accurately present the
Bank's consolidated financial condition and the consolidated results of its
operations and changes in stockholders' equity as stated including any
amendments thereto at the relevant dates thereof and for the periods covered
thereby; (iv) do contain or reflect all necessary adjustments and accruals for
an accurate presentation of the Bank's consolidated financial condition and
the consolidated results of the Bank's operations for the periods covered by
the Bank Financial Statements; and (v) do contain and reflect adequate
provisions for loan losses, for real estate owned reserves and for all
reasonably anticipatable liabilities for all taxes, federal, state, local or
foreign, with respect to the periods then ended.
(b) The Bank has delivered to Acquiror (or will deliver, when
available, with respect to periods ended after the date of this Merger
Agreement) true, correct and complete copies of (i) all Call Reports,
including any amendments thereto, filed with any Regulatory Authorities by the
Bank, (ii) all reports, including any amendments thereto filed with any
Regulatory Authorities by the Bank, each for any quarter ending after December
31, 1997 and (iii) all other financial reports prepared by the Bank or an
outside accounting firm concerning the Bank's financial condition, results of
operations or other financial matters. Such reports (i) were (or will be)
prepared from the books and records of the Bank, which are complete and
accurate in all material respects and have been maintained in accordance with
good business practices; (ii) were (or will be) prepared in accordance with
regulatory accounting principles consistently applied; (iii) accurately
present (or, when prepared, will present) the Bank's consolidated financial
condition and the consolidated results of its operations and changes in
stockholders' equity at the relevant dates thereof and for the periods covered
thereby; (iv) do contain or reflect (or, when prepared, will contain and
reflect) all necessary adjustments and accruals for an accurate presentation
of the Bank's consolidated financial condition and the consolidated results of
the Bank's operations for the periods covered thereby; and (v) do contain and
reflect (or, when prepared, will contain and reflect) adequate provisions for
loan losses, for real estate owned reserves and for all reasonably
anticipatable liabilities for all taxes, federal, state, local or foreign,
with respect to the periods then ended.
4.8 Absence of Certain Changes. Except as disclosed in Schedule
4.8 or as provided for or contemplated in this Merger Agreement, since
September 30, 1998 (the "Balance Sheet Date") there has not been:
(a) any material transaction by the Bank not in the ordinary
course of business and in conformity with past practice;
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(b) any material adverse change in the business, property,
assets (including loan portfolios), liabilities (whether absolute, accrued,
contingent or otherwise), prospects, operations, liquidity, income, condition
(financial or otherwise) or net worth of the Bank;
(c) any damage, destruction or loss, whether or not covered by
insurance, which has had or may have a material adverse effect on any of the
properties, business or prospects of the Bank or their future use and
operation by the Bank;
(d) any acquisition or disposition by the Bank of any property
or asset of the Bank, whether real or personal, having a fair market value,
singularly or in the aggregate, in an amount greater than Ten Thousand Dollars
($10,000), except in the ordinary course of business and in conformity with
past practice;
(e) any mortgage, pledge or subjection to lien, charge or
encumbrance of any kind on any of the respective properties or assets of the
Bank, except to secure extensions of credit in the ordinary course of business
and in conformity with past practice;
(f) any amendment, modification or termination of any contract
or agreement, relating to the Bank, to which the Bank is a party which would
have a material adverse effect upon the financial condition or operations of
the Bank;
(g) any increase in, or commitment to increase, the
compensation payable or to become payable to any officer, director, employee
or agent of the Bank, or any bonus payment or similar arrangement made to or
with any of such officers, directors, employees or agents, other than routine
increases made in the ordinary course of business not exceeding the greater of
five percent (5%) per annum or $5,000 for any of them individually;
(h) any incurring of, assumption of, or taking of, by the
Bank, any property subject to, any liability, except for liabilities incurred
or assumed or property taken subsequent to the Balance Sheet Date in the
ordinary course of business and in conformity with past practice;
(i) any material alteration in the manner of keeping the
books, accounts or Records of the Bank, or in the accounting policies or
practices therein reflected;
(j) any release or discharge of any obligation or liability of
any person or entity related to or arising out of any loan made by the Bank of
any nature whatsoever, except in the ordinary course of business and in
conformity with past practice; or
(k) any loan by the Bank to any Officer, director or 2%
shareholder of the Bank or any Affiliate of the Bank; or to any member of the
immediate family of such Officer, director or 2% shareholder of the Bank or
any Affiliate of the Bank; or to any Person in which such Officer, director or
2% shareholder directly or indirectly owns beneficially or of record ten
percent (10%) or more of any class of equity securities in the case of a
corporation, or of any equity interest, in the case of a partnership or other
non-corporate entity; or to any trust or estate in which such Officer,
director or 2% shareholder has a ten percent (10%) or more beneficial
interest; or as to which such Officer, director or 2% shareholder serves as a
trustee or in a similar capacity. As used herein, "Officer" shall refer to a
person who holds the title of chairman, president, executive vice president,
senior vice president, controller, chief financial officer, secretary, cashier
or treasurer.
4.9 Deposits. Except as set forth in Schedule 4.9, none of the
Bank Deposits is a "brokered" Deposit or subject to any encumbrance, legal
restraint or other legal process and no portion of the Deposits represents a
Deposit by any Affiliate or Major Shareholder of the Bank.
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4.10 Properties. Except as described in Schedule 4.10 hereto or
adequately reserved against in the Bank Financial Statements, the Bank has
good and marketable title free and clear of all material liens, encumbrances,
charges, defaults, or equities of whatever character to all of its properties
and assets, tangible or intangible, other than as reflected in the Bank
Financial Statements. All buildings, and all fixtures, equipment, and other
property and assets that are material to the business of the Bank, held under
leases or subleases by the Bank, are held under valid instruments enforceable
in accordance with their respective terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
other laws affecting the enforcement of creditors' rights generally, and
except that the availability of the equitable remedy of specific performance
or injunctive relief is subject to the discretion of the court before which
any proceedings may be pending).
4.11 Condition of Fixed Assets and Equipment. Except as disclosed
in Schedule 4.11 hereto, all of the Bank's buildings, structures and equipment
in regular use are in good and serviceable condition, normal wear and tear
excepted. None of the buildings, structures and equipment of the Bank
violates or fails to comply in any material respect with any applicable
health, fire, environmental, safety, zoning or building laws or ordinances or
any restrictive covenant pertaining thereto.
4.12 Tax Matters. Except as described in Schedule 4.12 hereto:
(a) All federal, state, local, and foreign tax returns and
information returns required to be filed by or on behalf of the Bank has been
timely filed or requests for extensions have been timely filed, granted, and
have not expired for periods ended on or before the date of this Merger
Agreement, and all returns filed are, and the information contained therein
is, complete and accurate. All tax obligations reflected in such returns have
been paid or adequately provided for. As of the date of this Merger
Agreement, there is no audit examination, deficiency, or refund litigation or
matter in controversy with respect to any taxes that might result in a
determination materially adverse to the Bank except as fully reserved for in
the Bank Financial Statements. All taxes, interest, additions, and penalties
due with respect to completed and settled examinations or concluded tax
litigation have been paid.
(b) The Bank has not executed an extension or waiver of any
statute of limitations on the assessment or collection of any tax due that is
currently in effect.
(c) Adequate provision for any federal, state, local, or
foreign taxes due or to become due for the Bank for all periods through and
including December 31, 1997, has been made and is reflected on the December
31, 1997 financial statements included in the Bank Financial Statements and
has been and will continue to be made with respect to periods ending after
December 31, 1997 and subsequent periods.
(d) Deferred taxes of the Bank has been and will be provided
for in accordance with GAAP.
(e) To the best knowledge of the Bank, neither the Internal
Revenue Service nor any foreign, state, local or other taxing authority is now
asserting or threatening to assert against the Bank any deficiency or claim
for additional taxes, or interest thereon or penalties in connection
therewith. All income, payroll, withholding, property, excise, sales, use,
franchise and transfer taxes, and all other taxes, charges, fees, levies or
other assessments, imposed upon the Bank by the United States or by any state,
municipality, subdivision or instrumentality of the United States or by any
other taxing authority, including all interest, penalties or additions
attributable thereto, which are due and payable by the Bank, either have been
paid in full, or have been properly accrued and reflected in the Bank
Financial Statements.
4.13 Litigation. Except as set forth in Schedule 4.13 hereto, there
is no action, suit or proceeding pending, or to the best knowledge of the
Bank, threatened against the Bank before any court or arbitrator or any
governmental body, agency or official, including, but not limited to, any
action suit or proceeding that (i) has been brought by or on behalf of any
person employed or formerly employed by the Bank or (ii) purports or seeks to
enjoin
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or restrain the transactions contemplated by this Merger Agreement. Except as
set forth on Schedule 4.13 there are no actions, suits, or proceedings pending
or, to the best knowledge of the Bank, threatened against any officers or
directors of the Bank by any stockholder of the Bank (or by any former
stockholder of the Bank) relating to or arising out of such person's status as
a stockholder.
4.14 Hazardous Materials.
(a) To the best knowledge of the Bank, the Bank has obtained
all permits, licenses and other authorizations which are required to be
obtained by them with respect to the Property (as defined herein) under all
Applicable Environmental Laws (as defined herein). All Property controlled,
directly or indirectly, by the Bank is in compliance with the terms and
conditions of all of such permits, licenses and authorizations, and, to the
best of knowledge of the Bank, is also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any Applicable
Environmental Laws or in any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder, except as described in detail in Schedule 4.14 hereto. For
purposes hereof, the following terms shall have the following meanings:
"Applicable Environmental Laws" shall mean all federal,
state, local and municipal environmental laws, rules or regulations to the
extent applicable to the Property, including, but not limited to, (a) the
Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Section 9601 et seq. ("CERCLA"); (b) the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq. "RCRA"; (c) the Federal Water
Pollution Control Act, 33 U.S.C. Section 1251 et seq.; (d) the Clean Air Act,
42 U.S.C. Section 7401 et seq.; (e) the Hazardous Materials Transportation
Act, 49 U.S.C. Section 1471 et seq.; (f) the Toxic Substances Control Act, 15
U.S.C. Section 2601 et seq.; (g) the Emergency Planning and Community
Right-to-Know Act, 42 U.S.C. Section 11001 et seq.; (h) the National
Environmental Policy Act, 42 U.S.C. Section 4321 et seq.; (i) the Rivers and
Harbours Act of 1899, 33 U.S.C. Section 401 et seq.; (j) the Occupational
Safety and Health Act, 29 U.S.C. Section 651 et seq.; (k) the Safe Drinking
Water Act, 42 U.S.C. Section 300(f) et seq.; (l) the Oil Pollution Act of
1990, 33 U.S.C. Section 2701 et seq.; and (m) any rule, regulation, order,
injunction, judgment, declaration or decree implementing or interpreting any
of the foregoing Acts, as amended.
"Hazardous Substances" shall mean any substance, material,
waste, or pollutant that is now (or prior to the Closing) listed, defined,
characterized or regulated as hazardous, toxic or dangerous under or pursuant
to any statute, law, ordinance, rule or regulation of any federal, state,
regional, county or local governmental authority having jurisdiction over the
Property of the Bank or its use or operation, including, without limitation,
(a) any substance, material, element, compound, mixture, solution, waste,
chemical or pollutant listed, defined, characterized or regulated as
hazardous, toxic or dangerous under any Applicable Environmental Laws, (b)
petroleum, petroleum derivatives or by-products, and other hydrocarbons, (c)
polychlorinated biphenyls (PCBs), asbestos and urea formaldehyde, and (d)
radioactive substances, materials or waste.
"Loan Property" means any property in which the Bank holds
a security interest.
"Property" means any real property owned, controlled,
leased or held by the Bank, in whole or in part, solely or in a joint venture
or other business arrangement, either for operational or investment purposes,
and whether assigned, purchased, or obtained through foreclosure (or similar
action) or in satisfaction of debts previously contracted.
(b) In addition, except as set forth in Schedule 4.14(b)
hereto:
(i) No notice, notification, demand, request for
information, citation, summons or order has been received by the Bank, no
complaint has been filed and served on the Bank, no penalty has been assessed
and to the best knowledge of the Bank no investigation or review is pending by
any governmental or other
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entity with respect to any alleged failure by the Bank to have any permit,
license or authorization required in connection with the conduct of the
business of the Bank or with respect to any generation, treatment, storage,
recycling, transportation, release or disposal, or any release as defined in
42 U.S.C. Section 9601(22) ("Release"), of any Hazardous Substances at any
Property or any Loan Property;
(ii) To the best knowledge of the Bank, no Property or
Loan Property has received or held any Hazardous Substances in such amount and
in such manner as to constitute a violation of the Applicable Environmental
Laws, and no Hazardous Substances have been Released or disposed of on, in or
under any of the Property during or prior to the Bank's occupancy thereof, or
during or prior to the occupancy thereof by any assignee or sublessee of the
Bank, except in compliance with all Applicable Environmental Laws;
(iii) To the best knowledge of the Bank, there are no
Hazardous Substances being stored at any Property or Loan Property or located
in, on or upon, any Property or Loan Property (including the subsurface
thereof) or installed or affixed to structures or equipment on any Property or
Loan Property; and, to the best knowledge of the Bank, there are no
underground storage tanks for Hazardous Substances, active or abandoned, at
any Property; and
(iv) To the best knowledge of the Bank, no Hazardous
Substances have been Released in a reportable quantity, where such a quantity
has been established by statute, ordinance, rule, regulation or order, at, on
or under any Property.
