As filed with the Securities and Exchange Commission on March 27, 2009.
Registration No. 333-158078
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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PRE EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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GLACIER BANCORP, INC.
(Exact name of registrant as specified in its charter)
MONTANA 6022 81-0519541
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer identification no.)
incorporation or organization) classification code number)
49 COMMONS LOOP, KALISPELL, MONTANA 59901 (406) 756-4200
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
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MICHAEL J. BLODNICK
President and Chief Executive Officer
49 Commons Loop
Kalispell, Montana 59901
(406) 756-4200
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies of communications to:
STEPHEN M. KLEIN DAVID CHISHOLM
WILLIAM E. BARTHOLDT Christian Samson Jones & Chisholm
Graham & Dunn PC 310 West Spruce
Pier 70, 2801 Alaskan Way, Suite 300 Missoula, Montana 59807
Seattle, Washington 98121-1128 Telephone: (406) 721-7772
Telephone: (206) 340-9648 Facsimile: (406) 721-7776
Facsimile: (206) 340-9599
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE PUBLIC:
The date of mailing of the enclosed proxy statement/prospectus to
shareholders of First Company.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of "large accelerated filer," "accelerated filer" and
"smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer [X] Accelerated Filer [ ]
Non-Accelerated Filer [ ] Smaller reporting Company [ ]
(Do not check if a smaller reporting company)
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT WILL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT WILL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT WILL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SECTION 8(A), MAY DETERMINE.
================================================================================
PROXY STATEMENT PROSPECTUS OF
OF FIRST COMPANY GLACIER BANCORP, INC.
MERGER PROPOSED - YOUR VOTE IS VERY IMPORTANT
Dear First Company Shareholders:
The boards of directors of First Company and Glacier Bancorp, Inc.
have agreed on a merger of First Company with and into Glacier Bancorp. When the
merger occurs, First National Bank & Trust, First Company's subsidiary, will
continue to operate as First National Bank & Trust with the same management, but
as a wholly owned subsidiary of Glacier.
Under the terms of the Plan and Agreement of Merger, dated February 6,
2009, Glacier will pay to First Company shareholders, a total of 100,000 shares
of Glacier common stock, plus a cash payment equal to $450,000, with each
portion of the merger consideration being subject to adjustment as described in
the attached proxy statement/prospectus.
Each outstanding share of First Company common stock will be exchanged
for a fixed number of shares of Glacier common stock and a fixed amount of cash.
The total cash portion of the merger consideration will be increased or reduced,
as the case may be, on a dollar for dollar basis by the amount, if any, that
First Company's "Closing Capital" is more or less than $15,250,000. Assuming for
purposes of illustration only that the cash payment made by Glacier is $450,000
and that certain outstanding First Company shares are redeemed prior to closing
as contemplated by the merger agreement, you will receive $_____ in a
combination of $55.57 in cash and 12.349 shares of Glacier common stock for each
of your First Company shares. This valuation is based on the $_____closing price
of Glacier common stock on _________, 2009. First Company shareholders will own
approximately 0.16% of Glacier's outstanding common stock following the merger.
In addition to the cash and stock payments from Glacier, all shareholders owning
First Company shares at the effective time of the merger will receive membership
interests in a limited liability company formed to hold certain loans, loan
participations, and other assets which Glacier required to be removed prior to
the closing of the merger. The most recent transaction in First Company stock,
an issuance of previously unissued shares, occurred July 29, 2008, at an
issuance price of $1,855.67 per share.
Your board of directors believes the terms of the merger are fair and
in the best interest of First Company and its shareholders. In reaching this
decision, the board considered numerous factors as described in the attached
proxy statement/prospectus, including the receipt of a fairness opinion from
Shesunoff Consulting.
We will hold a special shareholders' meeting to vote on the merger
proposal. THE FIRST COMPANY SPECIAL SHAREHOLDERS' MEETING WILL BE HELD ON APRIL
30, 2009, AT 10:00 A.M. LOCAL TIME, AT 245 EAST 1ST STREET, POWELL, WYOMING.
Whether or not you plan to attend the special meeting, please take the time to
vote by completing and mailing the enclosed form of proxy.
On behalf of the First Company board of directors, I recommend that
you vote FOR approval of the merger.
----------------------------------------
Richard S. Nelson
Chairman
NEITHER THE FEDERAL DEPOSIT INSURANCE CORPORATION, SECURITIES AND EXCHANGE
COMMISSION, NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THE SECURITIES TO
BE ISSUED BY GLACIER OR DETERMINED IF THIS PROXY STATEMENT/PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------
THE SHARES OF GLACIER COMMON STOCK TO BE ISSUED IN THE MERGER ARE NOT SAVINGS OR
DEPOSIT ACCOUNTS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL DEPOSIT INSURANCE FUND OR ANY
OTHER GOVERNMENTAL AGENCY. SUCH SHARES ARE NOT GUARANTEED BY GLACIER OR FIRST
COMPANY AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
----------
This proxy statement/prospectus is dated March __, 2009, and is first being
mailed to First Company's shareholders on March __, 2009.
FIRST COMPANY
245 EAST 1ST STREET
POWELL, WYOMING 82435
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 30, 2009
TO THE SHAREHOLDERS OF FIRST COMPANY:
A special meeting of shareholders of First Company will be held on
April 30, 2009, at 10:00 a.m. local time, at 245 East 1st Street, Powell,
Wyoming. The special meeting is for the following purposes:
1. MERGER AGREEMENT. To consider and vote on a proposal to approve the Plan
and Agreement of Merger, dated as of February 6, 2009, among Glacier
Bancorp, Inc., First Company and First National Bank & Trust, under the
terms of which First Company will merge with and into Glacier, as more
fully described in the accompanying proxy statement/prospectus. The merger
agreement is attached as APPENDIX A to the proxy statement/prospectus that
accompanies this notice.
2. OTHER MATTERS. If necessary, to consider and act upon a proposal to adjourn
the meeting to permit us to solicit additional proxies in the event that we
do not have sufficient votes to approve the merger as of the date of the
meeting.
Holders of record of First Company common stock at the close of
business on March 26, 2009 the record date for the special meeting, are
entitled to notice of, and to vote at, the special meeting or any adjournments
or postponements of it. The affirmative vote of the holders of at least a
majority of the shares of First Company's outstanding common stock is required
for approval of the merger agreement. As of March 26, 2009, there were 8,357
shares of First Company common stock outstanding and entitled to vote at the
special meeting.
First Company shareholders have the right to dissent from the merger
and obtain payment of the fair value of their First Company shares under
applicable provisions of Wyoming law. A copy of the provisions regarding
dissenters' rights is attached as APPENDIX B to the accompanying proxy
statement/prospectus. For details of your dissenters' rights and how to exercise
them, please see the discussion under "The Merger - Dissenters' Rights of
Appraisal."
YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the special
meeting, please complete, sign, date and promptly return the accompanying proxy
using the enclosed envelope. If for any reason you should desire to revoke your
proxy, you may do so at any time before it is voted at the meeting. IF YOU DO
NOT VOTE YOUR SHARES, IT WILL HAVE THE SAME EFFECT AS VOTING AGAINST THE MERGER.
THE BOARD OF DIRECTORS OF FIRST COMPANY HAS DETERMINED THAT THE MERGER
AGREEMENT IS FAIR TO AND IN THE BEST INTERESTS OF FIRST COMPANY AND ITS
SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE MERGER
AGREEMENT.
PLEASE DO NOT SEND ANY CERTIFICATES FOR YOUR STOCK AT THIS TIME. YOU
WILL RECEIVE INSTRUCTIONS ON HOW TO EXCHANGE YOUR CERTIFICATES SOON AFTER THE
MERGER IS CONSUMMATED.
By Order of the Board of Directors,
Linda Kolpitcke, Secretary
Powell, Wyoming
March __, 2009
REFERENCES TO ADDITIONAL INFORMATION
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND
FINANCIAL INFORMATION ABOUT GLACIER FROM DOCUMENTS THAT ARE NOT INCLUDED IN OR
DELIVERED WITH THIS DOCUMENT.
You can obtain documents incorporated by reference into this proxy
statement/prospectus by requesting them in writing or by telephone from Glacier
at the following address:
Glacier Bancorp, Inc.
49 Commons Loop
Kalispell, Montana 59901
ATTN: LeeAnn Wardinsky, Corporate Secretary
Telephone: (406) 751-4703
You will not be charged for the documents that you request. If you
would like to request documents, please do so by April 23, 2009 in order to
receive them before the First Company special shareholders' meeting.
See "Where You Can Find More Information About Glacier" at page 56.
TABLE OF CONTENTS
PAGE
----
QUESTIONS AND ANSWERS ABOUT THIS DOCUMENT AND THE MERGER................................................... 1
SUMMARY ................................................................................................... 5
RISK FACTORS............................................................................................... 12
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS....................................................... 17
SELECTED HISTORICAL FINANCIAL INFORMATION OF GLACIER....................................................... 18
COMPARATIVE STOCK PRICE AND DIVIDEND INFORMATION........................................................... 19
FIRST COMPANY SPECIAL SHAREHOLDERS' MEETING................................................................ 20
BACKGROUND OF AND REASONS FOR THE MERGER................................................................... 22
THE MERGER................................................................................................. 32
INFORMATION CONCERNING FIRST COMPANY....................................................................... 48
DESCRIPTION OF GLACIER'S CAPITAL STOCK..................................................................... 51
COMPARISON OF CERTAIN RIGHTS OF HOLDERS OF GLACIER AND FIRST COMPANY COMMON STOCK.......................... 52
CERTAIN LEGAL MATTERS...................................................................................... 55
EXPERTS ................................................................................................... 55
WHERE YOU CAN FIND MORE INFORMATION ABOUT GLACIER.......................................................... 56
Appendix A - Plan and Agreement of Merger
Appendix B -Wyoming Statutes 17-16-1302 through 17-16-1331, Regarding Dissenter's Rights
Appendix C - Opinion of Sheshunoff & Co. Investment Banking, Financial Advisor to First Company
i
QUESTIONS AND ANSWERS ABOUT THIS DOCUMENT AND THE MERGER
WHY AM I RECEIVING THESE MATERIALS?
We are sending you these materials to help you decide how to vote your
shares of First Company with respect to the proposed merger with Glacier. The
merger cannot be completed unless First Company receives the affirmative vote of
the holders of at least a majority of the shares of First Company' outstanding
common stock. First Company is holding a special meeting of shareholders to vote
on the proposals necessary to complete the merger. Information about the special
meeting is contained in this proxy statement of First Company and prospectus of
Glacier.
WHAT IS THE PURPOSE OF THIS PROXY STATEMENT/PROSPECTUS?
This document serves as both a proxy statement of First Company and a
prospectus of Glacier. As a proxy statement, it is being provided to you by
First Company because the board of directors of First Company is soliciting your
proxy to vote to approve the proposed merger of First Company with and into
Glacier. After the merger, First National Bank & Trust, the subsidiary of First
Company, will be wholly owned by Glacier. As a prospectus, it is being provided
to you by Glacier because Glacier is offering you shares of its common stock as
part of the consideration for your First Company shares.
WHAT WILL FIRST COMPANY SHAREHOLDERS RECEIVE IN THE MERGER?
Under the terms of the Plan and Agreement of Merger, Glacier will
issue shares of its common stock and pay cash in exchange for all outstanding
shares of First Company common stock. Glacier will issue a total of 100,000
shares of common stock, and will pay $450,000 in cash, for all of the shares of
First Company.
The cash portion of the amount to be paid by Glacier will be subject
to adjustment depending on First Company's capital at closing. If the "First
Company Closing Capital," as defined in the merger agreement, is less than
$15,250,000, then the cash portion will be reduced on a dollar-for-dollar basis.
If the First Company Closing Capital exceeds $15,250,000, then the cash portion
will be increased on a dollar for dollar basis.
The portion of the merger consideration consisting of Glacier common
stock is fixed at 100,000 shares, although the number of shares may be adjusted
in certain circumstances based on whether Glacier common stock is trading either
higher or lower than specified levels immediately prior to the closing of the
merger, in order to avoid the termination of the merger agreement. See "The
Merger -- Termination of the Merger Agreement."
WHAT WILL I RECEIVE IN THE MERGER?
The merger consideration to be received by shareholders of First
Company is a pro rata interest in a pool of merger consideration consisting of
100,000 shares and $450,000 in cash, the cash portion being subject to
adjustment as described above. As of the date of this proxy
statement/prospectus, there were 8,357 shares outstanding. Assuming that certain
shares held by directors (50 shares), shares held by First Company's ESOP (129
shares), and shares held by certain non-principal shareholders (80 shares) are
redeemed prior to the closing of the merger as contemplated by the merger
agreement, First Company would have 8,098 shares of common stock outstanding at
the closing of the merger.
Assuming for purposes of illustration only that (i) there is no
increase or reduction of the cash portion of the merger consideration, (ii) that
certain shares by First Company are redeemed prior to closing as contemplated by
the merger agreement, and (iii) the Glacier common stock is valued at $______
(the closing price for Glacier common stock on __________, 2009), each share of
First Company common stock would receive a value equal to $______, consisting of
$55.57 in cash and 12.349 shares of Glacier common stock.
In addition to the cash and common stock merger consideration from
Glacier, all shareholders holding First Company shares at the effective time of
the merger will receive membership interests in a limited liability
1
company formed to hold certain loans, loan participations, and other assets
which Glacier required to be removed prior to the closing of the merger. See
"The Merger -- Pre-Closing Actions to be Taken by Fist Company and/or First
National Bank."
WHAT ARE THE TAX CONSEQUENCES OF THE MERGER TO ME?
Glacier and First Company expect to report the merger as a tax-free
reorganization for United States federal income tax purposes. In a tax-free
reorganization, a shareholder who exchanges its shares of common stock in an
acquired company for shares of common stock in an acquiring company, plus cash,
must generally recognize gain (but not loss) on the exchange in an amount equal
to the lesser of (1) the amount of gain realized (i.e., the excess of the sum of
the fair market value of the shares of acquiring company common stock and cash
received pursuant to the merger, excluding any cash received in lieu of
fractional shares, over the shareholder's adjusted tax basis in its shares of
acquired company common stock surrendered pursuant to the merger), or (2) the
amount of cash (excluding any cash received in lieu of fractional shares)
received pursuant to the merger. Current law is unclear, however, on whether the
foregoing rule applies if the acquired company is an S corporation, such as
First Company. If its does not, then the cash received in the exchange may be
treated in whole or in part as a nontaxable distribution to the shareholders.
If the IRS disagrees with treatment of the merger as a tax
free-reorganization, then the foregoing description of the tax consequences of
the merger will not apply. Instead, First Company would be deemed to have sold
all of its assets to Glacier in a taxable transaction and distributing the
Glacier common stock and cash to its shareholders in a complete liquidation.
Each First Company shareholder would recognize its share of the gain or loss
recognized by First Company on the deemed sale of all of its assets. The gain or
loss would be either capital or ordinary, depending on the character of each of
the assets deemed sold. A shareholder's adjusted tax basis in its shares of
First Company common stock would be increased or decreased by the share of gain
or loss recognized by the shareholder. The shareholder would not recognize any
further gain or loss on the deemed receipt of Glacier common stock and cash from
First Company in complete liquidation, except to the extent the sum of the fair
market value of the Glacier common stock and cash received by the shareholder is
greater or less than the shareholder's adjusted tax basis in its shares of First
Company common stock. If the shareholder has held the shares of First Company
common stock as a capital asset for more than one year, then the gain or loss
will be long-term capital gain or loss.
We urge you to consult your tax adviser to fully understand the tax
consequences of the merger to you. Tax matters are very complicated and in many
cases tax consequences of the merger will depend on your particular facts and
circumstances.
WILL THE SHARES OF GLACIER THAT I RECEIVE IN THE MERGER BE FREELY TRANSFERABLE?
The Glacier common stock issued in the merger will be transferable
free of restrictions under federal and state securities laws.
WHEN AND WHERE WILL THE SPECIAL MEETING TAKE PLACE?
First Company will hold a special meeting of its shareholders on April
30, 2009, at 10:00 a.m., at 245 East 1st Street, Powell, Wyoming.
HOW DO I VOTE?
To vote, please indicate on the enclosed proxy card how you want to
vote and then sign, date, and mail your proxy card in the enclosed envelope AS
SOON AS POSSIBLE so that your shares will be represented at the special meeting.
2
WHAT VOTE IS REQUIRED TO APPROVE THE MERGER AGREEMENT?
Approval of the merger agreement requires the affirmative vote of the
holders of at least a majority of the shares of First Company's outstanding
common stock. As described in this proxy statement, the principal shareholders
of the First Company have agreed to vote the shares they own in favor of the
merger agreement. As such shareholders own approximately 97.5% of outstanding
First Company stock, shareholder approval is assured.
WHAT HAPPENS IF I RETURN MY PROXY BUT DO NOT INDICATE HOW TO VOTE MY SHARES?
If you sign and return your proxy card, but do not provide
instructions on how to vote your shares, your shares will be voted "FOR"
approval of the merger agreement.
CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?
Yes. You may change your vote at any time before your proxy is voted
at the special meeting. If your shares are held in your own name, you may change
your vote as follows:
- You may send a written notice stating that you would like to
revoke your proxy and provide new instructions on how to vote;
- You may complete and submit a later-dated proxy card; or
- You may attend the meeting and vote in person. If you intend to
vote in person and your shares are held by a broker, you should
contact your broker for instructions.
If you choose either the first or second method above, you must submit
your notice of revocation or your new proxy card to First Company's Secretary
prior to the vote.
WHO MAY VOTE AT THE MEETING?
The board of directors of First Company has set March 26, 2009, as
the record date for the meeting. If you were the owner of First Company common
stock at the close of business on March 26, 2009, you may vote at the
meeting.
WHEN WILL THE MERGER OCCUR?
We presently expect to complete the merger during the second quarter
of 2009. The merger will occur after approval of the shareholders of First
Company is obtained and after the merger has received regulatory approval and
the other conditions to the merger are satisfied or waived. Glacier and First
Company are working toward completing the merger as quickly as possible. If the
merger does not occur for any reason by July 31, 2009, either Glacier or First
Company may terminate the merger agreement.
HOW SOON AFTER THE MERGER IS COMPLETED CAN I EXPECT TO RECEIVE MY CASH OR
GLACIER COMMON STOCK?
Glacier will work with its exchange agent to distribute consideration
payable in the merger as promptly as practicable following the completion of the
merger.
WHAT DO I NEED TO DO NOW?
We encourage you to read this proxy statement/prospectus in its
entirety. Important information is presented in greater detail elsewhere in this
document and documents governing the merger are attached as appendices to this
proxy statement/prospectus. In addition, much of the business and financial
information about Glacier that may be important to you is incorporated by
reference into this document from documents separately filed by Glacier with the
Securities and Exchange Commission ("SEC"). This means that important disclosure
obligations to you are satisfied by referring you to one or more documents
separately filed with the SEC.
3
Following review of this proxy statement/prospectus, PLEASE COMPLETE,
SIGN, AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE AS
SOON AS POSSIBLE so that your shares can be voted at First Company's special
meeting of shareholders.
WHAT IF I CHOOSE NOT TO READ THE INCORPORATED DOCUMENTS?
Information contained in a document that is incorporated by reference
is part of this proxy statement/prospectus, unless it is superseded by
information contained directly in this proxy statement/prospectus or in
documents filed with the SEC after the date of this proxy statement/prospectus.
Information that is incorporated from another document is considered to have
been disclosed to you WHETHER OR NOT YOU CHOOSE TO READ THE DOCUMENT.
WHAT RISKS SHOULD I CONSIDER?
You should review carefully our discussion of "Risk Factors." You
should also review the factors considered by the First Company board of
directors in approving the merger agreement. See "Background of and Reasons for
the Merger."
SHOULD I SEND IN MY COMMON STOCK CERTIFICATES NOW?
No. Please do not send your stock certificates with your proxy card.
You will receive written instructions from the exchange agent after the merger
is completed on how to exchange your common stock certificates for the merger
consideration.
WHAT DO I DO IF I DO NOT AGREE WITH THE MERGER? DO I HAVE APPRAISAL OR
DISSENTER'S RIGHTS?
If you are a First Company shareholder and you do not agree with the
merger, vote against the merger, and take certain other actions required by
Wyoming law, you will have dissenter's rights under W.S. 17-16-1302 through
17-16-1331. Exercise of these rights will result in the purchase of your shares
at "fair value," as determined in accordance with Wyoming law. Please read the
section entitled "The Merger --Dissenter's Rights of Appraisal" for additional
information.
WHO CAN HELP ANSWER MY QUESTIONS?
If you have questions about the merger, the meeting, or your proxy, or
if you need additional copies of this document or a proxy card, you should
contact:
FIRST COMPANY
245 East 1st Street
Powell, Wyoming 82435
ATTN: Ty Nelson
Telephone No.: (307) 754-2201
This proxy statement/prospectus does not cover any resale of the
securities to be received by shareholders of First Company upon consummation of
the proposed merger, and no person is authorized to make any use of this proxy
statement/prospectus in connection with any such resale.
THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS MARCH __, 2009.
4
SUMMARY
This summary, together with the preceding section entitled "Questions
and Answers about this Document and the Merger," highlights selected information
about this proxy statement/prospectus. We urge you to read carefully the entire
proxy statement/prospectus and any other documents to which we refer to fully
understand the merger. The merger agreement is attached as APPENDIX A to this
proxy statement/prospectus.
INFORMATION ABOUT GLACIER AND FIRST COMPANY
GLACIER BANCORP, INC.
49 Commons Loop
Kalispell, Montana 59901
(406) 756-4200
Glacier, headquartered in Kalispell, Montana, is a Montana
corporation, initially incorporated in Delaware in 1990, and subsequently
incorporated under Montana law in 2004. Glacier is a regional multi-bank holding
company providing commercial banking services from more than 98 banking offices
throughout Montana, Idaho, Wyoming, Utah, Colorado and Washington. Glacier
offers a wide range of banking products and services, including transaction and
savings deposits, commercial, consumer and real estate loans, mortgage
origination services, and retail brokerage services. Glacier serves individuals,
small to medium-sized businesses, community organizations and public entities.
Glacier is the parent holding company of ten wholly-owned subsidiary
commercial banks: Glacier Bank of Kalispell, First Security Bank of Missoula,
Valley Bank of Helena, Big Sky Western Bank of Bozeman, Western Security Bank of
Billings, First Bank of Montana, in Lewistown, all located in Montana; Mountain
West Bank, located in Idaho with two branches in Utah and three branches in
Washington; 1st Bank, located in Evanston, Wyoming; Citizens Community Bank,
located in Pocatello, Idaho; and Bank of the San Juans, located in Durango,
Colorado. Glacier is also the holding company of five financing subsidiaries.
As of December 31, 2008, Glacier had total assets of approximately
$5.6 billion, total net loans receivable and loans held for sale of
approximately $4.1 billion, total deposits of approximately $3.3 billion and
approximately $677 million in shareholders' equity. Glacier common stock trades
on The NASDAQ Global Select Market under the symbol "GBCI."
Financial and other information regarding Glacier, including risks
associated with Glacier's business, is set forth in Glacier's annual report on
Form 10-K for the year ended December 31, 2008. Information regarding Glacier's
executive officers and directors, as well as additional information, including
executive compensation and certain relationships and related transactions, is
set forth or incorporated by reference in Glacier's annual report on Form 10-K
for the year ended December 31, 2008, and Glacier's proxy statement for its 2009
annual meeting of shareholders, and the Forms 8-K filed by Glacier that are
incorporated by reference into this proxy statement/ prospectus. See "Where You
Can Find More Information About Glacier."
FIRST COMPANY
245 East 1st Street
Powell, Wyoming 82435
(307) 754-2201
First Company is the holding company of First National Bank & Trust.
First National Bank is a national banking association headquartered in Powell,
Wyoming. First National Bank offers a wide range of banking products and
services, including transaction and savings deposits, commercial, consumer and
real estate loans, and mortgage origination services. First National Bank serves
individuals, small- to medium-sized businesses, community organizations and
public entities.
5
As of December 31, 2008, First Company and First National Bank, on a
consolidated basis, had total assets of approximately $285 million, total net
loans receivable of approximately $190 million, total deposits of approximately
$245 million and approximately $14.6 million in shareholders' equity.
First Company is a closely-held company, with its outstanding shares
held by approximately 24 holders of record. First Company has elected to be
subject to federal taxation as an "S Corporation" under the Internal Revenue
Code. Direct or indirect members of the Nelson family beneficially own
approximately 97.5% of First Company's outstanding shares. The Nelson family
shareholders are sometimes referred to in this document as the "Principal
Shareholders." Assuming that certain outstanding First Company shares are
redeemed prior to the closing of the merger as described under "The
Merger--Pre-Closing Actions to be Taken by First Company and/or First National
Bank," the Principal Shareholders will own all of the issued and outstanding
First Company common stock at the closing of the merger.
For additional information, see "Information Concerning First
Company."
FIRST COMPANY WILL MERGE INTO GLACIER
The merger agreement provides for the merger of First Company with and
into Glacier. In the merger, your shares of First Company common stock will be
exchanged for a combination of shares of Glacier common stock and cash. After
the merger, you will no longer own shares of First Company.
The merger agreement is attached as APPENDIX A to this document. We
encourage you to read the merger agreement in its entirety.
FIRST COMPANY SPECIAL MEETING
The special meeting of shareholders of First Company will be held at
245 East 1st Street, Powell, Wyoming, on April 30, 2009 at 10:00 a.m., local
time. At the meeting you will be asked to consider and vote upon a proposal to
approve the merger agreement and consider and act upon such other matters as may
properly come before the meeting or any adjournment of the meeting.
You will be entitled to vote at the First Company special meeting if
you owned First Company common stock at the close of business on March 26,
2009, the record date. As of that date there were 8,357 shares of First Company
common stock entitled to be voted at the special meeting.
REQUIRED APPROVAL OF THE MERGER AGREEMENT BY FIRST COMPANY SHAREHOLDERS
In order to approve the merger agreement, at least a majority of the
outstanding shares of First Company common stock must be voted at the special
meeting in favor of approval. Glacier's shareholders do not have to vote on the
transaction.
As of the record date for the meeting, the directors of First Company
beneficially owned 5,262 shares, or 63%, of First Company's outstanding common
stock. The First Company directors and certain principal shareholders of First
Company have agreed to vote their shares in favor of approval of the merger
agreement. Such persons own approximately 97.5% of the outstanding shares of
First Company. Accordingly, shareholder approval of the merger agreement is
assured.
FIRST COMPANY REASONS FOR THE MERGER
First Company's board of directors believes the merger is in your best
interest. The board considered a number of factors in deciding to approve and
recommend the terms of the merger agreement to you. These factors included the
following:
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- the value, form and mix of the consideration to be received by
First Company's shareholders in the merger;
- the existence and effect of agreements between First Company and
its primary regulator, the Board of Governors of the Federal
Reserve, and First National Bank and its primary regulator, the
OCC, on the ability of First Company to continue to operate;
- the ability of First Company or the Bank to raise additional
capital in order to meet projected needs and requirements imposed
by their respective regulators;
- the availability or likelihood of other transactions for the sale
or merger of First Company, First National Bank or the sale of
their respective assets with parties other than Glacier in the
time frames required under obligations imposed on First Company
and First National Bank under regulatory requirements and
agreements;
- the historical and prospective business of First Company;
- the likely impact of the merger on the employees and customers of
First National Bank;
- the strategic goals of First Company and First Company's
financial condition and prospects;
- the fact that Glacier's common stock is widely held and has an
active trading market; whereas, First Company's stock is illiquid
and is not publicly traded;
- the additional capital and managerial resources which Glacier
will provide to First National Bank; and
- the economic, competitive and regulatory environment for First
National Bank and community banks generally.
First Company's board of directors also took into account advice of
its financial advisors, Sheshunoff & Co. Investment Banking ("Sheshunoff"),
which issued an opinion that the merger consideration to be received by First
Company's shareholders in the merger is fair, from a financial point of view.
See "Background of and Reasons for the Merger - Reasons for the Merger" and "-
Opinion of Financial Advisor to First Company" and APPENDIX C "Fairness Opinion
of Sheshunoff."
FIRST COMPANY AND FIRST NATIONAL BANK WILL DISTRIBUTE CERTAIN ASSETS TO AN
ENTITY THAT IT IS ANTICIPATED WILL ULTIMATELY BE OWNED BY FIRST COMPANY'S
PRINCIPAL SHAREHOLDERS
The merger agreement provides that prior to the closing of the merger,
First Company and First National Bank will have removed certain assets from
First National Bank, consisting primarily of out-of-market First National Bank
loan participations, certain real estate owned by First National Bank and not
used in its business, a performing loan and similar assets referred to as the
"Excluded Assets." To comply with the merger agreement, First Company intends to
cause First National Bank to form a separate limited liability company
subsidiary and to transfer the Excluded Assets to the subsidiary immediately
prior to the closing of the merger. The membership interests in the subsidiary
holding the Excluded Assets will be distributed to all shareholders holding
First Company shares at the effective time of the merger. The Principal
Shareholders have entered into, and the limited liability company will be
required to enter into, an indemnification agreement with Glacier, covering any
liabilities that might arise from the Excluded Assets or the pre-closing
distributions, as well as other matters. See "The Merger -- Pre-Closing Actions
to be Taken by First Company and/or First National Bank."
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WE ANTICIPATE THAT CERTAIN FIRST COMPANY SHARES WILL BE REDEEMED FOR CASH BY
FIRST COMPANY PRIOR TO THE CLOSING OF THE MERGER.
First Company anticipates that, subject to the entry into agreements
satisfactory to First Company and the holders of certain outstanding shares of
First Company stock, that certain shares will be redeemed for cash prior to the
closing of the merger. It is anticipated that such shares will consist of 129
shares held of record by First Company's Employee Stock Ownership Plan ("ESOP");
50 shares owned by First Company directors; and 80 shares owned by non-Principal
Shareholders. The per share redemption amount with respect to such shares,
except for certain shares owned by directors that are subject to repurchase
agreements, will be based upon a valuation of First Company shares conducted by
Sheshunoff in its capacity as financial advisor to the ESOP. There can be no
assurance that any such redemptions will occur. See "The Merger -- Redemption of
Certain First Company Shares Prior to Closing."
WHAT FIRST COMPANY SHAREHOLDERS WILL RECEIVE IN THE MERGER
In the merger, Glacier will issue shares of its common stock and pay
cash for all shares of First Company common stock outstanding as of the date of
the closing of the merger.
If you do not provide notice of dissent, you will receive, for each
share of First Company common stock that you own, a fixed number of shares of
Glacier common stock and a fixed amount of cash, without interest.
The total merger consideration that Glacier will pay for the shares of
First Company will be as follows:
- Stock Portion: Glacier will issue a total of 100,000 shares of
its common stock. Assuming that certain outstanding First Company
shares are redeemed prior to closing as contemplated by the
merger agreement, First Company shareholders will receive 12.349
shares of Glacier common stock for each share of First Company
common stock. However, Glacier will not issue fractional shares,
and will pay cash in lieu of such fractional shares, as described
under "The Merger -- Fractional Shares."
- Cash Portion: Glacier will pay $450,000 in cash, subject to
increase or reduction, as the case may be, on a dollar for dollar
basis, by the amount (if any) by which the "First Company Closing
Capital," as defined in the merger agreement, is greater than or
less than $15,250,000. Generally speaking, the "First Company
Closing Capital" means First Company's capital stock, surplus and
retained earnings, after giving effect to specified costs,
payments, expenses and other adjustments, including the $15.3
million capital contribution by Glacier to First National Bank.
Assuming, there is no increase or reduction in the cash portion
of the merger consideration and that certain outstanding First
Company shares are redeemed prior to closing as contemplated by
the merger agreement, First Company shareholders will receive
$55.57 in cash for each share of First Company common stock.
The amount of consideration to be received for each share of First
Company common stock will be determined by dividing the total consideration
payable by the number of shares of First Company common stock outstanding
immediately prior to the effective time of the merger.
The actual aggregate amount of cash to be paid cannot be determined
until shortly before the effective date of the merger. Accordingly, the actual
amount of cash that you will receive for each of your First Company shares will
not be determined until shortly before the closing of the merger.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Glacier and First Company expect to report the merger as a tax-free
reorganization for United States federal income tax purposes. In a tax-free
reorganization, a shareholder who exchanges its shares of common stock in an
acquired company for shares of common stock in an acquiring company, plus cash,
must generally recognize gain (but not loss) on the exchange in an amount equal
to the lesser of (1) the amount of gain realized
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(i.e., the excess of the sum of the fair market value of the shares of acquiring
company common stock and cash received pursuant to the merger, excluding any
cash received in lieu of fractional shares, over the shareholder's adjusted tax
basis in its shares of acquired company common stock surrendered pursuant to the
merger), or (2) the amount of cash (excluding any cash received in lieu of
fractional shares) received pursuant to the merger. Current law is unclear,
however, on whether the foregoing rule applies if the acquired company is an S
corporation, such as First Company. If its does not, then the cash received in
the exchange may be treated in whole or in part as a nontaxable distribution to
the shareholders.