(c) Neither the Bank nor any Affiliate of the Bank has
knowingly transported or arranged for the transportation of any Hazardous
Substances to any location which is listed on the National Priorities List
under CERCLA, listed for possible inclusion on the National Priorities List by
the Environmental Protection Agency in the CERCLA Information System
("CERCLIS") or on any similar state list or which is the subject of federal,
state or local enforcement actions or other investigations which may lead to
claims against the owner of the Property for cleanup costs, remedial work,
damages to natural resources or for personal injury claims, including, but not
limited to, claims under CERCLA.
(d) No Hazardous Substances have been knowingly generated,
recycled, treated, stored, disposed of or Released by, the Bank or any
Affiliate of the Bank in violation of Applicable Environmental Laws.
(e) No oral or written notification of a Release of Hazardous
Substances has been given or filed by or on behalf of the Bank or any
Affiliate of the Bank relating to any Property and no Property is listed or
proposed for listing on the National Priority List promulgated pursuant to
CERCLA, on CERCLIS or on any similar state list of sites requiring
investigation or clean-up.
(f) To the best knowledge of the Bank, there are no liens
arising under or pursuant to any Applicable Environmental Laws on any
Property, and no government actions have been taken or, to the best knowledge
of the Bank, threatened, or are in process which could subject any Property to
such liens and none of the Property would be required to place any notice or
restriction relating to the presence of Hazardous Substances at any Property
in any deed to such Property.
(g) There have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted by or which are in the
possession of the Bank or any Affiliate of the Bank in relation to any
Property, which have not been made available to Acquiror.
(h) The Bank is not aware of any facts which might suggest
that the Bank has engaged in any management practice with respect to any of
its past or existing borrowers which could reasonably be expected to subject
the Bank or any Property or Loan Property to any liability under any
Applicable Environmental Laws.
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4.15 Insurance. The Bank and all of the Bank's material assets,
businesses, real property and other material properties are insured against
fire, casualty, theft, liability, loss, interruption, title and such other
events against which it is customary in the banking industry to insure, all
such insurance policies being in amounts that are adequate and consistent with
past practice and experience. Set forth on Schedule 4.15 is a list of all
insurance policies (excluding policies maintained on one- to four-family
residential properties acquired through foreclosure) maintained by or for the
benefit of the Bank or its respective directors, officers, employees or
agents. All such insurance policies are in full force and effect. The Bank
has taken or will take all requisite action (including without limitation the
making of claims and the giving of notices) pursuant to its directors' and
officers' liability insurance policy or policies in order to preserve all
rights thereunder with respect to all matters (other than matters arising in
connection with this Merger Agreement and the transactions contemplated
hereby) occurring prior to the Effective Time that are known to the Bank. The
Bank has not had an insurance policy canceled or been denied insurance
coverage for which any of such companies has applied. The fidelity bonds in
effect as to which the Bank is a named insured are believed by the Bank to be
sufficient.
4.16 Labor and Employment Matters. Except as reflected in Schedule
4.16 hereto, there is no (i) collective bargaining agreement or other labor
agreement to which the Bank is a party or by which any of them is bound; (ii)
employment, profit sharing, deferred compensation, bonus, stock option,
purchase, retainer, consulting, retirement, welfare or incentive plan or
contract to which the Bank is a party or by which it is bound; or (iii) plan
or agreement under which "fringe benefits" (including, but not limited to,
vacation plans or programs, sick leave plans or programs and related benefits)
are afforded any of the employees of the Bank. The Bank has not received any
notice that any party to any such agreement, plan or contract is in default
with respect to any material term or condition thereof, nor has any event
occurred which, through the passage of time or the giving of notice, or both,
would constitute a default thereunder or would cause the acceleration of any
obligation of any party thereto. The Bank has not received notice from any
governmental agency of any alleged violation of applicable laws that remains
unresolved respecting employment and employment practices, terms and
conditions of employment and wages and hours. To its best knowledge, the Bank
has complied in all material respects with all applicable laws, rules and
regulations relating to the employment of labor, including those related to
its employment practices, employee disabilities, wages, hours, collective
bargaining and the payment and withholding of taxes and other sums as required
by the appropriate governmental authorities, and the Bank has withheld and
paid to the appropriate governmental authorities or are holding for payment
not yet due to such authorities, all amounts required to be withheld from the
employees of the Bank and is not liable for any arrears of wages, taxes,
penalties or other sums for failure to comply with any of the foregoing.
Except as set forth in Schedule 4.16, there is no: unfair labor practice
complaint against the Bank pending before the National Labor Relations Board
or any state or local agency; pending labor strike or, to the best of
knowledge of the Bank, other labor trouble affecting the Bank; labor grievance
pending against the Bank; to the best knowledge of the Bank, pending
representation question respecting the employees of the Bank; pending
arbitration proceedings arising out of or under any collective bargaining
agreement to which the Bank is a party, or to the best knowledge of the Bank,
any basis for which a claim may be made under any collective bargaining
agreement to which the Bank is a party.
4.17 Records and Documents. The Records of the Bank are and will be
sufficient to enable the Bank to continue conducting its business under
similar standards as the Bank has heretofore conducted such business.
4.18 Capitalization of the Bank. The authorized capital stock of
the Bank consists of 200,000 shares of Bank Common Stock having a par value of
$10.00 per share. As of the date of this Merger Agreement, 101,000 shares of
the Bank Common Stock were issued and outstanding, zero shares of the Bank
Common Stock were held by the Bank as treasury stock and no shares of the
preferred stock were issued and outstanding. All of the outstanding Bank
Common Stock is validly issued, fully-paid and nonassessable and has not been
issued in violation of any preemptive rights of any shareholder. Except as
described on Schedule 4.18 hereto, as of the date hereof, there are no
outstanding securities or other obligations which are convertible into Bank
Common Stock or into any other equity or debt security of the Bank, and there
are no outstanding options, warrants, rights, scrip, rights to subscribe to,
calls or other commitments of any nature which would entitle the holder, upon
exercise thereof, to be issued Bank Common Stock or any other equity or debt
security of the Bank. Accordingly, immediately prior to the Effective Time,
there will be not more than 101,000 shares of Bank Common Stock issued and
outstanding.
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4.19 Sole Agreement. With the exception of this Merger Agreement,
the Bank has not been a party to: any letter of intent or agreement to merge,
to consolidate, to sell or purchase assets (other than in the normal course of
its business) or to any other agreement which contemplates the involvement of
the Bank (or any of its assets) in any business combination of any kind; or
any agreement obligating the Bank to issue or sell or authorize the sale or
transfer of Bank Common Stock. Except as described in Schedule 4.19 hereto,
there are no (nor will there be at the Effective Time any) shares of capital
stock or other equity securities of the Bank outstanding, except for shares of
the Bank Common Stock presently issued and outstanding, and there are no (nor
will there be at the Effective Time any) contracts, commitments,
understandings, or arrangements by which the Bank is or may be bound to issue
additional shares of their capital stock or options, warrants, or rights to
purchase or acquire any additional shares of their capital stock. There are
no (nor will there be at the Effective Time any) contracts, commitments,
understandings, or arrangements by which the Bank is or may be bound to
transfer or issue to any third party any shares of the capital stock of any
Bank Subsidiary, and there are no (nor will there be at the Effective Time
any) contracts, agreements, understandings or commitments relating to the
right of the Bank to vote or to dispose of any such shares.
4.20 Disclosure. The information concerning, and representations
and warranties made by, the Bank set forth in this Merger Agreement, or in the
Schedules of the Bank hereto, or in any document, statement, certificate or
other writing furnished or to be furnished by the Bank to Acquiror pursuant
hereto, does not and will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated herein or therein
necessary to make the statements and facts contained herein or therein, in
light of the circumstances in which they were or are made, not false or
misleading. Copies of all documents heretofore or hereafter delivered or made
available to Acquiror by the Bank pursuant hereto were or will be complete and
accurate copies of such documents.
4.21 Absence of Undisclosed Liabilities. Except as described in
Schedule 4.21 hereto, the Bank has no obligation or liability (contingent or
otherwise) that is material to the financial condition or operations of the
Bank, or that, when combined with all similar obligations or liabilities,
would be material to the financial condition or operations of the Bank (i)
except as disclosed in the Bank Financial Statements delivered to Acquiror
prior to the date of this Merger Agreement or (ii) except obligations or
liabilities incurred in the ordinary course of its business consistent with
past practices or (iii) except as contemplated under this Merger Agreement.
Since September 30, 1998, the Bank has not incurred or paid any obligation or
liability which would be material to the financial condition or operations of
the Bank, except for obligations paid by the Bank under the terms of this
Merger Agreement (all such obligations or payments are fully described by the
Bank in Schedule 4.21 hereto) or in connection with transactions made by it in
the ordinary course of its business consistent with past practices, laws and
regulations applicable to the Bank.
4.22 Allowance for Loan Losses. The allowance for loan losses shown
on the Bank Financial Statements is (with respect to periods ended on or
before December 31, 1997) or will be (with respect to periods ending
subsequent to December 31, 1997) adequate in all respects to provide for
anticipated losses inherent in loans outstanding or for commitments to extend
credit or similar off-balance sheet items (including accrued interest
receivable) as of the dates thereof and is in compliance with the requirements
of GAAP. Except as disclosed in Schedule 4.22 hereto, as of the date thereof,
the Bank does not have any loan which has been criticized or classified by
bank examiners representing any Regulatory Authority or by its independent
auditors as "Special Mention," "Substandard," "Doubtful" or "Loss" or as a
"Potential Problem Loan."
The allowance for possible losses on other real estate owned ("OREO")
shown on the Bank Financial Statements is (with respect to periods ended on or
before December 31, 1997) or will be (with respect to periods ending
subsequent to December 31, 1997) adequate in all respects to provide for
anticipated losses inherent in OREO or held by the Bank and the net book value
of OREO on the Balance Sheet of the Bank Financial Statements is the fair
value of the OREO in accordance with Statement of Position 92-3.
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4.23 Compliance with Laws. The Bank:
(a) Is in compliance with all laws, rules, regulations,
reporting and licensing requirements, and orders applicable to its business or
employees conducting its business (including, but not limited to, those
relating to consumer disclosure and currency transaction reporting) the breach
or violation of which would or could reasonably be expected to have a material
adverse effect on the financial condition or operations of the Bank, or which
would or could reasonably be expected to subject the Bank or any of its
directors or officers to civil money penalties;
(b) Has received no notification or communication from any
agency or department of federal, state, or local government or any of the
Regulatory Authorities, or the staff thereof (i) asserting that the Bank is or
may not be in compliance with any of the statutes, rules, regulations, or
ordinances which such governmental authority or Regulatory Authority enforces,
which, as a result of such noncompliance, would result in a material adverse
impact on the Bank, (ii) threatening to revoke any license, franchise, permit,
or governmental authorization which is material to the financial condition or
operations of the Bank, or (iii) requiring the Bank to enter into a cease and
desist order, consent, agreement, or memorandum of understanding; and
(c) Is in material compliance with the applicable provisions
of the Community Reinvestment Act ("CRA") and the regulations promulgated
thereunder, and the Bank currently has a CRA rating of satisfactory or better.
To the best knowledge of the Bank, there is no fact or circumstance or set of
facts or circumstances which would cause the Bank to fail to comply with such
provisions or cause the CRA rating of the Bank to fall below satisfactory.
4.24 Absence of Regulatory Actions. The Bank is not a party to any
cease and desist order, written agreement or memorandum of understanding with,
or a party to any commitment letter or similar undertaking to, or is subject
to any order or directive by, or is a recipient of any extraordinary
supervisory letter from, or has adopted any board resolutions at the request
of, federal or state governmental authorities charged with the supervision or
regulation of depository institutions or depository institution holding
companies or engaged in the insurance of bank and/or savings and loan deposits
nor has it been advised by any such governmental authority that it is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, directive, written agreement,
memorandum of understanding, extraordinary supervisory letter, commitment
letter, board resolutions or similar undertaking.
4.25 Employee Benefit Plans.
(a) The Bank has previously provided to Acquiror and First
Savings true and complete copies of each "employee pension benefit plan," as
defined in Section 3(2) of ERISA which, to the best of knowledge of the Bank,
is subject to any provision of ERISA and covers any employee, whether active
or retired, of the Bank or any other entity which is a member of a controlled
group or is under common control with the Bank in the manner defined and
further described in Section 414(b), (c), or (m) of the Internal Revenue Code.
Such plans are hereinafter referred to collectively as the "Employee Pension
Benefit Plans," and each such Employee Pension Benefit Plan is listed in
Schedule 4.25(a) hereto. The Bank has also provided to Acquiror and First
Savings true and complete copies of all trust agreements, collective
bargaining agreements, and insurance contracts related to such Employee
Pension Benefit Plans.
To the best knowledge of the Bank, each Employee Pension
Benefit Plan which is intended to be qualified under Section 401(a) of the
Internal Revenue Code is so qualified and each trust forming a part thereof is
exempt from tax pursuant to Section 501(a) of the Internal Revenue Code.
Copies of the latest determination letters concerning the qualified status of
each Employee Pension Benefit Plan which is intended to be qualified under
Section 401(a) of the Internal Revenue Code have been provided to Acquiror and
First Savings. Requests for determination letters relating to amendments
required to cause such Employee Pension Benefit Plans to be in compliance
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with the Tax Equity and Fiscal Responsibility Act of 1982, the Deficit
Reduction Act of 1984 and the Retirement Equity Act of 1984 were timely filed
and have been received by the Bank. Requests for determination letters
relating to any subsequent amendments to such plans which are currently
pending have been provided to Acquiror and First Savings. All such requests
were timely and properly filed and appropriate notice of any such filing was
timely and properly provided to affected plan participants and beneficiaries.
Each of the Employee Pension Benefit Plans has been operated in
substantial conformity with the written provisions of the applicable plan
documents which have been delivered to Acquiror and First Savings and in
compliance with the requirements prescribed by all statutes, orders, rules,
and regulations including, but not limited to, ERISA and the Internal Revenue
Code, which are applicable to such Employee Pension Benefit Plans. To the
extent that the operation of an Employee Pension Benefit Plan has deviated
from the written provisions of the plan, such operational deviations have been
disclosed in Schedule 4.24(a) hereto. All such deviations have been made in
conformity with applicable laws, including ERISA and the Internal Revenue
Code.
With respect to Employee Pension Benefit Plans which are
subject to the annual report requirement of ERISA Section 103 or to the annual
return requirement of Internal Revenue Code Section 6047, all required annual
reports and annual returns, or such other documents as may have been required
as alternative means of compliance with the annual report requirement, have
been timely filed. Copies of all such annual returns/reports, including all
attachments and Schedules, for the three (3) plan years immediately preceding
the current date have been delivered to Acquiror and First Savings. With
respect to Employee Pension Benefit Plans which complied with the annual
return requirement by satisfaction of an alternate compliance method, any
documents required to be filed with the Department of Labor in satisfaction of
such requirements have been provided to Acquiror and First Savings.
With respect to all Employee Pension Benefit Plans which are
subject to the summary plan description requirement of ERISA Section 102, all
such summary plan descriptions as were or will be required to be filed with
the Department of Labor and distributed to participants and beneficiaries have
been filed and timely distributed. Copies of all such summary plan
descriptions have been delivered to Acquiror and First Savings. No Employee
Pension Benefit Plan constitutes a "multi-employer plan" as defined in Section
4001(a)(3) of ERISA.
No Employee Pension Benefit Plan subject to Part III of
Subtitle B of ERISA or Section 412 of the Internal Revenue Code, or both, has
incurred an "accumulated funding deficiency" within the meaning of Internal
Revenue Code Section 412, whether or not waived. All required contributions
to all Employee Pension Benefit Plans have been timely made. Any penalties or
taxes which have been incurred by the Bank or by any Employee Pension Benefit
Plan with respect to the timing or amount of payment of any contribution to an
Employee Pension Benefit Plan have been timely paid. The limitations of
Internal Revenue Code Section 415 have not been exceeded with respect to any
Employee Pension Benefit Plan or combination of such plans to which such
limitations apply.
No "reportable event" (as described in Section 4043(b) of
ERISA) has occurred with respect to any Employee Pension Benefit Plan. No
Employee Pension Benefit Plan or any trust created thereunder, nor any
"disqualified person" with respect to the plan (as defined in Section 4975 of
the Internal Revenue Code), has engaged in a "prohibited transaction," as such
term is defined in Section 4975 of the Internal Revenue Code, which could
subject such Employee Pension Benefit Plan, any such trust or any such
disqualified person (other than a person for whom the Bank is not directly or
indirectly responsible) to liability under Title I of ERISA or to the
imposition of any tax under Section 4975 of the Internal Revenue Code.
No condition exists with regard to any Employee Pension Benefit
Plan which constitutes grounds for the termination of such plan pursuant to
Section 4042 of ERISA.
No Employee Pension Benefit Plan is subject to Title IV of
ERISA.
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No tax has been, will be, or is reasonably anticipated to be
imposed under Internal Revenue Code Section 4978, 4978A, 4978B, or 4979A due
to the operation of an Employee Pension Benefit Plan sponsored by the Bank
which is an employee stock ownership plan ("ESOP").
Except as disclosed in Schedule 4.25(a) hereto, all Employee
Pension Benefit Plans were in effect for substantially all of calendar year
1998. There has been no material amendment of any such plans (other than
amendments required to comply with applicable law) or material increase in the
cost of maintaining such plans or providing benefits thereunder on or after
the last day of the plan year which ended in calendar year 1997 for each such
Employee Pension Benefit Plan.
The Bank has provided to Acquiror and First Savings copies of
the annual actuarial valuation or allocation report for each Employee Pension
Benefit Plan for the three (3) plan years for such plan immediately preceding
the current date. With regard to Employee Pension Benefit Plans which are not
intended to be qualified under Section 401(a) of the Internal Revenue Code,
copies of financial statements or reports containing information regarding the
expense of maintaining any such Employee Pension Benefit Plan for the three
(3) plan years preceding the current date have been delivered to Acquiror and
First Savings.
The Bank has provided to Acquiror and First Savings copies of
all filings regarding the Employee Pension Benefit Plans which have been made
with the Regulatory Authorities for the three (3) plan years preceding the
current date.
(b) The Bank has furnished to Acquiror and First Savings true and
complete copies of each "Employee Welfare Benefit Plan" as defined in Section
3(1) of ERISA, which, to the best knowledge of the Bank, is subject to any
provision of ERISA and covers any employee, whether active or retired, of the
Bank or members of a controlled group or entities under common control with
the Bank in the manner defined and further described in Section 414(b), (c),
or (m) of the Internal Revenue Code. Such plans are hereinafter referred to
collectively as the "Employee Welfare Benefit Plans," and each such Employee
Welfare Benefit Plan is listed in Schedule 4.25(b) hereto.
The Bank has also provided to Acquiror and First Savings true
and complete copies of documents establishing all funding instruments for such
Employee Welfare Benefit Plans, including but not limited to, trust
agreements, cafeteria plans (pursuant to Internal Revenue Code Section 125),
and voluntary employee beneficiary associations (pursuant to Internal Revenue
Code Section 501(c)(9)). Each of the Employee Welfare Benefit Plans has been
operated in substantial conformity with the written provisions of the plan
documents which have been delivered to Acquiror and First Savings and in
compliance with the requirements prescribed by all statutes, orders, rules,
and regulations including, but not limited to, ERISA and the Internal Revenue
Code, which are applicable to such Employee Welfare Benefit Plans. Any
deviation in the operation of such plans from the requirements of the plan
documents or of applicable laws have been listed in Schedule 4.25(b) hereto.
The Bank have provided any notification required by law to any participant
covered under any Employee Welfare Benefit Plan which has failed to comply
with the requirements of any Internal Revenue Code section which results in
the imposition of a tax on benefits provided to such participants under such
plan.
With respect to all Employee Welfare Benefit Plans which are
subject to the annual report requirement of ERISA Section 103 or to the annual
return requirement of Internal Revenue Code Section 6039D, all annual reports
and annual returns as were required to be filed pursuant to such sections have
been timely filed. Copies of all such annual returns/reports, including all
attachments and Schedules, for the three (3) plan years immediately preceding
the current date for all plans subject to such requirements have been
delivered to Acquiror and First Savings. With respect to all Employee Welfare
Benefit Plans which are subject to the summary plan description requirement of
ERISA Section 102, all such summary plan descriptions as were required to be
filed with the Department of Labor and distributed to participants and
beneficiaries have been timely filed and distributed. Copies of all such
summary plan descriptions have been delivered to Acquiror and First Savings.
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Except as disclosed in Schedule 4.25(b) hereto, all Employee
Welfare Benefit Plans which are in effect were in effect for substantially all
of calendar year 1997. Except as disclosed in Schedule 4.25(b) hereto, there
has been with respect to such Employee Welfare Benefit Plans no material
amendment thereof or material increase in the cost thereof or benefits payable
thereunder on or after September 30, 1998.
No Employee Welfare Benefit Plan or any trust created
thereunder, nor any "party in interest" with respect to the plan (as defined
in Section 3(14) of ERISA), has engaged in a "prohibited transaction," as such
term is defined in Section 406 of ERISA, which could subject such Employee
Welfare Benefit Plan, any such trust, or any party in interest (other than a
person for whom the Bank is not directly or indirectly responsible) to the
imposition of a penalty for such prohibited transaction under Section 502(i)
of ERISA. The Department of Labor has not assessed any such penalty or served
notice to the Bank that such a penalty may be imposed upon any Employee
Welfare Benefit Plan.
The Bank has not failed to make any contribution to, or pay any
amount due and owing by the Bank under the terms of, an Employee Welfare
Benefit Plan. Except as disclosed in Schedule 4.25(b) hereto, no claims have
been incurred with respect to any Employee Welfare Benefit Plan which may, to
the best knowledge of the Bank, constitute a liability for the Bank after the
application of any insurance, trust or other funds which are applicable to the
payment of such claims.
Except as disclosed in Schedule 4.25(b) hereto, to the best
knowledge of the Bank, no condition exists that could subject any Employee
Welfare Benefit Plan or any person (other than a person for whom the Bank is
not directly or indirectly responsible) to liabilities, damages, losses,
taxes, or sanctions that arise under Section 4980B of the Internal Revenue
Code or Sections 601 through 608 of ERISA for failure to comply with the
continuation health care coverage requirements of ERISA Sections 601 through
608 and Internal Revenue Code Section 4980B with respect to any current or
former employee of the Bank, or the beneficiaries of such employee.
(c) The Bank has furnished to Acquiror and First Savings true and
complete copies and/or descriptions of each plan or arrangement maintained or
otherwise contributed to by the Bank which is not an Employee Pension Benefit
Plan and is not an Employee Welfare Benefit Plan and which (exclusive of base
salary and base wages) provides for any form of current or deferred
compensation, bonus, stock option, profit sharing, retirement, group health or
insurance, welfare benefits, fringe benefits, or similar plan or arrangement
for the benefit of any employee or class of employees, whether active or
retired, or independent contractors of the Bank. Such plans and arrangements
shall collectively be referred to herein as "Benefit Arrangements" and all
such Benefit Arrangements of the Bank are listed on Schedule 4.25(c) hereto.
Except as disclosed in Schedule 4.25(c) hereto, there are no other Benefit
Arrangements of the Bank and all Benefit Arrangements which are in effect were
in effect for substantially all of calendar year 1998. Except as disclosed in
Schedule 4.25(c) hereto, there has been with respect to Benefit Arrangements
no material amendment thereof or material increase in the cost thereof or
benefits payable thereunder on or after September 30, 1998. There has been no
material increase in the base salary and wage levels of the Bank and, except
in the ordinary course of business, no change in the terms or conditions of
employment (including severance benefits) compared, in each case, to those
prevailing for substantially all of calendar year 1997. Except as disclosed
in Schedule 4.25(c) hereto, there has been no material increase in the
compensation of, or benefits payable to, any senior executive employee of the
Bank on or after September 30, 1998 nor has any employment, severance, or
similar contract been entered into with any such employee, nor has any
amendment to any such contract been made on or after September 30, 1998.
With respect to all Benefit Arrangements which are subject to
the annual return requirement of Internal Revenue Code Section 6039D, all
annual returns as were required to be filed have been timely filed. Copies of
all such annual returns for the three (3) plan years immediately preceding the
current date have been delivered to Acquiror and First Savings.
(d) Listed in Schedule 4.25(d) hereto are all Employee Pension
Benefit Plans, Employee Welfare Benefit Plans, and Benefit Arrangements which
provide compensation or benefits which become effective upon a
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change in control of the Bank, including, but not limited to, additional
compensation or benefits, or acceleration in the amount or timing of payment
of compensation or benefits which had become effective prior to the date of
such acceleration. Except as disclosed in Schedule 4.25(d) hereto, there is
no Employee Pension Benefit Plan, Employee Welfare Benefit Plan, or Benefit
Arrangement covering any employee of the Bank which individually or
collectively could give rise to the payment of any amount which would
constitute an "excess parachute payment," as such term is defined in Section
280G of the Internal Revenue Code and Regulations proposed pursuant to that
section.
(e) Except as described in Schedule 4.25(e) hereto, each Employee
Pension Benefit Plan, Employee Welfare Benefit Plan, or Benefit Arrangement
and each personal services contract, fringe benefit, consulting contract or
similar arrangement with or for the benefit of any officer, director,
employee, or other person may be terminated by the Bank within a period of no
more than thirty (30) days following the effective time of the merger, without
payment of any amount as a penalty, bonus, premium, severance pay, or other
compensation for such termination. No limitation on the right to terminate
any such plan has been communicated by the Bank to employees, former
employees, or retirees who are or may be participants in or beneficiaries of
such plans or arrangements. No Employee Pension Benefit Plan which is
qualified under Section 401(a) of the Internal Revenue Code is a qualified
defined benefit pension plan.
(f) Except as disclosed in Schedule 4.25(f) hereto, the Bank has
not received notice from any governmental agency of any alleged violation of
applicable laws or of any prospective audit or other investigation for the
purpose of reviewing compliance with applicable laws with respect to any
Employee Pension Benefit Plan, Employee Welfare Benefit Plan or Benefit
Arrangement.
Except as disclosed in Schedule 4.25(f) hereto, no suits,
actions, or claims have been filed in any court of law or with any
governmental agency regarding the operation of any Employee Pension Benefit
Plan, Employee Welfare Benefit Plan, or Benefit Arrangement and no such
additional suits, actions, or claims are, to the best knowledge of the Bank,
anticipated to be filed.