If the IRS disagrees with treatment of the merger as a tax
free-reorganization, then the foregoing description of the tax consequences of
the merger will not apply. Instead, First Company would be deemed to have sold
all of its assets to Glacier in a taxable transaction and distributing the
Glacier common stock and cash to its shareholders in a complete liquidation.
Each First Company shareholder would recognize its share of the gain or loss
recognized by First Company on the deemed sale of all of its assets. The gain or
loss would be either capital or ordinary, depending on the character of each of
the assets deemed sold. A shareholder's adjusted tax basis in its shares of
First Company common stock would be increased or decreased by the share of gain
or loss recognized by the shareholder. The shareholder would not recognize any
further gain or loss on the deemed receipt of Glacier common stock and cash from
First Company in complete liquidation, except to the extent the sum of the fair
market value of the Glacier common stock and cash received by the shareholder is
greater or less than the shareholder's adjusted tax basis in its shares of First
Company common stock. If the shareholder has held the shares of First Company
common stock as a capital asset for more than one year, then the gain or loss
will be long-term capital gain or loss.
WE URGE YOU TO CONSULT YOUR TAX ADVISER TO FULLY UNDERSTAND THE TAX
CONSEQUENCES OF THE MERGER TO YOU. TAX MATTERS ARE VERY COMPLICATED AND IN MANY
CASES TAX CONSEQUENCES OF THE MERGER WILL DEPEND ON YOUR PARTICULAR FACTS AND
CIRCUMSTANCES.
FIRST COMPANY SHAREHOLDERS HAVE DISSENTERS' RIGHTS
Under Wyoming law, First Company shareholders have the right to
dissent from the merger and receive cash for the fair value of their shares of
First Company common stock. A shareholder electing to dissent must strictly
comply with all the procedures required by the Wyoming statutes. These
procedures are described later in this document, and a copy of the relevant
statutory provisions is attached as APPENDIX B.
THE FIRST COMPANY BOARD OF DIRECTORS RECOMMENDS SHAREHOLDER APPROVAL OF THE
MERGER
After careful consideration, the First Company board of directors
believes that the merger is in the best interests of First Company shareholders
and has unanimously approved the merger agreement. the First Company board of
directors recommends that First Company shareholders vote "FOR" approval of the
merger agreement.
FIRST COMPANY FINANCIAL ADVISOR SAYS THE MERGER CONSIDERATION IS FAIR TO FIRST
COMPANY SHAREHOLDERS FROM A FINANCIAL POINT OF VIEW
Sheshunoff has served as financial advisor to First Company in
connection with the merger and has given an opinion to First Company's board of
directors that, as of _______, 2009, the consideration that First Company's
shareholders will receive for their First Company shares in the merger is fair,
from a financial point of view, to First Company shareholders. A copy of the
opinion delivered by Sheshunoff is attached to this document as APPENDIX C.
First Company shareholders should read the opinion carefully to understand the
assumptions made, matters considered and limitations of the review undertaken by
Sheshunoff in providing its opinion. The opinion is more fully described under
the heading "Opinion of Financial Advisor to First Company" below. First Company
agreed to pay Sheshunoff a fee for its services and to indemnify it against
certain liabilities arising out of the merger or its engagement.
FIRST COMPANY'S OFFICERS AND DIRECTORS HAVE INTERESTS IN THE MERGER THAT ARE
DIFFERENT FROM OR IN ADDITION TO THEIR INTERESTS AS SHAREHOLDERS
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When you consider the unanimous recommendation of First Company board
of directors that First Company's shareholders approve the merger agreement, you
should be aware that certain members of First Company's management have
interests in the merger that are different from, or in addition to, their
interests as First Company shareholders. These interests arise out of provisions
in the merger agreement relating to indemnification of directors, an employment
agreement with the President of First Company that will be effective upon the
closing of the merger, and distribution to shareholders which may include
members of First Company's management, prior to closing, of interests in a
limited liability company holding certain out-of-market loan participations and
other assets of First Company and First National Bank which Glacier required to
be removed from First National Bank prior to the merger, to an entity to be
ultimately owned by the principal shareholders of First Company, some of whom
are also members of First Company's management. See "The Merger - Interests of
Certain Persons in the Merger" and The Merger -- Pre-Closing Actions to be Taken
by First Company and/or First National Bank."
The First Company board of directors was aware of these interests and
took them into account in its decision to approve the merger agreement.
THE MERGER IS EXPECTED TO OCCUR IN THE SECOND QUARTER OF 2009
Currently, we anticipate that the merger will occur in the second
quarter of 2009. However, we cannot assure you when or if the merger will occur.
The merger agreement may be terminated by either Glacier or First Company if the
merger does not occur on or before July 31, 2009.
COMPLETION OF THE MERGER IS SUBJECT TO SATISFACTION OR WAIVER OF CERTAIN
CONDITIONS
Completion of the merger is subject to the satisfaction or waiver of
certain conditions including, among others:
- approval of the merger agreement by holders of at least a
majority of the shares of First Company's outstanding common
stock;
- approval of the merger by federal and state regulatory
authorities;
- accuracy of each party's representations in the merger agreement;
- transfer of the Excluded Assets; and
- compliance by each party with all material terms, covenants and
conditions of the merger agreement.
The merger agreement provides that either Glacier or First Company may
terminate the merger either before or after the First Company special meeting,
under certain circumstances. Among other things, the merger agreement provides
that Glacier may terminate the merger agreement if the average trading price of
its stock, determined pursuant to the merger agreement, is above a specified
amount, unless First Company agrees to accept a reduced number of Glacier
shares, and that First Company may terminate the merger agreement if the average
trading price of Glacier stock is below a specified amount, unless Glacier
agrees to increase the number of its shares to be issued to First Company
shareholders. See "The Merger - Termination of the Merger Agreement."
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WE MAY NOT COMPLETE THE MERGER WITHOUT ALL REQUIRED REGULATORY APPROVALS
The merger must be approved by the Federal Reserve Bank of Minneapolis
and the Wyoming State Bank Commissioner. Additionally, certain First Company
stock redemptions and distributions by First Company and First National Bank
that are required to be accomplished prior to the closing of the merger must be
approved by the Federal Reserve Bank of Kansas City and the Office of the
Comptroller of the Currency, as applicable. Applications have been filed with
these regulatory bodies seeking such approvals. We expect to obtain all such
regulatory approvals, although we cannot be certain if or when we will obtain
them.
EITHER FIRST COMPANY OR GLACIER, AS THE CASE MAY BE, MUST PAY A TERMINATION FEE
UNDER CERTAIN CIRCUMSTANCES
If either party terminates the merger agreement due to specified
breaches of the merger agreement by the other party, the breaching party will be
required to pay the non-breaching party a termination fee of $200,000. See "The
Merger -- Termination Fees."
FIRST COMPANY MUST PAY GLACIER A BREAK-UP FEE UNDER CERTAIN CIRCUMSTANCES
Under the merger agreement, First Company must pay Glacier a break-up
fee of $1,000,000, if the merger agreement is terminated due to the failure of
First Company to recommend or obtain approval of the merger by its shareholders,
or due to the receipt of a "superior acquisition proposal" as defined in the
merger agreement which is acted upon by First Company.
First Company agreed to pay the break-up fee under the circumstances
described above in order to induce Glacier to enter into the merger agreement.
This arrangement could have the effect of discouraging other companies from
trying to acquire First Company. See "The Merger - Break-up Fee."
FIRST COMPANY SHAREHOLDERS WILL HAVE DIFFERENT RIGHTS AFTER THE MERGER
The rights of First Company shareholders are governed by Wyoming law,
as well as by First Company's articles of incorporation and bylaws. After
completion of the merger, the rights of the former First Company shareholders
receiving Glacier common stock in the merger will be governed by Montana law,
and by Glacier's articles of incorporation and bylaws. Although Glacier's
articles of incorporation and bylaws are similar in many ways to First Company's
articles of incorporation and bylaws, there are some substantive and procedural
differences that will affect the rights of First Company shareholders. See
"Comparison of Certain Rights of Holders of Glacier and First Company Common
Stock."
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RISK FACTORS
In addition to the other information contained in or incorporated by
reference into this document, including the matters addressed under the caption
"Cautionary Note Regarding Forward-Looking Statements," you should consider the
matters described below carefully in determining whether to approve the merger
agreement and the transactions contemplated by the merger agreement.
RISKS ASSOCIATED WITH THE PROPOSED MERGER
BECAUSE THE MARKET PRICE OF THE GLACIER COMMON STOCK MAY FLUCTUATE, YOU CANNOT
BE SURE OF THE VALUE OF THE SHARES OF GLACIER COMMON STOCK THAT YOU WILL
RECEIVE.
Although the number of shares of Glacier common stock that will
constitute the stock portion of the merger consideration that will be exchanged
for a share of First Company is fixed, at the time of the First Company special
shareholder meeting, and prior to the closing of the merger, you will not be
able to determine the value of the Glacier common stock you would receive upon
completion of the merger. Any change in the market price of Glacier common stock
prior to completion of the merger will affect the value of the merger
consideration that First Company shareholders will receive upon completion of
the merger. First Company is not permitted to terminate the merger agreement or
resolicit the vote of First Company shareholders solely because of changes in
the market price of Glacier common stock. Common stock price changes may result
from a variety of factors, including but not limited to general market and
economic conditions, changes in Glacier's business, operations and prospects,
and regulatory considerations. Many of these factors are beyond the control of
Glacier or First Company. You should obtain current market prices for Glacier
common stock.
The merger agreement provides that the number of shares of Glacier
common stock to be issued in the merger may be decreased or increased, as the
case may be, if the average trading price of Glacier common stock, determined
pursuant to the merger agreement, is greater than or less than specified
amounts. The First Company board of directors would make the decision, without
resoliciting the vote of First Company shareholders, to either terminate the
merger agreement or accept a decrease in the number of Glacier shares to be
issued if Glacier's average trading price is greater than a specified amount.
See "The Merger -- Termination of the Merger Agreement."
THE MERGER AGREEMENT LIMITS FIRST COMPANY'S ABILITY TO PURSUE OTHER TRANSACTIONS
AND PROVIDES FOR THE PAYMENT OF A BREAK UP FEE IF FIRST COMPANY DOES SO.
While the merger agreement is in effect and subject to very narrow
exceptions, First Company and its directors, officers and agents are prohibited
from initiating or encouraging inquiries with respect to alternative acquisition
proposals. The prohibition limits First Company's ability to seek offers that
may be superior from a financial point of view from other possible acquirers. If
First Company receives an unsolicited proposal from a third party that is
superior from a financial point of view to that made by Glacier and the merger
agreement is terminated, First Company may be required to pay a $1,000,000
break-up fee. This fee makes it less likely that a third party will make an
alternative acquisition proposal.
UNDER CERTAIN CONDITIONS, THE MERGER AGREEMENT REQUIRES FIRST COMPANY TO PAY A
TERMINATION FEE.
Under certain circumstances (generally involving First Company's
breach of its representations and covenants in the merger agreement), Glacier
can terminate the merger agreement and require First Company to pay a
termination fee of $200,000.
COMBINING OUR TWO COMPANIES MAY BE MORE DIFFICULT, COSTLY OR TIME-CONSUMING THAN
WE EXPECT.
Glacier and First Company have operated and, until the completion of
the merger, will continue to operate, independently. Even though First National
Bank will continue to be operated separately, it is possible that the
integration process could result in the loss of key employees, the disruption of
the ongoing business of
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First National Bank or inconsistencies in standards, controls, procedures and
policies that adversely affect our ability to maintain relationships with
customers and employees or to achieve the anticipated benefits of the merger. As
with any merger of banking institutions, there also may be disruptions that
cause us to lose customers or cause customers to take their deposits out of
First National Bank.
UNANTICIPATED COSTS RELATING TO THE MERGER COULD REDUCE GLACIER'S FUTURE
EARNINGS PER SHARE.
Glacier believes that it has reasonably estimated the likely costs of
integrating the operations of First National Bank into Glacier, and the
incremental costs of operating as a combined company. However, it is possible
that unexpected transaction costs or future operating expenses, as well as other
types of unanticipated adverse developments, could have a material adverse
effect on the results of operations and financial condition of Glacier after the
merger. If the merger is completed and unexpected costs are incurred, the merger
could have a dilutive effect on Glacier's earnings per share, meaning earnings
per share could be less than if the merger had not been completed.
GLACIER HAS VARIOUS ANTI-TAKEOVER MEASURES THAT COULD IMPEDE A TAKEOVER.
Glacier has various anti-takeover measures in place, which are
described elsewhere in this document. Any one or more of these measures may
impede the takeover of Glacier without the approval of the Glacier board of
directors and may prevent you from taking part in a transaction in which you
could realize a premium over the current market price of Glacier common stock.
See "Comparison of Certain Rights of Holders of Glacier and First Company Common
Stock."
RISKS ASSOCIATED WITH GLACIER'S BUSINESS
Our business exposes us to certain risks. The following is a
discussion of what we currently believe are the most significant risks and
uncertainties that may affect our business, financial condition and future
results.
WE CANNOT PREDICT THE EFFECT OF THE NATIONAL ECONOMIC SITUATION ON OUR FUTURE
RESULTS OF OPERATIONS OR STOCK TRADING PRICE.
The national economy, and the financial services sector in particular,
is currently facing challenges of a scope unprecedented in recent history. No
one can predict the severity or duration of this national downturn, which has
adversely impacted the markets we serve. Any deterioration in our markets
resulting from the economic slowdown would have an adverse effect on our
business, financial condition, results of operations and prospects, and could
also cause the trading price of our stock to decline.
WE CANNOT PREDICT THE EFFECT OF RECENTLY AND PENDING FEDERAL LEGISLATION.
On October 3, 2008, Congress enacted the Emergency Economic
Stabilization Act of 2008 ("EESA"), which provides the United States Treasury
Department ("Treasury") with broad authority to implement action intended to
help restore stability and liquidity to the US financial markets. Pursuant to
the EESA, the Treasury has the ability to purchase or insure up to $700 billion
in troubled assets held by financial institutions under the Troubled Asset
Relief Program ("TARP") under various programs. On October 14, 2008, the
Treasury announced it would initially purchase equity stakes in financial
institutions under a Capital Purchase Program (the "CPP") of up to $350 billion
of the $700 billion authorized under the TARP legislation. The CPP provides
direct equity investment of perpetual preferred stock by the Treasury in
qualified financial institutions. The EESA also increases the amount of deposit
account insurance coverage from $100,000 to $250,000 effective until December
31, 2009.
As indicated by the Treasury as of early 2009, additional related
legislation is pending, which among other things is expected to inject more
capital from the Treasury into financial institutions through the Capital
Assistance Program, establish a public-private investment fund for the purchase
of troubled assets, and expand the Term Asset-Backed Securities Loan Facility to
include commercial mortgage backed-securities.
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The full effect of the broad legislation already enacted and related
legislation expected to be enacted in the near future on the national economy
and financial institutions, particularly on mid-sized institutions like us,
cannot now be predicted.
OUR ABILITY TO ACCESS MARKETS FOR FUNDING AND ACQUIRE AND RETAIN CUSTOMERS COULD
BE ADVERSELY AFFECTED TO THE EXTENT THE FINANCIAL SERVICE INDUSTRY'S REPUTATION
IS DAMAGED.
Reputation risk is the risk to liquidity, earnings and capital arising
from negative publicity regarding the financial services industry. The financial
services industry continues to be featured in negative headlines about the
global and national credit crisis and the resulting stabilization legislation
enacted by the U.S. federal government. These reports can be damaging to the
industry's image and potentially erode consumer confidence in insured financial
institutions, such as our banking subsidiary.
WE HAVE A HIGH CONCENTRATION OF LOANS SECURED BY REAL ESTATE.
The Company has a concentration of loans secured by real estate. While
the Pacific Northwest economy typically lags the national economy, the effects
of the economic downturn are now significantly impacting our market area.
Further downturn in the market areas we serve may cause us to have lower
earnings and could increase our credit risk associated with our loan portfolio,
as the collateral securing those loans may decrease in value. A continued
downturn in the local economy could have a material adverse effect both on the
borrowers' ability to repay these loans, as well as the value of the real
property held as collateral. Our ability to recover on defaulted loans by
foreclosing and selling the real estate collateral would then be diminished and
we would be more likely to suffer losses on defaulted loans.
AN ECONOMIC DOWNTURN IN THE MARKET AREAS WE SERVE MAY CAUSE US TO HAVE LOWER
EARNINGS AND COULD INCREASE OUR CREDIT RISK ASSOCIATED WITH OUR LOAN PORTFOLIO.
The inability of borrowers to repay loans can erode our earnings.
Although the adverse effects of the national economic downturn have not yet been
experienced in our primary market areas to the extent of many other regions of
the country, there can be no assurance that our markets areas will also
deteriorate. A deterioration in economic conditions in the market areas we serve
could result in the following consequences, any of which could have an adverse
impact on our prospects, results of operations and financial condition:
- loan delinquencies may increase further, migrating into our
substantial commercial real estate and business lending
portfolios;
- collateral for loans made may decline further in value, in turn
reducing customers' borrowing power, reducing the value of assets
and collateral associated with existing loans;
- demand for banking products and services may decline; and
- low cost or non-interest bearing deposits may decrease.
OUR ALLOWANCE FOR LOAN LOSSES MAY NOT BE ADEQUATE TO COVER ACTUAL LOAN LOSSES,
WHICH COULD ADVERSELY AFFECT OUR EARNINGS.
The Company maintains an allowance for loan losses in an amount that
we believe is adequate to provide for losses inherent in the portfolio. While we
strive to carefully manage and monitor credit quality and to identify loans that
may become nonperforming, at any time there are loans included in the portfolio
that will result in losses, but that have not been identified as nonperforming
or potential problem loans. By managing our credit quality, we attempt to
identify deteriorating loans before they become nonperforming assets and adjust
the loan loss reserve accordingly. However, because future events are uncertain,
and if the economy continues to deteriorate, there may be loans that deteriorate
to a nonperforming status in an accelerated time frame. As a result, future
additions to the allowance may be necessary. Because the loan portfolio contains
a number of loans
14
with relatively large balances, the deterioration of one or a few of these loans
may cause a significant increase in nonperforming loans, requiring an increase
to the loan loss allowance. Additionally, future significant additions to the
allowance may be required based on changes in the mix of loans comprising the
portfolio, changes in the financial condition of borrowers, such as may result
from changes in economic conditions, or as a result of incorrect assumptions by
management in determining the allowance. Additionally, federal banking
regulators, as an integral part of their supervisory function, periodically
review our loan portfolio and the adequacy of our allowance for loan losses.
These regulatory agencies may require us to recognize further loan loss
provisions or charge-offs based upon their judgments, which may be different
from ours. Any increase in the allowance for loan losses could have a negative
effect on our financial condition and results of operation.
FLUCTUATING INTEREST RATES CAN ADVERSELY AFFECT OUR PROFITABILITY.
Our profitability is dependent to a large extent upon net interest
income, which is the difference (or "spread") between the interest earned on
loans, securities and other interest-earning assets and interest paid on
deposits, borrowings, and other interest-bearing liabilities. Because of the
differences in maturities and repricing characteristics of interest-earning
assets and interest-bearing liabilities, changes in interest rates do not
produce equivalent changes in interest income earned on interest-earning assets
and interest paid on interest-bearing liabilities. Accordingly, fluctuations in
interest rates could adversely affect the Company's interest rate spread, and,
in turn, profitability. Because the Company is asset sensitive, we seek to
manage our interest rate risk within well established guidelines. Generally, the
Company seeks an asset and liability structure that insulates net interest
income from large deviations attributable to changes in market rates.
A CONTINUED TIGHTENING OF THE CREDIT MARKETS MAY MAKE IT DIFFICULT TO OBTAIN
ADEQUATE FUNDING FOR LOAN GROWTH, WHICH COULD ADVERSELY AFFECT OUR EARNINGS.
A continued tightening of the credit market and the inability to
obtain or retain adequate money to fund continued loan growth may negatively
affect our asset growth and liquidity position and, therefore, our earnings
capability. In addition to core deposit growth, maturity of investment
securities and loan payments, the Company also relies on alternative funding
sources through correspondent banking, national certificates of deposit and
borrowing lines with the Federal Reserve Bank and FHLB to fund loans. In the
event the current economic downturn continues, particularly in the housing
market, these resources could be negatively affected, both as to price and
availability, which would limit and or raise the cost of the funds available to
the Company.
IF THE GOODWILL WE HAVE RECORDED IN CONNECTION WITH ACQUISITIONS BECOMES
IMPAIRED, IT COULD HAVE AN ADVERSE IMPACT ON OUR EARNINGS AND CAPITAL.
Accounting standards require that we account for acquisitions using
the purchase method of accounting. Under purchase accounting, if the purchase
price of an acquired company exceeds the fair value of its net assets, the
excess is carried on the acquiror's balance sheet as goodwill. At December 31,
2008, we had approximately $147 million of goodwill on our balance sheet. In
accordance with generally accepted accounting principles, our goodwill is not
amortized but rather is evaluated for impairment on an annual basis or more
frequently if events or circumstances indicate that a potential impairment
exists. Such evaluation is based on a variety of factors, including the quoted
price of our common stock, market prices of common stocks of other banking
organizations, common stock trading multiples, discounted cash flows, and data
from comparable acquisitions. Although at the current time we do not face a
direct risk of impairment of goodwill, there can be no assurance that future
evaluations of goodwill will not result in findings of impairment and
write-downs, which could be material.
A DECLINE IN THE FAIR VALUE OF OUR INVESTMENT PORTFOLIO COULD ADVERSELY AFFECT
EARNINGS.
Investment securities fair value could decline as a result of factors
including changes in market interest rates, credit quality and ratings,
liquidity and other economic conditions. Investment securities are impaired if
the fair value of the security is less than the carrying value. When a security
is impaired, the Company determines whether the impairment is temporary or
other-than-temporary. If an impairment is determined to be other-than-
15
temporary, an impaired loss is recognized by reducing the amortized cost basis
to fair value and as a charge to earnings.
WE MAY GROW THROUGH FUTURE ACQUISITIONS WHICH COULD, IN SOME CIRCUMSTANCES,
ADVERSELY AFFECT OUR PROFITABILITY MEASURES.
We have in recent years acquired other financial institutions. We may
in the future engage in selected acquisitions of additional financial
institutions. There are risks associated with any such acquisitions that could
adversely affect our profitability. These risks include, among other things,
incorrectly assessing the asset quality of a financial institution being
acquired, encountering greater than anticipated cost of incorporating acquired
businesses into our operations, and being unable to profitably deploy funds
acquired in an acquisition. Furthermore, we cannot provide any assurance as to
the extent to which we can continue to grow through acquisitions.
We anticipate issuing capital stock in connection with any future
acquisitions, either directly or through raising capital to fund the cash
portion of such acquisitions. Such acquisitions and related issuances of stock
may have a dilutive effect on earnings per share and the percentage ownership of
current shareholders. We do not have any current definitive understandings or
agreements for any acquisitions.
THE FDIC HAS INCREASED INSURANCE PREMIUMS TO REBUILD AND MAINTAIN THE FEDERAL
DEPOSIT INSURANCE FUND.
Based on recent events and the state of the economy, the FDIC has
increased federal deposit insurance premiums beginning in the first quarter of
2009. The FDIC also adopted a final rule revising its risk-based assessment
system, effective April 21, 2009. The changes to the assessment system involve
adjustments to the risk-based calculation for an institution's unsecured debts,
secured liabilities and brokered deposits. The revisions effectively result in a
range of possible assessments under the risk-based system of 7 to 77.5 basis
points. The increase of FDIC premiums will add to our cost of operations and
could have a significant impact on the Company. Depending on any future losses
that the FDIC insurance fund may suffer due to failed financial institutions,
there can be no assurance that there will not be additional significant premium
increases in order to replenish the fund.
On February 27, 2009 the FDIC adopted an interim rule that, if made
final, will impose a special Deposit Insurance Fund assessment of 20 basis
points on all insured institutions. However, there are some indications that
this assessment may be reduced to 10 basis points if the FDIC is able to secure
borrowing authority of up to $100 billion (from the current $30 billion limit),
which is subject to federal legislation. The assessment will be calculated on
June 30, 2009 deposit balances and collected on September 30, 2009. Based upon
the Company's December 31, 2008 deposits subject to FDIC insurance assessments,
the special assessment would be approximately $6.51 million before tax, assuming
that the assessment is made at the 20 basis point amount. As of the date of this
proxy statement/prospectus, the amount of the special assessment cannot be
determined.
WE OPERATE IN A HIGHLY REGULATED ENVIRONMENT AND MAY BE ADVERSELY AFFECTED BY
CHANGES IN FEDERAL STATE AND LOCAL LAWS AND REGULATIONS.
We are subject to extensive regulation, supervision and examination by
federal and state banking authorities. Any change in applicable regulations or
federal, state or local legislation could have a substantial impact on us and
our operations. Additional legislation and regulations that could significantly
affect our powers, authority and operations may be enacted or adopted in the
future, which could have a material adverse effect on our financial condition
and results of operations. Further, regulators have significant discretion and
authority to prevent or remedy unsafe or unsound practices or violations of laws
or regulations by financial institutions and holding companies in the
performance of their supervisory and enforcement duties. These powers recently
have been utilized more frequently due to the serious national, regional and
local economic conditions we are facing. The exercise of regulatory authority
may have a negative impact on our financial condition and results of operations.
16
GLACIER'S TRUST PREFERRED SECURITIES HAVE A PRIORITY RIGHT TO PAYMENT OF
DIVIDENDS.
Glacier has periodically supported its continued growth through the
issuance of trust preferred securities from special purpose trusts and
accompanying debt. Trust preferred securities have a priority right to
distributions and payment over the common stock. At December 31, 2008, Glacier
had trust preferred securities and accompanying debt totaling approximately $121
million.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This document, including information included or incorporated by
reference in this document may contain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements include, but are not limited to, (i) statements about
the benefits of the merger, including future financial and operating results,
cost savings, enhancements to revenue and accretion to reported earnings that
may be realized from the merger; (ii) statements about our respective plans,
objectives, expectations and intentions and other statements that are not
historical facts; and (iii) other statements identified by words such as
"expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates,"
or words of similar meaning. These forward-looking statements are based on
current beliefs and expectations of management and are inherently subject to
significant business, economic and competitive uncertainties and contingencies,
many of which are beyond Glacier's and First Company's control. In addition,
these forward-looking statements are subject to assumptions with respect to
future business strategies and decisions that are subject to change.
The following factors, among others, could cause actual results to
differ materially from the anticipated results or other expectations in the
forward-looking statements:
- the risks associated with lending and potential adverse changes
in credit quality;
- increased loan delinquency rates;
- competition from other financial services companies in our
markets;
- the risks presented by the current economic slowdown, which could
adversely affect credit quality, collateral values, including
real estate collateral, investment values and loan originations;
- demand for banking products and services may decline;
- the interest rate environment may change, causing margins to
compress and adversely affecting net interest income.
- our business may not be integrated successfully, or such
integration may take longer to accomplish than expected;
- the anticipated growth opportunities and cost savings from the
merger may not be fully realized or may take longer to realize
than expected;
- operating costs, customer losses and business disruption
following the merger, including adverse developments in
relationships with employees, may be greater than expected;
- adverse governmental or regulatory policies may be enacted; and
Additional factors that could cause actual results to differ
materially from those expressed in the forward-looking statements are discussed
in Glacier's reports filed with the SEC.
All subsequent written and oral forward-looking statements concerning
the proposed transaction or other matters attributable to Glacier or First
Company or any person acting on behalf of Glacier or First Company are expressly
qualified in their entirety by the cautionary statements above. Neither Glacier
nor First Company undertakes any obligation to update any forward-looking
statements to reflect circumstances or events that occur after the date the
forward-looking statements are made.
17
SELECTED HISTORICAL FINANCIAL INFORMATION OF GLACIER
The following selected financial information for the fiscal years
ended December 31, 2008, 2007, 2006, 2005 and 2004 is derived from audited
consolidated financial statements of Glacier. The financial data below should be
read in conjunction with the financial statements and notes thereto,
incorporated by reference in this proxy statement/prospectus. See "Where You Can
Find More Information About Glacier."
AT OR FOR THE FISCAL YEARS ENDED DECEMBER 31
--------------------------------------------------------------
2008 2007 2006 2005 2004
--------------------------------------------------------------
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
SUMMARY OF OPERATIONS:
Interest income $ 302,985 $ 304,760 $ 253,326 $ 189,985 $ 147,285
Interest expense 90,372 121,291 95,038 59,978 39,892
---------- ---------- ---------- ---------- ----------
Net interest income 212,613 183,469 158,288 130,007 107,393
Provision for loan losses 28,480 6,680 5,192 6,023 4,195
---------- ---------- ---------- ---------- ----------
Net interest income after provision
for loan losses 184,133 176,789 153,096 123,984 103,198
Noninterest income 61,034 64,818 51,842 44,626 34,565
Noninterest expenses 145,909 137,917 112,550 90,926 72,133
---------- ---------- ---------- ---------- ----------
Pre-tax net income 99,258 103,690 92,388 77,684 65,630
Taxes 33,601 35,087 31,257 25,311 21,014
---------- ---------- ---------- ---------- ----------
Net income 65,657 68,603 61,131 52,373 44,616
========== ========== ========== ========== ==========
Basic earnings per share* $ 1.20 $ 1.29 $ 1.23 $ 1.12 $ 0.97
Diluted earnings per share* $ 1.19 $ 1.28 $ 1.21 $ 1.09 $ 0.96
Cash dividends per share* $ 0.52 $ 0.50 $ 0.45 $ 0.40 $ 0.36
STATEMENT OF FINANCIAL CONDITIONS:
Total assets $5,553,970 $4,817,330 $4,471,298 $3,708,975 $3,013,213
Net loans receivable and LHFS 4,053,454 3,557,122 3,165,524 2,397,187 1,701,805
Total deposits 3,262,475 3,184,478 3,207,533 2,534,712 1,729,708
Total borrowings 1,449,187 940,570 646,508 719,413 900,148
Shareholder's equity 676,940 528,576 456,143 333,239 270,184
Book value per share* $ 11.04 $ 9.85 $ 8.72 $ 6.91 $ 5.87
KEY OPERATING RATIOS:
Return on average assets 1.31% 1.49% 1.52% 1.52% 1.54%
Average equity to average assets 11.23% 10.78% 9.52% 8.61% 8.75%
Net interest margin(1) 4.70% 4.50% 4.44% 4.25% 4.18%
Non-performing over assets 1.46% 0.27% 0.19% 0.26% 0.32%
Dividend payout ratio 43.33% 38.76% 36.59% 35.93% 37.36%
(1) Calculated on a tax equivalent basis.
* Revised for stock splits and dividends.
18
COMPARATIVE STOCK PRICE AND DIVIDEND INFORMATION
GLACIER COMMON STOCK
Glacier common stock is quoted on The NASDAQ Global Select Market
under the symbol "GBCI." The following table sets forth for the periods
indicated:
- the high and low sale prices for Glacier common stock as reported
on The NASDAQ Global Select Market, and
- dividends per share on Glacier common stock.
CASH
HIGH* LOW* DIVIDENDS DECLARED
------ ------ ------------------
2006
First quarter ....................... $21.81 $19.72 $0.11
Second quarter ...................... $21.20 $18.69 $0.11
Third quarter ....................... $23.24 $18.55 $0.11
Fourth quarter ...................... $25.25 $21.99 $0.12
2007
First quarter ....................... $25.39 $22.76 $0.12
Second quarter ...................... $24.61 $19.55 $0.12
Third quarter ....................... $24.00 $18.41 $0.13
Fourth quarter ...................... $23.85 $17.57 $0.13
2008
First quarter ....................... $20.48 $15.54 $0.13
Second quarter ...................... $21.78 $15.99 $0.13
Third quarter ....................... $27.72 $14.46 $0.13
Fourth quarter ...................... $25.36 $14.12 $.013
2009
First quarter ....................... $18.76 $12.78 $.013
Section quarter (through March 26) $12.15 $19.36
----------
* Adjusted for stock splits and stock dividends.
At March 25, 2009, 61,509,818 outstanding shares of Glacier common
stock were held by approximately 2,041 holders of record.
FIRST COMPANY COMMON STOCK
Presently, no active trading market exists for the First Company
common stock. If First Company were to remain independent, management of First
Company does not expect that a market for First Company common stock would
develop. No registered broker/dealer makes a market in First Company common
stock, and First Company common stock is not listed or quoted on any stock
exchange or automated quotation system. First Company acts as its own transfer
agent and registrar.