4.26 Material Contracts. (a) Except as set forth on Schedule 4.26
(and with a true and correct copy of the document or other item in question
attached to such Schedule), the Bank is not a party or subject to any of the
following (whether written or oral, express or implied):
(i) any agreement, arrangement or commitment (A) not
made in the ordinary course of business or (B) pursuant to which the Bank is
or may become obligated to invest in or contribute capital to any Bank
Subsidiary or any other entity;
(ii) any agreement, indenture or other instrument not
disclosed in the Bank Financial Statements relating to the borrowing of money
by the Bank or the guarantee by the Bank of any such obligation (other than
trade payables or instruments related to transactions entered into in the
ordinary course of business by any Bank Subsidiary, such as deposits, Fed
Funds borrowings and repurchase agreements);
(iii) any contract, agreement or understanding with any
labor union or collective bargaining organization;
(iv) any contract containing covenants which limit the
ability of the Bank to compete in any line of business or with any person or
containing any restriction of the geographical area in which, or method by
which, the Bank may carry on its business (other than as may be required by
law or any applicable Regulatory Authority);
(v) any contract or agreement which is a "material
contract" within the meaning of Item 601(b)(10) of Regulation S-K promulgated
by the SEC;
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(vi) any lease with annual rental payments aggregating
$10,000 or more;
(vii) consulting agreement (other than data processing,
software programming and licensing contracts entered into in the ordinary
course of business) involving the payment of more than $10,000 per annum;
(viii) any agreement with any executive officer or other
key employee of the Bank the benefits of which are contingent, or the terms of
which are materially altered or any payments or rights are accelerated, upon
the occurrence of a transaction involving the Bank of the nature contemplated
by this Merger Agreement;
(ix) any agreement with respect of any executive officer
of the Bank providing any term of employment or compensation guarantee
extending for a period longer than one year and for the payment of in excess
of $30,000 per annum;
(x) any agreement with any director or executive
officer of the Bank providing for indemnification of such person; or
(xi) agreement or plan, including any stock option plan,
stock appreciation rights plan, restricted stock plan or stock purchase plan,
any of the benefits of which will be increased, or the vesting of the benefits
of which will be accelerated, by the occurrence of any of the transactions
contemplated by this Merger Agreement or the value of any of the benefits of
which will be calculated on the basis of any of the transactions contemplated
by this Merger Agreement.
(b) Except as disclosed on Schedule 4.26, no officer or
director of the Bank or any "associate" (as such term is defined in Rule 12b-2
under the 1934 Act) of any such officer or director, has any material interest
in any material contract or property (real or personal), tangible or
intangible, used in or pertaining to the business of the Bank.
4.27 Material Contract Defaults. The Bank is not in default in any
respect under any contract, agreement, commitment, arrangement, lease,
insurance policy, or other instrument to which it is a party or by which its
respective assets, business, or operations may be bound or affected or under
which it or its respective assets, business, or operations receives benefits,
and which default is reasonably expected to have either individually or in the
aggregate a material adverse effect on the condition (financial or other) of
the Bank, and there has not occurred any event that, with the lapse of time or
the giving of notice or both, would constitute such a default.
4.28 Reports. Since January 1, 1995, the Bank has filed all reports
and statements, together with any amendments required to be made with respect
thereto, that it was required to file with (i) the FDIC; (ii) the FRB; and
(iii) any other applicable federal or state securities or banking authorities.
As of their respective dates and to its best knowledge, each of such reports
and documents, including the financial statements, exhibits, and schedules
thereto, complied in all material respects with all of the requirements of
their respective forms and all of the statutes, rules, and regulations
enforced or promulgated by the Regulatory Authority with which they were
filed. To the Bank's best knowledge, all such reports were true and complete
in all material respects and did 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 therein, in light of the circumstances
under which they were made, not misleading. The Bank has previously provided
to Acquiror and First Savings true and correct copies of all such reports and
any amendments thereto filed by the Bank after January 1, 1995.
4.29 Statements True and Correct. None of the information prepared
by, or on behalf of, the Bank regarding the Bank included in the Proxy
Statement mailed to the Bank's Shareholders in connection with the
Shareholders Meeting, and any other documents filed with the FRB, the FDIC or
any other Regulatory Authority in
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connection with the transaction contemplated herein (if applicable), will be,
at the respective times such documents are filed, and, with respect to the
Proxy Statement, when first mailed to the shareholders of the Bank, comply
with all applicable laws and regulations.
4.30 Brokers and Finders. Except as set forth in the agreement with
Columbia Financial Advisors, Inc. dated November 23, 1998, which has not been
amended since such date, neither the Bank nor any of their respective
officers, directors or employees has employed any broker or finder, or agreed
to pay any fees to any director or former director or incurred any liability
for any financial advisory fees, brokerage fees, commissions or finder's fees,
and no broker or finder, or director or former director of the Bank, has acted
directly or indirectly for the Bank, in connection with this Merger Agreement
or the transactions contemplated hereby.
4.31 Derivatives Contracts; Structured Notes; Etc. The Bank is not
a party to or has agreed to enter into an exchange traded or over-the-counter
equity, interest rate, foreign exchange or other swap, forward, future,
option, cap, floor or collar or any other contract that is not included on the
balance sheet and is a derivative contract (including various combinations
thereof) (each a "Derivatives Contract") or owns securities that (1) are
referred to generically as "structured notes," "high risk mortgage
derivatives," "capped floating rate notes" or "capped floating rate mortgage
derivatives" or (2) are likely to have changes in value as a result of
interest or exchange rate changes that significantly exceed normal changes in
value attributable to interest or exchange rate changes, except for those
Derivatives Contracts and other instruments legally purchased or entered into
in the ordinary course of business, consistent with safe and sound banking
practices and regulatory guidance, and listed (as of the date hereof) on
Schedule 4.31.
4.32 Year 2000 Issues. Expenses associated with resolving Year 2000
technology issues are not expected to have a material adverse effect on the
financial condition or results of operations of the Bank, nor are Year 2000
technology issues expected to have a material adverse effect on the operations
of the Bank. The Bank has not received, or reasonably expects to receive, a
"Year 2000 Deficiency Notification Letter" (as such term is employed in the
Federal Reserve's Supervision and Regulation Letter No. SR-98-3 (SUP), dated
March 4, 1998). The Bank has made available to the Acquiror and First Savings
a complete and accurate copy of its plans, including an estimate of the
anticipated associated costs, for addressing the issues ("Year 2000 Issues")
set forth in the statements of the Federal Financial Institutions Examinations
Council, dated May 5, 1997, entitled "Year 2000 Project Management Awareness"
and December 1997, entitled "Safety and Soundness Guidelines Concerning the
Year 2000 Business Risk" as such issues affect the Bank. Between the date
hereof and the Effective Time, the Bank shall use its commercially practicable
efforts to implement its plans.
4.33 Loans. To the best knowledge of the Bank, with respect to each
loan owned by the Bank in whole or in part: (i) the note and any related
mortgage are each legal, valid and binding obligations of the maker or obligor
thereof, enforceable against such maker or obligor in accordance with their
terms; (ii) neither the Bank nor any prior holder of a loan has modified the
related documents in any material respect or satisfied, canceled or
subordinated such mortgage or note except as otherwise disclosed by documents
in the applicable loan file; (iii) the Bank is the sole holder of legal and
beneficial title to each loan (or the Bank's applicable participation
interest), as applicable and there has not been any assignment or pledge of
any loan; and (iv) the note, mortgage and any other collateral documents,
copies of which are included in the loan files, are true and correct copies of
the documents they purport to be and have not been superseded, amended,
modified, canceled or otherwise changed except as disclosed by documents in
the applicable loan file.
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ARTICLE 5
COVENANTS OF ACQUIROR
5.1 Regulatory Approvals. Within a reasonable time after execution
of this Merger Agreement, Acquiror shall commence preparation of applications
and shall file any and all applications with the appropriate government
Regulatory Authorities in order to obtain the Government Approvals and shall
take such other actions as may be reasonably required to consummate the
transactions contemplated in this Merger Agreement and the Plan of Merger with
reasonable promptness. Acquiror shall pay all fees and expenses arising in
connection with such applications for regulatory approval. Acquiror agrees to
provide the appropriate Regulatory Authorities with the information required
by such authorities in connection with Acquiror's applications for regulatory
approval and Acquiror agrees to use its best efforts to obtain such regulatory
approvals, and any other approvals and consents as may be required for the
Closing, as promptly as practicable; provided, however, that nothing in this
Section 5.1 shall be construed to obligate Acquiror to take any action to meet
any condition required to obtain prior regulatory approval if any such
condition materially differs from conditions customarily imposed by such
Regulatory Authorities in orders approving acquisitions of the type
contemplated by this Merger Agreement, constitutes a significant impediment
upon Acquiror's ability to carry on its business or acquisition programs (as
may be determined in the sole discretion of Acquiror) or requires Acquiror to
increase the Bank's capital ratios to amounts in excess of the FDIC's minimum
capital ratio guidelines which may be in effect from time to time.
5.2 Preparation of Bank Proxy Statement. Acquiror shall cooperate
with the Bank in preparation of the Proxy Statement to be used at the
Shareholders Meeting.
5.3 Employees. Upon consummation of the Merger, all employees of
the Bank shall be deemed to be at-will employees except for those employees
who are parties to a written employment agreement.
(a) As soon as administratively practicable after the Effective
Time, employees of the Bank who continue as employees of the Acquiror and
First Savings shall be entitled to participate on an equitable basis in the
same benefit plans, programs or policies as are generally available to
Acquiror's and First Savings' employees of similar rank and status. For
purposes of eligibility and vesting (but not for the accrual of benefits)
under such plans, programs or policies, employees of the Bank who continue as
Acquiror's or First Savings' employees will be credited for prior years of
service with the Bank, and there shall be no exclusion from coverage under the
Acquiror's or First Savings' health insurance plan as a result of pre-existing
conditions to the extent such conditions were covered under any health
insurance plan maintained by the Bank prior to the Effective Time.
(b) Prior to the Effective Time, the Bank shall terminate the
Bank's 401(k) Profit Sharing Plan (the "401(k) Plan") by proper action of the
Board of Directors of the Bank; provided, however, that, in the event such
action is not taken prior to the Effective Time, the 401(k) Plan shall
thereafter be merged with and into a comparable plan of the Acquiror. In
connection with such termination, the 401(k) Plan shall be submitted to the
Internal Revenue Service for a determination regarding its qualification and,
upon receipt of a favorable determination, distributions shall be made to
participants in accordance with ERISA and the Internal Revenue Code. Neither
the Acquiror nor First Savings shall have any obligation to make contributions
to the 401(k) Plan after the Effective Time.
(c) The Acquiror agrees to honor the terms of the Bank employment
agreement with Greg Charlton set forth in Schedule 4.26; provided, however, in
no event shall the Acquiror or First Savings be obligated to make any payment
or provide any benefits whatsoever to any officer or employee of the Bank
under any circumstance in which such payments or benefits, whether due under
such agreements or otherwise, is or will not be deductible by the Acquiror or
First Savings by reason of Section 280G of the Internal Revenue Code.
(d) If any employee of the Bank who is not a party to an
employment, severance or similar agreement with the Bank is terminated by the
Acquiror or First Savings without cause within three months after the
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Effective Time (as determined in the reasonable discretion of the Board of
Directors of the Acquiror), such employee shall be paid a severance payment by
the Acquiror or First Savings based on the Bank's current severance policy,
not to exceed a maximum of eight weeks compensation.
5.4 Reasonable Efforts to Close. Subject to the terms and
conditions of this Merger Agreement, Acquiror agrees to use all its best
efforts and to take, or to cause to be taken, all actions, and to do, or to
cause to be done, all things necessary, proper, or advisable under applicable
laws and regulations to consummate and make effective, with reasonable
promptness after the date of this Merger Agreement, the transactions
contemplated by this Merger Agreement, including, without limitation, using
reasonable efforts to lift or rescind any injunction or restraining or other
order adversely affecting the ability of the Parties to consummate the
transaction contemplated by this Merger Agreement; provided, however, that
such efforts do not impose unreasonable expense or obligations on Acquiror.
Acquiror shall use, and shall cause each of its Subsidiaries to use, its best
efforts to obtain consents of all third parties and Regulatory Authorities
necessary or desirable for the consummation of each of the transactions
contemplated by this Merger Agreement.
5.5 Indemnification and Insurance.
(a) Acquiror agrees that all rights to indemnification or
exculpation now existing in favor of the directors and officers of the Bank as
provided in their respective articles, bylaws, indemnification agreements or
other written agreements in effect as of the date hereof with respect to
matters occurring prior to the Closing Date shall survive the Merger and shall
continue in full force and effect. If Acquiror or any of its successors or
assigns (i) shall consolidate with or merge into any other corporation or
entity and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) shall transfer all or substantially all
of its properties and assets to any individual, corporation or other entity,
then, in each such case, Acquiror shall use its best efforts to cause the
successor and assigns of Acquiror to assume the obligations set forth in this
Section 5.5.
(b) Acquiror shall use its best efforts to cause the persons
serving as officers and directors of the Bank immediately prior to the Closing
Date to be covered for a period of two years after the Closing Date by
Acquiror's present carrier with respect to acts or omissions occurring prior
to the Closing Date which were committed by such officers and directors in
their capacity as such; provided, however, that Acquiror shall not be
obligated to obligated to incur additional costs for such insurance to the
extent such premiums exceed 150% of the premiums paid as of the date hereof by
the Bank for such insurance.