Occasionally, management of First Company becomes aware of trades of
private sales of its common stock and the prices at which these trades were
executed. First Company is not aware of any third-party transactions in its
common stock since January 1, 2008. First Company issued 55 shares of common
stock in early July 2008 for a purchase price of $1,850.00 per share and an
additional 485 shares of common stock in late July 2008 for a purchase price of
$1,855.67 per share. Both issuances were to existing shareholders of First
Company.
At March 26, 2009, the 8,357 outstanding shares of First Company
common stock were held by approximately 24 holders of record.
19
FIRST COMPANY SPECIAL SHAREHOLDERS' MEETING
DATE, TIME, PLACE
The First Company special meeting of shareholders will be held on
April 30, 2009, at 10:00 a.m. local time, at 245 East 1st Street, Powell,
Wyoming.
As described below under "Vote Required," approval of the merger
agreement requires the affirmative vote of at least a majority of the shares of
First Company's outstanding common stock. If there are not sufficient votes
represented at the special meeting, either in person or by proxy, to approve the
merger agreement, or if a quorum is not present, First Company may adjourn or
postpone the meeting in order to permit further solicitation of proxies by First
Company. The persons appointed as proxies on the form accompanying this document
are authorized to vote to approve such adjournment or postponement, unless the
proxy appointing them instructs them to vote against approval of the merger
agreement.
PURPOSE
At the special meeting, First Company shareholders will:
- consider and vote on a proposal to approve the merger, and
- if necessary, consider and act upon a proposal to adjourn the
special meeting to allow additional time to solicit proxies.
RECORD DATE; SHARES OUTSTANDING AND ENTITLED TO VOTE
The First Company board of directors has fixed 5:00 p.m. on March
26, 2009 as the record date for determining the holders of shares of First
Company common stock entitled to notice of and to vote at the special meeting.
At the close of business on the First Company record date, there were 8,357
shares of common stock issued and outstanding and held by approximately 24
holders of record. Holders of record of First Company common stock on the record
date are entitled to one vote per share and are also entitled to exercise
dissenters' rights if certain procedures are followed. See "The Merger -
Dissenters' Rights of Appraisal" and APPENDIX B.
Certain directors and the principal shareholders of First Company have
agreed to vote all shares held or controlled by them in favor of approval of the
merger. A total of 8,148 outstanding shares, or approximately 97.5% of the
outstanding shares of First Company common stock, are covered by the voting
agreement. Thus shareholder approval of the merger agreement is assured. See
"The Merger - Voting Agreement."
VOTE REQUIRED AND QUORUM
The affirmative vote of the holders of at least a majority of the
shares of First Company's outstanding common stock is required to approve the
merger. At least a majority of the total outstanding shares of First Company
common stock must be present, either in person or by proxy, in order to
constitute a quorum for the meeting. For purposes of determining a quorum,
abstentions and broker nonvotes (that is, proxies from brokers or nominees,
indicating that such person has not received instructions from the beneficial
owners or other persons entitled to vote shares as to a matter with respect to
which the broker or nominees do not have discretionary power to vote) are
counted in determining the shares present at a meeting.
For voting purposes, however, only shares actually voted FOR the
approval of the merger agreement, and neither abstentions nor broker nonvotes,
will be counted as favorable votes in determining whether the merger agreement
is approved by the holders of First Company common stock. As a result,
abstentions and broker nonvotes will have the same effect as votes against
approval of the merger agreement.
20
VOTING, SOLICITATION, AND REVOCATION OF PROXIES
If the enclosed proxy card is duly executed and received in time for
the special meeting, it will be voted in accordance with the instructions given.
If the proxy card is duly executed and received but no instruction is given, it
is the intention of the persons named in the proxy to vote the shares
represented by the proxy for the approval of the merger and in the proxy
holder's discretion on any other matter properly coming before the meeting. Any
proxy given by a shareholder may be revoked before its exercise by:
- written notice to the Secretary of First Company;
- a later-dated proxy; or
- appearing and voting at the special meeting in person.
First Company is soliciting the proxy for the special meeting on
behalf of the First Company board of directors. First Company will bear the cost
of solicitation of proxies from its shareholders. In addition to using the
mails, First Company may solicit proxies by personal interview, telephone, and
facsimile. Banks, brokerage houses, other institutions, nominees, and
fiduciaries will be requested to forward their proxy soliciting material to
their principals and obtain authorization for the execution of proxies. First
Company does not expect to pay any compensation for the solicitation of proxies.
However, First Company will, upon request, pay the standard charges and expenses
of banks, brokerage houses, other institutions, nominees, and fiduciaries for
forwarding proxy materials to and obtaining proxies from their principals.
VOTING IN PERSON AT THE SPECIAL MEETING
Shareholders of Record. Shares held directly in your name as the
shareholder of record may be voted in person at the special meeting. If you
choose to vote your shares in person, please bring the enclosed proxy card or
proof of identification. Even if you plan to attend the special meeting, we
recommend that you vote your shares in advance as described above so that your
vote will be counted if you later decide not to attend the special meeting.
Beneficial Owner. Shares held in street name may be voted in person by
you only if you bring an account statement or letter from the nominee indicating
that you were the beneficial owner of the shares on the record date.
21
BACKGROUND OF AND REASONS FOR THE MERGER
BACKGROUND OF THE MERGER
First Company contacted Sheshunoff in mid-2008 and expressed an
interest in discussing strategic alternatives. Sheshunoff made a presentation to
First Company's board of directors in August 2008, discussing First Company's
possible value in the bank merger and acquisition marketplace, trends of
consolidation and increased competition in the financial services industry as
well as deteriorating credit quality across the industry, and merger and
acquisition activity on a regional basis. Sheshunoff was hired in September to
market First National Bank and began contacting selected potentially interested
parties regarding a potential acquisition of First Company. Glacier was one of
the financial institutions contacted due to its strong financial position,
commitment to community banking, and a perceived fit with the organization
culturally
On October 13, 2008, a representative of Sheshunoff contacted Michael
Blodnick, the Chief Executive Officer of Glacier, to inquire as to whether
Glacier might be interested in submitting a proposal for the merger or
acquisition of First Company. Mr. Blodnick expressed interest in receiving
additional information on the opportunity, and received an informational package
from Sheshunoff. Glacier and its investment banking advisor, D.A. Davidson & Co.
("Davidson"), reviewed the information, and on October 22, 2008, Glacier
delivered a letter to First Company expressing its interest in further pursuing
discussions toward a possible transaction.
On October 30, 2008, Mr. Blodnick and a representative of Davidson met
with First Company in Cody, Wyoming. Participants in the meeting included
Richard S. Nelson, Richard T. Nelson, Robert A. Nelson, Julie Sullivan, and a
representative of Sheshunoff. Matters discussed at the meeting included each
organization's community banking philosophy, Glacier's business model, First
Company's banking operations, asset quality, recent operating results, and
prospects, and First Company's desire to remain a separately-chartered community
bank serving northern Wyoming. At the same time, Glacier's chief credit officer
separately met with the chief credit officer and chief financial officer of
First National Bank & Trust to review and discuss the bank's loan portfolio and
various measures of asset quality. At the conclusion of the meetings, Glacier
expressed its interest in submitting a formal proposal for an acquisition or
merger transaction First Company, and First Company agreed to provide Glacier a
30 day period in which to submit its proposal.
During November, First Company and Sheshunoff furnished additional
information to Glacier, and Glacier and Davidson evaluated the information and
prepared financial analyses. On November 14, 2008, Richard S. Nelson, Richard T.
Nelson, and Robert A. Nelson met with Mr. Blodnick and a representative of
Davidson in Kalispell, Montana. Matters discussed and reviewed at the meeting
included Glacier's recently completed public stock offering, First Company's
assets and liabilities, First National Bank & Trust's asset quality, operating
results, and prospects, and the framework for a possible transaction structure.
On November 26, 2008, Glacier's board of directors met and approved
the submission of a term sheet for the acquisition of First National Bank &
Trust through the merger of First Company into Glacier. Glacier delivered a term
sheet setting forth the proposed terms of the transaction, including merger
consideration of $1.6 million in cash and 225,000 shares of Glacier common
stock, the distribution of certain out-of-market loan participations, and the
closing delivery of consolidated tangible equity of at least $16.5 million,
after giving effect to a $13.4 million capital contribution by Glacier. On
November 28, 2008, First Company's board of directors met with a representative
of Sheshunoff to review, consider, and approve the Glacier proposal.
During December, 2008 and January, 2009, Glacier, First Company, and
their respective financial and legal advisors conducted on-site and off-site due
diligence and drafted and negotiated the definitive merger agreement and related
ancillary agreements. On February 2, 2009, the parties agreed to modify the
terms of the transaction to provide for the distribution of an additional two
loans having a book value of approximately $1.9
22
million, to reduce the cash and stock consideration to $450,000 and 100,000
shares, to reduce the closing capital requirement to $15.25 million, and to
increase the amount of Glacier's capital contribution to $15.3 million.
On February 4, 2009, the board of directors of First Company met,
together with its legal counsel and Sheshunoff, to consider approval of the
merger agreement with Glacier. Sheshunoff presented its analysis and draft
opinion as to the fairness of the merger, from a financial point of view. Among
other matters discussed, the board held in-depth discussions on the specifics of
the merger agreement, the form and value of consideration to be received by the
shareholders of First Company, the asset distributions to be made prior to
consummation of the merger, the potential purchase price adjustments, the price
and historical performance of Glacier common stock, the timing and process for
consummation of the merger, the break-up fee, current market and regulatory
conditions, the implications of the merger to First Company's shareholders, and
the implications of the merger to First National Bank & Trust's employees,
customers, and communities. After due consideration of these and other matters,
and taking into consideration the fairness opinion to be delivered by
Sheshunoff, the First Company board of directors voted unanimously to approve
the merger.
On February 6, 2009, the board of directors of Glacier met to consider
approval of the merger. Matters discussed included the results of due diligence
reviews, the terms of the merger agreement and related documents, key pricing
metrics, risks of the merger, the pro forma financial impact of the merger, and
the timing and process for consummation of the merger. After due consideration
of these and other matters, the Glacier board approved the merger by unanimous
vote.
On February 6, 2009, Sheshunoff delivered its fairness opinion and
Glacier and First Company executed the merger agreement and related documents.
After the close of business on February 9, 2009, the parties issued a joint
press release announcing the execution of the merger agreement.
REASONS FOR THE MERGER - FIRST COMPANY
At a special meeting held on February 4, 2009, the First Company board
of directors unanimously determined that the terms of the merger agreement were
in the best interests of First Company and its shareholders. In the course of
reaching its decision to approve the merger agreement, the First Company board
of directors consulted with Sheshunoff, its financial advisor, and Christian
Samson Jones & Chisholm, PLLC, its legal counsel. In reaching its determination,
First Company's board of directors considered a number of factors. Such factors
also constituted the reasons that the board of directors determined to approve
the merger and to recommend that First Company's shareholders vote in favor of
the merger. Such reasons included the following:
- the terms of the merger agreement and the form of the
consideration, and the historical trading ranges for Glacier
common stock;
- the existence and effect of agreements between First Company and
its primary regulator, the Board of Governors of the Federal
Reserve, and First National Bank and its primary regulator, the
OCC, on the ability of First Company or First National Bank to
continue to operate
- the ability of First Company or First National Bank to raise
additional capital in order to meet projected needs and
requirements imposed by their respective regulators
- the availability or likelihood of other transactions for the sale
or merger of First Company or First National Bank or the sale of
their respective assets with parties other than Glacier in the
time frames required under obligations imposed on First Company
and First National Bank under regulatory requirements and
agreements;
- information concerning Glacier's financial condition and results
of operations as well as the likelihood that Glacier would be
able to obtain regulatory approval for the merger;
23
- the financial terms of recent business combinations in the
financial services industry and a comparison of the multiples of
selected combinations with the terms of the proposed acquisition
by with Glacier;
- the opinion of Sheshunoff that the merger consideration to be
received by First Company's shareholders in the merger is fair
from a financial point of view;
- the expectation that First Company shareholders would have the
opportunity to continue to participate in the growth of the
combined company and would also greatly benefit from the
significantly greater liquidity of the trading market for Glacier
common stock;
- that Glacier has historically paid cash dividends on its common
sock;
- the effects of the economic, regulatory and market pressures
facing First Company and community banks generally and First
National Bank's prospects as an independent bank;
- the determination that a business combination with Glacier would
extend First National Bank's lending capabilities and increase
the range of financial products and services available to First
National Bank's customers;
- the provisions in the merger agreement that provide for the
ability of the board of directors to respond to an unsolicited
acquisition proposal that the board of directors determines in
good faith is a superior proposal as defined in the merger
agreement;
- the provisions of the merger agreement that provide for the
ability of the First Company board of directors to terminate the
merger agreement, subject to certain conditions including the
payment of a break-up fee, if First Company has entered into a
letter of intent or other agreement with respect to a superior
proposal;
- the broad experience of Glacier's management team and its
particular experience in managing and supporting subsidiary banks
that have an emphasis on local decision making and authority;
- the likelihood of the merger being approved by applicable
regulatory authorities without undue conditions or delay;
- First Company's board's understanding of the business,
operations, financial conditions, earnings, management and future
prospects of Glacier, taking into account First Company's due
diligence investigation of Glacier, including, but not limited
to, debt service and other existing financial obligations, the
financial obligations to be incurred in connection with the
proposed transaction and other likely financial obligations of
Glacier and the possible effects of such obligations; and
- the current and prospective economic and competitive environment
facing the financial services industry generally, including
continued consolidation in the industry and the increased
importance of operational scale and financial resources in
maintaining efficiency and remaining competitive over the
long-term.
The First Company board of directors also considered a number of
uncertainties and risks in its deliberations concerning the transactions
contemplated by the merger agreement, including the following:
- that a portion of the merger consideration will be paid through
the issuance of a fixed number of shares of Glacier common stock
and any decrease in the market price of Glacier common stock will
result in a reduction in the aggregate merger consideration to be
received by First Company
24
shareholders at the time of completion of the merger subject to
the adjustment procedures described under "The
Merger--Termination of the Merger Agreement";
- that First Company shareholders will not necessarily know or be
able to calculate the actual value of the merger consideration
which they would receive upon completion of the merger;
- that the "break-up" fee provisions in the merger agreement could
have the effect of discouraging superior proposals for a business
combination between First Company and third parties;
- the possible disruption to First Company's business that may
result from the announcement of the merger and the resulting
distraction of management's attention from the day-to-day
operations of First Company's business; and
- the restrictions contained in the merger agreement on the
operation of First Company's business during the period between
signing of the merger agreement and completion of the merger, as
well as the other covenants and agreements of First Company
contained in the merger agreement.
The foregoing discussion of the reasons that led the First Company
board of directors to approve the merger and recommend that First Company's
shareholders vote in favor of the merger is not intended to be exhaustive, but
is believed to include all of the material reasons for the board of directors'
decision. In reaching its determination to approve and recommend the
transaction, the First Company board based its recommendation on the totality of
the information presented to it and did not assign any relative or specific
weights to the reasons considered in reaching that determination. Individual
directors may have given differing weights to different reasons. After
deliberating with respect to the merger with Glacier, considering, among other
things, the matters discussed above and the opinion of Sheshunoff referred to
above, the First Company board of directors unanimously approved and adopted the
merger agreement and the merger with Glacier as being in the best interests of
First Company and its shareholders.
OPINION OF FINANCIAL ADVISOR TO FIRST COMPANY
First Company retained Sheshunoff to provide its opinion as to the
fairness from a financial viewpoint of the merger consideration to the First
Company shareholders. As part of its investment banking business, Sheshunoff is
regularly engaged in the valuation of securities in connection with mergers and
acquisitions and valuations for estate, corporate and other purposes. First
Company's board of directors retained Sheshunoff based upon its experience as a
financial advisor in mergers and acquisitions of financial institutions and its
knowledge of financial institutions.
Sheshunoff is regularly engaged in the valuation of securities in
connection with mergers and acquisitions and valuations for estate, corporate
and other purposes. Sheshunoff is experienced in these activities and has
performed assignments similar in nature to that requested by First Company on
other occasions.
On February 6, 2009, Sheshunoff rendered its fairness opinion to First
Company's board of directors that, as of such date, the merger consideration was
fair, from a financial point of view, to the shareholders of First Company.
Sheshunoff has updated its fairness opinion as of the date of this proxy
statement/prospectus. The full text of the updated fairness opinion which sets
forth, among other things, assumptions made, procedures followed, matters
considered, and limitations on the review undertaken, is attached as Appendix C
to this proxy statement. You are urged to read Sheshunoff's fairness opinion
carefully and in its entirety. The fairness opinion is addressed to First
Company's board of directors and does not constitute a recommendation to any
First Company shareholder as to how he or she should vote at the special meeting
of First Company's shareholders.
In connection with the February 6, 2009 fairness opinion and its
updated opinion, Sheshunoff:
25
1. Reviewed the Merger Agreement dated February 6, 2009;
2. Reviewed First Company's financial statements for the period
ending September 30, 2008 and preliminary statements for the
period ending December 31, 2008;
3. Evaluated First Company's subsidiary bank's regulatory reports as
of September 30, 2008 and preliminary reports for the period
ending December 31, 2008;
4. Evaluated First Company's consolidated results based upon a
review of its regulatory reports for the five-year period ending
December 31, 2007;
5. Conducted conversations regarding recent and projected financial
performance of First Company with members of executive
management;
6. Compared First Company's recent operating results and pricing
multiples for First Company in the Merger with those of certain
other banks in the U.S. with assets between $50 million and $500
million that have recently been acquired;
7. Compared First Company's recent operating results and the pricing
multiples for First Company in the Merger to the public stock
trading levels of certain other banks in the western U.S. along
with consideration of recent control premiums paid for public
bank stocks in recent acquisitions of banks in the U.S.;
8. Reviewed the historical stock price data and trading volume of
Glacier's common stock;
9. Compared the historical stock price data and trading volume of
Glacier's common stock with that of certain other comparable
publicly traded companies;
10. Compared certain financial characteristics and performance
measures of Glacier with that of certain other comparable
publicly traded companies;
11. Compared the historical stock price performance of Glacier's
common stock with that of selected indices Sheshunoff deemed
relevant;
12. Held various on-site meetings with First Company's management to
discuss the potential sale of First Company; and
13. Performed such other analyses as we deemed appropriate.
In connection with its review, Sheshunoff relied upon and assumed the
accuracy and completeness of all of the foregoing information provided to it or
made publicly available, and Sheshunoff did not assume any responsibility for
independent verification of such information. Sheshunoff assumed that internal
confidential financial projections provided by First Company were reasonably
prepared reflecting the best currently available estimates and judgments of the
future financial performance of First Company, and did not independently verify
the validity of such assumptions.
Sheshunoff did not make any independent evaluation or appraisal of the
assets or liabilities of First Company or Glacier nor was Sheshunoff furnished
with any such appraisals. Sheshunoff did not examine any individual loan files
of First Company. Sheshunoff is not an expert in the evaluation of loan
portfolios and has assumed that loan losses have been adequately reflected.
26
Sheshunoff assumed that all required regulatory and third-party
approvals will be received in a timely fashion and without any conditions or
requirements that could adversely affect First Company, Glacier, the merger or
Glacier's operations following the merger. Sheshunoff assumed that there would
be no impediment to Glacier's ability to procure financing to fund the merger
consideration. Sheshunoff has also assumed that the executed merger agreement
will conform in all material respects to the latest draft of the merger
agreement provided to Sheshunoff.
The fairness opinion is necessarily based on economic, market and
other conditions as in effect on, and the information made available to
Sheshunoff as of February 4, 2009.
In rendering the fairness opinion, Sheshunoff performed a variety of
financial analyses. The preparation of an opinion involves various
determinations as to the most appropriate and relevant methods of financial
analysis and the application of those methods to the particular circumstances.
Consequently, the fairness opinion is not readily susceptible to partial
analysis or summary description. Moreover, the evaluation of fairness, from a
financial point of view, of the merger consideration is to some extent
subjective, based on the experience and judgment of Sheshunoff, and not merely
the result of mathematical analysis of financial data. Sheshunoff did not
attribute particular weight to any analysis or factor considered by it.
Accordingly, notwithstanding the separate factors summarized below, Sheshunoff
believes that its analyses must be considered as a whole and that selecting
portions of its analyses and of the factors considered by it, without
considering all analyses and factors, could create an incomplete view of the
evaluation process underlying its opinion. The ranges of valuations resulting
from any particular analysis described below should not be taken to be
Sheshunoff's view of the actual value of First Company, Glacier or the combined
entity.
In performing its analyses, Sheshunoff made numerous assumptions with
respect to industry performance, business and economic conditions and other
matters, many of which are beyond the control of First Company or Glacier. The
analyses performed by Sheshunoff are not necessarily indicative of actual values
or future results, which may be significantly more or less favorable than
suggested by such analyses. In addition, Sheshunoff's analyses should not be
viewed as determinative of the opinion of the board of directors or the
management of First Company with respect to the value of First Company or
Glacier or to the fairness of the merger consideration.
Pursuant to the merger agreement dated February 6, 2009 between the
parties, Glacier has agreed to exchange the aggregate of $450,000 in cash,
100,000 shares of Glacier common stock, and the Loan Participations (as defined
in the Merger Agreement) and certain other loans for all of the outstanding
shares of common stock of First Company, subject to certain adjustments and
pre-closing actions as provided in the Merger Agreement. The stock component is
subject to a cuff of $14.00 and collar of $21.00 based on the price performance
of Glacier common stock over the 10 trading days preceding the fifth trading day
immediately prior to the Effective Date. The merger consideration may be higher
or lower as of the Effective Date based upon the terms of the Agreement.
Pursuant to the Merger Agreement, First Company will merge with and into Glacier
and First National Bank & Trust will become a wholly-owned subsidiary of
Glacier.
The estimated total merger consideration to be paid reflects the cash
component, the Glacier stock valued at $16 per share (an approximate average
price of the stock as of February 4, 2009), the Loan Participations (as measured
by their recent book value), certain other loans (as measured by their recent
book value), and a distribution of investments to be made prior to closing.
Total merger consideration for these purposes was $17.8 million.
The following is a summary of the analyses performed by Sheshunoff in
connection with its opinion. The discussion utilizes financial information
concerning First Company as of December 31, 2008.
First Company Discounted Cash Flow Analysis: Using discounted cash
flow analysis, Sheshunoff estimated the present value of the future after-tax
cash flow streams that First Company could produce on a stand-
27
alone basis through the year 2013 under various circumstances, assuming that it
performed in accordance with the projections provided by First Company's
management. Such a 'going concern' analysis included the requisite capital raise
necessary to restore adequate capital to First Company and its banking
subsidiary.
Sheshunoff estimated the terminal value for First Company at the end
of 2013 by capitalizing the final period projected earnings using a discount
rate that is the quotient of (1) the assumed annual long-term growth rate of the
earnings of First Company of 3.25% and (2) the difference between a range of
required rates of return and the assumed annual long-term growth rate of
earnings in (1) above. Sheshunoff discounted the annual net income and the
terminal values using discount rates ranging from 14% to 16%. The discount range
was chosen to reflect different assumptions regarding the required rates of
return of First Company and the inherent risk surrounding the underlying
projections. This discounted cash flow analysis indicated a range of values of
$4.9 million to $2.8 million as shown in the table below compared to the
estimated net merger consideration of $17.8 million.
DISCOUNT RATE
14% 15% 16%
------ ------ ------
Present value (in thousands) $4,895 $3,731 $2,752
Analysis of Selected Transactions: Sheshunoff performed an analysis of
premiums paid in select, recently-announced acquisitions of banking
organizations with comparable characteristics to the merger. Two sets of
transactions were selected to ensure a thorough analysis.
The first set of comparable transactions consisted of a group of
selected transactions for banks with announced pricing, total assets between $50
million and $500 million, announced since August 1, 2008, and whose
nonperforming assets to total assets ratio was greater than 1% (First Company
had a 3.44% NPA/Assets ratio). These comparable transactions consisted of 10
mergers and acquisitions of banks with assets between $56 million and $403
million that were announced between August 18, 2008 and January 16, 2009. The
Glacier Offer multiples assume a transaction value of $17.8 million for the
analysis. The analysis yielded purchase price multiples in these transactions as
shown below:
PRICE/ PRICE/TG PRICE/LTM PRICE/ PRICE/ PREMIUM TO
BOOK BOOK EARNINGS ASSETS DEPOSITS DEPOSITS
(X) (X) (X) (%) (%) (%)
------ -------- --------- ------ -------- ----------
Maximum 2.68 2.68 44.9 26.6 31.7 13.24
Minimum 0.55 0.55 13.0 5.4 7.4 -6.82
Median 1.16 1.16 21.2 8.0 9.1 1.09
Glacier Offer 1.17 1.17 NM 6.3 7.3 1.05
The price as a multiple of book and tangible book in the merger were
slightly higher than the median multiple of those in comparable transactions.
The premium to deposit ratio was slightly lower than the median. The price to
latest twelve months (LTM) earnings did not produce a meaningful multiple as
First Company posted a net loss in 2008. Finally, price as a percentage of
assets and deposits were both lower than the median, but this ratio is
understated for the Glacier Offer as compared to the medians due to the fact
that the capital level of First Company is below the median for the group (First
Company had a capital ratio of 5.40% versus a median capital ratio of 8.17% for
the group).
The second set of comparable transactions consisted of the previous
group of selected transactions (banks with total assets between $50 million and
$500 million that were announced since August 1, 2008 and whose nonperforming
assets to total assets ratio was greater than 1%) along with the additional
constraint that recent
28
profitability as measured by ROAA was less than 0.50% (First Company's 2008 ROAA
was -1.25%). These comparable transactions consisted of seven mergers and
acquisitions of banks with assets between $56 million and $403 million that were
announced between September 17, 2008 and January 14, 2009. The Glacier Offer
multiples assume a transaction value of $17.8 million for the analysis. The
analysis yielded purchase price multiples in these transactions as shown below:
PRICE/ PRICE/TG PRICE/LTM PRICE/ PRICE/ PREMIUM TO
BOOK BOOK EARNINGS ASSETS DEPOSITS DEPOSITS
(X) (X) (X) (%) (%) (%)
------ -------- --------- ------ -------- ----------
Maximum 2.68 2.68 44.9 9.2 11.0 5.20
Minimum 0.55 0.55 44.9 5.4 7.4 -6.82
Median 1.05 1.14 44.9 6.9 8.4 0.41
Glacier Offer 1.17 1.17 NM 6.3 7.3 1.05
The price as a multiple of book, tangible book, and premium to
deposits in the merger were all higher than the median multiple of those in
comparable transactions. The price to latest twelve months (LTM) earnings did
not produce a meaningful multiple as First Company posted a net loss in 2008.
Finally, price as a percentage of assets and deposits were only slightly lower
than the median, but this ratio is understated for the Glacier Offer as compared
to the medians due to the fact that the capital level of First Company is below
the median for the group (First Company had a capital ratio of 5.40% versus a
median capital ratio of 7.29% for the group).
Analysis of Selected Publicly Traded Stocks: Sheshunoff also analyzed
select western U.S. publicly traded bank stocks along with recent M&A control
premiums in order to achieve a geographic comparison. Two sets of transactions
were selected to ensure a thorough analysis.
The first set of publicly traded bank stocks consisted of banks under
$5 billion in total assets with shares traded on the NASDAQ stock exchange. Only
banks based in the following western states were included: Wyoming, Montana,
Nevada, Idaho, Colorado, Oregon, Washington, Nebraska, North Dakota and South
Dakota. The analysis yielded 20 bank stocks. Also reviewed were recent control
premiums of publicly traded banks as measured by the premium paid to the stock
price one month prior to the announcement. The median premium paid for banks
under $500 million in total assets was approximately 40%. The Glacier Offer
pricing multiples as compared to the median trading multiples including a 40%
premium is shown below:
PRICE/ PRICE/ TG PRICE/LTM PRICE/ PREMIUM TO
BOOK (X) BOOK (X) EARNINGS (X) ASSETS (%) DEPOSITS (%)
-------- --------- ------------ ---------- ------------
Median with 40% premium 0.36 0.44 17.8 3.0 NM
Glacier Offer 1.17 1.17 NM 6.3 1.05
Note: Stock prices as of February 3, 2009
The price as a multiple of book, tangible book, and as a percent of
assets in the merger were all significantly higher than the median multiple of
the publicly traded banks. The price to latest twelve months (LTM) earnings did
not produce a meaningful multiple as First Company posted a net loss in 2008.
Finally, the median premium to deposits was negative for the public banks, while
the Glacier Offer implies a premium of 1.05%.
The second set of publicly traded bank stocks consisted of banks under
$5 billion in total assets with
29
shares traded on the NASDAQ stock exchange, as well as those traded
over-the-counter or on pink sheets. Only banks based in the following western
states were included: Wyoming, Montana, Nevada, Idaho, Colorado, Nebraska, North
Dakota and South Dakota. The analysis yielded 19 bank stocks. Also included was
the median premium paid for banks under $500 million in total assets of
approximately 40%. The Glacier Offer pricing multiples as compared to the median
trading multiples including a 40% premium is shown below:
PRICE/ PRICE/ TG PRICE/LTM PRICE/ PREMIUM TO
BOOK (X) BOOK (X) EARNINGS (X) ASSETS (%) DEPOSITS (%)
-------- --------- ------------ ---------- ------------
Median with 40% premium 0.70 0.78 9.9 5.9 NM
Glacier Offer 1.17 1.17 NM 6.3 1.05
Note: Stock prices as of February 3, 2009
The price as a multiple of book, tangible book, and as a percent of
assets in the merger were all higher than the median multiple of the publicly
traded banks. The price to latest twelve months (LTM) earnings did not produce a
meaningful multiple as First Company posted a net loss in 2008. Finally, the
median premium to deposits was negative for the public banks, while the Glacier
Offer implies a premium of 1.05%.
Comparable Company Analysis: Sheshunoff compared the operating and
market results of Glacier to the results of other publicly traded banking
companies. The comparable publicly traded companies were selected primarily on
the basis of two criteria: geographic location and total asset size. The
geographic location of the companies was select western and midwestern states
including Wyoming, Montana, Nevada, Idaho, Oregon, Washington, Nebraska, North
Dakota, South Dakota, Wisconsin and Iowa. Glacier was compared to banks with
total assets between $1 billion and $10 billion. The data for the following
table was based on GAAP financial information provided by SNL Financial with
financial information as of September 30, 2008. Some of the ratios presented are
proprietary to SNL Financial and may not strictly conform to the common industry
determination.
PEER
GLACIER GROUP MEDIAN
------- ------------
Net Interest Margin 4.61% 4.04%
Noninterest Income to Average Assets 1.24% 0.86%
Efficiency Ratio 49.6% 62.2%
Return on Average Assets 1.37% 0.55%
Tangible Equity to Tangible Asset Ratio 8.11% 7.39%
Tier 1 Risk-Based Capital Ratio 12.39% 10.05%
Non-performing Assets to Total Loans 1.75% 3.29%
Glacier's performance as measured by its return on average assets was
significantly higher than that of its peers, while Glacier's net interest margin
and noninterest income ratios were both higher than its peers. Glacier's asset
quality as measured by its ratio of non-performing assets to total loans was
significantly lower than the peer group median. Glacier's capital level was
generally higher than its peers with both the tangible equity to asset ratio and
tier 1 risk-based capital ratio being above the median of its peers.
Sheshunoff compared Glacier's trading results to these peers. The
results are contained in the following table. The data for the following table
were based on publicly available GAAP financial information and market data
provided by SNL Financial with financial information as of September 30, 2008.
30
PEER
GLACIER GROUP MEDIAN
------- ------------
Market Price as a Multiple of Stated Book Value 1.44x 0.47x
Market Price as a Multiple of Stated Tangible Book Value 1.89x 0.66x
Price as a Multiple of LTM Earnings 13.7x 11.5x
Market Price as a Percent of Assets 17.6% 4.6%
Market Price Premium over Book
Value to Deposits 9.18% -6.68%
Note: Stock prices as of February 3, 2009
Glacier's price-to-book multiples as measured by its market price as a
multiple of stated book value and its market price to stated tangible book
value, along with its price as a percent of assets and premium to deposits were
all significantly higher than the comparable peer group medians. Glacier's
price-to-earnings multiple as shown in the price as a multiple of latest twelve
months earnings for the period ending September 30, 2008 was slightly higher
than its peers.
Sheshunoff compared selected stock market results of Glacier to the
publicly available corresponding data of other composites that Sheshunoff deemed
to be relevant, including (1) the SNL index for all publicly traded banks in the
United States, (2) the SNL index of banks in the West region of the United
States, and (3) the SNL index of banks in the Midwest region of the United
States. Glacier's common stock price generally outperformed the selected indices
for the period from February 2008 until February 2009. For the period from
February 2006 through February 2009, Glacier's stock price also outperformed
each of the selected indices.