ARTICLE 6
COVENANTS OF THE BANK
6.1 Shareholders Meeting. The Bank shall call a special meeting of
the holders of Bank Common Stock to be held as soon as practicable for
purposes of voting upon the transactions contemplated hereby and the Bank
shall use its best efforts to solicit and obtain the votes of the holders of
Bank Common Stock in favor of the transactions contemplated hereby and,
subject to the exercise of its fiduciary duties, the Board of Directors of the
Bank shall recommend approval of such transactions by such holders. In
connection with the Shareholders Meeting, the Acquiror and the Bank shall
cooperate in the preparation of the Proxy Statement and, with the approval of
each of the Acquiror and the Bank, which approvals will not be unreasonably
withheld, the Proxy Statement will be mailed to the shareholders of the Bank.
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6.2 Conduct of Business -- Affirmative Covenants. Unless the prior
written consent of Acquiror shall have been obtained, and, except as otherwise
contemplated herein:
(a) The Bank shall:
(i) Operate its business only in the usual, regular, and
ordinary course;
(ii) Preserve intact its business organizations and
assets and to maintain its rights and franchises;
(iii) Take no action, unless otherwise required by law,
rules or regulation, that would (A) materially adversely affect the ability of
any of them or Acquiror to obtain any necessary approvals of Regulatory
Authorities required to consummate the transactions contemplated by this
Merger Agreement, or (B) adversely affect the ability of such Party to perform
its covenants and agreements under this Merger Agreement;
(iv) Except as they may terminate in accordance with
their terms, keep in full force and effect, and not default in any of their
obligations under, all material contracts;
(v) Keep in full force and effect insurance coverage
with responsible insurance carriers which is reasonably adequate in coverage
and amount for companies the size of the Bank and for the businesses and
properties owned by each and in which each is engaged, to the extent that such
insurance is reasonably available;
(vi) Use its best efforts to retain the Bank's present
customer base and to facilitate the retention of such customers after the
Effective Time;
(vii) Maintain, renew, keep in full force and effect, and
preserve its business organization and material rights and franchises, permits
and licenses, and to use its best efforts to maintain positive relations with
its present employees so that such employees will continue to perform
effectively and will be available to the Bank or Acquiror and Acquiror's
Subsidiaries at and after the Effective Time, and to use its best efforts to
maintain its existing, or substantially equivalent, credit arrangements with
banks and other financial institutions and to assure the continuance of the
Bank's customer relationships; and
(b) The Bank agrees to use its best efforts to assist Acquiror
and First Savings in obtaining the Government Approvals necessary to complete
the transactions contemplated hereby, and the Bank shall provide to Acquiror
and First Savings or to the appropriate governmental authorities all
information reasonably required to be submitted in connection with obtaining
such approvals;
(c) The Bank, at its own cost and expense, shall use its best
efforts to secure all consents and releases, if any, of third parties
necessary or desirable for the consummation of the transactions contemplated
by this Merger Agreement and shall comply with all applicable laws,
regulations and rulings in connection with this Merger Agreement and the
consummation of the transactions contemplated hereby;
(d) At all times to and including, and as of, the Closing, the
Bank shall inform Acquiror and First Savings in writing of any and all facts
necessary to amend or supplement the representations and warranties made
herein and the Schedules attached hereto as necessary so that the
representations and warranties and information provided in the schedules
remain true and correct in all respects; provided, however, that any such
updates to Schedules shall be required prior to the Closing only with respect
to matters which represent material changes to the Schedules and the
information contained therein; and provided further, that before such
amendment, supplement or update may be deemed to be a part of this Merger
Agreement, Acquiror and First Savings shall have agreed in writing to each
amendment, supplement or update to the Schedules made subsequent to the date
of this Merger Agreement as an amendment to this Merger Agreement;
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(e) At all times to and including, and as of, the Closing, the
Bank shall give such further assistance to Acquiror and First Savings and
shall execute, acknowledge and deliver all such documents and instruments as
Acquiror and First Savings may reasonably request and take such further action
as may be reasonably necessary or appropriate effectively to consummate the
transactions contemplated by this Merger Agreement;
(f) Between the date of this Merger Agreement and the Closing
Date, the Bank shall afford Acquiror and First Savings and its authorized
agents and representatives reasonable access during normal business hours to
the properties, operations, books, records, contracts, documents, loan files
and other information of, or relating to Bank. The Bank shall provide
reasonable assistance to Acquiror and First Savings in its investigation of
matters relating to the Bank;
(g) The Bank has taken or will take all steps necessary to
exempt the transactions contemplated by this Merger Agreement from any
applicable state takeover or similar law or takeover or similar provision in
the charter documents or bylaws of the Bank, including without limitation any
provisions of the Articles of Incorporation of the Bank restricting the
ownership or acquisition of the Bank's capital stock or imposing any "fair
price" or supermajority director or stockholder vote requirements;
(h) Subject to the terms and conditions of this Merger
Agreement, the Bank agrees to use all reasonable efforts and to take, or to
cause to be taken, all actions, and to do, or to cause to be done, all things
necessary, proper, or advisable under applicable laws and regulations to
consummate and make effective, with reasonable promptness after the date of
this Merger Agreement, the transactions contemplated by this Merger Agreement,
including, without limitation, using reasonable efforts to lift or rescind any
injunction or restraining or other order adversely affecting the ability of
the Parties to consummate the transaction contemplated by this Merger
Agreement; provided, however, that such efforts do not impose unreasonable
expense or obligations on the Bank.
(i) At the request of Acquiror and First Savings, the Bank
shall hire an outside consultant reasonably acceptable to Acquiror and First
Savings to undertake to determine as soon as reasonably practicable but in any
event prior to Closing whether or not there are any underground storage tanks,
asbestos, ureaformaldehyde, polychlorinated biphenyls, solid wastes or hazard
substances, as defined in the Model Toxics Control Act, CERCLA or any other
applicable Environmental Laws, present at or on any of the "other real estate
owned" of the Bank (excluding any one- to four-family residential property
with appraised value less than $150,000) or at or on any of the branch or
office facilities owned by the Bank. Such investigation shall be conducted in
a manner satisfactory to Acquiror and First Savings, and the results of such
investigation shall be set forth in a written report delivered to Acquiror and
First Savings prior to Closing. The scope and detail of such report shall be
reasonably satisfactory to Acquiror and First Savings. It is understood that
the investigation shall be a "Phase I."
6.3 Conduct of Business -- Negative Covenants. From the date of
this Merger Agreement until the earlier of the Effective Time or the
termination of this Merger Agreement, the Bank covenants and agrees it will
neither do, nor agree or commit to do, any of the following without the prior
written consent of the chief executive officer, president, or chief financial
officer of Acquiror:
(a) Except as expressly contemplated by this Merger Agreement
or the Plan of Merger, amend its Articles of Incorporation or Bylaws; or
(b) Impose, or suffer the imposition, on any share of capital
stock held by it of any lien, charge, or encumbrance, or permit any such lien,
charge, or encumbrance to exist; or
(c) (i) Repurchase, redeem, or otherwise acquire or exchange,
directly or indirectly, any shares of its capital stock or other equity
securities or any securities or instruments convertible into any shares of its
capital stock, or any rights or options to acquire any shares of its capital
stock or other equity securities except as expressly permitted by this Merger
Agreement or the Plan of Merger; or (ii) split or otherwise subdivide its
capital stock;
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or (iii) recapitalize in any way; or (iv) declare a stock dividend on the Bank
Common Stock; or (v) pay or declare a cash dividend or make or declare any
other type of distribution on the Bank Common Stock; or
(d) Except as expressly permitted by the Merger Agreement,
acquire direct or indirect control over any corporation, association, firm,
organization or other entity, other than in connection with (i) mergers,
acquisitions, or other transactions approved in writing by Acquiror, (ii)
internal reorganizations or consolidations involving existing Subsidiaries,
(iii) foreclosures in the ordinary course of business and not knowingly
exposing it to liability by reason of Hazardous Substances, (iv) acquisitions
of control in its fiduciary capacity, or (v) the creation of new subsidiaries
organized to conduct or continue activities otherwise permitted by this Merger
Agreement; or
(e) Except as expressly permitted by this Merger Agreement or
the Plan of Merger, to (i) issue, sell, agree to sell, or otherwise dispose of
or otherwise permit to become outstanding any additional shares of Bank Common
Stock or any other capital stock of the Bank, or any stock appreciation
rights, or any option, warrant, conversion, call, scrip, or other right to
acquire any such stock, or any security convertible into any such stock,
unless any such shares of such stock are directly sold or otherwise directly
transferred to the Bank, or (ii) sell, agree to sell, or otherwise dispose of
any substantial part of the assets or earning power of the Bank; or (iii)
sell, agree to sell, or otherwise dispose of any asset of the Bank other than
in the ordinary course of business for reasonable and adequate consideration;
or (iv) buy, agree to buy or otherwise acquire a substantial part of the
assets or earning power of any other Person or entity; or
(f) Incur, or permit any Bank Subsidiary to incur, any
additional debt obligation or other obligation for borrowed money except in
the ordinary course of the business of the Bank consistent with past
practices; or
(g) Grant any increase in compensation or benefits to any of
its employees or officers; pay any bonus; enter into any severance agreements
with any of its officers or employees; grant any increase in fees or other
increases in compensation or other benefits to any director of the Bank; or
effect any change in retirement benefits for any class of its employees or
officers, unless such change is required by applicable law; or
(h) Amend any existing employment contract between it and any
person (unless such amendment is required by law); enter into or amend any
indemnification agreement with any person; or enter into any new employment
contract with any person that the Bank (or its successors) does not have the
unconditional right to terminate without liability (other than liability for
services already rendered), at any time on or after the Effective Time; or
(i) Adopt any new employee benefit plan or terminate or make
any material change in or to any existing employee benefit plan other than any
change that is required by law or that, in the opinion of counsel, is
necessary or advisable to maintain the tax-qualified status of any such plan
(except for a termination resulting from Acquiror's decision not to continue
any such plan); or
(j) Enter into any new service contracts, purchase or sale
agreements or lease agreements that are material to the Bank; or
(k) Except for capital expenditures required for Year 2000
compliance, which amounts will not exceed $60,000, make any capital
expenditure except for ordinary purchases, repairs, renewals or replacements
in an amount less than $10,000 per individual expenditure and $25,000 in the
aggregate; or
(l) Other than in the ordinary course of business consistent
with past practice, sell, transfer, mortgage, encumber or otherwise dispose of
any of its properties, leases or assets to any person, or cancel, release or
assign any indebtedness of any person, except pursuant to contracts or
agreements in force at the date of this Merger Agreement; or
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(m) Other than as contemplated by this Merger Agreement, enter
into, renew or terminate any material contract or agreement or make any change
in any of its material leases or contracts; or
(n) Settle any claim, action or proceeding involving any
liability of the Bank for money damages in excess of $10,000 or agree in
connection with any such settlement to material restrictions upon the
operations of the Bank; or
(o) Change its method of accounting in effect at December 31,
1997, except as required by changes in GAAP as concurred in by the Bank's
independent auditors or as required by regulatory accounting principles or
regulatory requirements; or
(p) Enter into any new activities or lines of business, or
cease to conduct any material activities or lines of business that it conducts
on the date hereof, or conduct any material business activity not consistent
with past practice; or
(q) Except in the ordinary course of business, make,
renegotiate, renew, increase, extend or purchase any loan, lease (credit
equivalent), advance, credit enhancement or other extension of credit, or make
any commitment in respect of any of the foregoing; or
(r) Enter into, renew or purchase any Derivatives Contracts;
or
(s) Purchase any investment securities other than in the
ordinary course of business consistent with past practices; or
(t) Enter into any transactions other than in the ordinary
course of business; or
(u) Grant or commit to grant any new extension of credit to
any officer, director or holder of 2% or more of the outstanding the Bank
Common Stock, or to any corporation, partnership, trust or other entity
controlled by any such person, if such extension of credit, together with all
other credits then outstanding to the same borrower and all affiliated persons
of such borrower, would exceed the legal lending limit of the Bank; or
(v) Agree in writing or otherwise to take any of the foregoing
actions or engage in any activity, enter into any transaction or take or omit
to take any other act which would make any of the representations and
warranties in Article 4 of this Merger Agreement untrue or incorrect in any
material respect if made anew after engaging in such activity, entering into
such transaction, or taking or omitting such other act.
6.4 Conduct of Business -- Certain Actions.
(a) The Bank shall not, and shall use its best efforts to
ensure that its directors, officers, employees, and advisors do not, directly
or indirectly, institute, solicit, or knowingly encourage (including by way of
furnishing any information not legally required to be furnished) any inquiry,
discussion, or proposal, or participate in any discussions or negotiations
with, or, except for actions reasonably considered by the Board of Directors
of the Bank based upon the written advice of outside legal counsel to be
required in order to fulfill its fiduciary obligations, provide any
confidential or non-public information to or negotiate with, any corporation,
partnership, person or other entity or group (other than to Acquiror or any
Acquiror Subsidiary) concerning any "Acquisition Proposal" (as defined below).