No company or transaction used in the comparable transaction and
comparable stock analysis is identical to First Company or Glacier. Accordingly,
an analysis of the results of the foregoing necessarily involves complex
considerations and judgments concerning differences in financial and operational
characteristics of First Company and Glacier and other factors that could affect
the public trading value of the companies to which they are being compared.
Mathematical analysis (such as determining the average or median) is not in and
of itself a meaningful method of using comparable transaction data or comparable
company data.
Pursuant to its engagement letter with First Company, Sheshunoff will
receive a fee of approximately $225,000 contingent upon the closing of the
merger (excluding the fairness opinion fee discussed below). In addition, First
Company agreed to reimburse Sheshunoff for its reasonable out-of-pocket
expenses. First Company also agreed to indemnify and hold harmless Sheshunoff
and its officers and employees against certain liabilities in connection with
its services under the engagement letter, except for liabilities resulting from
the negligence, violation of law or regulation or bad faith of Sheshunoff or any
matter for which Sheshunoff may have strict liability. Under the engagement
letter with First Company, Sheshunoff will also receive a fee of $25,000, plus
expenses, for rendering the fairness opinion, which is not contingent upon the
closing of the transaction.
The fairness opinion is directed only to the question of whether the
merger consideration is fair from a financial perspective and does not
constitute a recommendation to any First Company shareholder to vote in favor of
the merger. No limitations were imposed on Sheshunoff regarding the scope of its
investigation or otherwise by First Company.
Based on the results of the various analyses described above,
Sheshunoff concluded that the merger consideration to be paid by Glacier
pursuant to the merger is fair to First Company shareholders, from a financial
point of view.
31
RECOMMENDATION OF THE FIRST COMPANY BOARD
The board of directors of First Company has concluded that the
proposed merger as described in the merger agreement is in the best interest of
First Company and its shareholders. AFTER CAREFULLY CONSIDERING THE PROPOSED
MERGER, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF
FIRST COMPANY VOTE "FOR" THE APPROVAL OF THE MERGER AGREEMENT.
THE MERGER
The following is a brief description of the material aspects of the
merger. There are other aspects of the merger that are not discussed below but
that are contained in the merger agreement. You are being asked to approve the
merger in accordance with the terms of the merger agreement, and you are urged
to read the merger agreement carefully. The merger agreement is attached to this
proxy statement/prospectus as APPENDIX A.
BASIC TERMS OF THE MERGER
The merger agreement provides for the merger of First Company with and
into Glacier. Following the merger, First National Bank will operate as a wholly
owned subsidiary of Glacier.
In the merger, First Company shareholders will receive a combination
of Glacier common stock and cash for their First Company common stock, as
described below.
While Glacier and First Company believe that they will receive the
necessary regulatory approvals for the merger, there can be no assurance that
such approvals will be received or, if received, as to the timing of such
approvals or as to the ability to obtain such approvals on satisfactory terms.
See "--Conditions to the Merger" and "--Regulatory Requirements."
PRE-CLOSING ACTIONS TO BE TAKEN BY FIRST COMPANY AND/OR FIRST NATIONAL BANK
The merger agreement sets forth certain actions to be taken by First
Company, First National Bank and/or the principal shareholders of First Company
prior to the closing of the merger. Such actions are summarized below.
Bank Divestiture
Prior to the closing of the merger, First National Bank must sell or
otherwise dispose of its residential servicing portfolio and its trust company
and related business operations, with such sale or disposition to be completed
prior to or effective as of the closing date of the merger, on terms reasonably
acceptable to Glacier. This transaction is referred to in the merger agreement
as the "Bank Divestiture."
Pre-Closing Distributions
Prior to the closing of the merger, First Company and First National
Bank must have removed certain out-of-market loan participations, certain real
estate owned by First National Bank and not used in its business, a performing
loan and similar assets which Glacier required to be removed prior to the
closing of the merger (defined in the merger agreement as the "Excluded
Assets"). The Excluded Assets will be contributed to a Wyoming limited liability
company ("Newco") to be formed as a subsidiary of First National Bank,
membership interests in which will ultimately be distributed to all shareholders
holding First Company shares at the effective time of the merger. Assuming the
redemption of certain First Company shares prior to the closing of the merger as
discussed below, the Newco membership interests will be distributed solely to
the Principal Shareholders.
Excluded assets include:
32
- specified loans and/or loan participations, with an approximate book
value of $15.0 million and other real estate owned by First National
Bank resulting from foreclosure of loan participations ("Loan
Participations");
- the membership or other interests held by First Company, First
National Bank or Newco or such other entity or entities holding the
Loan Participations prior to closing of the merger;
- all First Company investments other than cash equivalents and First
Company's ownership interests in its statutory trust subsidiaries;
- the membership or other interests held by First National Bank in
community development limited liability companies; and
- any non-cash value received by First National Bank in consideration of
the Loan Participations.
The distributions of the Excluded Assets to Newco are referred to in the
merger agreement as the "Pre-Closing Distributions." The Pre-Closing
Distributions require the prior approval of the Federal Reserve Bank of Kansas
City and the Office of the Comptroller of the Currency ("OCC"), as applicable.
Redemption of Certain First Company Shares Prior to Closing
Pre-Closing Distributions as defined in the merger agreement also
includes the redemption of 129 shares of First Company held of record by First
Company's Employee Stock Ownership Plan ("ESOP") and the redemption of eight
"directors' qualifying shares" held by certain First Company and First National
Bank directors. Additionally, it is anticipated that 42 additional shares owned
by directors will also be redeemed prior to closing of the merger.
With respect to First Company shares held by the ESOP, the trustee of
the ESOP received the required annual valuation from Sheshunoff in its capacity
as advisor to the ESOP, as to the fair value of the First Company shares held by
the ESOP as of December 31, 2008. Such valuation is $1,843.94 per share and does
not take into consideration the proposed merger transaction or the distribution
of any assets, including the Excluded Assets. First Company intends to terminate
the ESOP and anticipates entering into an agreement with the ESOP trustee to
redeem the shares held by the ESOP immediately prior to the effective time of
the merger. The redemption agreement with the ESOP will provide for the
distribution of cash to participants immediately prior to closing, conditioned
upon the receipt by the ESOP of cash in redemption of all shares of First
Company held by the ESOP in an amount equal to the greater of (i) $1,843.00 per
share, or (ii) the amount per share established by an updated valuation to be
prepared by Seshunoff prior to closing of the merger (the "Redemption Price").
The eight directors' qualifying shares are subject to a repurchase
agreement providing for the redemption of such shares at the greater of (i) book
value, or (ii) $1,000.00 per share. First Company anticipates that such
directors' qualifying shares will be redeemed prior to closing of the merger. It
is also anticipated that the 42 other shares held by such directors that are not
subject to the repurchase agreement will be redeemed prior to the closing of the
merger, at a price per share equal to the Redemption Price.
A total of 80 additional First Company shares are owned by four
persons who are not Principal Shareholders. First Company intends to enter into
an agreement with such persons pursuant to which the shares owned by them will
be redeemed for cash immediately prior to the closing of the merger, at a per
share price equal to the Redemption Price. Such agreement, if entered into, will
provide for the waiver by such persons of their respective rights to receive any
interest in the Excluded Assets. Whether or not the 80 shares held by them are
redeemed prior to closing, such persons will not individually enter into the
Indemnification Agreement with Glacier described below.
33
The redemptions described above require the prior approval of the
Federal Reserve Bank of Kansas CITY and in the case of the redemption of ESOP
shares, the approval of the ESOP trustee.
In the event that approvals for the redemptions described above cannot
be obtained, it is anticipated that Glacier will waive this condition to the
closing of the merger. In such event, the ESOP participants, holders of
directors' qualifying shares, and the other non-Principal Shareholders, to the
extent the shares held by them are not redeemed, would be entitled to
participate in the merger and, in the absence of perfecting dissenters' rights,
would receive merger consideration from Glacier on the same terms as other First
Company shareholders. Such persons would also receive membership interests in
Newco as described above under "--Pre-Closing Distributions." Such shareholders
would not, however, individually enter into the Indemnification Agreement with
Glacier described below.
Notwithstanding the termination of the ESOP as described above, ESOP
participants will be have pass-through voting rights with respect to voting on
the merger agreement and will receive, in addition to this proxy statement,
certain additional disclosure and voting directive instructions from the ESOP
trustee.
It should be noted that Sheshunoff, which will provide the ESOP
valuations described above, is also the financial advisor to First Company in
connection with the merger.
Indemnification Agreement
The Principal Shareholders have (and Newco will, prior to closing)
entered into an Indemnification Agreement with Glacier, pursuant to which they
agree to jointly and severally indemnify Glacier against claims, losses,
liabilities incurred by Glacier or an affiliate of Glacier that arises from or
is in any way related to:
- any acts or omissions of First Company, First National Bank or their
affiliates relating to the Excluded Assets, the Pre-Closing
Distributions, the Loan Participations, or any other transfers of
First Company's assets undertaken in anticipation of the merger;
- Glacier's reporting of the merger as a reorganization under Section
368(a)(1) of the Internal Revenue Code;
- a Mortgage Servicing Purchase and Sale Agreement between First
National Bank and a third-party purchaser; and
- a specified litigation matter to which First National Bank is a party.
CAPITAL CONTRIBUTION TO BE MADE BY GLACIER UPON CLOSING
Upon the closing of the merger Glacier will make a capital
contribution to First National Bank in the amount of $15,300,000, less any
amounts received by First National Bank in cash after the date of the execution
of the merger agreement and applied to the principal balance of the Loan
Participations prior to closing.
MERGER CONSIDERATION
The merger agreement provides that as of the effective date of the
merger, each share of First Company common stock will be converted into the
right to receive an amount of merger consideration consisting of a combination
of Glacier common stock and cash, as described below.
34
The total merger consideration consists of a stock portion and a cash
portion, which will be determined in the following manner:
Stock Portion of Merger Consideration
The total stock consideration payable by Glacier is fixed at 100,000
shares of Glacier common stock. The total stock consideration may be adjusted
under certain circumstances if the trading price of Glacier stock immediately
prior to the closing of the merger is above or below specified amounts, as
described below under "-- Termination of the Merger Agreement."
Cash Portion of Merger Consideration
The total cash consideration payable by Glacier is $450,000. This
amount is subject to increase or reduction, as the case may be, on a dollar for
dollar basis, by the amount by which the "First Company Closing Capital" is
greater or less than $15,250,000.
The "First Company Closing Capital" is defined in the merger agreement
as an amount, as of the closing date of the merger, equal to First Company's
capital stock, surplus and retained earnings determined in accordance with
generally accepted accounting principles ("GAAP"), after giving effect to:
- the payment of all First Company "Transaction Fees" (as defined
in the merger agreement) and severance obligations;
- the Pre-Closing Distributions;
- the capital contribution to be made by Glacier to First National
Bank;
- adjustments, calculated in accordance with GAAP, for accumulated
other comprehensive income or loss as reported on the First
Company or First National Bank balance sheet
- amounts received by First National Bank in cash after February 6,
2008 and applied to the principal balance of the Loan
Participations prior to closing;
- the exclusion of any intangible assets; and
- the amount by which First National Bank's Allowance for Loan and
Lease Losses ("ALLL") at closing exceeds $5,000,000, if
applicable.
The value of the consideration (in a combination of Glacier stock and
cash) that a First Company shareholder will receive for each share of First
Company common stock is the sum of (i) the per-share cash consideration and (ii)
the per-share stock consideration, referred to collectively in the merger
agreement as the "merger consideration." The per-share cash consideration is the
amount obtained by dividing the $450,000 total cash consideration (increased or
reduced for any First Company Closing Capital adjustment) by the number of
shares of First Company common stock outstanding on the effective date of the
merger. The per-share stock consideration is the number of Glacier shares
determined by dividing 100,000 by the number of shares of First Company common
stock outstanding on the effective date of the merger.
Assuming for purposes of illustration only that (i) there is no
increase or reduction of the cash portion of the merger consideration, (ii) that
certain outstanding shares of First Company are redeemed prior to closing as
contemplated by the merger agreement, and (iii) the Glacier common stock is
valued at $______ (the closing price for Glacier common stock on March __,
2009), each share of First Company common stock would receive a value equal to
$_______, consisting of $55.57 in cash and 12.349 shares of Glacier common
stock.
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FRACTIONAL SHARES
No fractional shares of Glacier common stock will be issued to any
holder of First Company common stock in the merger. For each fractional share
that would otherwise be issued, Glacier will pay cash in an amount equal to the
fraction multiplied by the "GBCI Average Closing Price" calculated as provided
in the merger agreement. No interest will be paid or accrued on cash payable in
lieu of fractional shares of Glacier common stock.
EFFECTIVE DATE OF THE MERGER
Subject to the conditions to the obligations of the parties to
complete the merger as set forth in the merger agreement, the effective date of
the merger will occur as soon as practicable after such conditions have been
satisfied or waived. Subject to the foregoing, it is currently anticipated that
the merger will be consummated during the second quarter of 2009. Either Glacier
or First Company may terminate the merger agreement if the effective date does
not occur on or before July 31, 2009.
LETTER OF TRANSMITTAL
Prior to the closing of the merger, Glacier's exchange agent will send
a letter of transmittal to each person who was a First Company shareholder at
the effective time of the merger. This mailing will contain instructions on how
to surrender shares of First Company common stock in exchange for the merger
consideration that the holder is entitled to receive under the merger agreement.
All shares of Glacier common stock issued to the holders of First
Company common stock pursuant to the merger will be deemed issued as of the
effective date. Until you surrender your First Company stock certificates for
exchange, you will accrue, but will not be paid, any dividends or other
distributions declared after the effective date of the merger with respect to
Glacier common stock into which your shares have been converted. When you
surrender your certificates, Glacier will pay any unpaid dividends or other
distributions, as well as any merger consideration payable in cash, without
interest. After the effective time of the merger, there will be no transfers on
the stock transfer books of First Company of any shares of First Company common
stock. If certificates representing shares of First Company common stock are
presented for transfer after the completion of the merger, they will be
cancelled and exchanged for the merger consideration into which the shares of
First Company common stock represented by those certificates shall have been
converted.
If a certificate for First Company common stock has been lost, stolen
or destroyed, the exchange agent will issue the consideration properly payable
under the merger agreement upon receipt of appropriate evidence as to that loss,
theft or destruction, appropriate evidence as to the ownership of that
certificate by the claimant, and reasonable assurances, such as a bond or
indemnity, satisfactory to Glacier in consultation with First Company, and
appropriate and customary identification.
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following is a discussion of the material federal income tax
consequences of the merger that are generally applicable to a First Company
shareholder who is:
- a citizen or resident of the United States;
- corporation or other entity taxable as a corporation created in
or organized under the laws of the United States or ant political
subdivision thereof;
- an estate the income of which is subject to Untied States federal
income tax without regard to source; or
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- a trust, if a court within the United States is able to exercise
primary supervision over its administration and one or more
United States persons have the authority to control all of the
substantial decision of such trust.
This discussion is based on currently existing provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), existing regulations
thereunder (including final, temporary or proposed regulations) and current
administrative rulings and court decisions, all of which are subject to change.
Any such change, which may or may not be retroactive, could alter the tax
consequences described herein. The following discussion is intended only as a
general summary of the material federal income tax consequences of the merger
and is not a complete analysis or listing of all potential tax effects relevant
to a decision on whether to vote in favor of approval of the merger agreement.
This discussion assumes that First Company shareholders hold their
shares of First Company common stock as a capital asset within the meaning of
section 1221 of the Code. Further, it does not address all aspects of federal
income taxation that may be relevant to First Company shareholders in light of
their particular circumstances or that may be applicable to them if they are
subject to special treatment under the Code, including, without limitation,
shareholders who are subject to such special treatment because they are:
- financial institutions, mutual funds, dealers or brokers in
securities or insurance companies;
- tax-exempt organizations;
- S corporations, partnerships or other pass-through entities;
- non-United States persons;
- holders of First Company common stock whose shares are qualified
small business stock for purposes of section 1202 of the Code or
who may be subject to the alternative minimum tax provisions of
the Code; or
- holders of First Company common stock who received their shares
through the exercise of employee stock options or otherwise as
compensation or through a tax-qualified retirement plan.
Neither Glacier nor First Company will ask the Internal Revenue
Service ("IRS") to rule that the merger will be treated for United States
federal income tax purposes as a reorganization within the meaning of section
368(a) of the Code ("tax-free reorganization"). Moreover, neither Glacier nor
First Company will ask the IRS to rule on any other United States Federal income
tax consequences of the merger. However, both Glacier and First Company expect
to report the merger as a tax-free reorganization.
In a tax-free reorganization, a shareholder who exchanges its shares
of common stock in an acquired company for shares of common stock in an
acquiring company, plus cash, must generally recognize gain (but not loss) on
the exchange in an amount equal to the lesser of (1) the amount of gain realized
(i.e., the excess of the sum of the fair market value of the shares of acquiring
company common stock and cash received pursuant to the merger, excluding any
cash received in lieu of fractional shares, over the shareholder's adjusted tax
basis in its shares of acquired company common stock surrendered pursuant to the
merger), or (2) the amount of cash (excluding any cash received in lieu of
fractional shares) received pursuant to the merger. For this purpose, gain or
loss must be calculated separately for each identifiable block of shares
surrendered in the exchange, and a loss realized on one block of shares may not
be used to offset a gain realized on another block of shares with a different
holding period. Any recognized gain will generally be long-term capital gain if
the shareholder's holding period with respect to the acquired company common
stock surrendered is more than one year. If, however, the cash received has the
effect of the distribution of a dividend, the gain would be treated as a
dividend to the extent of the shareholder's ratable share of accumulated
earnings and profits as calculated for federal
37
income tax purposes. See "--Possible Treatment of Cash as a Dividend" below.
Current law is unclear, however, on whether the foregoing rules apply if the
acquired company is an S corporation, such as First Company. If its does not,
then the cash received in the exchange may be treated as a nontaxable
distribution to the shareholders, to the extent of First Company's accumulated
adjustments account (AAA), and then as a dividend, to the extent of First
Company's accumulated earnings and profits. The amount of cash received in
excess of the AAA and accumulated earnings and profits would be treated first as
a return of the shareholder's adjusted tax basis in its shares of First Company
common stock and then as capital gain, if such shares are a capital asset in the
shareholder's hands.
The aggregate tax basis of Glacier common stock received by a First
Company shareholder who exchanges shares of First Company common stock for a
combination of Glacier common stock and cash pursuant to the merger (before
reduction for the basis in any fraction shares deemed received and exchanged for
cash) will be equal to the aggregate adjusted tax basis of its shares of First
Company common stock surrendered for Glacier common stock and cash, reduced by
the amount of cash received by the shareholder pursuant to the merger (other
than cash received in lieu of a fractional share), and increased by the amount
of gain (including any portion of the gain that is treated as a dividend as
described below), if any, recognized by the shareholder on the exchange (other
than gain recognized as a result of cash received in lieu of a fractional
share). The holding period of the Glacier common stock will include the holding
period of its shares of First Company common stock surrendered. If a First
Company shareholder has differing basis or holding periods in respect of its
shares of First Company common stock, the shareholder should consult its tax
advisor prior to the exchange with regard to identifying the basis or holding
periods of the particular shares of Glacier common stock received in the
exchange.
Possible Treatment of Cash as a Dividend. In general, the
determination of whether the gain recognized in the exchange will be treated as
capital gain or has the effect of a distribution of a dividend depends upon
whether and to what extent the exchange reduces the shareholder's deemed
percentage stock ownership of Glacier. For purposes of this determination, the
shareholder is treated as if it first exchanged all of his, hers or its shares
of First Company common stock solely for Glacier common stock and Glacier then
immediately redeemed (the "deemed redemption") a portion of the Glacier common
stock in exchange for the cash the shareholder actually received. The gain
recognized in the exchange followed by a deemed redemption will be treated as
capital gain if the deemed redemption is (1) substantially disproportionate with
respect to the shareholder, or (2) not essentially equivalent to a dividend.
The deemed redemption, generally, will be substantially
disproportionate with respect to a shareholder if the shareholder owns, actually
and constructively, (i) less than 50% of the total combined voting power of all
classes of Glacier stock entitled to vote and (ii) less than 80% of the
percentage of Glacier stock the shareholder actually and constructively owned
before the deemed redemption. Whether the deemed redemption is not essentially
equivalent to a dividend with respect to a shareholder will depend upon the
particular circumstances of the shareholder. At a minimum, however, in order for
the deemed redemption to be not essentially equivalent to a dividend, the deemed
redemption must result in a meaningful reduction in the shareholder's actual and
constructive percentage stock ownership of Glacier. In general, that
determination requires a comparison of (1) the percentage of the outstanding
stock of Glacier the shareholder is deemed to actually and constructively own
immediately before the deemed redemption and (2) the percentage of the
outstanding stock of Glacier the shareholder actually and constructively owns
immediately after the deemed redemption. In determining whether the deemed
redemption is substantially disproportionate or not essentially equivalent to a
dividend, a shareholder is deemed to own stock actually owned and, in some
cases, constructively owned, by certain family members, by certain estates and
trusts of which the shareholder is a beneficiary, and by certain affiliated
entities. As these rules are complex, each shareholder that may be subject to
these rules should consult its tax advisor. The Internal Revenue Service has
ruled that a relatively minor reduction in the percentage stock ownership of a
minority shareholder in a publicly held corporation whose relative stock
interest is minimal and who exercises no control with respect to corporate
affairs is a meaningful reduction.
38
Cash Received in Lieu of a Fractional Share. Cash received by a First
Company shareholder in lieu of a fractional share of Glacier common stock
generally will be treated as received in redemption of the fractional share, and
gain or loss generally will be recognized based on the difference between the
amount of cash received in lieu of the fractional share and the portion of the
shareholder's adjusted tax basis of its shares of First Company common stock
surrendered allocable to the fractional share. Such gain or loss generally will
be long-term capital gain or loss if the holding period for such shares of First
Company common stock is more than one year.
Dissenting Shareholders. First Company shareholders who dissent with
respect to the merger, as discussed in "Dissenters' Rights," and who receive
cash in respect of their shares of First Company common stock, and who own such
shares as a capital asset and who do not actually or constructively own shares
of Glacier after the merger, will recognize gain or loss in an amount equal to
the difference between the amount of cash received in the exchange and the
shareholder's tax basis in his or her shares of First Company common stock. The
gain or loss will be long-term capital gain or loss if the shares of First
Company were held for more than one year.
Non-Tax-Free Reorganization Treatment. If the IRS disagrees with
treatment of the merger as a tax free-reorganization, then the foregoing
description of the tax consequences of the merger will not apply. Instead, First
Company would be deemed to have sold all of its assets to Glacier in a taxable
transaction and distributing the Glacier common stock and cash to its
shareholders in a complete liquidation. Each First Company shareholder would
recognize its share of the gain or loss recognized by First Company on the
deemed sale of all of its assets. The gain or loss would be either capital or
ordinary, depending on the character of each of the assets deemed sold. A
shareholder's adjusted tax basis in its shares of First Company common stock
would be increased or decreased by the share of gain or loss recognized by the
shareholder. The shareholder would not recognize any further gain or loss on the
deemed receipt of Glacier common stock and cash from First Company in complete
liquidation, except to the extent the sum of the fair market value of the
Glacier common stock and cash received by the shareholder is greater or less
than the shareholder's adjusted tax basis in its shares of First Company common
stock. If the shareholder has held the shares of First Company common stock as a
capital asset for more than one year, then the gain or loss will be long-term
capital gain or loss.
Backup Withholding. Non-corporate shareholders of First Company may be
subject to information reporting and backup withholding on any cash payments
they receive. Shareholders will not be subject to backup withholding, however,
if they:
- furnish a correct taxpayer identification number and certify
under penalty of perjury that they are not subject to backup
withholding on the substitute Form W-9 or successor form included
in the election form/letter of transmittal they will receive; or
- are otherwise exempt from backup withholding.
Any amounts withheld under the backup withholding rules will be
allowed as a refund or credit against a shareholder's federal income tax
liability, provided he or she furnishes the required information to the IRS.
Reporting Requirements. Shareholders who receive Glacier common stock
as a result of the merger will be required to retain records pertaining to the
merger and each shareholder will be required to file with such shareholder's
federal income tax return for the year in which the merger takes place a
statement setting forth certain facts relating to the merger. First Company
shareholders will be responsible for the preparation of their own tax returns.
THE FOREGOING IS A GENERAL SUMMARY OF THE MATERIAL FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER TO FIRST COMPANY SHAREHOLDERS, WITHOUT REGARD TO THE
PARTICULAR FACTS AND CIRCUMSTANCES OF EACH SHAREHOLDER'S TAX SITUATION AND
STATUS. IN ADDITION, THERE MAY BE RELEVANT STATE, LOCAL, FOREIGN OR OTHER TAX
CONSEQUENCES, NONE OF WHICH IS DESCRIBED ABOVE. BECAUSE CERTAIN TAX CONSEQUENCES
OF THE MERGER MAY VARY
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DEPENDING ON THE PARTICULAR CIRCUMSTANCES OF EACH SHAREHOLDER, EACH FIRST
COMPANY SHAREHOLDER SHOULD CONSULT ITS OWN TAX ADVISOR REGARDING ITS SPECIFIC
TAX SITUATION AND STATUS, INCLUDING THE SPECIFIC APPLICATION OF STATE, LOCAL AND
FOREIGN LAWS TO SUCH SHAREHOLDER AND THE POSSIBLE EFFECT OF CHANGES IN FEDERAL
AND OTHER TAX LAWS.
VOTING AGREEMENT
The directors and principal shareholders of First Company and the
directors of First National Bank have entered into a Voting Agreement, dated as
of February 6, 2009. In the Voting Agreement, each signing director or principal
shareholder agrees, among other things, to vote the shares of First Company
common stock that he or she owns or controls in favor of the merger. The
directors and principal shareholders who have entered into this Voting Agreement
are entitled to vote a total of 8,148 outstanding shares of First Company common
stock, which is 97.5% of the total shares outstanding.
DISSENTERS' RIGHTS OF APPRAISAL
Under the Wyoming Business Corporation Act :("WBCA"), First Company
shareholders are entitled to exercise dissenters' rights and to receive the fair
value in cash of their shares of First Company common stock if they fully comply
with the provisions of the WBCA relating to dissenters' rights, if the merger
agreement is approved and the merger is consummated. The following summary of
the WBCA provisions with respect to dissenters' rights is qualified in its
entirety by reference to those statutes. SHAREHOLDERS ANTICIPATING EXERCISING
DISSENTERS' RIGHTS WITH RESPECT TO THE MERGER ARE STRONGLY ENCOURAGED TO CONSULT
THEIR LEGAL COUNSEL AND TAX, FINANCIAL AND OTHER ADVISORS.
The WBCA requires that shareholders be accorded dissenters' rights in
connection with the proposed merger transaction. A copy of the relevant portions
of the WBCA, Sections 17-16-1301 through 17-16-1331 are included as APPENDIX B.
The following discussion of dissenters' rights is qualified in its entirety by
reference to those statutes.
A shareholder may elect to dissent from the proposed merger
transaction and, upon consummation of the transaction, to receive the "fair
value" of such shareholder's First Company stock.
In order to properly exercise dissenters' rights the shareholder must:
- Not vote in favor of the proposed merger; and
- Prior to the time of the vote taken by First Company shareholders,
notify First Company of the shareholder's intent to exercise
dissenters' rights.
Except in limited circumstances stated in the WBCA, a shareholder
electing to assert dissenters' rights must assert such rights with respect to
all shares of First Company stock beneficially owned by the shareholder. A
notice of intent to demand payment under dissenters' rights given to First
Company shareholders must be in writing. IF A SHAREHOLDER FAILS TO MEET THE
REQUIREMENTS FOR ASSERTION OF DISSENTERS' RIGHTS SUCH SHAREHOLDER IS NOT
ENTITLED TO PAYMENT FOR HIS OR HER SHARES UNDER THE WBCA.
If a shareholder properly asserts dissenters' rights and the proposed
merger is consummated, Glacier, as the surviving corporation in the merger, will
send each shareholder who has properly exercised dissenters' rights a
dissenter's notice, notifying the shareholder of, among other things, the
completion of the merger and providing the shareholder instructions for the
deposit of certificates representing the dissenter's First Company shares and
supplying a form for demanding payment. A DISSENTING SHAREHOLDER FAILING TO
TIMELY DEMAND PAYMENT OR TO DEPOSIT CERTIFICATES REPRESENTING THE DISSENTED
FIRST COMPANY STOCK IS NOT THEREAFTER ENTITLED TO RECEIVE PAYMENT FOR HIS OR HER
SHARES UNDER THE WBCA.
40
Glacier, as the surviving corporation in the merger, is required to
pay all dissenting First Company shareholders who have properly and timely
exercised dissenters' rights, deposited certificates and demanded payment of the
"fair value" for their shares of First Company stock. The amount of payment is
determined by Glacier and made to dissenting shareholders within time frames
specified by the WBCA. If a shareholder is dissatisfied with the amount of the
payment determined by Glacier, such shareholder may notify Glacier in writing,
within 30 days after Glacier made or offered to make payment, of the
shareholder's own estimate of the fair value of his or her shares and demand
payment for such amount (less any payment made by Glacier). Glacier may, after
the receipt of such demand, elect to pay the additional amount demanded or,
within 60 days following receipt of such demand, commence a legal proceeding for
a determination of the "fair value" of the shares.
CONDITIONS TO THE MERGER
Consummation of the merger is subject to various conditions. No
assurance can be provided as to whether these conditions will be satisfied or
waived by the appropriate party. Accordingly, there can be no assurance that the
merger will be completed.
Certain conditions must be satisfied or events must occur before the
parties will be obligated to complete the merger. Each party's obligations under
the merger agreement are conditioned on satisfaction by the other party of
conditions applicable to them. Some of these conditions, applicable to the
respective obligations of both Glacier and First Company, are as follows:
- approval of the merger by First Company shareholders;
- accuracy of the other party's representations in the merger agreement
and any certificate or other instrument delivered in connection with
the merger agreement;
- compliance by the other party of all material terms, covenants, and
conditions of the merger agreement;
- that there shall have been no damage, destruction, or loss, or other
event or sequence of events, that has had or potentially may have a
material adverse effect with respect to the other party;
- that no action or proceeding has been commenced or threatened by any
governmental agency to restrain or prohibit or invalidate the merger;
- the parties shall have agreed on the amount of the First Company
Closing Capital;
- the receipt of all necessary approvals for the Bank Divestiture and
the Pre-Closing Distributions will have been obtained; and
- the registration statement filed with the SEC, required to register
the Glacier common stock to be issued to shareholders of First
Company, has become effective, and no stop-order suspending such
effectiveness has been issued and no proceedings for that purpose have
been initiated or threatened by the SEC.
In addition to the above, the obligations of Glacier under the merger
agreement are subject to conditions that include the following:
- employment agreement between First National Bank and Richard T.
Nelson shall be in effect as of the closing date of the merger
- the Indemnification Agreement shall be in effect as of the
closing date of the merger with Newco and all principal
shareholders of First Company;
41
- First National Bank's ALLL shall be at least $5,000,000;
- the First Company Closing Capital will not be less that
$15,000,000; and
- the Bank Divestiture and the Pre-Closing Distributions will have
been completed in accordance with all necessary regulatory
approvals obtained.
Additionally, either Glacier or First Company may terminate the merger
if certain conditions applicable to the other party are not satisfied or waived.
Those conditions are discussed below under "-Termination of the Merger
Agreement."
Either Glacier or First Company may waive any of the other party's
conditions, except those that are required by law (such as receipt of regulatory
approvals and First Company shareholder approval). Either Glacier or First
Company may also grant extended time to the other party to complete an
obligation or condition.
AMENDMENT OF THE MERGER AGREEMENT
The merger agreement may be amended upon authorization of the boards
of directors of the parties, whether before or after the First Company special
meeting of the shareholders. To the extent permitted under applicable law, the
parties may make any amendment or supplement without further approval of First
Company shareholders. However, after shareholder approval, any amendments that
would reduce the amount or change the form or reducing the amount of
consideration First Company shareholders will receive in the merger or the
allocation would require further First Company shareholder approval.
TERMINATION OF THE MERGER AGREEMENT
The merger agreement contains several provisions entitling either
Glacier or First Company to terminate the merger agreement under certain
circumstances. The following briefly describes these provisions:
Lapse of Time. If the merger has not been consummated on or before
July 31, 2009, then at any time after that date, the board of directors of
either Glacier or First Company may terminate the merger agreement and the
merger if (i) the terminating party's board of directors decides to terminate by
a majority vote of all if its members, and (ii) the terminating party delivers
to the other party written notice that its board of directors has voted in favor
of termination.
Mutual Consent. The parties may terminate the merger agreement at any
time before closing, whether before or after approval by First Company
shareholders, by mutual consent if the board of directors of each party agrees
to terminate by a majority vote of all of its members.
Glacier Average Closing Price Greater than $21.00. By specific action
of its board of directors, Glacier may terminate the merger agreement if the
Glacier average closing price (as defined in the merger agreement) is greater
than $21.00.
If Glacier provides written notice of its intent to terminate the
merger agreement because the Glacier average closing price is greater than
$21.00, First Company may elect, within two business days of its receipt of such
notice, to accept an adjustment to the total stock consideration through the
issuance of fewer Glacier shares; in such event, the total stock consideration
will be the number of Glacier shares equal to the quotient obtained by dividing
$2,100,000 by the Glacier average closing price. If First Company makes the
election to accept such decrease in the number of Glacier shares to be issued,
no termination of the merger agreement will occur, and the merger agreement will
remain in effect in accordance with its terms, except as the total stock
consideration has been adjusted.
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Glacier Average Closing Price Less than $14.00. By specific action of
it board of directors, First Company may terminate the merger agreement if the
Glacier average closing price is less than $14.00.
If First Company provides written notice of its intent to terminate
the merger agreement because the Glacier average closing price is less than
$14.00, Glacier may elect, within two business days of its receipt of such
notice, to adjust the total stock consideration through the issuance of
additional Glacier shares; in such event, the total stock consideration will be
the number of Glacier shares equal to the quotient obtained by dividing
$1,400,000 by the Glacier average closing price. If Glacier elects to increase
the number of Glacier shares to be issued, no termination of the merger
agreement will occur, and the merger agreement will remain in effect in
accordance with its terms, except as the total stock consideration has been
adjusted.
No Regulatory Approvals. Either party may terminate the merger
agreement if the regulatory approvals required to be obtained are denied, or if
any such approval is conditioned on a substantial deviation from the
transactions contemplated by the merger agreement, subject to certain rights
granted in the merger agreement to appeal the denial of such regulatory
approval.
Breach of Representation or Covenant. Either party may terminate the
merger agreement (so long as the terminating party is not then in material
breach of any of its representations, warranties, covenants or agreements in the
merger agreement) if there has been a material breach of any covenants or
agreements set forth in the merger agreement by the other party, which is not
cured within 30 days following written notice to the party committing such
breach, or which breach, by its nature, cannot be cured prior to the closing of
the merger.
Failure to Recommend or Obtain Shareholder Approval. Glacier may
terminate the merger agreement (so long as it is not then in material breach of
any of its representations, warranties, covenants or agreements in the merger
agreement), if (i) the First Company board of directors fails to recommend to
its shareholders approval of the merger, or (ii) modifies, withdraws or changes
in a manner adverse to Glacier its recommendation to shareholders to approve the
merger. Additionally, regardless of whether the First Company board of directors
recommends approval of the merger to its shareholders, Glacier may terminate the
merger agreement if First Company shareholders elect not to approve the merger.
Impracticability. Either party may terminate the merger agreement upon
written notice to the other party if the board of directors of the party seeking
termination has determined in its sole judgment, made in good faith and after
due consideration and consultation with counsel, that the merger has become
inadvisable or impracticable by reason of actions taken by the federal
government or the government of the States of Montana or Wyoming to restrain or
invalidate the merger or the merger agreement.
Potential Dissenting Shares. Glacier may terminate the merger
agreement if holders of 10% or more of the outstanding shares of First Company
common stock are proposed dissenting shares (as defined in the merger
agreement).
Superior Proposal --Termination by First Company. First Company may
terminate the merger agreement if its board of directors determines in good
faith that First Company has received a "Superior Proposal" as defined in the
merger agreement. This right is subject to the requirement that First Company
may terminate the merger agreement only if First Company (i) has not breached
its covenants regarding the initiation or solicitation of acquisition proposals
from third parties; and (ii) subsequent to delivering the notice of termination
to Glacier, First Company intends to enter into a letter of intent, acquisition
agreement or similar agreement relating to such Superior Proposal, (iii) First
Company has provided Glacier with at least five business days prior notice that
First Company intends to accept a Superior Proposal and given Glacier, if it so
elects, an opportunity to amend the terms of the merger agreement (negotiated in
good faith between Glacier and First Company) in such a manner as would enable
First Company to proceed with the merger and (iv) simultaneously upon entering
into a letter of intent or agreement relating to the Superior Proposal, it
delivers to Glacier the break-up fee described below.
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Superior Proposal -- Termination by Glacier. Glacier may terminate the
merger agreement if (i) an "Acquisition Event" (as defined in the merger
agreement) has occurred or (ii) a third party has made a proposal to First
Company or its shareholders to engage in, or has entered into an agreement with
respect to, an Acquisition Event, and the merger agreement and the merger are
not approved at the special meeting of First Company shareholders.
TERMINATION FEES
Subject to certain exceptions, First Company will pay Glacier a
termination fee of $200,000 if Glacier terminates the merger agreement based on
a First Company breach of its representations or breach of its covenants.
Glacier will pay First Company a termination fee of $200,000 if First Company
terminates the merger agreement based on a Glacier breach of its representations
or breach of its covenants.
BREAK-UP FEE
If the merger agreement is terminated because (i) the First Company
board of directors fails to recommend shareholder approval of the merger
agreement; or (ii) First Company terminates the merger agreement after receiving
a "Superior Proposal" (as defined in the merger agreement) and Glacier declines
the opportunity to amend the terms of the merger agreement to enable First
Company's board of directors to proceed with the merger; or (iii) Glacier
terminates the merger agreement after First Company's receipt of a Superior
Proposal followed by an immediate Acquisition Event, then First Company will
immediately pay Glacier a break-up fee of $1,000,000. If the merger agreement is
terminated by Glacier due to First Company's receipt of a proposal to enter into
an Acquisition Event and the merger agreement and merger are not approved at the
shareholders' meeting, and prior to or within six months after such termination,
First Company or First National Bank enters into an agreement, or publicly
announces an intention, to engage in an Acquisition Event, or within 12 months
after such termination an Acquisition Event has occurred, then First Company
will promptly pay to Glacier the break-up fee in the amount of $1,000,000.
ALLOCATION OF COSTS UPON TERMINATION
If the merger agreement is terminated (except under circumstances that
would require the payment of a termination fee or break-up fee) Glacier and
First Company will each pay their own out-of-pocket expenses incurred in
connection with the transaction and, except for any applicable termination or
break-up fees, will have no other liability to the other party.
CONDUCT PENDING THE MERGER
The merger agreement provides that, until the merger is effective,
First Company will conduct its business only in the ordinary and usual course.
The merger agreement also provides that, unless Glacier otherwise consents in
writing, and except as required by applicable regulatory authorities, or with
respect to the Excluded Assets, First Company will refrain from engaging in
various activities such as:
- effecting any stock split or other recapitalization with respect
to First Company or First National Bank, or pledge or encumber
any shares of First Company or First National Bank stock or grant
any options for such stock;
- except as specifically permitted under the terms of the merger
agreement, declaring or paying any dividends, or making any other
distributions;
- acquiring, selling, transferring assigning or encumbering or
otherwise disposing of assets or making any commitment other than
in the ordinary course of business other than the Pre-Closing
Distributions or as specifically permitted by the merger
agreement;
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- soliciting or accepting deposit accounts of a different type than
previously accepted by First National Bank or at rates materially
in excess of prevailing interest rates, or, with specified
exceptions, incurring any indebtedness for borrowed money;
- offering or making loans or other extensions of credit of a
different type, or applying different underwriting standards,
from those previously offered or applied by First National Bank,
or offering or making a loan or extension of credit in an amount
greater than $500,000 without prior consultation with Glacier;
- with specified exceptions, acquiring an ownership or leasehold
interest in real property without conducting an appropriate
environmental evaluation;
- with specified exceptions, entering into, renewing, amending or
terminating any contracts calling for a payment of more than
$25,000, with a term of one year or more;
- with specified exceptions, entering into or amending any contract
calling for a payment of more than $25,000, unless the contract
may be terminated without cause or penalty upon 30 days notice or
less;
- with specified exceptions, entering into any personal services
contract;
- with respect to First National Bank only, selling any securities
other than in the ordinary course of business, or selling any
securities even in the ordinary course of business if the
aggregate gain or loss realized from all sales after the date of
execution of the merger agreement would exceed $25,000, or
transferring investment securities between portfolios;
- with specified exceptions, amending or materially changing its
operations, policies or procedures;
- other than in accordance with binding existing commitments,
making capital expenditures in excess of $25,000 per project or
related series of projects or $50,000 in the aggregate;
- entering into material transactions or making any material
expenditures other than in the ordinary course of business except
for expenses reasonably related to the completion of the merger.
FIRST NATIONAL BANK MANAGEMENT AND OPERATIONS AFTER THE MERGER
Effective at the closing of the merger, the board of directors of
First Company will tender their resignations. The current board of directors is
composed of 9 individuals, all of whom are also directors of First National
Bank. Subsequent to the closing of the merger, the board of directors of First
National Bank will include certain current members of the existing board of
directors.
As described below under "-Interests of Certain Persons in the
Merger," Richard T. Nelson, President of First Company and First National Bank,
has entered into an employment agreement with First Company and First National
Bank, effective upon the closing of the merger, pursuant to which he will serve
as President and Chief Executive Officer of First National Bank.
EMPLOYEE BENEFIT PLANS
The merger agreement confirms Glacier's intent that Glacier's current
personnel policies and benefits will apply to any employees of First Company and
First National Bank who remain employed following the closing of the merger.
Such employees will be eligible to participate in all of the benefit plans of
Glacier that are generally available to similarly-situated employees of Glacier.
For purposes of participation in such plans, service with First Company or First
National Bank prior to the merger will constitute prior service with Glacier for
purposes of
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determining eligibility and vesting. For purposes of such participation, current
employees' prior service with First Company and/or First National Bank will
constitute prior service with Glacier for purposes of determining eligibility
and vesting, including vacation time and participation and benefits under
Glacier's Severance Plan for employees in effect at the time of any termination.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of the First Company board of directors and management
may be deemed to have interests in the merger, in addition to their interests as
shareholders of First Company generally. The First Company board of directors
was aware of these factors and considered them, among other things, in approving
the merger agreement.
Stock Ownership. The First Company directors and their spouses
beneficially owned, as of the record date for the special meeting, 5,262 shares
of First Company common stock, representing 63% of all outstanding First Company
shares. The directors of First Company will receive the same consideration in
the merger for their shares as other shareholders of First Company.
Voting Agreements. The directors of First Company and First National
Bank, together with the principal shareholders of First Company, have entered
into a Voting Agreement, dated as of the date of the merger agreement. Pursuant
to the voting agreement, each signing director and principal shareholder agrees
to vote the shares of First Company common stock that he or she owns or controls
in favor of the merger.
Employment Agreements.
Richard T. Nelson.
Mr. Nelson, First Company's President, has entered into an employment
agreement, ratified by Glacier, with First Company and First National Bank. The
employment agreement provides that Mr. Nelson will serve as President and Chief
Executive Officer of First National Bank following the merger. The employment
agreement, which becomes effective on the date of the closing of the merger, is
for a three-year term.
The employment agreement provides for an annualized salary of
$144,051, with subsequent salary increases subject to First National Bank's
annual review of his compensation and performance. Until such time as Mr. Nelson
becomes eligible to participate in Glacier's short term incentive plan and long
term incentive plan for bank presidents, his bonuses, if any, will be determined
by First National Bank's board of directors in conjunction with Glacier's
President and Chief Executive Officer.
The employment agreement provides that if Mr. Nelson's employment is
terminated without cause (as defined in the agreement) or resigns with good
reason (as defined in the agreement), then contingent upon his execution of a
release agreement, First National Bank will pay him a lump-sum payment equal to
one times his annual base salary at the time of termination ("Termination
Payment").
The employment agreement provides that during the period of his
employment and for a period of one year after termination of employment, Mr.
Nelson will not engage in specified activities within Park or Big Horn Counties
in Wyoming that are competitive with the business of First National Bank or
Glacier.
First Company Director and Principal Shareholder Non-Competition
Agreement. Certain members of the board of directors of First Company and
certain members of the board of directors of First National Bank, together
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with certain principal shareholders of First Company, have entered into a
non-competition agreement with Glacier, First Company and First National Bank.
Except under certain limited circumstances, the non-competition agreement
prohibits such directors and principal shareholders from competing with Glacier
and First National Bank within Park or Big Horn Counties in Wyoming. The term of
the non-competition agreement commences upon the effective date of the merger
and continues until the later of (i) three years following the closing of the
merger or (ii) in the case of a First Company or First National Bank director,
one year following termination of such director's service on the board of
directors of First National Bank.
Indemnification of Directors and Officers; Insurance. The merger
agreement provides that Glacier will, for a period of four years following the
closing of the merger, indemnify the present and former directors and officers
of First Company and First National Bank against liabilities or costs that may
arise in the future, incurred in connection with claims or actions arising out
of or pertaining to matters that existed or occurred prior to the effective date
of the merger (but excluding, to the extent such officer or director is an
indemnifying party under the Indemnification Agreement, any claims for
indemnification made against such former officer or director pursuant thereto).
The scope of this indemnification is to the fullest extent that such persons
would have been entitled to indemnification under applicable law and the
articles of incorporation or bylaws of First Company and First National Bank, as
applicable.
The merger agreement also provides that for a period of four years
following the closing of the merger, Glacier will use reasonable efforts to
cause to be maintained in effect, director and officer liability insurance
substantially similar to that maintained by Glacier with respect to claims
arising from facts or events that occurred before the effective date of the
merger.
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REGULATORY REQUIREMENTS
Closing of the merger is subject to approval by the appropriate
banking regulatory authorities, including the Federal Reserve Bank of
Minneapolis and the Wyoming State Banking Commissioner. Additionally, the
Pre-Closing Distributions must be approved by the Federal Reserve Bank of Kansas
City and the Office of the Comptroller of the Currency, as applicable.
ACCOUNTING TREATMENT OF THE MERGER
The acquisition of First Company will be accounted for using the
purchase method of accounting by Glacier under accounting principles generally
accepted in the United States of America. Accordingly, using the purchase method
of accounting, the assets and liabilities of First Company will be recorded by
Glacier at their respective fair values at the time of the merger. The excess of
Glacier's purchase price over the net fair value of assets acquired including
identifiable intangible assets and liabilities assumed will be recorded as
goodwill. Goodwill will be periodically assessed for impairment but no less
frequently than on an annual basis. Prior period financial statements are not
restated and results of operation of First Company will be included in Glacier's
consolidated statement of operations after the date of the merger. The
identifiable intangible assets with finite lives, other than goodwill, will be
amortized against the combined company's earnings following completion of the
merger.
INFORMATION CONCERNING FIRST COMPANY
GENERAL
First Company is a Wyoming corporation formed in 1976 for the purpose
of acquiring the stock of First National Bank and becoming the holding company
for First National Bank. First Company is registered with the Board of Governors
of the Federal Reserve System as a bank holding company. First Company has no
substantial operations separate or apart from First National Bank.
The principal offices of First Company are located at 1426 Sheridan
Avenue, Cody, Wyoming 82414.
First National Bank is a national banking association which commenced
operations in 1912. As of December 31, 2008, First National Bank had total
assets of approximately $282 million, total net loans of approximately $190
million, total deposits of approximately $245 million and approximately $24
million of shareholders' equity.
MARKET AREA
First National Bank currently operates banking offices in Powell, Cody
and Lovell, Wyoming. It principal market area consists of Park and Big Horn
Counties in Wyoming.
LENDING ACTIVITIES
First National Bank's principal business is to accept deposits from
the public and to make loans and make loans and other investments. To develop
business, the bank relies to a great extent on the personalized approach of its
officers and directors, who have extensive business and personal contacts in the
communities served by the bank. First National Bank offers a variety of
traditional loan products to its customers, primarily individual consumers and
small to medium-sized businesses. For businesses, First National Bank provides
term loans, lines of credit, loans for working capital, loans for business
expansion and the purchase of equipment and machinery, construction and land
development loans for builders and developers and commercial real estate loans.
First National Bank offers consumers residential mortgage loans, home equity
loans, automobile loans and various other consumer installment loans.
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At December 31, 2008, First National Bank's consolidated total loan
portfolio was $195 million, representing approximately 69% of its total assets.
As of such date, First National Bank's loan portfolio consisted of 21% 1-4
family real estate secured loans, 18% commercial real estate secured loans
(excluding construction and land development loans), 17% real estate
construction and land development loans, 18% commercial loans, 8% installment or
consumer loans and 18% farm and agriculture loans.
DEPOSIT AND BANKING SERVICES
Customers of First National Bank are provided with a full complement
of traditional banking and deposit products. The bank is engaged in
substantially all of the business operations customarily conducted by
independent financial institutions in Wyoming, including the acceptance of
checking accounts, savings accounts, money market accounts and a variety of
certificates of deposit accounts.
First National Bank does a substantial amount of business with
individuals, as well as with customers in small to medium-sized commercial,
industrial and agriculture businesses. The primary sources of core deposits are
residents of First National Bank s primary market area and businesses and their
employees located in that area. First National Bank also obtains deposits
through personal solicitation by the bank's officers and directors and through
local advertising. For the convenience of its customers, First National Bank
offers drive-through banking facilities, automated teller machines, internet
banking, direct deposit, night depositories, personalized checks, merchant bank
card processing and safe deposit boxes. The bank's services also include
cashier's checks, travelers' checks, domestic wire transfers, account research,
stop payments, and telephone and internet based transfers between accounts.
FIRST COMPANY AND FIRST NATIONAL BANK SUMMARY FINANCIAL INFORMATION
The following selected financial information for the fiscal years
ended December 31, 2008, 2007 and 2006 are derived from unaudited financial
statements of First Company on a consolidated basis:
FIRST COMPANY
BALANCE SHEET
YEAR ENDED DECEMBER 31,
---------------------------
2008 2007 2006
------- ------- -------
Cash and Due from Banks 16,698 16,929 12,646
Fed Funds 10,000 4,300 9,200
Securities 55,475 50,029 49,919
Gross Loans 195,369 190,511 174,834
Allowance for Loan Loss 4,835 2,303 2,000
NET LOANS 190,534 188,208 172,834
Premises & Fixed Assets 4,697 5,721 5,994
Other Assets 7,516 10,907 8,267
TOTAL ASSETS 285,190 276,094 258,860
Deposits 244,527 236,569 221,191
Fed Funds & Repos 11,685 13,584 11,253
Borrowings 13,178 8,098 8,541
Other Liabilities 1,169 1,449 1,205
TOTAL LIABILITIES 270,559 259,700 242,190
Equity 14,631 16,394 16,670
TOTAL LIABILITIES AND SHAREHOLDER EQUITY 285,190 279,094 258,860
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FIRST COMPANY
INCOME STATEMENT
YEAR ENDED DECEMBER 31,
---------------------------
2008 2007 2006
------- ------- -------
Interest Income 16,454 18,371 17,606
Interest Expense 6,674 8,290 6,851
Net Interest Income 9,780 10,081 10,755
Loan Loss Provision 7,377 1,508 476
Non-interest Income 3,427 3,647 3,791
Non-interest Expense 8,527 10,696 10,875
Pre-Tax Income (2,697) 1,524 3,195
Taxes 0 0 0
NET INCOME (2,697) 1,524 3,195
COMPETITION
First National Bank experiences competition in both lending and
attracting funds from other commercial banks, savings banks, savings and loan
associations, credit unions, finance companies, pension trusts, mutual funds,
insurance companies, mortgage bankers and brokers, brokerage and investment
banking firms, asset-based non-bank lenders, government agencies and certain
other non-financial institutions, including retail stores, which may offer more
favorable financing alternatives than First National Bank.
First National Bank also competes with companies located outside of
its primary market that provide financial services to persons within this
market. Some of First National Bank's current and potential competitors have
larger customer bases, greater brand recognition, and significantly greater
financial, marketing and other resources than First National Bank and some of
them are not subject to the same degree of regulation as First National Bank.
EMPLOYEES
As of December 31, 2008, First National Bank had 76 full-time and 7
part-time employees. First Company has no employees. First National Bank
believes that it has a good relationship with its employees and the employees
are not represented by a collective bargaining agreement.
PROPERTIES
First National Bank operates from three locations:
- First National Bank's main office is located at 245 East 1st
Street, Powell, Wyoming 82435 and is housed in an approximately
33,331 square foot building. This banking center is equipped with
11 teller stations and an automated teller machine.
- First National Bank's Cody, Wyoming branch is located at 1507 8th
Street, Cody, Wyoming 82414, and is housed in a an approximately
7,440 square foot building. This banking center is equipped with
8 teller stations and an automated teller machine.
- First National Bank's Lovell, Wyoming branch is located at 284
East Main Street, Lovell, Wyoming 82431, and is housed in an
approximately 4800 square foot building. This banking center is
equipped with 4 teller stations and an automated teller machine.
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All buildings are owned by First National Bank.
LEGAL PROCEEDINGS
From time to time, litigation arises in the normal conduct of First
Company's business. First Company, however, is not currently involved in any
litigation that management of First Company believes, either individually or in
the aggregate, could reasonably be expected to have a material adverse effect on
its business, financial condition or results of operations.
SHARE OWNERSHIP OF PRINCIPAL SHAREHOLDERS, MANAGEMENT AND DIRECTORS OF FIRST
COMPANY
The following table shows, as of March 26, 2009, the beneficial
ownership of First Company common stock by (i) each person known by First
Company to be the beneficial owner more than 5% of First Company's outstanding
common stock, (ii) each of First Company's directors and executive officers; and
(iii) all of First Company's directors and officers as a group. Except as
otherwise noted in the footnotes to the table, each individual has sole
investment and voting power with respect to the shares of common stock set
forth.
SHARES PERCENTAGE
NAME BENEFICIALLY OWNED OF CLASS(1)
---- ------------------ -----------
DIRECTORS AND EXECUTIVE OFFICERS
Richard S. Nelson 2,462 29.5%
Julie M. Sullivan 1,548 18.5%
Elsie M. Nelson QTIP Trusts 2,066 24.7%
Elsie M. Nelson 485 5.8%
Richard T. Nelson 576 6.9%
Robert A. Nelson 576 6.9%
David R. Reetz 1 .01%
Douglas V. Nissen 31 .37%
Gary L. Mills 1 .01%
Jack Turnell 1 .01%
Colin Simpson 1 .01%
Joel Revill 13 .16%
Victor Riley 1 .01%
Brad Bonner 1 .01%
ALL DIRECTORS AND EXECUTIVE OFFICERS
AS A GROUP (14 PERSONS) 5,262 63%
DESCRIPTION OF GLACIER'S CAPITAL STOCK
Glacier's authorized capital stock consists of 117,187,500 shares of
common stock, $0.01 par value per share, and 1,000,000 shares of preferred
stock, $0.01 par value per share. As of the date of this proxy
statement/prospectus, Glacier had no shares of preferred stock issued. The
Glacier board of directors is authorized, without further shareholder action, to
issue preferred stock shares with such designations, preferences and rights as
the Glacier board of directors may determine.
Glacier common stock is listed for trading on The NASDAQ Global Select
Market under the symbol "GBCI."
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Glacier's shareholders do not have preemptive rights to subscribe to
any additional securities that may be issued. Each share of Glacier common stock
has the same relative rights and is identical in all respects to every other
share of Glacier common stock. If Glacier is liquidated, the holders of Glacier
common stock are entitled to share, on a pro rata basis, Glacier's remaining
assets after provision for liabilities.
For additional information concerning Glacier's capital stock, see
"Comparison Of Certain Rights Of Holders Of Glacier And First Company Common
Stock."
COMPARISON OF CERTAIN RIGHTS OF HOLDERS OF
GLACIER AND FIRST COMPANY COMMON STOCK
Montana law and Glacier's articles of incorporation and bylaws govern
the rights of Glacier shareholders and will govern the rights of First Company
shareholders, who will become shareholders of Glacier as a result of the merger.
The rights of First Company shareholders are currently governed by Wyoming law
and by First Company's articles of incorporation and bylaws. The following is a
brief summary of certain differences between the rights of Glacier and First
Company shareholders. This summary does not purport to be complete and is
qualified by the documents referenced. See also "Where You Can Find More
Information About Glacier."
GENERAL
Under its articles of incorporation, Glacier's authorized capital
stock consists of 117,187,500 shares of common stock, $0.01 par value per share,
and 1,000,000 shares of preferred stock, $0.01 par value per share. No shares of
preferred stock are currently outstanding.
Under its articles of incorporation, First Company's authorized
capital consists of 50,000 shares of common stock, no par value per share.
The following is a more detailed description of Glacier's and First
Company's capital stock.
COMMON STOCK
As of December 31, 2008, there were 61,331,273 shares of Glacier
common stock issued and outstanding, in addition to options for the purchase of
1,548,219 shares of Glacier common stock under Glacier's employee and director
stock option plans.
As of December 31, 2008, there were 8,357 shares of First Company
common stock issued and outstanding.
PREFERRED STOCK
As of the date of this proxy statement/prospectus, Glacier had no
shares of preferred stock issued. The Glacier board of directors is authorized,
without further shareholder action, to issue preferred stock shares with such
designations, preferences and rights as the Glacier board of directors may
determine.
First Company's authorized capital does not include preferred stock.
DIVIDEND RIGHTS
Dividends may be paid on Glacier common stock as and when declared by
the Glacier board of directors out of funds legally available for the payment of
dividends. The Glacier board of directors may issue preferred stock that is
entitled to such dividend rights as the board of directors may determine,
including priority over the common stock in the payment of dividends.
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The ability of Glacier to pay dividends basically depends on the
amount of dividends paid to it by its subsidiaries. The payment of dividends is
subject to government regulation, in that regulatory authorities may prohibit
banks and bank holding companies from paying dividends in a manner that would
constitute an unsafe or unsound banking practice. In addition, a bank may not
pay cash dividends if doing so would reduce the amount of its capital below that
necessary to meet minimum applicable regulatory capital requirements. State laws
also limit a bank's ability to pay dividends. Accordingly, the dividend
restrictions imposed on the subsidiaries by statute or regulation effectively
may limit the amount of dividends Glacier can pay.
Distributions may be paid on First Company common stock as and when
declared by the First Company board of directors out funds legally available for
the payment of dividends.
VOTING RIGHTS
All voting rights are currently vested in the holders of Glacier
common stock and First Company common stock, with each share being entitled to
one vote.
The articles of incorporation of Glacier provide that shareholders do
not have cumulative voting rights in the election of directors. The articles of
incorporation of First Company provide that shareholders do not have cumulative
voting rights in the election of directors or for any other purpose.
PREEMPTIVE RIGHTS
Glacier's shareholders do not have preemptive rights to subscribe to
any additional securities that may be issued.
First Company's shareholders do not have preemptive rights to acquire
additional unissued or treasury shares of First Company or securities
convertible into shares or carrying stock purchase warrants or privileges.
LIQUIDATION RIGHTS
If Glacier is liquidated, the holders of Glacier common stock are
entitled to share, on a pro rata basis, Glacier's remaining assets after
provision for liabilities. The Glacier board of directors is authorized to
determine the liquidation rights of any preferred stock that may be issued.
If First Company is liquidated, the holders of First Company common
stock are entitled to share, on a pro rata basis, First company's remaining
assets after provision for liabilities.
All outstanding shares of Glacier common stock are, and the shares to
be issued in the merger will be, fully paid and nonassessable. Shares of First
Company's common stock are fully paid and nonassessable.
AMENDMENT OF ARTICLES AND BYLAWS
The Montana Business Corporation Act ("MBCA") authorizes a
corporation's board of directors to make various changes of an administrative
nature to its articles of incorporation. Other amendments to a corporation's
articles of incorporation must be recommended to the shareholders by the board
of directors, unless the board determines that because of a conflict of interest
or other special circumstances it should make no recommendation, and must be
approved by a majority of all votes entitled to be cast by each voting group
that has a right to vote on the amendment. The Glacier board of directors may,
by a majority vote, amend Glacier's bylaws.
The articles of incorporation of First Company provide that amendment
to such articles of incorporation must be approved by the vote of a majority of
the shares of each class entitled vote on the action. The bylaws of
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First Company provide that except as otherwise provide by law, the articles of
incorporation or by specific provisions of the bylaws, such bylaws may be
amended, supplemented or repealed by the board of directors.
APPROVAL OF CERTAIN TRANSACTIONS
The MBCA does not contain any "anti-takeover" provisions imposing
specific requirements or restrictions on transactions between a corporation and
significant shareholders. Glacier's articles of incorporation contain a
provision requiring that specified transactions with an "interested shareholder"
be approved by 80% of the voting power of the then outstanding shares unless it
is (i) approved by Glacier's board of directors, or (ii) certain price and
procedural requirements are satisfied. An "interested shareholder" is broadly
defined to include the right, directly or indirectly, to acquire or to control
the voting or disposition of 10% or more of Glacier's voting stock.
First Company's articles of incorporation do not contain any
anti-takeover provisions.
BOARD OF DIRECTORS - NUMBER OF DIRECTORS
Glacier's articles of incorporation provide that the number of
directors may not be less than seven or more than 17. Glacier's board currently
consists of 10 members, each of whom is currently serving an annual term.
First Company's articles of incorporation provide that the number of
directors may not be less than 3. The board of directors of First Company
currently consists of 9 members, each of whom is currently serving an annual
term.
INDEMNIFICATION AND LIMITATION OF LIABILITY
Under the MBCA, indemnification of directors and officers is
authorized to cover judgments, amounts paid in settlement, and expenses arising
out of actions where the director or officer acted in good faith and in or not
opposed to the best interests of the corporation, and in criminal cases, where
the director or officer had no reasonable cause to believe that his or her
conduct was unlawful. Unless limited by the corporation's articles of
incorporation, Montana law requires indemnification if the director or officer
is wholly successful on the merits of the action. Glacier's bylaws provide that
Glacier shall indemnify its directors and officers to the fullest extent not
prohibited by law, including indemnification for payments in settlement of
actions brought against a director or officer in the name if the corporation,
commonly referred to as a derivative action. Under the MBCA, any indemnification
of a director in a derivative action must be reported to shareholders in writing
prior to the next annual meeting of shareholders.
RESTRICTION ON TRANSFER OF SHARES
Neither Glacier's articles of incorporation nor bylaws provide any
specific limitations on the ability to transfer Glacier shares, nor require the
company's shares to bear a restrictive legend.
First Company Articles of Incorporation, Article Ten states the
following:
CORPORATION GIVEN FIRST OPTION TO PURCHASE STOCK. It is hereby
expressly provided that no person shall be eligible to be a
stockholder of this corporation except the original stockholders,
their heirs or persons designated by the board of directors.
Shares of stock in this corporation shall not be transferred or sold
until the sale or transfer shall have been reported to the board of
directors and approved by them.
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The corporation shall have the prior option to purchase such shares
involved in said sale or transfer from any shareholder, including, but
not limited to, individuals, partnerships, corporations, trusts or
other entities.
In the event of death of any shareholder who is not a director of the
corporation, the corporation shall have the prior option to purchase
the shares from the shareholder's estate, heirs, or other holder at
any time the shares are offered for sale.
The company's shares bear a restrictive legend with regard to the
transfer restrictions.
POTENTIAL "ANTI-TAKEOVER" PROVISIONS
Glacier's articles of incorporation include certain provisions that
could make more difficult the acquisition of Glacier by means of a tender offer,
a proxy contest, merger or otherwise. These provisions consist of a requirement
that any "Business Combination" (as defined in the articles of incorporation) be
approved by the affirmative vote of not less than 80% of the voting power of the
then outstanding shares unless it is either approved by the board of directors
or certain price and procedural requirements are satisfied.
In addition, the authorization of preferred stock, which is intended
primarily as a financing tool and not as a defensive measure against takeovers,
may potentially be used by management to make more difficult uninvited attempts
to acquire control of Glacier (for example, by diluting the ownership interest
of a substantial shareholder, increasing the amount of consideration necessary
for shareholder to obtain control, or selling authorized but unissued shares to
friendly third parties).
The "supermajority" approval requirement for certain business
transactions and the availability of Glacier's preferred stock for issuance
without shareholder approval, may have the effect of lengthening the time
required for a person to acquire control of Glacier through a tender offer,
proxy contest or otherwise, and may deter any potentially unfriendly offers or
other efforts to obtain control of Glacier. This could deprive Glacier's
shareholders of opportunities to realize a premium for their Glacier common
stock, even in circumstances where such action was favored by a majority of
Glacier's shareholders.
First Company's articles of incorporation do not contain
"anti-takeover" provisions.
CERTAIN LEGAL MATTERS
The validity of the Glacier common stock to be issued in the merger
will be passed upon for Glacier by its special counsel, Christensen, Moore,
Cockrell, Cummings & Axelberg, P.C., Kalispell, Montana.
EXPERTS
The consolidated financial statements of Glacier Bancorp, Inc. as of
December 31, 2008 and 2007 and for each of the years in the three year period
ended December 31, 2008 have been incorporated by reference herein and in the
registration statement in reliance upon the report of BKD, LLP, independent
registered public accounting firm, and upon the authority of said firm as
experts in accounting and auditing.