The Bank shall notify Acquiror and First Savings immediately if any
Acquisition Proposal has been or should hereafter be received by the Bank,
such notice to contain, at a minimum, the identity of such persons, and,
subject to disclosure being consistent with the fiduciary obligations of the
Bank's Board of Directors, a copy of any written inquiry, the terms of any
proposal or inquiry, any information requested or discussions sought to be
initiated, and the status of any reports, negotiations or expressions of
interest. For purposes of this Section, "Acquisition Proposal" means any
tender offer, agreement, understanding or other proposal of any nature
pursuant to which any corporation, partnership, person or
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other entity or group, other than Acquiror, First Savings, would directly or
indirectly (i) acquire or participate in a merger, share exchange,
consolidation or any other business combination involving the Bank; (ii)
acquire the right to vote ten percent (10%) or more of the outstanding Bank
Common Stock; (iii) acquire a significant portion of the assets or earning
power of the Bank; or (iv) acquire in excess of ten percent (10%) of the
outstanding Bank Common Stock.
(b) The Bank shall immediately terminate all negotiations or
discussions concerning any Acquisition Proposal with parties other than
Acquiror and First Savings and enforce the terms of all confidentiality
agreements with such other parties.
6.5 Accruals and Reserves. At the request of Acquiror and First
Savings, the Bank shall establish such additional accruals and reserves as may
be necessary to conform the Bank's accounting and credit loss reserve
practices and methods to those of Acquiror and First Savings; provided,
however, that the Bank shall not be required to take such action prior to the
receipt of all Government Approvals as contemplated by Section 7.3(b).
6.6 Access; Information. Upon reasonable notice and consistent
with regulatory requirements, the Bank shall afford Acquiror and First Savings
and each of their officers, employees, counsel, accountants and other
authorized representatives, access, during normal business hours throughout
the period up to the Effective Date, to all of the properties, books,
contracts, commitments and records of the Bank and, during such period, the
Bank shall permit Acquiror and First Savings to review at the Bank's location
(i) a copy of each material report, schedule and other document filed by the
Bank with any Regulatory Authority and (ii) all other information concerning
the business, properties and personnel of the Bank as Acquiror and First
Savings may reasonably request, provided that no investigation pursuant to
this Section 6.6 shall affect or be deemed to modify or waive any
representation or warranty made by the Bank in this Merger Agreement or the
conditions to the obligations of the Bank to consummate the transactions
contemplated by this Merger Agreement.
ARTICLE 7
CONDITIONS TO CLOSING
7.1 Conditions to the Obligations of the Bank. Unless waived in
writing by the Bank, the obligations of the Bank to consummate the transaction
contemplated by this Merger Agreement are subject to the satisfaction at or
prior to the Closing Date of the following conditions:
(a) Performance. Each of the material acts and undertakings
of Acquiror and First Savings to be performed at or prior to the Closing Date
pursuant to this Merger Agreement shall have been duly performed;
(b) Representations and Warranties. The representations and
warranties of Acquiror and First Savings contained in Article 3 of this Merger
Agreement shall be true and correct, in all material respects, on and as of
the Effective Time with the same effect as though made on and as of the
Effective Time;
(c) Documents. In addition to the other deliveries of
Acquiror and First Savings described elsewhere in this Merger Agreement, the
Bank shall have received the following documents and instruments:
(i) a certificate signed by the Secretary or an assistant
secretary of Acquiror and First Savings dated as of the Closing Date
certifying that:
(A) Acquiror's and First Savings' Boards of
Directors have duly adopted resolutions (copies of which shall be
attached to such certificate) approving the substantive terms of
this Merger Agreement (including the Plan of Merger) and authorizing
the consummation
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of the transactions contemplated by this Merger Agreement and
certifying that such resolutions have not been amended or modified
and remain in full force and effect;
(B) each person executing this Merger Agreement on
behalf of Acquiror and First Savings is an officer of Acquiror and
First Savings holding the office or offices specified therein, with
full power and authority to execute this Merger Agreement and any
and all other documents in connection with the Merger, and that the
signature of each person set forth on such certificate is his or her
genuine signature; and
(C) the charter documents of Acquiror and First
Savings attached to such certificate remain in full force and
effect.
(ii) a certificate signed by a duly authorized officer of
Acquiror and First Savings stating that the conditions set forth in Section
7.1(a) and Section 7.1(b) of this Merger Agreement have been fulfilled;
(d) Opinion of Acquiror's and First Savings' Counsel. The
Bank shall have been furnished with an opinion of counsel to Acquiror and
First Savings, dated as of the Closing Date, addressed to and in form and
substance satisfactory to the Bank, to the effect that:
(i) Acquiror is a corporation duly incorporated and
validly existing under the laws of the State of Washington.
(ii) First Savings is a bank duly organized, validly
existing and in good standing under the laws of the State of Washington.
(iii) The execution and delivery of the Merger Agreement
by Acquiror, and the consummation by Acquiror and First Savings of the
transactions provided for therein, have been duly authorized by all requisite
corporate action on the part of Acquiror and First Savings.
(iv) The Merger Agreement has been duly executed and
delivered by Acquiror and First Savings and is a valid and binding obligation
of Acquiror and First Savings enforceable in accordance with its terms, except
as the enforceability thereof may be limited by (1) bankruptcy, insolvency,
moratorium, reorganization, receivership, conservatorship or similar laws
relating to or affecting the enforcement of creditors' rights generally and
(2) general principles of equity, whether applied by a court of law or equity.
(v) Except for the filing of articles of merger with the
Secretary of State for the State of Washington and the Secretary of State for
the State of Idaho, no consent or approval under any statutory law or
regulation applicable to Acquiror or First Savings, other than such consents
and approvals as have been obtained, is required for Acquiror and First
Savings to consummate the transactions provided for in the Merger Agreement.
Such opinion may (i) expressly rely as to matters of fact upon certificates
furnished by appropriate officers of Acquiror and First Savings or appropriate
government officials; (ii) in the case of matters of law governed by the laws
of the states in which they are not licensed, reasonably rely upon the
opinions of legal counsel duly licensed in such states and may be limited, in
any event, to Federal Law and the laws of the State of Washington; and (iii)
incorporate, be guided by, and be interpreted in accordance with, the Legal
Opinion Accord of the ABA Section of Business Law (1991).
7.2 Conditions to the Obligations of Acquiror and First Savings.
Unless waived in writing by Acquiror and First Savings, the obligation of
Acquiror and First Savings to consummate the transactions contemplated by this
Merger Agreement is subject to the satisfaction at or prior to the Closing
Date of the following conditions:
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(a) Performance. Each of the material acts and undertakings
of the Bank to be performed at or before the Closing Date pursuant to this
Merger Agreement shall have been duly performed;
(b) Representations and Warranties. The representations and
warranties of the Bank contained in Article 4 of this Merger Agreement shall
be true and correct, in all material respects, on and as of the Closing Date
with the same effect as though made on and as of the Closing Date;
(c) Documents. In addition to the documents described
elsewhere in this Merger Agreement, Acquiror and First Savings shall have
received the following documents and instruments:
(i) a certificate signed by the Secretary or an assistant
secretary of the Bank dated as of the Closing Date certifying that:
(A) The Bank's Board of Directors and shareholders
have duly adopted resolutions (copies of which shall be attached to
such certificate) approving the substantive terms of this Merger
Agreement (including the Plan of Merger) and authorizing the
consummation of the transactions contemplated by this Merger
Agreement and certifying that such resolutions have not been amended
or modified and remain in full force and effect;
(B) each person executing this Merger Agreement on
behalf of the Bank, is an officer of the Bank, holding the office or
offices specified therein, with full power and authority to execute
this Merger Agreement and any and all other documents in connection
with the Merger, and that the signature of each person set forth on
such certificate is his or her genuine signature; and
(C) the charter documents of the Bank attached to
such certificate remain in full force and effect; and
(ii) a certificate signed by the President, Chief
Executive Officer or an Executive Vice President of the Bank stating that the
conditions set forth in Section 7.2(a), Section 7.2(b) and Section 7.2(f) this
Merger Agreement have been satisfied.
(d) Destruction of Property. Between the date of this Merger
Agreement and the Closing Date, there shall have been no damage to or
destruction of real property, improvements or personal property of the Bank
which materially reduces the market value of such property, and no zoning or
other order, limitation or restriction imposed against the same that might
have a material adverse impact upon the operations, business or prospects of
the Bank taken as a whole; provided, however, that the availability of
insurance coverage shall be taken into account in determining whether there
has been such a material adverse impact or material reduction in market value.
In the event of such damage, destruction, order, limitation or restriction,
Acquiror and First Savings may elect either (i) to close the contemplated
transactions in accordance with the terms of this Merger Agreement or (ii) to
terminate this Merger Agreement without penalty;
(e) Inspections Permitted. Between the date of this Merger
Agreement and the Closing Date, the Bank shall have afforded Acquiror and
First Savings and their authorized agents and representatives reasonable
access during normal business hours to the properties, operations, books,
records, contracts, documents, loan files and other information of or relating
to the Bank. The Bank shall have caused all Bank personnel to provide
reasonable assistance to Acquiror and First Savings in its investigation of
matters relating to the Bank;
(f) No Material Adverse Change. No material adverse change in
the business, property, assets (including loan portfolios), liabilities
(whether absolute, contingent or otherwise), prospects, operations, liquidity,
income, or condition (financial or otherwise) of the Bank shall have occurred
since the date of this Merger Agreement.
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In the event of such a material adverse change with respect to the Bank,
Acquiror and First Savings may elect either (i) to close the contemplated
transactions in accordance with the terms of this Merger Agreement or (ii) to
terminate this Merger Agreement without penalty;
(g) Opinion of the Bank's Counsel. Acquiror and First Savings
shall have been furnished with an opinion of legal counsel to the Bank, dated
the Closing Date, addressed to and in form and substance satisfactory to
Acquiror and First Savings, to the effect that:
(i) The Bank is a bank duly incorporated, validly
existing and in good standing under the laws of the State of Idaho.
(ii) The Bank is an "insured depository institution" as
defined in the Federal Deposit Insurance Act and applicable regulations
thereunder.
(iii) The execution and delivery of the Merger Agreement
by the Bank, and the consummation by the Bank of the transactions provided for
therein, have been duly authorized by all requisite corporate action on the
part of the Bank.
(iv) The Merger Agreement has been duly executed and
delivered by the Bank and is a valid and binding obligation of the Bank
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by (1) bankruptcy, insolvency, moratorium, reorganization,
receivership, conservatorship or similar laws relating to or affecting the
enforcement of creditors' rights generally or the rights of creditors of
depository institutions whose accounts are insured by the FDIC and (2) general
principles of equity, whether applied by a court of law or equity.
(v) The execution, delivery and performance of the
Merger Agreement by the Bank did not, and the consummation of the transactions
contemplated thereby by the Bank does not and will not (i) violate any
statutory law or regulation applicable to the Bank or any judgment, decree or
order that specifically names the Bank, which violation is reasonably likely,
individually or in the aggregate, to have a material adverse effect on the
financial condition and results of operations of the Bank; (ii) constitute a
breach of or default under any agreement or other arrangement that is listed
on Schedule 4.26 to the Merger Agreement, which breach or default is
reasonably likely, individually or in the aggregate, to have a material
adverse effect on the financial condition or results of operations of the
Bank; (iii) violate the Articles of Incorporation, Charter or Bylaws of the
Bank; or (iv) require any consent or approval under any such law or regulation
or under any such judgment, decree or order, or the consent or approval of any
other party to any such agreement or other arrangement, other than such
consents and approvals as have been obtained.
(vi) To the best of such counsel's knowledge: (i) there
is no litigation or proceeding against the Bank pending before any court or
governmental agency which, individually or in the aggregate, is reasonably
likely to have a material adverse effect on the financial condition or results
of operations of the Bank, or which alleges claims under any fair lending law
or other law relating to discrimination, including, without limitation, the
Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment
Act and the Home Mortgage Disclosure Act, and no such litigation or proceeding
has been threatened; (ii) neither the Bank nor any of its or their properties,
officers, directors, or controlling persons is a party to or is subject to any
order, decree, agreement, memorandum of understanding or similar arrangement
with, or a commitment letter or similar submission to, any Regulatory
Authority regarding the Bank; and (iii) the Bank has not been advised by any
such Regulatory Authority that such authority 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.
(vii) The Merger has been duly approved by the Bank
Shareholders.
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Such opinion may (i) expressly rely as to matters of fact upon certificates
furnished by appropriate officers of the Bank or appropriate government
officials; (ii) in the case of matters of law governed by the laws of the
states in which they are not licensed, reasonably rely upon the opinions of
legal counsel duly licensed in such states and may be limited, in any event,
to Federal Law and the law of the State of Idaho and (iii) incorporate, be
guided by, and be interpreted in accordance with, the Legal Opinion Accord of
the ABA Section of Business Law (1991);
(h) Other Business Combinations, Etc. Other than as
contemplated hereunder, subsequent to the date of this Merger Agreement, the
Bank shall not have entered into any agreement, letter of intent,
understanding or other arrangement pursuant to which the Bank would merge;
consolidate with; effect a business combination with; sell any substantial
part of the Bank's assets; acquire a significant part of the shares or assets
of any other Person or entity (financial or otherwise); adopt any "poison
pill" or other type of anti-takeover arrangement, any shareholder rights
provision, any "golden parachute" or similar program which would have the
effect of materially decreasing the value of the Bank or the benefits of
acquiring the Bank Common Stock;
(i) Maintenance of Certain Covenants, Etc. At the time of
Closing (i) the Bank shall not have issued or repurchased from the date hereof
any additional equity or debt securities, or any rights to purchase or
repurchase such securities (therefore, there shall be not more than 101,000
shares of Bank Common Stock validly issued and outstanding at the Effective
Time); and (ii) from September 30, 1998, there shall have been no
extraordinary sale of assets.