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WHERE YOU CAN FIND MORE INFORMATION ABOUT GLACIER
Glacier files annual, quarterly and current reports, proxy statements,
and other information with the SEC. You may read and copy any reports,
statements, or other information that Glacier files at the SEC's public
reference room at 100 F Street, N.E., Washington, D.C. 20549. You can
request copies of these documents, upon payment of a duplicating fee, by writing
the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the
operation of the public reference rooms. Glacier's SEC filings are also
available to the public on the SEC Internet site (http://www.sec.gov). As
described below, you may also obtain the documents that Glacier is incorporating
by reference into this proxy statement/prospectus from Glacier.
Glacier has filed a Registration Statement on Form S-4 to register
with the SEC the shares of Glacier common stock to be issued to First Company
shareholders in the merger. This proxy statement/prospectus is part of that
Registration Statement and constitutes a prospectus of Glacier in addition to
being a proxy statement of First Company for the First Company special
shareholders meeting. As allowed by SEC rules, this proxy statement/prospectus
does not contain all of the information that you can find in the Registration
Statement or the exhibits to the Registration Statement.
The SEC allows Glacier to "incorporate by reference" information into
this proxy statement/prospectus, which means that Glacier can disclose important
information to you by referring you to another document filed separately by
Glacier with the SEC. The information incorporated by reference is deemed to be
part of this proxy statement/prospectus, except for any information superseded
by any information in this proxy statement/prospectus. This proxy
statement/prospectus incorporates by reference the documents set forth below
that Glacier has previously filed with the SEC (other than current reports
furnished under Item 9 or Item 12 of Form 8-K). These documents contain
important information about Glacier and its finances:
- Annual Report on Form 10-K for the year ended December 31, 2008;
- Proxy Statement for Glacier's 2009 Annual Meeting of
Shareholders; and
- Current Reports on Form 8-K filed January 14, 2009; January 30,
2009; and February 10, 2009.
Glacier is also incorporating by reference additional documents that
Glacier files with the SEC between the date of this proxy statement/prospectus
and the date of the special meeting of First Company shareholders (other than
current reports furnished under Item 9 or Item 12 of Form 8-K).
YOU CAN OBTAIN THE DOCUMENTS THAT ARE INCORPORATED BY REFERENCE
THROUGH GLACIER OR THE SEC. YOU CAN OBTAIN THE DOCUMENTS FROM THE SEC, AS
DESCRIBED ABOVE. THESE DOCUMENTS ARE ALSO AVAILABLE FROM GLACIER WITHOUT CHARGE,
EXCLUDING EXHIBITS UNLESS GLACIER HAS SPECIFICALLY INCORPORATED SUCH EXHIBITS BY
REFERENCE IN THIS PROXY STATEMENT/PROSPECTUS. YOU MAY OBTAIN DOCUMENTS
INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT/PROSPECTUS BY REQUESTING THEM
FROM GLACIER AT 49 COMMONS LOOP, KALISPELL, MONTANA 59901, TELEPHONE NUMBER
(406) 751-4703, ATTN: LEEANN WARDINSKY, CORPORATE SECRETARY. IF YOU WOULD LIKE
TO REQUEST DOCUMENTS FROM GLACIER, PLEASE DO SO BY APRIL 23, 2009 TO RECEIVE
THEM BEFORE THE FIRST COMPANY SPECIAL SHAREHOLDERS MEETING. CERTAIN REPORTS CAN
ALSO BE FOUND ON GLACIER'S WEBSITE AT WWW.GLACIERBANCORP.COM.
Glacier has supplied all of the information concerning it contained in
this proxy statement/prospectus, and First Company has supplied all of the
information concerning it.
You should rely only on the information contained or incorporated by
reference in this proxy statement/prospectus in deciding how to vote on the
merger. We have not authorized anyone to provide you with information other than
what is contained in this proxy statement/prospectus. This proxy
statement/prospectus is dated March __, 2009. You should not assume that
information contained in this proxy statement/prospectus is accurate as of any
other date, and neither the mailing of this proxy statement/prospectus to First
Company shareholders nor the issuance of Glacier common stock in the merger will
create any implication to the contrary.
56
APPENDIX A
================================================================================
PLAN AND AGREEMENT OF MERGER
AMONG
GLACIER BANCORP, INC.
FIRST COMPANY AND
FIRST NATIONAL BANK & TRUST
DATED AS OF FEBRUARY 6, 2009
================================================================================
PLAN AND AGREEMENT OF MERGER
AMONG
GLACIER BANCORP, INC.,
FIRST COMPANY AND FIRST NATIONAL BANK & TRUST
This Plan and Agreement of Merger (the "Agreement"), dated as of February
6, 2009, is made by and between GLACIER BANCORP, INC. ("GBCI"), FIRST COMPANY
and FIRST NATIONAL BANK & TRUST (the "Bank").
PREAMBLE
The management and boards of directors of GBCI and First Company believe
that the proposed Merger, to be accomplished in the manner set forth in this
Agreement, is in the best interests of the respective corporations and their
shareholders.
RECITALS
A. THE PARTIES.
(1) GBCI is a corporation duly organized and validly existing under
Montana law and is a registered bank holding company under the Bank
Holding Company Act of 1956, as amended ("BHC Act"). GBCI's principal
office is located in Kalispell, Montana.
(2) First Company is a corporation duly organized and validly existing
under Wyoming law and is a registered bank holding company under the
BHC Act. First Company's principal office is located in Powell,
Wyoming. First Company owns all of the outstanding capital stock of
the Bank.
(3) The Bank is a national banking association duly organized and validly
existing under the laws of the United States of America with its
principal office located in Powell, Wyoming. In addition to its
principal office, the Bank maintains branch offices in Cody and
Lovell.
B. THE TRANSACTION. On the Effective Date, (i) First Company will merge with
and into GBCI, with GBCI as the surviving entity, and (ii) the Bank will
become a wholly owned subsidiary of GBCI.
C. BOARD APPROVALS. The respective boards of directors of GBCI, First Company
and the Bank have approved this Agreement and authorized its execution and
delivery.
D. OTHER APPROVALS. The Merger is subject to:
(1) Satisfaction of the conditions described in this Agreement;
(2) Approval by First Company's shareholders; and
(3) Approval or acquiescence, as appropriate, by the Board of Governors of
the Federal Reserve System ("Federal Reserve"), the Wyoming State
Banking Commissioner and any other agencies having jurisdiction over
the Merger.
E. EMPLOYMENT AGREEMENT. First Company and its President, Richard T. Nelson,
have entered into an employment agreement which will take effect as of the
Effective Date.
1
F. DIRECTOR AND SHAREHOLDER AGREEMENTS. In connection with the parties'
execution of this Agreement, certain directors of First Company and the
Bank, and each principal shareholder of First Company, has entered into
agreements, the forms of which have been approved by GBCI, pursuant to
which, among other things, each agrees to vote his shares of First Company
capital stock in favor of the actions contemplated by this Agreement and to
refrain from competing with GBCI and/or the Bank and their respective
successors for a period of time.
G. INDEMNIFICATION AGREEMENTS. First Company's principal shareholders, acting
on their own behalf and on behalf of a Wyoming limited liability company to
be formed by or for the benefit of them ("Newco"), have entered into an
indemnification agreement with GBCI regarding certain pre-closing
distributions of First Company and Newco, as well as certain tax and
litigation matters, which agreement will take effect as of the Effective
Date (the "INDEMNIFICATION AGREEMENT").
H. FAIRNESS OPINION. First Company has received from Sheshunoff & Company
("SHESHUNOFF") an opinion to the effect that the Merger Consideration is
fair from a financial point of view to First Company's shareholders.
AGREEMENT
In consideration of the mutual agreements set forth in this Agreement,
GBCI, First Company and the Bank agree as follows:
DEFINITIONS
The following capitalized terms used in this Agreement will have the
following meanings:
"Acquisition Event" means any of the following: (i) a merger, consolidation
or similar transaction involving First Company, its Subsidiaries or any
successor, (ii) a purchase, lease or other acquisition in one or a series of
related transactions of assets of First Company or any of its Subsidiaries
representing 25% or more of the consolidated assets of First Company and its
Subsidiaries, or (iii) a purchase or other acquisition (including by way of
merger, consolidation, share exchange or any similar transaction) in one or a
series of related transactions of beneficial ownership of securities
representing 50% or more of the voting power of First Company or its
Subsidiaries, in each case with or by a person or entity other than GBCI or one
of its Subsidiaries.
"Acquisition Proposal" has the meaning assigned to such term in Section
4.1.10.
"Agreement" means this Plan and Agreement of Merger.
"ALLL" means allowance for possible loan and lease losses.
"Asset Classification" has the meaning assigned to such term in Section
3.1.15.
"Bank" means First National Bank & Trust, a national banking association
that has its principal office in Powell, Wyoming and is wholly owned by First
Company.
"Bank Divestiture" has the meaning assigned to such term in Section
4.1.3(i).
"Bank Financial Statements" means the Bank's (i) unaudited balance sheets
as of December 31, 2008, 2007, 2006 and 2005 and the related unaudited
statements of income, cash flows and changes in
2
shareholders' equity for each of the years ended December 31, 2008, 2007, 2006
and 2005; and (ii) the Subsequent Bank Financial Statements.
"BHC Act" has the meaning assigned to such term in Recital A.
"Break-Up Fee" has the meaning assigned to such term in Section 7.7.
"Business Day" means any day other than a Saturday, Sunday, legal holiday
or a day on which banking institutions located in the State of Montana and the
State of Wyoming are required by law to remain closed.
"WBCA" means the Wyoming Business Corporation Act.
"Certificate" has the meaning assigned to such term in Section 1.6.1.
"Closing" means the closing of the Merger contemplated by this Agreement,
as more fully specified in Section 2.2.
"Closing Capital Differential" has the meaning assigned to such term in
Section 1.2.2(i).
"Compensation Plans" has the meaning assigned to such term in Section
3.1.19.
"Daily Sales Price" has the meaning assigned to such term in Section
1.3(i).
"Determination Date" has the meaning assigned to such term in Section
1.3(ii).
"Effective Date" means the date on which the Merger takes place, as more
fully specified in Section 2.1.
"Employees" has the meaning assigned to such term in Section 3.1.19.
"Environmental Laws" has the meaning assigned to such term in Section
3.1.7.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means, with respect to First Company, any other entity
that is considered one employer with First Company under Section 4001 of ERISA
or Section 414 of the IRC.
"Exchange Act" has the meaning assigned to such term in Section 3.1.5.
"Exchange Agent" means American Stock Transfer and Trust Co.
"Exchange Fund" has the meaning assigned to such term in Section 1.5.
"Excluded Assets" means (i) the Loan Participations, (ii) the membership or
other interests held by First Company or the Bank in Newco or such other entity
or entities holding the Loan Participations prior to Closing, (iii) all First
Company investments other than cash equivalents and First Company's ownership
interests in its statutory trust subsidiaries, (iv) the membership or other
interests held by the Bank in community development limited liability companies,
and (v) any non-cash value received by the Bank in consideration of the Loan
Participations. As of the Execution Date, the assets that are anticipated to be
Excluded Assets are set forth on Schedule 1.
3
"Execution Date" means the date of this Agreement.
"Executive Officers," with respect to GBCI, means Michael J. Blodnick and
Ronald Copher.
"Executive Officers," with respect to First Company means Richard S.
Nelson, Richard T. Nelson and Robert A. Nelson and with respect to the Bank
means Richard S. Nelson, Richard T. Nelson, Robert A. Nelson, Douglas V. Nessen,
David R. Reetz, Gary L. Mills, Robert P. Golden and Andrew T. Penfield.
"FDIC" means the Federal Deposit Insurance Corporation.
"Federal Reserve" means the Board of Governors of the Federal Reserve
System.
"First Company Capital" means First Company's capital stock, surplus and
retained earnings determined in accordance with GAAP on a consolidated basis,
applied on a consistent basis for financial institutions, after giving effect to
(a) the payment of all First Company Transaction Fees and severance obligations,
(b) the Pre-Closing Distributions, (c) the capital contribution to be made by
GBCI to the Bank pursuant to Section 2.4, (d) adjustments, calculated in
accordance with GAAP, for accumulated other comprehensive income or loss as
reported on the First Company or Bank balance sheet, (e) amounts received by the
Bank in cash after the Execution Date and applied to the principal balance of
the Loan Participations prior to Closing, (f) the exclusion of any intangible
assets, and (g) the amount by which the Bank's ALLL at Closing exceeds Five
Million Dollars ($5,000,000), if applicable.
"First Company Closing Capital" has the meaning assigned to such term in
Section 4.12.
"First Company Contract" has the meaning assigned to such term in Section
3.1.2.
"First Company Financial Statements" means First Company's (i) unaudited
consolidated balance sheets as of December 31, 2008, 2007, 2006 and 2005 and the
related unaudited consolidated statements of income, cash flows and changes in
shareholders' equity for each of the years ended December 31, 2008, 2007, 2006
and 2005; and (ii) the Subsequent First Company Financial Statements.
"First Company Meeting" has the meaning assigned in Section 4.2.2.
"First Company Stock" means the shares of First Company no par value stock
issued and outstanding from time to time.
"First Company Transaction Fees" means all costs and expenses incurred by
First Company or the Bank or owed or paid by First Company or the Bank to
investment advisors, independent accountants, legal counsel, printers and other
professional advisors in connection with the preparation, negotiation and
execution of this Agreement and related documents and the consummation of the
Merger.
"GAAP" means United States generally accepted accounting principles.
"GBCI" is Glacier Bancorp, Inc., a Montana corporation that has its
principal place of business in Kalispell, Montana, and that is a bank holding
company registered pursuant to the BHC Act.
"GBCI Average Closing Price" has the meaning assigned to such term in
Section 1.3(iii).
"GBCI Common Stock" means the shares of GBCI common stock, $0.01 par value
per share, issued and outstanding from time to time.
"GBCI Contract" has the meaning assigned to such term in Section 3.2.2.
4
"GBCI Financial Statements" means GBCI's (i) audited consolidated balance
sheets as of December 31, 2007, 2006 and 2005 and the related audited
consolidated statements of income, cash flows and changes in shareholders'
equity for each of the years ended December 31, 2007, 2006 and 2005; (ii)
unaudited consolidated balance sheet as of the end of each fiscal quarter
following December 31, 2007 but preceding the Execution Date, and the related
unaudited consolidated statements of income, cash flows and changes in
shareholders' equity for each such quarter; and (iii) unaudited consolidated
balance sheets and related consolidated statements of income and shareholders'
equity for each of the fiscal quarters ending after the Execution Date and
before Closing or the Termination Date, as the case may be.
"GBCI Shares" means the shares of GBCI Common Stock to be issued to the
holders of First Company Stock as Merger Consideration in accordance with
Section 1.2.2.
"Hazardous Substances" has the meaning assigned to such term in Section
3.1.7.
"Indemnification Agreement" has the meaning assigned to such term in
Recital G.
"Independent Accountants" has the meaning assigned to such term in Section
4.12.
"IRC" means the Internal Revenue Code of 1986, as amended.
"Knowledge" has the following meanings: (i) First Company will be deemed to
have "Knowledge" of a particular fact or matter if any Executive Officer of
First Company or the Bank has actual knowledge of such fact or matter or if any
such person could reasonably be expected to discover or otherwise become aware
of such fact or matter in the course of making a reasonable inquiry into such
areas of First Company's and the Bank's business that are under such
individual's general area of responsibility; and (ii) GBCI will be deemed to
have "Knowledge" of a particular fact or matter if any Executive Officer of GBCI
has actual knowledge of such fact or matter or if any such person could
reasonably be expected to discover or otherwise become aware of such fact or
matter in the course of making a reasonable inquiry into such areas of GBCI's
business that are under such individual's general area of responsibility.
"Leased Real Property" means the real properties subject to Leases as
identified in Schedule 3.1.6.
"Leases" means the terms and conditions governing the leasehold interests
in the Leased Real Property as identified in Schedule 3.1.6 to this Agreement.
"Liens" means, collectively, liens, pledges, security interests, claims,
proxies, preemptive or subscriptive rights or other encumbrances or restrictions
of any kind.
"Loan Participations" means the loans and loan participations identified on
Schedule 2.
"Material Adverse Effect" with respect to a Person means an effect that:
(i) is materially adverse to the business, financial condition, results of
operations or prospects of the Person and its Subsidiaries taken as a whole;
(ii) significantly and adversely affects the ability of the Person to consummate
the Merger on or by the Termination Date or to perform its material obligations
under this Agreement; or (iii) enables any Person to prevent the consummation of
the Merger on or by the Termination Date; provided, however, that Material
Adverse Effect shall not be deemed to include the impact of any (a) changes in
banking and similar laws of general applicability or interpretations thereof by
governmental authorities or other changes affecting depository institutions
generally that do not have a materially more adverse effect on such party than
that experienced by similarly situated financial services
5
companies, including changes in general economic conditions and changes in
prevailing interest and deposit rates that do not have a materially more adverse
effect on such party than that experienced by similarly situated financial
services companies, (b) acts of terrorism or war; (c) any modifications or
changes to valuation policies and practices in connection with the Merger or
restructuring charges taken in connection with the Merger, in each case in
accordance with GAAP; (d) any modifications or changes made by First Company to
its or its Subsidiaries' general business practices or policies as may be
required by GBCI so as to be consistent with the practices or policies of GBCI;
(e) actions or omissions of a party taken with the prior consent of the other,
in contemplation of the transactions contemplated hereby, as required or
permitted hereunder, as required under any regulatory approval received in
connection with the Merger or which have been waived in writing by the other
party; (f) distributions of the Excluded Assets; or (g) charge-off or other
adjustments of the Loan Participations.
"MBCA" means the Montana Business Corporations Act, as amended.
"Merger" means the merger of First Company with and into GBCI.
"Merger Consideration" means the aggregate consideration contemplated by
Section 1.2.2.
"Newco" has the meaning assigned to such term in Recital G.
"Pension Plan" has the meaning assigned to such term in Section 3.1.19.
"Per Share Cash Consideration" has the meaning assigned to such term in
Section 1.2.2(ii).
"Per Share Stock Consideration" has the meaning assigned to such term in
Section 1.2.2(iii).
"Person" includes an individual, corporation, partnership, association,
limited liability company, trust or unincorporated organization.
"Plan" has the meaning assigned to such term in Section 3.1.19.
"Pre-Closing Distributions" has the meaning assigned to such term in
Section 4.1.2(ii)(4).
"Properties," with respect to any party to this Agreement, means properties
or other assets owned or leased by such party or any of its Subsidiaries
including, with respect to First Company, Real Property.
"Proposed Dissenting Shares" means those shares of First Company Stock as
to which shareholders have properly given notice of their intent to assert
appraisal rights pursuant to Section 17-16-1321 of the WBCA.
"Prospectus/Proxy Statement" means the Prospectus/Proxy Statement referred
to in Section 4.2.1, to be provided to all shareholders of First Company in
connection with their consideration and approval of the Merger.
"Real Property" means any real property that First Company or the Bank owns
in fee title, other than "other real estate owned."
"Registration Statement" has the meaning assigned to such term in Section
4.2.1.
"Reports" has the meaning assigned to such term in Section 3.1.5.
"SEC" means the United States Securities and Exchange Commission.
6
"Securities Act" has the meaning assigned to such term in Section 3.1.5.
"Securities Laws" has the meaning assigned to such term in Section 3.1.5.
"Sheshunoff" means Sheshunoff & Company.
"Subject Property" has the meaning assigned to such term in Section 3.1.7.
"Subsequent Bank Financial Statements" means the Bank's unaudited balance
sheets and related statements of income and shareholders' equity for each month
after the Execution Date and before Closing or the Termination Date, as the case
may be, prepared in accordance with Section 4.1.8.
"Subsequent First Company Financial Statements" means First Company's
unaudited consolidated balance sheets and related consolidated statements of
income and shareholders' equity for each month after the Execution Date and
before Closing or the Termination Date, as the case may be, prepared in
accordance with Section 4.1.8.
"Subsidiary" with respect to any party to this Agreement means any Person
in which such party owns the majority of outstanding capital stock or voting
power.
"Superior Proposal" means, with respect to First Company and/or the Bank,
any Acquisition Proposal made by a Person other than GBCI or its Subsidiary(A)
that is for (i) a merger, reorganization, consolidation, share exchange,
business combination, recapitalization or similar transaction involving First
Company or the Bank, (ii) a sale, lease, exchange, transfer, or other
disposition of at least 25% of the assets of First Company or the Bank, taken as
a whole, in a single transaction or a series of related transactions, or (iii)
the acquisition, directly or indirectly, by a person of beneficial ownership of
50% or more of the First Company Stock or the Bank's outstanding shares whether
by merger, consolidation, share exchange, business combination, tender, or
exchange offer or otherwise, and (B) that is otherwise on terms which the Board
of Directors of First Company in good faith concludes (after consultation with
its financial advisors and outside counsel), taking into account, among other
things, all legal, financial, regulatory, and other aspects of the proposal and
the Person making the proposal, (x) would, if consummated, result in a
transaction that is more favorable to its stockholders (in their capacities as
stockholders), from a financial point of view, than the transactions
contemplated by this Agreement, and (y) is reasonably probable of being
completed.
"Termination Date" means July 31, 2009.
"Termination Fee" has the meaning assigned to such term in Section 7.5.
"Title Companies" has the meaning assigned to such term in Section 4.1.11.
"Total Cash Consideration" has the meaning assigned to such term in Section
1.1(i).
"Total Stock Consideration" has the meaning assigned to such term in
Section 1.1(ii).
"Trading Day" has the meaning assigned to such term in Section 1.3(iv).
7
SECTION 1.
TERMS OF TRANSACTION
1.1 EFFECT OF MERGER. Upon Closing of the Merger, pursuant to the provisions of
the MBCA and the WBCA, all shares of First Company Stock issued and
outstanding immediately prior to Closing, except for Proposed Dissenting
Shares, will, by virtue of the Merger and without any action on the part of
any holder of shares of First Company Stock, be converted into the right to
receive in the aggregate:
(i) $450,000 in cash (the "Total Cash Consideration"), which is
subject to adjustment pursuant to Section 1.2.2(ii); and
(ii) 100,000 shares of GBCI Common Stock (the "Total Stock
Consideration"), which is subject to adjustment pursuant to
Sections 7.2.2 and 7.3.2.
First Company intends for federal income tax purposes that (a) the Merger
will qualify as a reorganization with the meaning of Section 368(a)(1)(A)
of the IRC, (b) this Agreement will constitute a "plan of reorganization"
for purposes of Section 1.368-2(g) of the Treasury Regulations promulgated
under the IRC, and (c) the parties to this Agreement are parties to a
reorganization within the meaning of Section 368(b) of the IRC. From and
after the date of this Agreement, each party shall use its reasonable best
efforts to cause the Merger to qualify, and will not knowingly take any
action, cause any action to be taken or fail to take any action which
action or failure to act could prevent the Merger from qualifying as, a
reorganization within the meaning of Section 368(a)(1) of the IRC;
provided, however, that GBCI shall not be required to incur any additional
costs in connection with such efforts or actions.
1.2 MERGER CONSIDERATION. Subject to the provisions of this Agreement, on the
Effective Date:
1.2.1 OUTSTANDING GBCI COMMON STOCK. The shares of GBCI Common Stock issued
and outstanding immediately prior to the Effective Date will, on and
after the Effective Date, remain as issued and outstanding shares of
GBCI.
1.2.2 OUTSTANDING FIRST COMPANY STOCK. Each share of First Company Stock
issued and outstanding immediately prior to the Execution Date, except
for Proposed Dissenting Shares, will automatically and without any
action on the part of the holder of such share, be converted into and
represent the right to receive from GBCI (i) the Per Share Cash
Consideration and (ii) the Per Share Stock Consideration (the "Merger
Consideration"). For purposes of this Agreement, the following terms
have the following meanings:
(i) "Closing Capital Differential" means the positive or negative
difference between the First Company Closing Capital and
$15,250,000.
(ii) "Per Share Cash Consideration" means $450,000 increased or
decreased, as the case may be, by the amount of any Closing
Capital Differential, divided by the number of shares of First
Company Stock outstanding on the Effective Date.
(iii) "Per Share Stock Consideration" means the number of shares of
GBCI Common Stock determined by dividing the Total Stock
Consideration by the number of shares of First Company Stock
outstanding on the Effective Date.
8
1.3 NO FRACTIONAL SHARES. No fractional shares of GBCI Common Stock will be
issued. In lieu of fractional shares, if any, each holder of First Company
Stock who is otherwise entitled to receive a fractional share of GBCI
Common Stock will receive an amount of cash equal to the product of such
fractional share times the GBCI Average Closing Price. Such fractional
share interests will not include the right to vote or receive dividends or
any interest on dividends. For purposes of this Agreement, the following
terms have the following meanings:
(i) "Daily Sales Price" for any Trading Day means the daily closing
price per share of GBCI Common Stock on the NASDAQ Global Market,
as reported on the website www.nasdaq.com.
(ii) "Determination Date" means the fifth (5th) Business Day
immediately preceding the Effective Date.
(iii) "GBCI Average Closing Price" means the average Daily Sales Price
of GBCI Common Stock for the ten (10) Trading Days immediately
preceding the Determination Date.
(iv) "Trading Day" means a day on which GBCI Common Stock is traded on
the NASDAQ Global Market.
1.4 PAYMENT TO DISSENTING SHAREHOLDERS. Proposed Dissenting Shares will have
the rights provided by Article 13 of the WBCA.
1.5 DEPOSIT OF CASH AND SHARES. On or before the Effective Date, GBCI will
deposit, or will cause to be deposited, with the Exchange Agent, for the
benefit of the holders of certificates representing First Company Stock,
for exchange in accordance with this Section 1.5, (i) certificates
representing the GBCI Shares; (ii) the aggregate cash consideration for
payment of the Per Share Cash Consideration; and (iii) the cash in lieu of
fractional shares to be paid in accordance with Section 1.3. Such cash and
certificates for GBCI Shares, together with any dividends or distributions
with respect thereto, are referred to in this Agreement as the "Exchange
Fund."
1.6 CERTIFICATES.
1.6.1 LETTER OF TRANSMITTAL. On the business day after the Closing, GBCI
will cause the Exchange Agent to mail to each holder of record of a
certificate evidencing First Company Stock shares (a "Certificate") a
form letter of transmittal (which will specify that delivery will be
effected, and risk of loss and title to the Certificates will pass,
only upon delivery of the Certificates to the Exchange Agent) and
instructions for use in effecting the surrender of the Certificates in
accordance with Section 1.6.2.
1.6.2 SURRENDER OF CERTIFICATES. Subject to Section 1.4, each Certificate
will, from and after the Effective Date, be deemed for all corporate
purposes to represent and evidence only the right to receive the
Merger Consideration (and cash for fractional shares). Following the
Effective Date, holders of Certificates will exchange their
Certificates in accordance with instructions provided by the Exchange
Agent pursuant to Section 1.6.1 and together with a properly completed
and executed form of transmittal letter in order to effect their
exchange for, as applicable, (i) certificates representing GBCI Common
Stock; (ii) a check or, at the election of the First Company
shareholder, a wire transfer (but only if the amount of cash included
in that shareholder's Merger Consideration exceeds $100,000),
9
representing the cash consideration to be received pursuant to Section
1.2.2; and/or (iii) a check representing the amount of cash in lieu of
fractional shares, if any. Until a Certificate is so surrendered, the
holder will not be entitled to receive his, her or its portion of the
Merger Consideration.
1.6.3 ISSUANCE OF CERTIFICATES IN OTHER NAMES. Any person requesting that
any certificate evidencing GBCI Shares be issued in a name other than
the name in which the surrendered Certificate is registered must: (1)
establish to the Exchange Agent's satisfaction the right to receive
the certificate evidencing GBCI Shares and (2) either pay to the
Exchange Agent any applicable transfer or other taxes or establish to
the Exchange Agent's satisfaction that all applicable taxes have been
paid or are not required.
1.6.4 LOST, STOLEN, AND DESTROYED CERTIFICATES. With respect to a
Certificate that has been lost, stolen or destroyed, the Exchange
Agent will be authorized to issue or pay the holder's portion of the
Merger Consideration in exchange thereof, if the holder provides the
Exchange Agent with: (1) satisfactory evidence that the holder owns
First Company Stock and that the certificate representing this
ownership is lost, stolen, or destroyed, (2) any appropriate affidavit
or security the Exchange Agent may require, and (3) any reasonable
assurances that the Exchange Agent or GBCI may require.
1.6.5 RIGHTS TO DIVIDENDS AND DISTRIBUTIONS. After the Effective Date, no
holder of any Certificate will be entitled to receive any dividends or
other distributions otherwise payable to holders of record of GBCI
Common Stock on any date after the Effective Date, unless the holder
(1) is entitled by this Agreement to receive a certificate
representing GBCI Common Stock and (2) has surrendered in accordance
with this Agreement his, her or its Certificates (or has met the
requirements of Section 1.6.4) in exchange for certificates
representing GBCI Shares. Surrender of Certificates will not deprive
the holder of any dividends or distributions that the holder is
entitled to receive as a record holder of First Company Stock on a
date before the Effective Date. When the holder surrenders his, her or
its Certificates in exchange for GBCI Shares, the holder will receive
the amount, without interest, of any cash dividends and any other
distributions distributed after the Effective Date on the whole number
of GBCI Shares into which the holder's First Company Stock was
converted at the Effective Date.
1.6.6 CHECKS IN OTHER NAMES. Any person requesting that a check for cash to
be received in the Merger or cash in lieu of fractional shares be
issued in a name other than the name in which the Certificate
surrendered in exchange for the cash is registered, must establish to
the Exchange Agent's satisfaction the right to receive this cash.
1.6.7 UNDELIVERED CERTIFICATES. Any portion of the Exchange Fund that
remains unclaimed by shareholders of First Company on a date that is
six months after the Effective Date may be paid to GBCI, at GBCI's
election. To the extent so paid, holders of First Company Stock who
have not, prior to such time, complied with the provisions of this
Section 1.6 will, from such time forward, look only to GBCI for
payment of the Merger Consideration, the cash in lieu of fractional
shares, and/or unpaid dividends and distributions on the GBCI Shares
deliverable with respect to each share of First Company Stock held by
such holder as determined pursuant to this Agreement, in each case,
without any interest. Neither GBCI nor First Company will be liable to
any holder of First Company Stock for any amount properly delivered to
a public official pursuant to applicable abandoned property, escheat
or similar laws.
10
SECTION 2.
CLOSING OF TRANSACTION
2.1 EFFECTIVE DATE. The Merger shall be consummated by the filing with and
acceptance by the Montana Secretary of State of Articles of Merger, in the
form required by and executed in accordance with the relevant provisions of
the MBCA, and by the issuance of a Certificate of Merger by the Secretary
of State of Montana. Unless GBCI and First Company agree upon a different
date, the Effective Date will occur on the date of Closing. If the
Effective Date does not occur on or prior to the Termination Date and the
parties do not mutually agree in writing to extend the Termination Date,
either party may terminate this Agreement in accordance with Section 7.1.
2.2 EVENTS OF CLOSING. Closing shall occur within five (5) business days after
fulfillment or waiver of each condition precedent set forth in, and the
granting of each approval (and expiration of any waiting period) covered by
Section 5, or such other date as may be agreed upon by the parties. At the
Closing, all properly executed documents required by this Agreement will be
delivered to the proper party, in form consistent with this Agreement. If
any party fails to deliver a required document at the Closing or otherwise
defaults under this Agreement on or prior to the Effective Date, then the
Merger will not occur unless the adversely affected party waives the
default.
2.3 MANNER AND TIME OF CLOSING. The Closing will take place remotely via the
electronic exchange of documents and signatures, at 9:00 a.m. Mountain
Time, or such other time as the parties agree.
2.4 CAPITAL CONTRIBUTION. GBCI has reasonably determined that a capital
contribution of $15,300,000 (less any amounts received by the Bank in cash
after the date hereof and applied to the principal balance of the Loan
Participations prior to Closing) will adequately capitalize the Bank as of
Closing, and GBCI will make such capital contribution to the Bank upon
Closing.
SECTION 3.
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF FIRST COMPANY AND THE BANK. Each of First
Company and the Bank represents and warrants to GBCI that, except as
disclosed in a Schedule to this Agreement:
3.1.1 ORGANIZATION AND GOOD STANDING. First Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Wyoming, is a registered bank holding company pursuant to the
BHC Act, and has all requisite power and authority to own and operate
its properties and to carry on its businesses as now conducted. Each
of its Subsidiaries is either a commercial bank, statutory trust,
limited liability company or a corporation duly organized, validly
existing and in good standing under the laws of its state of
incorporation or formation and has all requisite power and authority
to own and operate its Properties and to carry on its businesses as
now conducted. The locations of all offices, including approved and
unopened offices of its Subsidiaries, are listed in Schedule 3.1.1.
3.1.2 CORPORATE AUTHORITY. Its execution, delivery and performance of this
Agreement does not and will not, and its consummation of the Merger
will not, constitute or result in: (1) a breach or violation of, or a
default under, its articles of incorporation, articles of association
or bylaws; (2) other than as disclosed on Schedule 3.1.2, a breach or
violation of, or a default under, or the acceleration of or the
creation of a Lien (with or without the
11
giving of notice, the lapse of time or both) under, any provision of
any agreement, lease, contract, note, mortgage, indenture, arrangement
or other obligation by which it or any of its Subsidiaries is bound or
to which it or any of its Subsidiaries is a party (collectively, the
"First Company Contracts"); or (3) a material violation of any law,
rule, ordinance or regulation or judgment, decree, order, award, or
governmental or non-governmental permit or license to which it is
subject; or (4) any change in the rights or obligations of any party
under any of the First Company Contracts. Schedule 3.1.2 contains a
list of all consents First Company or the Bank must obtain from third
parties under any First Company Contracts before consummation of the
Merger, the failure of which to obtain would have a Material Adverse
Effect.
3.1.3 CAPITAL STOCK.
(i) The authorized capital stock of First Company consists of 50,000
shares of First Company Stock, no par value per share. A total of
8,357 shares of First Company Stock are issued and outstanding as
of the date of this Agreement, all of which were validly issued
and are fully paid and nonassessable.
(ii) The authorized capital stock of the Bank consists of 5,000 shares
of common stock, par value $100 per share. A total of 5,000
shares of Bank Common Stock are issued and outstanding as of the
date of this Agreement, all of which are owned by First Company
free and clear of all liens, claims, encumbrances and
restrictions on transfer, other than (a) as disclosed on Schedule
3.1.3 or (b) the restrictions imposed by applicable federal and
state securities laws, and all of which are validly issued, fully
paid and nonassessable, except to the extent of any assessment
required under 12 U.S.C. Section 55 and 12 U.S.C. Section 1831o.
(iii) No shares of First Company Stock are reserved for issuance
except as set forth in Schedule 3.1.3. Except as set forth in
Schedule 3.1.3, there are no preemptive rights or any outstanding
subscriptions, warrants, options, conversion privileges, rights
or commitments of First Company or its Subsidiaries of any
character, kind or nature (including those relating to the
issuance, sale, purchase, redemption, conversion, exchange,
registration, voting or transfer of such stock or securities),
and neither First Company nor the Bank has issued or is obligated
to issue any additional shares of common stock or any other
security to any other person, except as so disclosed.
3.1.4 SUBSIDIARIES; INVESTMENTS.
(i) Other than Newco and except as disclosed in Schedule 3.1.4(a),
First Company has no Subsidiaries other than the Bank, and the
Bank has no Subsidiaries. Except as disclosed in Schedule
3.1.4(a), the shares of capital stock of each of First Company's
Subsidiaries other than the Bank are owned by First Company free
and clear of all liens, claims, encumbrances and restrictions on
transfer.
(ii) Schedule 3.1.4(a) lists all investments (except investments in
securities issued by federal, state or local government or any
subdivision or agency thereof) made by First Company or the Bank.
All such investments comply with all applicable laws and
regulations, including without limitation the BHC Act.
12
3.1.5 REPORTS AND FINANCIAL STATEMENTS.
(i) Filing of Reports. Since January 1, 2003, each of First Company
and the Bank has filed all reports and statements, together with
any required amendments to these reports and statements, that
they were required to file with (1) the Federal Reserve, (2) the
OCC, (3) the Wyoming State Banking Commissioner and (4) any other
applicable federal or state banking, insurance, securities, or
other regulatory authorities. Each of these reports and
statements, including the related financial statements and
exhibits, complied as to form in all material respects with all
applicable statutes, rules and regulations as of their respective
dates.
(ii) Delivery to Other Party of Reports. First Company has delivered
or otherwise made available to GBCI a copy of each and any
registration statement, offering circular, report, definitive
proxy statement or information statement (collectively, its
"Reports") under the Securities Act of 1933, as amended
("Securities Act"), the Securities Exchange Act of 1934, as
amended ("Exchange Act"), and state securities and "Blue Sky"
laws (collectively, the "Securities Laws") filed, used or
circulated by it or the Bank with respect to periods since
January 1, 2003, through the Execution Date.
(iii) Compliance with Securities Laws. As of their respective dates
(and without giving effect to any amendments or modifications
filed after the Execution Date), each of the Reports, including
the related financial statements, exhibits and schedules, filed,
used or circulated before the Execution Date complied (and each
of the Reports filed after the Execution Date, will comply) in
all material respects with applicable Securities Laws, and did
not (or in the case of reports, statements, or circulars filed
after the Execution Date, will not) contain any untrue statement
of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were
made, not misleading.
(iv) Financial Statements. Each of First Company's and the Bank's
balance sheets included in the First Company Financial Statements
and the Bank Financial Statements, respectively, fairly presents
(or, in the case of such financial statements for periods ending
on a date following the Execution Date, will fairly present) the
financial position of First Company and the Bank as of the date
of such balance sheet. Except as disclosed in Schedule 3.1.5,
each of the statements of income, cash flows and shareholders'
equity included in the First Company Financial Statements and the
Bank Financial Statements fairly presents the results of
operations, shareholders' equity and cash flows, as the case may
be, of First Company and the Bank for the periods set forth in
these statements (subject, in the case of unaudited statements,
to normal year-end audit adjustments), in each case in accordance
with GAAP, except as may be noted in these statements.
3.1.6 PROPERTIES.
(i) First Company and its Subsidiaries are not a party to any real
property lease, whether as landlord, tenant, guarantor or
otherwise, except as disclosed in Schedule 3.1.6. Except as
disclosed or reserved against in the First Company Financial
Statements or in Schedule 3.1.6, First Company and/or one of its
Subsidiaries have good and marketable title, free and clear of
all Liens (other
13
than Liens for taxes not yet delinquent or pledges to secure
deposits and other security provided in the ordinary course of
business including, without limitation, security for Federal Home
Loan Bank borrowings, federal funds and repurchase agreements) to
all of the properties and assets, tangible or intangible,
reflected in the First Company Financial Statements as being
owned or leased by any of them as of the Execution Date. To the
Knowledge of First Company, except as disclosed in Schedule
3.1.6, all buildings and structures on the Real Property and the
equipment located thereon are in all material respects in good
operating condition and repair (ordinary wear and tear excepted)
and conform in all material respects to all applicable laws,
ordinances and regulations.
(ii) To the Knowledge of First Company, all buildings and all
fixtures, equipment and other property and assets that are
material to First Company's business on a consolidated basis are
owned by it or one of its Subsidiaries or are held under leases
or subleases by it or one of its Subsidiaries, enforceable in
accordance with their respective terms (except as may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors' rights generally or by general
equitable principles).
(iii) Schedule 3.1.1 lists all of its existing branches and offices
and all new branches or offices that the Bank has applied to
establish or purchase, along with the estimated cost to establish
or purchase those new branches.
(iv) First Company has provided to GBCI copies of existing title
policies, if any, held in its files relating to the Real
Property.
3.1.7 ENVIRONMENTAL MATTERS.
(i) For purposes of this Section 3.1.7, the following definitions
apply:
(1) "Subject Property" with respect to a party means (i) all
real property at which its business has been conducted, and
any property where under any Environmental Law it is deemed
to be the owner or operator of the property; (ii) any
facility in which it is the owner or operator of the
facility; and (iii) all other real property that, for
purposes of any Environmental Law, it otherwise could be
deemed to be an owner or operator of or as otherwise having
control over.
(2) "Environmental Laws" means any federal, state or local law,
regulation, order, decree, judgment, judicial opinion, or
any agreement between First Company or any of its
Subsidiaries and any Governmental Entity presently in effect
relating to: (i) the manufacture, generation, transport,
use, treatment, storage, recycling, disposal, release,
threatened release or presence of Hazardous Substances, or
(ii) the protection of human health or the environment.
(3) "Hazardous Substances" means any substance, material or
waste that is (a) defined as a "hazardous substance" in 42
USC Section 9601(14), (b) defined as a "pollutant or
contaminant" in 33 USC Section 1362(6), (c) defined as a
"hazardous waste" in 42 USC Section 6903(5), or (d)
petroleum or a petroleum product or any other substance
defined as "hazardous,"
14
"dangerous" or "toxic" under any federal or state law or
regulation enacted for the protection of human health or the
environment; provided, however, that supplies and materials
used by First Company and/or its Subsidiaries for general
office purposes will not be deemed to be Hazardous
Substances for the purposes of this Agreement.
(ii) To the Knowledge of First Company, (A) except as disclosed in
Schedule 3.1.7, First Company, its Subsidiaries and the Subject
Property are, and have been, in material compliance with all
applicable Environmental Laws, and (B) no circumstances exist
that would result in a material violation of such Environmental
Laws.
(iii) Except as disclosed in Schedule 3.1.7, none of the following
exists, and to First Company's Knowledge, no reasonable basis for
any of the following exists: pending or threatened claims,
actions, investigations, notices of non-compliance, information
requests or notices of potential responsibility or proceedings
involving First Company, any of its Subsidiaries or any Subject
Property, the occurrence or existence of which would result in a
Material Adverse Effect, relating to:
(1) an asserted liability of First Company or any of its
Subsidiaries or any prior owner, occupier or user of Subject
Property under any applicable Environmental Law or the terms
and conditions of any permit, license, authority,
settlement, agreement, decree or other obligation arising
under any applicable Environmental Law;
(2) the handling, storage, use, transportation, removal or
disposal of Hazardous Substances;
(3) the actual or threatened discharge, release or emission of
Hazardous Substances from, on or under or within Subject
Property into the air, water, surface water, ground water,
land surface or subsurface strata; or
(4) personal injuries or damage to the Subject Property related
to or arising out of the release of Hazardous Substances.
(iv) Except as disclosed in Schedule 3.1.7, to the Knowledge of First
Company, no storage tanks underground or otherwise are present on
the Subject Property or, if present, none of such tanks are
leaking and each of them is in full compliance with all
applicable Environmental Laws (except where the failure to be in
full compliance would not have a Material Adverse Effect). With
respect to any Subject Property, except as permitted by
applicable Environmental Laws, neither First Company nor any of
its Subsidiaries owns, possesses or controls any PCBs,
PCB-contaminated fluids, wastes or equipment, or any material
amount of asbestos or asbestos-containing material, the existence
of which would have a Material Adverse Effect. No Hazardous
Substances have been used, handled, stored, discharged, released
or emitted, or are threatened to be discharged, released or
emitted, at or on any Subject Property, except in compliance with
applicable Environmental Laws (except where failure to be in
compliance would not have a Material Adverse Effect).
15
(v) To the Knowledge of First Company, except as disclosed in
Schedule 3.1.7, no part of the Subject Property has been or is
scheduled for investigation or monitoring under any applicable
Environmental Law.
(vi) Except as disclosed in Schedule 3.1.7, no condition from, on or
under the Subject Property exists with respect to the Subject
Property which would have a Material Adverse Effect that would
require remediation under applicable Environmental Laws.
3.1.8 TAXES.
(i) All tax returns and reports required by law to be filed by First
Company and its Subsidiaries have been duly filed, and all taxes,
assessments, fees and other government charges upon First Company
or any of its Subsidiaries or upon any of their respective
properties, assets, income or franchises that are due and payable
have been paid, of which the failure to file or pay would have a
Material Adverse Effect. The federal income portion of such taxes
have been paid in full as indicated in the tax returns of First
Company and its Subsidiaries for the past five years or adequate
provision has been made for any such taxes on its balance sheet
in accordance with GAAP, of which the failure to pay or provide
for on the balance sheet would have a Material Adverse Effect. No
material objections to returns or claims for additional taxes are
being asserted with respect to federal or state tax returns of
First Company and its Subsidiaries for any prior years, except
for such audits, objections or claims which are being contested
in good faith, by appropriate proceedings and with establishment
of appropriate reserves, and which have been disclosed in writing
to the other parties to this Agreement. Except as specified in
the foregoing sentence, in the past five years, there has been no
past audit, objection to returns, or claim for additional taxes.
(ii) First Company (and any predecessor of First Company) has been a
validly electing S corporation within the meaning of IRC
Section 1361 and Section 1362 at all times since January 1, 1998
and will be a validly election S corporation up to the time of
the Closing.
(iii) The Bank has been a "qualified subchapter S subsidiary" within
the meaning of IRC Section 1361(b)(3)(B) at all times since
January 1, 1998 and will be a "qualified subchapter S subsidiary"
up to the time of the Closing. First Company does not own shares
of stock in any corporation, other than the Bank, that is
eligible to make an election under IRC Section 1361(b)(3)(B)(ii)
to be treated as a "qualified subchapter S subsidiary."
(iv) First Company has no liability for any tax under IRC Section
1374. Neither First Company nor any "qualified subchapter S
subsidiary" of First Company has, in the past 10 years, other
than as disclosed on Schedule 3.1.8(iv), (A) acquired assets from
another corporation in a transaction in which First Company's tax
basis for the acquired assets was determined, in whole or in
part, by reference to the tax basis of the acquired assets (or
any other property) in the hands of the transferor, or (B)
acquired the stock of any corporation that is a "qualified
subchapter S subsidiary."
16
3.1.9 ABSENCE OF REGULATORY ACTION. Neither First Company nor any of its
Subsidiaries is in violation of any statute, rule or governmental
regulation applicable to them (including, without limitation, the
Community Reinvestment Act, Bank Secrecy Act, Truth in Lending Act,
Equal Credit Opportunity Act, and statutes, rules and regulations
governing the reporting of taxpayer identification numbers of its
customers), which violation is reasonably likely to have a Material
Adverse Effect on First Company or any of its Subsidiaries. Other than
as disclosed on Schedule 3.1.9, neither First Company nor any of its
Subsidiaries is 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 regulatory authorities, nor have they
been advised by such authorities that they are contemplating issuing
or requesting any such order, agreement, memorandum or similar
document or undertaking.
3.1.10 MATERIAL AGREEMENTS.
(i) Except for arrangements made after the date and in accordance
with the terms of this Agreement, First Company and its
Subsidiaries are not bound by any material contract (as defined
in Item 601(b)(10) of Regulation S-K under the Securities Act)
that: (1) is to be performed after the date of this Agreement and
(2) has not been set forth in Schedule 3.1.10.
(ii) Neither First Company nor any of its Subsidiaries is in default
under any contract, agreement, commitment, arrangement, lease,
insurance policy or other instrument, which default would result
in a Material Adverse Effect.
3.1.11 COMPLIANCE WITH LAWS. Other than as disclosed on Schedule 3.1.11,
First Company and each of its Subsidiaries has all material permits,
licenses, certificates of authority, orders, and approvals of, and has
made all filings, applications, and registrations with, federal,
state, local, and foreign governmental or regulatory bodies that are
required in order to permit First Company or its Subsidiaries to carry
on their respective businesses as they are presently conducted and the
absence of which, individually or in the aggregate, can reasonably be
expected to have a Material Adverse Effect on them. All such material
permits, licenses, certificates of authority, orders and approvals are
in full force and effect, and, to the Knowledge of First Company, no
suspension or cancellation of any of them is threatened.
3.1.12 KNOWLEDGE AS TO CONDITIONS. Other than as disclosed on Schedule
3.1.12, First Company knows of no reason why the approvals, consents
and waivers of governmental authorities referred to in Section 5.1
cannot be obtained.
3.1.13 NO MATERIAL ADVERSE EFFECT. Since December 31, 2007, (i) First
Company and its Subsidiaries have conducted their respective
businesses only in the ordinary and usual course of business, and (ii)
there has not been any change in the financial condition (which
includes, without limitation, the condition of assets, franchises,
results of operations and prospects) that has had or may reasonably be
expected to have a Material Adverse Effect on First Company or any of
its Subsidiaries.
3.1.14 COMPLETENESS OF REPRESENTATIONS. No representation or warranty made
by or with respect to First Company or its Subsidiaries in this
Agreement (or in the Schedules to this
17
Agreement) contains any untrue statement of a material fact or omits
to state a material fact necessary to make the statements contained in
this Agreement (or in such Schedules) or in such representation or
warranty not misleading.
3.1.15 ASSET CLASSIFICATION.
(i) Schedule 3.1.15 sets forth a list, accurate and complete, as of
December 31, 2008 except as otherwise expressly noted, and
separated by category of classification or criticism ("Asset
Classification"), of the aggregate amounts of loans, extensions
of credit and other assets of First Company and its Subsidiaries
that have been criticized or classified by any internal audit
conducted by First Company, taking into account any assets that
have been criticized or classified by any governmental or
regulatory authority.
(ii) Except as shown in Schedule 3.1.15, no amounts of its loans,
extensions of credit or other assets that have been classified or
criticized by any representative of any governmental entity as
"Other Assets Especially Mentioned," "Substandard," "Doubtful,"
"Loss" or words of similar effect as of December 31, 2008 are
excluded from the amounts disclosed in the Asset Classification,
other than amounts of loans, extensions of credit or other assets
that were paid off or charged off by First Company or its
Subsidiaries before the date of this Agreement.
3.1.16 LITIGATION. Except as disclosed in Schedule 3.1.16, no material
litigation, proceeding or controversy before any court or governmental
agency is pending (other than routine foreclosure proceedings), and
there is no pending claim, action or proceeding against First Company
or any of its Subsidiaries, which is reasonably likely, individually
or in the aggregate, to have a Material Adverse Effect on them or to
materially hinder or delay consummation of the Merger, and, to the
Knowledge of First Company, no such litigation, proceeding,
controversy, claim or action has been threatened or is contemplated.
3.1.17 INSURANCE. First Company and each of its Subsidiaries have taken all
requisite action (including the making of claims and the giving of
notices) under their respective directors' and officers' liability
insurance policy or policies in order to preserve all rights under
such policies with respect to all matters known to them (other than
matters arising in connection with, and the transactions contemplated
by, this Agreement). Schedule 3.1.17 lists all directors' and
officers' liability insurance policies and other material insurance
policies maintained by First Company or its Subsidiaries.
3.1.18 LABOR MATTERS. Neither First Company nor any of its Subsidiaries is
a party to, or is bound by, any collective bargaining agreement,
contract, or other agreement or understanding with a labor union or
labor organization. Neither First Company nor any of its Subsidiaries
is the subject of any proceeding: (1) asserting that they have
committed an unfair labor practice or (2) seeking to compel them to
bargain with any labor organization as to wages or conditions of
employment. No strike involving First Company or its Subsidiaries is
pending or, to First Company's Knowledge, threatened. First Company
has no Knowledge of any activity involving its or the Bank's employees
seeking to certify a collective bargaining unit or engaging in any
other organizational activity.
18
3.1.19 EMPLOYEE BENEFITS.
(i) For purposes of this Agreement, "Plan" or "Plans", individually
or collectively, means any "employee benefit plan," as defined in
Section 3(3) of ERISA, maintained by First Company or its
Subsidiaries, as the case may be. First Company and its
Subsidiaries are not now nor have ever been a contributing
employer to or sponsor of a multiemployer plan or a single
employer plan subject to Title IV of ERISA.
(ii) Schedule 3.1.19 sets forth a list, as of the Execution Date, of
(a) all Plans, stock purchase plans, restricted stock and stock
option plans, and other deferred compensation arrangements, and
(b) all other material employee benefit plans that cover
employees or former employees of First Company and its
Subsidiaries (its "Compensation Plans"). True and complete copies
of the Compensation Plans (and, as applicable, copies of summary
plan descriptions, governmental filings (on Form 5500 series or
otherwise), actuarial reports and reports under Financial
Accounting Standards Board Statement No. 106 relating to such
Compensation Plans) covering its current employees or those of
its Subsidiaries (collectively, "Employees"), including Plans and
related amendments, have been made available to GBCI.
(iii) All of its Plans covering Employees (other than "multi-employer
plans" within the meaning of ERISA Sections 3(37) or 4001(a)(3)),
to the extent subject to ERISA, are in substantial compliance
with ERISA. Each of its Plans that is an "employee pension
benefit plan" within the meaning of ERISA Section 3(2) ("Pension
Plan") and that is intended to be qualified under IRC Section
401(a), has either received a favorable determination letter from
the Internal Revenue Service or consists of a master, prototype,
or volume submitter plan which has received an opinion or
advisory letter from the Internal Revenue Service upon which
First Company may rely, and First Company is not aware of any
circumstances likely to result in revocation of any such
favorable determination letter. No litigation relating to its
Plans is pending or, to First Company's Knowledge, threatened.
Neither First Company nor any of its Subsidiaries has engaged in
a transaction with respect to any Plan that could subject it or
any of its Subsidiaries to a tax or penalty imposed by either IRC
Section 4975 or ERISA Section 502(i) in an amount that would be
material.
(iv) All material contributions First Company or any of its
Subsidiaries are or were required to make under the terms of any
of its Plans have been timely made or have been reflected in the
First Company Financial Statements. Neither any of its Pension
Plans nor any single-employer plan of any of its ERISA Affiliates
has an "accumulated funding deficiency" (whether or not waived)
within the meaning of IRC Section 412 or ERISA Section 302.
Neither First Company nor any of its Subsidiaries or its ERISA
Affiliates has provided, or is required to provide, security to
any Pension Plan or to any single-employer plan of an ERISA
Affiliate under IRC Sections 401(a)(29) or 412(f)(3) or ERISA
Sections 306, 307 or 4204.
(v) Except as disclosed in the First Company Financial Statements or
in Schedule 3.1.19, neither First Company nor any of its
Subsidiaries has any obligations for retiree health and life
benefits.
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(vi) No provision of the documents governing any Plan contains
restrictions on the rights of First Company or its Subsidiaries
to amend or terminate any Plan without incurring liability under
the Plan other than normal liabilities for benefits.
(vii) Except as disclosed in the First Company Financial Statements or
otherwise disclosed in this Agreement or in Schedule 3.1.19, the
Merger will not result in (a) vesting, acceleration, or increase
of any amounts payable under any Compensation Plan, (b) any
material increase in benefits under any Compensation Plan or (c)
payment of any severance or similar compensation under any
Compensation Plan.
(viii) Except as disclosed in Schedule 3.1.19, neither First Company
nor any of its Subsidiaries maintains an executive supplemental
retirement plan or similar arrangement.
3.1.20 BROKER'S OR FINDER'S FEES. Except for the fees of Sheshunoff deemed
by First Company to be required to obtain a fairness opinion and
related advice from Sheshunoff to effect the Merger pursuant to such
agreement that has been disclosed to GBCI, no agent, broker, person or
firm acting on behalf of First Company or the Bank, or under their
authority, is or will be entitled to any commission, broker's,
finder's or financial advisory fee in connection with the Merger.
3.2 REPRESENTATIONS AND WARRANTIES OF GBCI. Except as disclosed in a schedule
to this Agreement, GBCI represents and warrants to First Company:
3.2.1 ORGANIZATION AND GOOD STANDING. GBCI is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Montana, is a registered bank holding company pursuant to the BHC Act,
and has all requisite power and authority to own and operate its
properties and to carry on its businesses as now conducted. Each of
its Subsidiaries is either a commercial bank, a statutory trust or a
corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation and has all requisite
power and authority to own and operate its Properties and to carry on
its businesses as now conducted.
3.2.2 CORPORATE AUTHORITY. The execution, delivery and performance by GBCI
of this Agreement does not and will not, and the consummation by GBCI
of the Merger will not, constitute or result in: (1) a breach or
violation of, or a default under, either of their articles of
incorporation or bylaws; (2) a breach or violation of, or a default
under, or the acceleration of or the creation of a Lien (with or
without the giving of notice, the lapse of time or both) under any
provision of any agreement, lease, contract, note, mortgage,
indenture, arrangement or other obligation by which either of them is
bound or to which either of them is a party (collectively, the "GBCI
Contracts"); or (3) a material violation of any law, rule, ordinance
or regulation or judgment, decree, order, award, or governmental or
non-governmental permit or license to which either of them is subject;
or (4) any change in the rights or obligations of any party under any
of the GBCI Contracts.
20
3.2.3 CAPITAL STOCK.
(i) The authorized capital stock of GBCI consists of 117,187,500
shares of GBCI Common Stock, par value $0.01 per share. A total
of 61,331,293 shares of GBCI Common Stock were issued and
outstanding as of December 31, 2008, all of which were validly
issued and are fully paid and nonassessable. As of December 31,
2008, options to acquire 2,628,609 shares of GBCI Common Stock
have been granted and are outstanding.
(ii) No unissued shares of common stock or any other securities of
GBCI are subject to any warrants, options, conversion privileges,
rights or commitments of any character, kind or nature, except as
set forth in GBCI's Reports, and GBCI has not issued and is not
obligated to issue any additional shares of common stock or any
other security to any other person, except as so disclosed.
3.2.4 REPORTS AND FINANCIAL STATEMENTS.
(i) Filing of Reports. Since January 1, 2003, GBCI and each of its
Subsidiaries has filed all reports and statements, together with
any required amendments to these reports and statements, that
they were and will be required to file with (1) the SEC, (2) the
Federal Reserve, (3) the FDIC, and (4) any other applicable
federal or state banking, insurance, securities, or other
regulatory authorities. Each of these reports and statements,
including the related financial statements and exhibits, complied
as to form in all material respects with all applicable statutes,
rules and regulations as of their respective dates.
(ii) Compliance with Securities Laws. As of their respective dates
(and without giving effect to any amendments or modifications
filed after the Execution Date), each of the Reports, including
the related financial statements, exhibits and schedules, filed,
used or circulated before the Execution Date complied (and each
of the Reports filed after the Execution Date, will comply) in
all material respects with applicable Securities Laws, and did
not (or, in the case of reports, statements, or circulars filed
after the Execution Date, will not) contain any untrue statement
of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were
made, not misleading.
(iii) Financial Statements. Each of GBCI's balance sheets included in
the GBCI Financial Statements and the unaudited balance sheet of
GBCI provided to First Company as of December 31, 2008, have been
prepared in conformity with GAAP and fairly present (or, in the
case of GBCI Financial Statements for periods ending on a date
following the Execution Date, will fairly present) the financial
position of GBCI and its Subsidiaries as of the date of the
balance sheet. Each of the statements of income, cash flows and
shareholders' equity included in the GBCI Financial Statements
and the unaudited statements of income, cash flows and
shareholders' equity GBCI provided to First Company as of
December 31, 2008, fairly presents (or, in the case of GBCI
Financial Statements to be prepared and filed with the SEC
pursuant to GBCI's reporting obligations under the Exchange Act
for periods ending on a date following the Execution Date, will
fairly present) the results of operations, shareholders' equity
and cash flows, as the case may be, of GBCI and its Subsidiaries
for the periods set forth in these
21
statements, in each case in accordance with GAAP, except as may
be noted in these statements.
3.2.5 FINANCING AND SHARES AVAILABLE. GBCI has, and at the Effective Date
will have, (i) sufficient cash and cash equivalents on hand to pay the
cash component of the Merger Consideration, cash in lieu of fractional
shares, and any amounts payable to holders of Proposed Dissenting
Shares; and (ii) a sufficient number of shares of common stock
authorized and available to issue the GBCI Shares.
3.2.6 ABSENCE OF REGULATORY ACTION. Neither GBCI nor any of its
Subsidiaries is, to the Knowledge of GBCI, in material violation of
any statute, rule or governmental regulation applicable to them
(including, without limitation, the Community Reinvestment Act, Bank
Secrecy Act, Truth in Lending Act, Equal Credit Opportunity Act, and
statutes, rules and regulations governing the reporting of taxpayer
identification numbers of its customers). Neither GBCI nor any of its
Subsidiaries is 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 regulatory authorities, nor has it been
advised by such authorities that they are contemplating issuing or
requesting any such order, agreement, memorandum or similar document
or undertaking.
3.2.7 KNOWLEDGE AS TO CONDITIONS. GBCI knows of no reason why the
approvals, consents and waivers of governmental authorities referred
to in Section 5.1 cannot be obtained.
3.2.8 LITIGATION. Except as disclosed in GBCI's Reports, no material
litigation, proceeding or controversy before any court or governmental
agency is pending, and there is no pending claim, action or proceeding
against GBCI or any of its Subsidiaries, which is reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on
them or to materially hinder or delay consummation of the Merger.
3.2.9 TAXES. All tax returns and reports required by law to be filed by
GBCI and its Subsidiaries have been duly filed, and all taxes,
assessments, fees and other government charges upon GBCI or any of its
Subsidiaries or upon any of their respective properties, assets,
income or franchises that are due and payable have been paid. The
federal income portion of such taxes have been paid in full as
indicated in the tax returns of GBCI and its Subsidiaries for the past
five years or adequate provision has been made for any such taxes on
its balance sheet in accordance with GAAP. No material objections to
returns or claims for additional taxes are being asserted with respect
to federal or state tax returns of GBCI and its Subsidiaries for any
prior years, except for such audits, objections or claims which are
being contested in good faith, by appropriate proceedings and with
establishment of appropriate reserves, and which have been disclosed
in writing to the other parties to this Agreement. Except as specified
in the foregoing sentence, in the past five years, there has been no
past audit, objection to returns, or claim for additional taxes.
3.2.10 NO MATERIAL ADVERSE EFFECT. Since December 31, 2007, (i) GBCI and
its Subsidiaries have conducted their respective businesses only in
the ordinary and usual course of business, and (ii) there has not been
any change in the financial condition (which includes, without
limitation, the condition of assets, franchises, results of operations
and prospects) that has had or may reasonably be expected to have a
Material Adverse Effect on GBCI or any of its Subsidiaries.
22
3.2.11 COMPLETENESS OF REPRESENTATIONS. No representation or warranty made
by or with respect to GBCI or its Subsidiaries in this Agreement (or
in the Schedules to this Agreement) contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements contained in this Agreement (or in such Schedules) or in
such representation or warranty not misleading.
SECTION 4.
CONDUCT AND TRANSACTIONS PRIOR TO CLOSING
4.1 CONDUCT OF FIRST COMPANY'S AND THE BANK'S BUSINESSES PRIOR TO CLOSING.
First Company and the Bank covenant that, from the date of this Agreement
and prior to Closing:
4.1.1 AVAILABILITY OF BOOKS, RECORDS AND PROPERTIES.
(i) With prior notice to First Company, subject to applicable law,
the books, records, properties, contracts and documents of First
Company and the Bank will be available at all reasonable times to
GBCI and its counsel, accountants and other representatives. Such
items will be open for inspection, audit and direct verification
of loan or deposit balances, collateral receipts and such other
transactions or documentation as GBCI deems reasonably relevant
to the Transaction. First Company and the Bank will cooperate
fully in such inspection and audit, and make available all
information reasonably requested by or on behalf of GBCI.
(ii) Upon request by GBCI, First Company and the Bank will request
that any third parties involved in the preparation or review of
the First Company Financial Statements or First Company
Subsequent Financial Statements disclose to GBCI the work papers
or any similar materials related to such financial statements.
4.1.2 ORDINARY AND USUAL COURSE. Without prior written consent of GBCI,
subject to applicable law and except (a) as required by the Wyoming
State Banking Commissioner, the OCC, or the Federal Reserve (so long
as GBCI receives prior written notice of such required action), or (b)
with respect to the Excluded Assets, First Company and the Bank will
conduct their respective business only in the ordinary and usual
course and will not do any of the following:
(i) effect any stock split or other recapitalization with respect to
First Company Stock or the shares of the Bank; issue (except for
issuances upon exercise of SJ Options), redeem, pledge or
encumber in any way any shares of such capital stock; or grant
any option for shares of such capital stock;
(ii) declare or pay any dividend, or make any other distribution,
either directly or indirectly, with respect to First Company
Stock or the shares of the Bank, or assets of the Company or the
Bank; provided, however, that prior to the Effective Time, the
Company or the Bank, as applicable, may:
(1) declare and pay such cash dividends as necessary to pay
First Company Transaction Fees consistent with this
Agreement or as authorized by Section 4.12;
(2) declare and pay dividends from the Bank to First Company;
23
(3) distribute to First Company's shareholders or their nominee
the Excluded Assets; and
(4) redeem shares of First Company Stock held of record by a
Plan or a trustee of a Plan or by a director solely as
qualifying shares (together with the distribution of the
Excluded Assets, the "Pre-Closing Distributions").