(j) Dissenting Shares. Bank Shareholders holding or
controlling no more than five percent (5%) of the shares of the Bank Common
Stock issued and outstanding immediately prior to the Effective Time shall
have perfected and maintained in perfected status their dissenters' rights in
accordance with the Idaho Code;
(k) Accruals and Reserves. The Bank shall have established
the accruals and reserves described in Section 6.5;
(l) Employment Agreements. The Employment Agreement between
First Savings' and Greg Charlton substantially in the form attached as Exhibit
C shall have been duly executed and delivered by all parties to such
agreements; and
(m) Major Shareholders and Directors. Simultaneous with the
execution and delivery of this Merger Agreement, each of the Major
Shareholders and directors of the Bank shall have executed and delivered to
Acquiror a Voting Agreement in the form attached hereto as Exhibit B.
7.3 Conditions to Obligations of All Parties. The obligation of
each party to effect the transactions contemplated hereby shall be subject to
the fulfillment, at or prior to the Closing, of the following conditions:
(a) No Pending or Threatened Claims. That no claim, action,
suit, investigation or other proceeding shall be pending or threatened before
any court or governmental agency which presents a substantial risk of the
restraint or prohibition of the transactions contemplated by this Merger
Agreement or the obtaining of material damages or other relief in connection
therewith;
(b) Government Approvals and Acquiescence Obtained. The
Parties hereto shall have received all applicable Government Approvals for the
consummation of the transactions contemplated herein and all waiting periods
incidental to such approvals or notices given shall have expired; and
(c) Shareholder Vote. The Bank Shareholders shall have
approved the transactions contemplated hereby by the requisite vote.
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ARTICLE 8
TERMINATION
8.1 Termination. This Merger Agreement and the Plan of Merger may
be terminated at any time prior to the Closing, as follows:
(a) By mutual consent in writing of the Parties;
(b) By Acquiror and First Savings, should the Bank fail to
conduct its business pursuant to the covenants made in Article 6;
(c) By Acquiror or the Bank in the event the Closing shall not
have occurred by June 30, 1999, unless the failure of the Closing to occur
shall be due to the failure of the Party seeking to terminate this Merger
Agreement to perform its obligations hereunder in a timely manner. If
Acquiror and First Savings shall have filed any and all applications to obtain
the requisite Government Approvals within forty-five (45) days of the date
hereof, and if the Closing shall not have occurred solely because of a delay
caused by a government regulatory agency or authority in its review of the
application before it, then the Bank shall, upon Acquiror's and First Savings'
written request, extend the Closing Date a reasonable number of days until
such time as all Government Approvals have been obtained and any stipulated
waiting periods have expired.
(d) By either Acquiror or the Bank, upon written notice to the
other Party, upon denial of any Governmental Approval necessary for the
consummation of the Merger (or should such approval be conditioned upon a
substantial deviation from the transactions contemplated); provided, however,
that either Acquiror or the Bank may, upon written notice to the other, extend
the term of this Merger Agreement for only one sixty (60) day period to
prosecute diligently and overturn such denial, provided that such denial has
been appealed within ten (10) business days of the receipt thereof;
(e) By Acquiror in the event the conditions set forth in
Section 7.2 or Section 7.3 are not satisfied in all material respects as of
the Closing Date, or by the Bank if the conditions set forth in Section 7.1 or
Section 7.3 are not satisfied in all material respects as of the Closing Date,
and such failure has not been waived prior to the Closing;
(f) By Acquiror in the event that there shall have been, in
Acquiror's opinion, a material adverse change in the business, property,
assets (including loan portfolios), liabilities (whether absolute, accrued,
contingent or otherwise), prospects, operations, liquidity, income, condition
(financial or otherwise) or net worth of the Bank or upon the occurrence of
any event or circumstance which may have the effect of limiting or restricting
Acquiror's voting power or other rights normally enjoyed by the registered
holders of the Bank Common Stock which are the subject of this transaction;
(g) By Acquiror or the Bank in the event that there shall have
been a material breach of any obligation of the other Party hereunder and such
breach shall not have been remedied within thirty (30) days after receipt by
the breaching Party of written notice from the other Party specifying the
nature of such breach and requesting that it be remedied;
(h) By Acquiror should the Bank or any Bank Subsidiary enter
into any letter of intent or agreement with a view to being acquired by or
effecting a business combination with any other Person; or any agreement to
merge, to consolidate, to combine or to sell a material portion of its assets
or to be acquired in any other manner by any other Person or to acquire a
material amount of assets or a material equity position in any other Person,
whether financial or otherwise; or
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(i) By Acquiror should the Bank enter into any formal
agreement, letter of understanding, supervisory agreement, cease and desist
order, consent agreement, memorandum or other similar arrangement with any
bank regulatory agency.
(j) By Acquiror in the event that (i) any situation, event,
circumstance or other matter shall come to the attention of Acquiror during
the course of the Acquiror Due Diligence Review which Acquiror shall, in a
good faith exercise of its reasonable discretion, believe (A) to be
inconsistent in any material respect with any of the representations and
warranties of the Bank, (B) to be of such significance as to have a material
adverse effect on the financial condition, prospects, results of operations or
business of the Bank, or (C) is a material deviation from the Bank Financial
Statements, and (ii) Acquiror notifies the Bank of such matters within five
(5) business days after the end of the Acquiror Due Diligence Review Period
and such matters are not capable of being cured or have not been cured within
thirty (30) days after written notice thereof to the Bank. For purposes of
this Section, (i) "Acquiror Due Diligence Review" shall mean a review by
Acquiror of the Bank's operations, business affairs, prospects and financial
condition, including without limitation, those matters which are the subject
of the representations and warranties of the Bank and (ii) "Acquiror Due
Diligence Review Period" shall mean a fifteen (15) day period beginning on the
date of this Merger Agreement. Notwithstanding anything in this Section
contained or implied to the contrary, the Acquiror Due Diligence Review shall
not limit, restrict or preclude Acquiror, at any time or from time to time,
from conducting such reviews or from exercising any rights available to it
hereunder as a result of the existence or occurrence prior to the Acquiror Due
Diligence Review Period of any event or condition which was not detected in
the Acquiror Due Diligence Review by Acquiror and which constitutes a breach
of any representation or warranty of the Bank under this Merger Agreement.
If a Party should elect to terminate this Merger Agreement pursuant to
subsections (b), (c), (d), (e), (f), (g), (h), (i) or (j) of this Section 8.1,
it shall give notice to the other Party, in writing, of its election in the
manner prescribed in Section 9.1 ("Notices") of this Merger Agreement.
8.2 Effect of Termination. In the event that this Merger Agreement
should be terminated pursuant to Section 8.1 hereof, all further obligations
of the Parties under this Merger Agreement shall terminate without further
liability of any Party to another; provided, however, that a termination under
Section 8.1 hereof shall not relieve any Party of any liability for a breach
of this Merger Agreement or for any misstatement or misrepresentation made
hereunder prior to such termination, or be deemed to constitute a waiver of
any available remedy for any such breach, misstatement or misrepresentation.
8.3 Termination Fee. The parties hereby acknowledge that, in
negotiating and executing this Merger Agreement and in taking the steps
necessary or appropriate to effect the transaction contemplated hereby,
Acquiror and First Savings have incurred and will incur direct and indirect
monetary and other costs (including without limitation attorneys' fees and
costs of Acquiror's and First Savings' employee and management time) and will
forego discussions with respect to other potential acquisitions.
(a) To compensate Acquiror and First Savings for such costs and to
induce it to forego initiating discussions regarding other acquisitions, if
(i) this Merger Agreement terminates because the Bank does not use its best
efforts to consummate the transactions contemplated by this Merger Agreement
in accordance with the terms of this Merger Agreement (unless a condition set
forth in Section 7.1 is not satisfied and such nonsatisfaction has not been
the result of the failure of the Bank to use its best efforts to consummate
this Merger Agreement in accordance to the terms of this Merger Agreement);
(ii) the Bank terminates this Merger Agreement for any reason other than the
grounds for termination set out in Sections 8.1(a), 8.1(c), 8.1(d), 8.1(e) or
8.1(g) or (iii) the Bank Shareholders do not approve the Merger, then the Bank
shall be obligated to pay Acquiror on demand (and in no event more than three
days after such demand) in immediately available funds Two Hundred Fifty
Thousand and No/100 Dollars ($250,000.00). It is further understood and
agreed that the fee payable under this Section shall be due and owing even
though the event or condition which caused the fee to be payable was the
result (in part or in whole) of the directors of the Bank complying with their
fiduciary duties.
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(b) To compensate Seaport for such costs and to induce it to forego
initiating discussions regarding other acquisitions, if (i) this Merger
Agreement terminates because Acquiror does not use its best efforts to
consummate the transactions contemplated by this Merger Agreement in
accordance with the terms of this Merger Agreement (unless a condition set
forth in Section 7.2 is not satisfied and such nonsatisfaction has not been
the result of the failure of Acquiror to use its best efforts to consummate
this Merger Agreement in accordance to the terms of this Agreement); or (ii)
Acquiror terminates this Merger Agreement for any reason other than the
grounds for termination set out in Sections 8.1, then Acquiror shall be
obligated to pay Seaport on demand (and in no event more than three days after
such demand) in immediately available funds Two Hundred Fifty Thousand and
No/100 Dollars ($250,000.00).
8.4 Acquiror Fee. The Bank hereby agrees to pay Acquiror and First
Savings on demand (and in no event more than three days after such demand) in
immediately available funds $500,000 (the "Acquiror Fee") if within 18 months
after the date hereof the Merger has not been completed and there occurs any
of the events set forth in subparagraphs (a), (b) or (c) below.
(a) Any person other than Acquiror or First Savings or an affiliate
of Acquiror or First Savings acquires beneficial ownership of 25% or more of
the then-outstanding Bank Common Stock;
(b) The Bank, without having received Acquiror's and First Savings'
prior written consent, enters into an agreement to engage in an Acquisition
Transaction (as defined below) with any person (the term "person" for purposes
of this section having the meaning assigned thereto in Sections 3(a)(9) and
13(d)(3) of the 1934 Act and the rules and regulations thereunder) other than
Acquiror and First Savings or any of their respective Subsidiaries, or the
Bank's Board of Directors recommends that the Bank Shareholders approve or
accept any Acquisition Transaction with any person other than Acquiror and
First Savings or any of their respective Subsidiaries. For purposes of this
section, "Acquisition Transaction" shall mean (a) a merger or consolidation,
or any similar transaction, involving the Bank, (b) a purchase, lease or other
acquisition of all or substantially all of the assets of the Bank, or (c) a
purchase or other acquisition (including by way of merger, consolidation,
share exchange or otherwise) of securities representing 10% or more of the
voting power of the Bank; or
(c) A bona fide proposal is made by a third party to the Bank to
engage in an Acquisition Transaction and after such proposal is made any of
the following events occurs: the Bank willfully breaches this Merger
Agreement and such breach entitles Acquiror and First Savings to terminate
this Merger Agreement; the Bank Shareholders do not approve this Merger
Agreement at the Shareholders Meeting; the Shareholders Meeting is not held or
is canceled prior to termination of this Merger Agreement for reasons other
than the fault of Acquiror and First Savings; or the Bank's Board of Directors
modifies in a manner adverse to Acquiror and First Savings its recommendation
with respect to this Merger Agreement.
Notwithstanding the foregoing, the Bank shall not be obligated to pay to
Acquiror and First Savings the Acquiror Fee if, prior to the occurrence of any
of the events specified in 8.4(a), (b), or (c), the Bank validly terminates
this Merger Agreement pursuant to Section 8.1(a) or 8.1(g) (but only in the
event that Acquiror or First Savings materially breaches a representation,
warranty or covenant contained herein and, as a result thereof, the Bank
exercises its right to terminate this Merger Agreement under Section 8.1(g) at
a time when Acquiror and First Savings were not entitled to terminate this
Merger Agreement under Section 8.1(c), 8.1(g)) or Section 8.1(d). The parties
further agree that this Section 8.4 is without prejudice to any other rights
that the parties hereto may have for any failure to perform this Merger
Agreement.
ARTICLE 9
GENERAL PROVISIONS
9.1 Notices. Any notice, request, demand and other communication
which either Party hereto may desire or may be required hereunder to give
shall be in writing and shall be deemed to be duly given if delivered
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personally or mailed by certified or registered mail (postage prepaid, return
receipt requested), air courier or facsimile transmission, addressed or
transmitted to such other Party as follows:
If to the Bank: Seaport Citizens' Bank
639 Bryden Avenue
Lewiston, Idaho 83501
Fax: (208) 743-3355
Attn: Thomas Perko, Chairman and
Chief Executive Officer
With a copy to: Paine, Hamblen, Coffin, Brooke & Miller LLP
717 West Sprague Avenue, Suite 1200
Spokane, Washington 99201
Fax: (509) 838-0007
Attn: Lawrence R. Small, Esq.
If to Acquiror and
First Savings: First Washington Bancorp, Inc.
10 South First Avenue
Walla Walla, Washington 99362
Fax: (509) 527-3633
Attn: Gary Sirmon, President and
Chief Executive Officer
With a copy to: Breyer & Associates PC
1100 New York Avenue, N.W.
Suite 700 East
Washington, D.C. 20005
Fax: (202) 737-7979
Attn: John F. Breyer, Jr., Esq.
or to such other address as any Party hereto may hereafter designate to the
other Parties in writing. Notice shall be deemed to have been given on the
date reflected in the proof or evidence of delivery, or if none, on the date
actually received.
9.2 Assignability and Parties in Interest. This Merger Agreement
shall not be assignable by any of the Parties hereto; provided, however, that
Acquiror and First Savings may assign, set over and transfer all, or any part
of their rights and obligations under this Merger Agreement to any one or more
of their present or future Affiliates. This Merger Agreement shall inure to
the benefit of, and be binding only upon the Parties hereto and their
respective successors and permitted assigns and no other Persons.
9.3 Governing Law. This Merger Agreement shall be governed by,
and construed and enforced in accordance with, the internal laws, and not the
laws pertaining to choice or conflicts of laws, of the State of Washington,
unless and to the extent that federal law controls. Any dispute arising
between the Parties in connection with the transactions which are the subject
of this Merger Agreement shall be heard in a court of competent jurisdiction
located in Walla Walla County, Washington.
9.4 Counterparts. This Merger Agreement may be executed
simultaneously in one or more counterparts (any of which may be facsimile
copies), each of which shall be deemed an original, but all of which shall
constitute but one and the same instrument.
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9.5 Best Efforts. The Bank, Acquiror and First Savings each
agrees to use its best efforts to complete the transactions contemplated by
this Merger Agreement; provided, however, that the use of best efforts by
Acquiror and First Savings shall not obligate Acquiror and First Savings to
obtain or to provide the Bank additional capital in an amount, to divest any
branch, or to meet any other condition which may be imposed by any Regulatory
Authority as a condition to approval which Acquiror and First Savings shall
deem, in good faith, to be unreasonable in the circumstances.
9.6 Publicity. The Parties agree that press releases and other
public announcements to be made by any of them with respect to the
transactions contemplated hereby shall be subject to mutual agreement.
9.7 Entire Agreement. This Merger Agreement, together with the
Plan of Merger which is attached as Exhibit A hereto, the Schedules, Exhibits
and certificates required to be delivered hereunder and any amendments or
addenda hereafter executed and delivered in accordance with Section 9.9 hereof
constitute the entire agreement of the Parties hereto pertaining to the
transaction contemplated hereby and supersede all prior written and oral (and
all contemporaneous oral) agreements and understandings of the Parties hereto
concerning the subject matter hereof. The schedules, annexes, exhibits and
certificates attached hereto or furnished pursuant to this Merger Agreement
are hereby incorporated as integral parts of this Merger Agreement. Except as
provided herein, by specific language and not by mere implication, this Merger
Agreement is not intended to confer upon any other person not a Party to this
Merger Agreement any rights or remedies hereunder.
9.8 Severability. If any portion or provision of this Merger
Agreement should be determined by a court of competent jurisdiction to be
invalid, illegal or unenforceable in any jurisdiction, such portion or
provision shall be ineffective as to that jurisdiction to the extent of such
invalidity, illegality or unenforceability, without affecting in any way the
validity or enforceability of the remaining portions or provisions hereof in
such jurisdiction or rendering that or any other portions or provisions of
this Merger Agreement invalid, illegal or unenforceable in any other
jurisdiction.
9.9 Modifications, Amendments and Waivers. At any time prior to
the Closing or termination of this Merger Agreement, the Parties may, solely
by written agreement executed by their duly authorized officers:
(a) extend the time for the performance of any of the
obligations or other acts of the other Party hereto;
(b) waive any inaccuracies in the representations and
warranties made by the other Party contained in this Merger Agreement or in
the Schedules or Exhibits hereto or any other document delivered pursuant to
this Merger Agreement;
(c) waive compliance with any of the covenants or agreements
of the other Party contained in this Merger Agreement; and
(d) amend or add to any provision of this Merger Agreement or
the Plan of Merger; provided, however, that no provision of this Merger
Agreement may be amended or added to except by an agreement in writing signed
by the Parties hereto or their respective successors in interest and expressly
stating that it is an amendment to this Merger Agreement.
9.10 Interpretation. The headings contained in this Merger
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Merger Agreement.
9.11 Payment of Expenses. Except as set forth herein, Acquiror,
First Savings and the Bank shall each pay its own fees and expenses
(including, without limitation, legal fees and expenses) incurred by it in
connection with the transactions contemplated hereunder.
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9.12 Equitable Remedies. The Parties hereto agree that, in the
event of a breach of this Merger Agreement by the Bank, Acquiror and First
Savings will be without an adequate remedy at law by reason of the unique
nature of the Bank. In recognition thereof, in addition to (and not in lieu
of) any remedies at law which may be available to Acquiror, Acquiror shall be
entitled, at its sole discretion, either (i) to obtain equitable relief,
including the remedies of specific performance and injunction, in the event of
a breach of this Merger Agreement by the Bank or (ii) if applicable, to
receive the payment described in Section 8.3 hereof. The Bank covenants that
it shall not contend in any such proceeding that Acquiror and First Savings
are not entitled to a decree of specific performance by reason of having an
adequate remedy at law. Notwithstanding the foregoing, if the Bank accepts an
Acquisition Proposal from a third party and Acquiror and First Savings receive
an opinion of counsel from the Bank that the failure of the Board of Directors
of the Bank to accept such Acquisition Proposal would constitute a breach of
such directors' fiduciary duty to the shareholders of the Bank, Acquiror and
First Savings shall not be entitled to the equitable remedy of specific
performance. No attempt on the part of Acquiror and First Savings to obtain
such equitable relief shall be deemed to constitute an election of remedies by
Acquiror which would preclude Acquiror from obtaining any remedies at law to
which they would otherwise be entitled.
9.13 Attorneys' Fees. If any Party hereto shall bring an action at
law or in equity to enforce its rights under this Merger Agreement (including
an action based upon a misrepresentation or the breach of any warranty,
covenant, agreement or obligation contained herein), the prevailing Party in
such action shall be entitled to recover from the other Party its reasonable
costs and expenses necessarily incurred in connection with such action
(including fees, disbursements and expenses of attorneys and costs of
investigation).
9.14 No Waiver. No failure, delay or omission of or by any Party in
exercising any right, power or remedy upon any breach or default of any other
Party shall impair any such rights, powers or remedies of the Party not in
breach or default, nor shall it be construed to be a waiver of any such right,
power or remedy, or an acquiescence in any similar breach or default; nor
shall any waiver of any single breach or default be deemed a waiver of any
other breach or default theretofore or thereafter occurring. Any waiver,
permit, consent or approval of any kind or character on the part of any Party
of any provisions of this Merger Agreement must be in writing and must be
executed by the Parties to this Merger Agreement and shall be effective only
to the extent specifically set forth in such writing.
9.15 Remedies Cumulative. All remedies provided in this Merger
Agreement, by law, equity or otherwise, shall be cumulative and not
alternative.
9.16 Non-Survival of Representations and Warranties. No
representations and warranties made by the Parties hereto or in any instrument
or document furnished in connection herewith shall survive the Closing. This
Section 9.16 shall not apply to covenants and agreements which by their terms
are intended to be performed after the Closing or the termination of this
Merger Agreement. Nothing in this Section 9.16 shall limit the Bank's or
Acquiror's and First Savings' rights or remedies for misrepresentations,
breaches of this Merger Agreement or any other improper action or inaction by
the other Party hereto prior to its termination.
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IN WITNESS WHEREOF, each of the Parties hereto has duly executed and
delivered this Merger Agreement or has caused this Merger Agreement to be
executed and delivered in its name and on its behalf by its representative
thereunto duly authorized, all as of the date first written above.
SEAPORT CITIZENS' BANK
By:
--------------------------------------
Thomas Perko
Its: Chairman and Chief Executive Officer
ATTEST:
- -------------------------------------
Greg Charlton
President and Chief Operating Officer
FIRST WASHINGTON BANCORP, INC.
By:
--------------------------------------
Gary Sirmon
Its: President and Chief Executive Officer
ATTEST:
- -------------------------------------
D. Allan Roth, Secretary
FIRST SAVINGS BANK OF WASHINGTON
By:
--------------------------------------
Gary Sirmon
Its: President and Chief Executive Officer
ATTEST:
- -------------------------------------
D. Allan Roth, Secretary
42
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Exhibit 99
<PAGE>
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Monday December 28, 6:31 pm Eastern Time
Company Press Release
First Washington Bancorp Signs Definitive Agreement to Acquire Seaport
Citizens Bank
WALLA WALLA, Wash.--(BUSINESS WIRE)--Dec. 28, 1998--First Washington Bancorp
(Nasdaq: FWWB - news) today announced it has signed a definitive agreement to
acquire Seaport Citizens Bank, of Lewiston, Idaho, in an all cash transaction
valued at approximately $10.1 million. This acquisition, which has been
approved by the Boards of Directors of each company, is subject to, among
other contingencies, approval by regulators and Seaport Citizens Bank
shareholders. The transaction is expected to close during the second quarter
of the 1999 calendar year. Seaport Citizens Bank is a state chartered
commercial bank that is not publicly traded. It provides financial services in
the Lewis and Clark Valley through two full service branches in Lewiston. The
transaction valuation represents approximately 2.5 times book value and 16
times earnings for the twelve months ended September 30, 1998 for Seaport
Citizens Bank.
''Using growth assumptions in line with Seaport Citizen Bank's historical
trends, and making moderate provision for operating cost savings, we expect
this acquisition to modestly add to FWWB's net income and earnings per share
during the first year following acquisition and to provide further earnings
accretion in subsequent years,'' said Gary , President and CEO of FWWB. This
will be the fourth commercial bank acquisition for FWWB in the past two and a
half years.
''First Washington currently operates a branch in Cardston, Washington, which
is adjacent to Lewiston on the Idaho/Eastern Washington border. This
acquisition allows us to better serve the Lewiston-Cardston area,
complementing our existing operation,'' noted Sirmon. ''We plan to operate
these three branches as Seaport Citizens Bank, a division of First Savings
Bank. Since there will be no consolidation of branches, we anticipate only
positive results for Seaport Citizens' employees and customers. With this
acquisition, First Savings will develop a presence in northern Idaho, where we
expect solid economic growth. We believe that Seaport's dedication to
delivering premium financial services, along with the new division retaining
its name and maintaining its strong local identity, is consistent with our
management philosophy.''
Founded in 1979, Seaport Citizens Bank is a profitable and successful
community bank with approximately $45.0 million in assets, $41.5 million in
deposits, $27.0 million in loans and $4.1 million in shareholders' equity at
November 30, 1998. The Bank specializes in commercial and residential
financing, serving small to medium sized businesses, professionals and
individuals.
''Given First Washington's operating philosophy and management style, we
believe our two organizations will form an effective combination. We will now
be able to offer a broader range of services to our customers including
Internet banking, increased lending limits, an expanded ATM network and new
expanded consumer lending programs,'' added Greg Charlton, President and COO
of Seaport. ''Both banks have long histories of community involvement and I
am confident our employees and customers will feel very comfortable in joining
First Savings.''
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Earlier this year FWWB agreed to acquire Whatcom State Bancorp, Inc., the
holding company for Whatcom State Bank in Bellingham, Washington, for
approximately $12.5 million in FWWB stock. This acquisition, which has
received regulatory and shareholder approval, is expected to close in early
January. On April 1, 1998 First Washington acquired Towne Bank. Towne Bank
operates five full service branches in the Seattle metropolitan area, in
Woodinville, Redmond, Bellevue, Renton and Bothell.
First Washington Bancorp has grown significantly since its stock conversion in
1995, through both internal expansion and external acquisitions. The Bancorp
had total assets of $1.44 billion, shareholders' equity of $172 million and
book value of $16.07 per share at September 30, 1998. Commercial lending,
which includes business, commercial real estate, construction, and
agricultural loans, is a primary focus of all units of FWWB. FWWB consists of
First Savings Bank, founded in 1890, Inland Empire Bank, founded in 1948, and
Towne Bank, founded in 1991. These community- oriented institutions operate a
combined total of 26 branch offices and five loan offices in Washington and
Oregon. The Whatcom State Bank acquisition will add five branch offices and
another loan office to these totals. First Savings Bank's lending business has
been primarily residential mortgage loans for the purchase of homes and home
construction, although it is becoming increasingly more involved in
non-mortgage commercial and agricultural lending. Inland Empire Bank
specializes in agricultural, commercial and consumer lending in northeastern
Oregon. Towne Bank primarily focuses on being a premier community business
bank in King and Snohomish counties in western Washington. On Monday,
December 28, 1998, the Bancorp's stock closed the trading day at $23.50 per
share.
Statements concerning future developments or events, concerning expectations
for growth and market forecasts, and any other guidance on future periods,
constitute forward-looking statements, which are subject to a number of risks
and uncertainties that might cause actual results to differ materially from
stated objectives. These factors include but are not limited to: the effect
of interest rate changes; competition in the financial services market for
both deposits and loans; FWWB's ability to efficiently incorporate
acquisitions into its operations; FWWB's ability to successfully address Y2K
issues during the assimilation process; the ability of FWWB and its
subsidiaries to increase its customer base: and regional and general economic
conditions.
Contact:
First Washington Bancorp
Gary Sirmon, President and CEO
509/527-3636
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