(iii) acquire, sell, transfer, assign, encumber or otherwise dispose
of any material assets or make any material commitment other than
in the ordinary and usual course of business other than the
Pre-Closing Distributions or pursuant to Section 4.1.3;
(iv) solicit or accept deposit accounts of a different type from
accounts previously accepted by the Bank or at rates materially
in excess of prevailing interest rates, or incur any indebtedness
for borrowed money (excluding Fed Funds and Federal Home Loan
Bank borrowings);
(v) offer or make loans or other extensions of credit of a different
type, or apply different underwriting standards, from those
previously offered or applied by the Bank, or offer or make a new
loan or extension of credit in an amount greater than $500,000
without prior consultation with GBCI; which consultation will not
be unreasonably withheld or delayed and will be deemed provided
if GBCI has not responded to First Company's request for
consultation within three (3) Business Days after GBCI's receipt
of a loan package concerning the loan at issue;
(vi) except for the transfer of the Leased Real Property, cancellation
of Leases, foreclosures and satisfaction of obligations as
contemplated by Section 4.1.11, acquire an ownership interest or
a leasehold interest in any real property, except those disclosed
in Schedule 3.1.6, without making an appropriate environmental
evaluation in advance of obtaining such interest and without
providing to GBCI such evaluation and at least 30 days' advance
notice;
(vii) enter into, renew, or terminate any contracts calling for a
payment by any of them of more than $25,000 (including real
property leases and data or item processing agreements) with or
for a term of one-year or more, except for its contracts of
deposit and agreements to lend money not otherwise restricted
under this Agreement and (1) entered into in the ordinary course
of business, consistent with past practices, and (2) providing
for not less (in the case of loans) or materially more (in the
case of deposits) than prevailing market rates of interest;
(viii) enter into or amend any contract (other than contracts for
deposits or agreements to lend money not otherwise restricted by
this Agreement) calling for a payment by any of them of more than
$25,000, unless the contract may be terminated without cause or
penalty upon 30 days notice or less;
(ix) enter into any personal services contract with any person or firm
outside the ordinary course of business, except contracts,
agreements, or arrangements for legal, accounting, consulting,
investment advisory, or tax services entered into to directly
facilitate the Merger;
24
(x) with respect to the Bank only, (A) sell any securities, whether
held for investment or sale, other than in the ordinary course of
business or sell any securities, whether held for investment or
sale, even in the ordinary course of business, if the aggregate
gain or loss realized from all sales after the Execution Date
would be more than $25,000 or (B) transfer any investment
securities between portfolios of securities available for sale
and portfolios of securities to be held to maturity;
(xi) amend its Articles of Incorporation, Bylaws, or other formation
agreements, or convert its charter or form of entity;
(xii) other than as contemplated by Section 4.1.3, implement or adopt
any material changes in its operations, policies, or procedures,
including loan loss reserve policies, unless the changes are
requested by GBCI or are necessary or advisable, on the advice of
legal counsel, to comply with applicable laws, regulations, or
regulatory policies;
(xiii) implement or adopt any change in its accounting principles,
practices or methods, other than as may be required (1) by GAAP,
(2) for tax purposes, or (3) to take advantage of any beneficial
tax or accounting methods;
(xiv) other than in accordance with binding commitments existing on
the Execution Date and that have been disclosed to GBCI, make any
capital expenditures in excess of $25,000 per project or related
series of projects or $50,000 in the aggregate;
(xv) enter into any other material transaction or make any material
expenditure other than in the ordinary and usual course of its
business except for expenses reasonably related to completion of
the Merger; or
(xvi) take any action which would materially and adversely affect or
delay their ability or the ability of GBCI to obtain any
necessary approvals, consents or waivers of any governmental
authority required for the Merger or to perform in all material
respects their respective covenants and agreements under this
Agreement.
4.1.3 FIRST COMPANY AND BANK PRE-CLOSING ACTIONS. Following execution of
this Agreement and prior to Closing, First Company or the Bank, as
applicable, shall:
(i) sell or otherwise dispose of the Bank's residential mortgage
servicing portfolio and its trust company and related business
operations, which sale or disposition shall be completed prior to
or effective as of the Closing on such terms as are reasonably
acceptable to GBCI (the "Bank Divestiture");
(ii) promptly seek regulatory approval for, and distribute or
otherwise effect, the Pre-Closing Distributions; and
(iii) maintain the Bank's ALLL at a level not less than $5,000,000.
4.1.4 MAINTENANCE OF PROPERTIES. First Company and the Bank will in all
material respects maintain their respective properties and equipment
(and related insurance or its equivalent) in accordance with good
business practice.
25
4.1.5 PRESERVATION OF BUSINESS ORGANIZATION. Each of First Company and the
Bank will use its commercially-reasonable efforts to:
(i) Preserve its respective business organization (other than those
matters subject to the Pre-Closing Distribution and the Bank
Divestiture).
(ii) Retain the services of management and employees consistent with
such program for consolidation of redundant employment positions
resulting from the Merger as will be developed in cooperation
with GBCI; provided, such efforts shall not require First Company
or the Bank to adopt any bonus, severance, retention or similar
agreement or plan.
(iii) Preserve the goodwill of suppliers, customers and others with
whom First Company and the Bank have business relations.
4.1.6 SENIOR MANAGEMENT. Except as otherwise provided in this Agreement and
excluding resignations, without prior consultation with GBCI, First
Company and the Bank will not make any change with respect to present
management personnel having the rank of vice-president or higher.
4.1.7 COMPENSATION. First Company and the Bank will not permit any increase
in the current or deferred compensation payable or to become payable
by First Company or the Bank to any of its directors, officers,
employees, agents or consultants other than normal increments in
compensation in accordance with First Company's and the Bank's
established policies with respect to the timing and amounts of such
increments. Without the prior written approval of GBCI, First Company
and the Bank will not commit to, execute or deliver any employment
agreement with any party not terminable without expense with two weeks
notice.
4.1.8 UPDATE OF FINANCIAL STATEMENTS. First Company will deliver unaudited
balance sheets and related statements of income and shareholders'
equity for (i) the Bank for each month ending after the Execution Date
and before Closing or the Termination Date, as the case may be, within
15 days after each such month-end and (ii) First Company on a
parent-only basis for each quarter ending after the Execution Date and
before Closing or the Termination Date. The Subsequent First Company
Financial Statements:
(i) will be prepared from the books and records of First Company and
its Subsidiaries;
(ii) will present fairly the financial position and operating results
of First Company and its Subsidiaries at the times indicated and
for the periods covered;
(iii) will be prepared in accordance with GAAP (except for the absence
of notes and exceptions from GAAP identified in Section 3.1.5)
and with the regulations promulgated by applicable regulatory
authorities, to the extent then applicable; and
(iv) will reflect all liabilities, contingent or otherwise, of First
Company and its Subsidiaries on the respective dates and for the
respective periods covered, except for liabilities: (1) not
required to be so reflected in accordance with GAAP or (2) not
significant in amount. All contingent liabilities known to First
26
Company and not recorded on the Subsequent First Company
Financial Statements will be disclosed in writing to GBCI.
4.1.9 UPDATE SCHEDULES. From the date of this Agreement until Closing,
First Company will promptly revise and supplement the Schedules to
this Agreement prepared by or on behalf of First Company or its
Subsidiaries to ensure that such Schedules remain materially accurate
and complete. Notwithstanding anything to the contrary contained
herein, supplementation of such Schedules following the execution of
this Agreement will not be deemed a modification of First Company's
representations or warranties contained in this Agreement.
4.1.10 ACQUISITION PROPOSAL. First Company agrees that neither it nor any
of its Subsidiaries will, and First Company will direct and use its
best efforts to cause its and its Subsidiaries' directors, officers,
employees, agents and representatives (including, without limitation,
any investment banker, attorney or accountant retained by it or any of
its Subsidiaries) not to, initiate, solicit, encourage or take any
other action to facilitate any inquiries or the making of any proposal
or offer (including, without limitation, any proposal or offer to
shareholders of First Company) with respect to an Acquisition Event
(any such proposal or offer being hereinafter referred to as an
"Acquisition Proposal") or, except to the extent legally required for
the discharge by the board of directors of its fiduciary duties as
advised in writing by such board's counsel, engage in any negotiations
concerning, or provide any confidential information or data to any
Person relating to, an Acquisition Proposal, or otherwise facilitate
any effort or attempt to make or implement an Acquisition Proposal.
First Company and its Subsidiaries will immediately cease and cause to
be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any of the
foregoing. First Company will take the necessary steps to inform the
appropriate individuals or entities referred to in the first sentence
hereof of the obligations undertaken in this Section 4.1.10. First
Company will notify GBCI immediately if any such inquiries or
proposals are received by, any such information is requested from, or
any such negotiations are sought to be initiated or continued with
First Company or its Subsidiaries.
4.1.11 STATUS OF TITLE/LEASEHOLD INTERESTS. First Company will use its
reasonable best efforts to provide GBCI, no later than 30 days after
the Execution Date, title commitments for the Real Property issued by
title insurance companies reasonably satisfactory to the parties (the
"Title Companies"). These title commitments must show the current
status of title to the Real Property. Within 15 days after the date on
which First Company delivers all of the title reports to GBCI for its
review, GBCI will inform First Company in writing whether, and in what
manner, it objects to any of the exceptions to title shown on any of
the title reports. First Company will, within 10 days of the date on
which it receives the written notice of objection from GBCI, inform
GBCI if there are any objections that it is unable to remove at or
prior to Closing. First Company will not, however, be obligated to
remove exceptions that are non-monetary exceptions that do not
prohibit or materially interfere with the use of the properties as
bank main office or branch locations or as otherwise used by First
Company or the Bank as of the date hereof. At Closing, if requested by
GBCI, First Company will cause the Title Companies to provide GBCI
with standard coverage title insurance policies issued with respect to
each of the Properties, in an amount commensurate with the value of
each such Property as agreed upon by GBCI and First Company, dated as
of the Effective Date, insuring fee title in GBCI or such subsidiary
of GBCI, as so designated by GBCI, and that each such Real Property is
27
unencumbered by any Liens, other than Liens for taxes not yet
delinquent and other exceptions to title as set forth in the title
commitments as approved by GBCI.
4.1.12 DIRECTORS' AND OFFICERS' LIABILITY. Before the Effective Date, First
Company will notify its directors' and officers' liability insurers of
the Merger and of all pending or, to First Company's Knowledge,
threatened claims, actions, suits, proceedings or investigations
asserted or claimed against any Person entitled to indemnification
pursuant to Section 6.4 and known to First Company, or circumstances
reasonably deemed by GBCI to be likely to give rise thereto, in
accordance with terms and conditions of the applicable policies.
4.1.13 REVIEW OF LOANS. First Company and the Bank will permit GBCI to
conduct an examination of the Bank's loans to determine credit quality
and the adequacy of its ALLL. GBCI will have continued access to the
Bank's loans through Closing to update its examination. At GBCI's
reasonable request, the Bank will provide GBCI with current reports
updating the information set forth in Schedule 3.1.15.
4.1.14 CONTINUING REPRESENTATION AND WARRANTY. Neither First Company nor
any of its Subsidiaries will do or cause to be done anything that
would cause any representation or warranty in Section 3.1 to be untrue
or inaccurate if made at Closing, except as otherwise contemplated or
required by this Agreement or consented to in writing by GBCI.
4.2 REGISTRATION STATEMENT.
4.2.1 PREPARATION OF REGISTRATION STATEMENT.
(i) Within 30 days after the Execution Date, a Registration Statement
on Form S-4 (together with any amendments or supplements, the
"Registration Statement") will be filed by GBCI with the SEC
under the Securities Act for registration of the GBCI Shares to
be issued in the Merger, and the parties will prepare a related
prospectus/proxy statement ("Prospectus/Proxy Statement") to be
mailed, together with any amendments and supplements thereto, to
First Company's shareholders. Following filing, GBCI shall use
all reasonable efforts to cause the Registration Statement to be
effective and, if necessary, to amend and supplement the
Registration Statement. GBCI shall, as soon as practical after
the Execution Date, make all filings required to obtain all
permits, authorizations, consents or approvals required under
law, including all state securities laws, for the issuance of the
shares of GBCI Stock to shareholders of First Company.
(ii) The parties will cooperate with each other in preparing the
Registration Statement and Prospectus/Proxy Statement, and will
use their best efforts to obtain the clearance of the SEC, any
appropriate state securities regulators and any other required
regulatory approvals, to issue the Prospectus/Proxy Statement.
(iii) Nothing will be included in the Registration Statement or the
Prospectus/Proxy Statement or any proxy solicitation materials
with respect to any party to this Agreement unless approved by
that party, which approval will not be unreasonably withheld.
When the Registration Statement becomes effective, and at all
times subsequent to such effectiveness (up to and including the
date of the First Company Meeting), all information set forth in
the Registration Statement that is or to be furnished by or on
behalf of GBCI relating to GBCI and by or on
28
behalf of First Company relating to First Company, (1) will
comply in all material respects with the provisions of the
Securities Act and any other applicable statutory or regulatory
requirements, and (2) will not contain any untrue statement of a
material fact or omit to state a material fact that is required
to be stated or necessary to make the statements in the
Registration Statement not misleading; provided, however, that in
no event will any party be liable for any untrue statement of a
material fact or omission to state a material fact in the
Registration Statement where such statement or omission, as the
case may be, was made in reliance upon, and in conformity with,
written information concerning another party furnished by or on
behalf of such other party specifically for use in the
Registration Statement.
(iv) GBCI will pay all fees and costs associated with the preparation
by GBCI's counsel (and other professional advisors) and the
filing of the Registration Statement. First Company will pay all
costs associated with its review and preparation of the
Registration Statement and the Prospectus/Proxy Statement. First
Company will pay the costs associated with the printing and
mailing of the Prospectus/Proxy Statement to its shareholders and
any other direct costs incurred by it in connection with the
Prospectus/Proxy Statement.
4.2.2 SUBMISSION TO SHAREHOLDERS.
(i) GBCI and First Company will submit the Prospectus/Proxy Statement
to, and will use their best efforts in good faith to obtain the
prompt approval of the Prospectus/Proxy Statement by, all
applicable regulatory authorities. The parties will provide each
other with copies of such submissions for review.
(ii) First Company will promptly take the actions necessary in
accordance with applicable law and its Articles of Incorporation
and Bylaws to convene a shareholders' meeting to consider the
approval of this Agreement and to authorize the transactions
contemplated by this Agreement (such meeting and any adjournment
or postponement thereof, the "First Company Meeting"). The First
Company Meeting will be held on the earliest practical date after
the date the Prospectus/Proxy Statement may first be sent to
First Company's shareholders without objection by applicable
governmental authorities. First Company's board of directors and
officers will recommend approval of the Merger to First Company's
shareholders.
4.3 SUBMISSION TO REGULATORY AUTHORITIES. Representatives of GBCI will prepare
and file with applicable regulatory agencies, applications for approvals,
waivers or other actions deemed necessary or desirable, in the opinion of
counsel, in order to consummate the Merger. GBCI will use its best efforts
to file such regulatory applications within 30 days following the date of
execution of this Agreement. GBCI will provide copies of such applications
for review by First Company prior to their submission to the applicable
regulatory authorities. These applications are expected to include:
(i) An application to the Federal Reserve and related filings
regarding the Merger.
(ii) An application to the Wyoming State Banking Commissioner and
related filings regarding the Merger.
29
(iii) Filings and coordination with the office of the Montana
Secretary of State with respect to the Merger.
Representatives of First Company will prepare and file with applicable
regulatory agencies, applications for approvals, waivers of other actions
deemed necessary or desirable, in the opinion of counsel, in order to
effect the Pre-Closing Distributions. First Company will coordinate its
efforts to file such regulatory applications with those of GBCI and, if so
requested, shall provide GBCI with copies of such applications prior to
their submission.
4.4 PUBLIC ANNOUNCEMENTS. Subject to written advice of legal counsel with
respect to legal requirements relating to public disclosure of matters
related to the subject matter of this Agreement, the timing and content of
any announcements, press releases or other public statements concerning the
Merger will occur upon, and be determined by, the mutual consent of First
Company and GBCI.
4.5 CONSENTS. Each party to this Agreement will use its best efforts to obtain
the timely consent or approval of any Person whose consent or approval is
required in order to permit GBCI or Holdings and First Company to
consummate the Merger.
4.6 FURTHER ACTIONS. The parties to this Agreement will use their best efforts
in good faith to make all such arrangements, do or cause to be done all
such acts and things, and execute and deliver all such certificates and
other instruments and documents as may be reasonably necessary or
appropriate in order to consummate the Merger promptly.
4.7 NOTICE. The parties will provide each other with prompt written notice of:
(i) Any events that, individually or in the aggregate, can reasonably
be expected to have a Material Adverse Effect with respect to
them.
(ii) The commencement of any proceeding against any one or more of
them by or before any court or governmental agency that,
individually or in the aggregate, can reasonably be expected to
have a Material Adverse Effect with respect to any one or more of
them.
(iii) In the case of First Company and its Subsidiaries, the
acquisition of an ownership or leasehold interest in any real
property (except as disclosed in Schedule 3.1.6), as specified in
Section 4.1.2.
4.8 CONFIDENTIALITY. Subject to the requirements of law, each party will keep
confidential, and will exercise its best efforts to cause its
representatives to keep confidential, all information and documents
obtained pursuant to this Agreement unless such information (i) is required
by law to be disclosed, (ii) becomes available to such party from other
sources not bound by a confidentiality obligation, (iii) is disclosed with
prior written approval of the party to which such information pertains or
is disclosed in a legal action between the parties relating to the Merger,
or (iv) is or becomes public without fault of the subject party. If this
Agreement is terminated or the Merger otherwise fails to be consummated,
each party to this Agreement will promptly (i) return to the other all
confidential documents obtained from them and (ii) not use or disclose any
nonpublic information obtained under this Agreement or in connection with
the Merger.
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4.9 AVAILABILITY OF GBCI'S BOOKS, RECORDS AND PROPERTIES.
(a) GBCI will make its books, records, properties, contracts and documents
available during business hours with reasonable advance notice to
First Company and its counsel, accountants and other representatives.
These items will be open for inspection, audit and direct verification
of loan or deposit balances and collateral receipts. GBCI will
cooperate fully in any such inspection, audit, or direct verification
procedures, and will make available all information reasonably
required by or on behalf of GBCI.
(b) At First Company's request, GBCI will request any third parties
involved in the preparation or review of (1) GBCI Financial Statements
or (2) any audits of GBCI's operations, loan portfolios or other
assets, to disclose to First Company the work papers or any similar
materials related to these items.
4.10 BLUE SKY FILINGS. GBCI will use its best efforts to obtain, prior to the
effective date of the Registration Statement, any necessary state
securities laws or "Blue Sky" permits and approvals.
4.11 CONDUCT OF GBCI'S BUSINESS BEFORE CLOSING. GBCI will:
(i) provide First Company with prompt written notice of any events,
individually or in the aggregate, that could have a Material
Adverse Effect with respect to GBCI;
(ii) conduct, and cause its Subsidiaries to conduct, their respective
businesses in compliance with all material obligations and duties
imposed on them by applicable federal and state laws; and
(iii) maintain all books and records of it and its Subsidiaries,
including all financial statements, in accordance with such
accounting principles and practices consistent with those used
for the GBCI Financial Statements, except for changes in such
principles and practices required under GAAP.
4.12 FIRST COMPANY CLOSING CAPITAL. No later than the seventh (7th) Business Day
before Closing, First Company shall calculate in good faith the estimated
First Company Capital as of the Closing and shall provide GBCI with a copy
of the proposed Subsequent First Company Financial Statements for the month
preceding the date of calculation (if not already provided in accordance
with Section 4.1.8), together with internally prepared financial statements
through the date of calculation, estimated retained earnings through the
date of Closing, the impact of any pending adjustments required in the
calculation of the First Company Capital, and any other documentation
requested by GBCI for purposes of confirming the amount of such First
Company Capital. GBCI shall review such materials and, within two (2)
Business Days following receipt thereof, notify First Company as to whether
GBCI accepts or disputes the amount of the First Company Capital. If GBCI
disputes such calculation, it shall describe in its notice the specific
changes or adjustments that must be made. If GBCI and First Company are
unable to resolve such dispute through good faith negotiations within three
(3) Business Days after delivery of GBCI's notice of objection, then the
parties shall mutually engage and submit such dispute to, and the same
shall be finally resolved by, an accounting firm that is mutually and
reasonably acceptable to the parties (the "Independent Accountants"). The
Independent Accountants shall determine and report in writing to GBCI and
First Company the resolution of such disputed matters and the effect of
such determinations on the calculation of the First Company Capital as of
Closing, and such determinations shall be final, binding and conclusive
unless GBCI and First Company mutually agree upon an different amount. The
First Company Capital as of Closing, as
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determined and agreed upon in writing by GBCI and First Company in
accordance with this Section 4.12, is the "First Company Closing Capital."
The fees and disbursements of the Independent Accountants shall be shared
equally by GBCI, on the one hand, and First Company, on the other hand, and
with respect to First Company's portion, shall be deducted from the First
Company Closing Capital.
4.13 BEST EFFORTS. Subject to the terms and conditions of this Agreement, each
party will use its reasonable best efforts in good faith to take, or cause
to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or desirable, or advisable under applicable laws, so as
to permit consummation of the Merger by April 30, 2009, and in any case as
early as possible, and to otherwise enable consummation of the transactions
contemplated by this Agreement, subject to any delays resulting from SEC
review or bank regulatory processing.
SECTION 5.
APPROVALS AND CONDITIONS
5.1 REQUIRED APPROVALS. The obligations of the parties to this Agreement are
subject to the approval of this Agreement, the Merger and the Pre-Closing
Distributions by all appropriate regulatory agencies having jurisdiction
with respect thereto; provided, however, that no such consent or approval
will have imposed any condition or requirement not normally imposed in such
transactions that, in the opinion of GBCI, would deprive GBCI of the
material economic or business benefits of the Merger.
5.2 CONDITIONS TO OBLIGATIONS OF GBCI. All obligations of GBCI pursuant to this
Agreement are subject to satisfaction of the following conditions at or
before Closing:
5.2.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
First Company contained in this Agreement or in any certificate or
other instrument delivered in connection with this Agreement that are
not qualified as to materiality will be true and correct in all
material respects at Closing, and the representations and warranties
of First Company contained in this Agreement or in any certificate or
other instrument delivered in connection with this Agreement that are
qualified as to materiality will be true and correct at Closing, all
with the same force and effect as though such representations and
warranties had been made on and as of Closing (except to the extent
that such representations and warranties are by their express
provisions made as of a specified date, in which case such
representations and warranties will be true and correct in all
material respects or true and correct, as the case may be, as of such
date). First Company will have delivered to GBCI a certificate to that
effect, executed by a duly authorized officer of First Company and
dated as of Closing.
5.2.2 COMPLIANCE. First Company will have performed and complied, and will
have caused the Bank to perform and comply, in all material respects
with all terms, covenants and conditions of this Agreement on or
before Closing. First Company will have delivered to GBCI a
certificate to that effect, executed by a duly authorized officer of
First Company and dated as of Closing.
5.2.3 EFFECTIVENESS OF EMPLOYMENT AND INDEMNIFICATION AGREEMENTS. The
employment agreement of Richard T. Nelson referenced in Recital E
shall be in effect as of the Effective Date, and the Indemnification
Agreement shall be in effect of the Effective Date with Newco and all
principal shareholders of First Company.
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5.2.4 CLOSING CAPITAL AND FINANCIAL STATEMENTS. First Company will have
delivered to GBCI the financial information set forth in Section 4.12,
and the parties will have agreed upon the amount of First Company
Closing Capital pursuant to the terms of Section 4.12.
5.2.5 NO MATERIAL ADVERSE EFFECT. Since December 31, 2007, and since the
date of this Agreement, there will have been no material damage,
destruction or loss (whether or not covered by insurance) and no other
event, individually or in the aggregate, constituting a Material
Adverse Effect with respect to First Company or the Bank.
5.2.6 FINANCIAL CONDITION. The following will be true and the certificate
of First Company referred to in Section 5.2.2 will so state:
(i) The Bank's ALLL shall be at least $5,000,000.
(ii) The First Company Closing Capital will not be less than $15
million.
5.2.7 NO GOVERNMENTAL PROCEEDINGS. No action or proceeding will have been
commenced or threatened by any governmental agency to restrain or
prohibit or invalidate the Merger.
5.2.8 OPINION OF COUNSEL. Counsel to First Company will have delivered to
GBCI a legal opinion in form and substance reasonably acceptable to
First Company and GBCI.
5.2.9 REAL PROPERTY MATTERS. GBCI will have received the irrevocable
commitments by the Title Companies to issue the policies required
under Section 4.1.11.
5.2.10 CORPORATE AND SHAREHOLDER ACTION. Each of the following will have
approved or ratified the Merger, as applicable:
(i) The Boards of Directors of First Company and the Bank;
(ii) First Company, as sole shareholder of the Bank; and
(iii) The shareholders of First Company.
5.2.11 RESIGNATION OF DIRECTORS. The directors of First Company will have
tendered their written resignations from the Board of Directors, to be
effective upon consummation of the Merger.
5.2.12 BANK DIVESTITURE AND PRE-CLOSING DISTRIBUTIONS. All necessary
approvals for the Bank Divestiture and the Pre-Closing Distributions
will have been obtained, and the Bank Divestiture and the Pre-Closing
Distributions will have been completed in accordance therewith.
5.2.13 FAIRNESS OPINION. First Company will have received from Sheshunoff
an updated fairness opinion, dated on or about the date on which the
Prospectus/Proxy Statement is distributed to First Company's
shareholders, to the effect that the Merger Consideration to be
received by First Company shareholders is fair to such shareholders
from a financial point of view.
5.2.14 REGISTRATION STATEMENT. The Registration Statement, as it may have
been amended, required in connection with the GBCI Shares, and as
described in Section 4.2, will have
33
become effective, and no stop order suspending the effectiveness of
such Registration Statement will have been issued or remain in effect,
and no proceedings for that purpose will have been initiated or
threatened by the SEC, the basis for which still exists.
5.2.15 NO CHANGE IN LOAN REVIEW. First Company will have provided to GBCI
the reports reasonably requested by GBCI under Section 4.1.13, and
neither these reports nor any examinations conducted by GBCI under
Section 4.1.13 will have revealed a change in either: (i) the
information set forth in Schedule 3.1.15 or (ii) information revealed
during GBCI's previous examinations of the Bank's loans, in either
case which change constitutes a Material Adverse Effect.
5.3 CONDITIONS TO OBLIGATIONS OF FIRST COMPANY. All obligations of First
Company pursuant to this Agreement are subject to satisfaction of the
following conditions at or before Closing:
5.3.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
GBCI contained in this Agreement or in any certificate or other
instrument delivered in connection with this Agreement that are not
qualified as to materiality will be true and correct in all material
respects at Closing, and the representations and warranties of GBCI
contained in this Agreement or in any certificate or other instrument
delivered in connection with this Agreement that are qualified as to
materiality will be true and correct at Closing, all with the same
force and effect as though such representations and warranties had
been made on and as of Closing (except to the extent that such
representations and warranties are by their express provisions made as
of a specified date, in which case such representations and warranties
will be true and correct in all material respects or true and correct,
as the case may be, as of such date). GBCI will have delivered to
First Company a certificate to that effect, executed by a duly
authorized officer of GBCI and dated as of Closing.
5.3.2 COMPLIANCE. GBCI will have performed and complied with all terms,
covenants and conditions of this Agreement on or before Closing. GBCI
will have delivered to First Company a certificate to that effect,
executed by a duly authorized officer of GBCI and dated as of Closing.
5.3.3 NO GOVERNMENTAL PROCEEDINGS. No action or proceeding will have been
commenced or threatened by any governmental agency to restrain or
prohibit or invalidate the Merger.
5.3.4 NO MATERIAL ADVERSE EFFECT. Since December 31, 2007, there will have
been no material damage, destruction or loss (whether or not covered
by insurance) and no other event, individually or in the aggregate,
constituting a Material Adverse Effect with respect to GBCI.
5.3.5 CORPORATE ACTION. The Board of Directors of GBCI will have approved
the Merger:
5.3.6 REGISTRATION STATEMENT; LISTING. The Registration Statement will have
become effective as specified in Section 5.2.14, and no stop order
suspending the effectiveness of such Registration Statement will have
been issued or remain in effect, and no proceedings for that purpose
will have been initiated or threatened by the SEC, the basis for which
still exists. The shares of GBCI Common Stock to be issued in the
Merger shall have been approved for quotation on NASDAQ (or such other
exchange on which the GBCI Common Stock may become listed) if so
required and shall be freely tradable.
34
5.3.7 BLUE SKY FILINGS. GBCI will have received the state securities laws
or "Blue Sky" permits and approvals specified in Section 4.10.
5.3.8 PAYMENTS TO THE EXCHANGE AGENT. GBCI will have deposited the Merger
Consideration with the Exchange Agent.
5.3.9 APPROVAL OF FIRST COMPANY SHAREHOLDERS. The shareholders of First
Company will have approved the Merger by at least a two-thirds
majority of all outstanding shares of First Company as required by the
Articles of Incorporation of First Company.
5.3.10 FAIRNESS OPINION. First Company will have received from Sheshunoff
an updated fairness opinion, dated on or about the date on which the
Prospectus/Proxy Statement is distributed to First Company's
shareholders, to the effect that the Merger Consideration to be
received by First Company shareholders is fair to such shareholders
from a financial point of view.
5.3.11 CLOSING CAPITAL AND FINANCIAL CONDITION. The parties will have
agreed upon the amount of First Company Closing Capital pursuant to
the terms of Section 4.12, and the First Company Closing Capital will
not be less than $15 million.
5.3.12 BANK DIVESTITURE AND PRE-CLOSING DISTRIBUTIONS. All necessary
approvals for the Bank Divestiture and the Pre-Closing Distributions
will have been obtained.
SECTION 6.
DIRECTORS, OFFICERS AND EMPLOYEES
6.1 DIRECTOR AND SHAREHOLDER AGREEMENTS; INDEMNIFICATION AGREEMENT. As a
condition to the execution of this Agreement, (i) the directors and
principal shareholders described in Recital F have entered into the written
agreements described in Recital F, and (ii) the principal shareholders of
First Company, on their own behalf and on behalf of Newco, have entered
into the Indemnification Agreement, each case on or before the Execution
Date. Such agreements will take effect at the Effective Date unless
otherwise noted in the applicable agreement.
6.2 EMPLOYMENT CONTRACT. As a condition to the execution of this Agreement, the
employment agreement described in Recital E have been executed on or before
the Execution Date. Such agreement will take effect at the Effective Date.
6.3 EMPLOYEE BENEFIT ISSUES.
6.3.1 COMPARABILITY OF BENEFITS. GBCI intends that its current personnel
policies will apply to any current employees of First Company and the
Bank who are retained after Closing. Such retained employees will be
eligible to participate in all of the benefit plans of GBCI that are
generally available to similarly situated employees of GBCI in
accordance with and subject to the terms of such plans.
6.3.2 TREATMENT OF PAST SERVICE. For purposes of such participation,
current employees' prior service with First Company and/or the Bank
will constitute prior service with GBCI for purposes of determining
eligibility and vesting (including but not limited to vacation time
and participation and benefits under the GBCI Severance Plan for
Employees in effect at the time of any termination).
35
6.3.3 NO CONTRACT CREATED. Nothing in this Agreement will give any employee
a right to continuing employment.
6.3.4 TERMINATION OF FIRST COMPANY PLAN. First Company may terminate the
employee stock ownership plan upon notice to, but not consent of,
GBCI.
6.4 INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS. For a period of four
(4) years from and after the Effective Date, GBCI will indemnify and defend
each present and former director and officer of First Company and the Bank
from and against any and all claims, losses, liabilities, judgments, fines,
damages, costs, and expenses (including reasonable attorneys' fees)
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative, or investigative,
arising out of actions or omissions accruing at or prior to the Effective
Date, including, without limitation, the Merger contemplated by this
Agreement (but excluding, however, to the extent such officer or director
is an indemnifying party under the Indemnification Agreement, any claims
for indemnification made against such former director or officer pursuant
thereto), to the fullest extent that First Company and/or the Bank is
currently permitted to indemnify (and advance expenses to) its directors
and officers under applicable law, including federal banking law, and under
their respective articles of incorporation or bylaws in effect at the date
of this Agreement. Any determination required to be made with respect to
whether an officer's or director's conduct complies with the standard set
forth under First Company's or the Bank's articles of incorporation or
bylaws will be made by independent counsel (which will not be counsel that
provides any services to GBCI or any of its Subsidiaries) selected by GBCI
and reasonably acceptable to such officer or director. For a period of four
(4) years after the Effective Date, GBCI will use reasonable efforts to
cause to be maintained in effect (with reputable and financially sound
insurers) director and officer liability insurance substantially similar to
that maintained by GBCI with respect to claims arising from facts or events
that occurred before the Effective Date.
SECTION 7.
TERMINATION OF AGREEMENT AND ABANDONMENT OF TRANSACTION
7.1 TERMINATION BY REASON OF LAPSE OF TIME. If Closing does not occur on or
before the Termination Date, either GBCI or First Company may terminate
this Agreement and the Merger if both of the following conditions are
satisfied:
(a) the terminating party's board of directors decides to terminate by a
majority vote of all of its members; and
(b) the terminating party delivers to the other party written notice that
its board of directors has voted in favor of termination.
7.2 TERMINATION DUE TO GBCI AVERAGE CLOSING PRICE GREATER THAN $21.00.
7.2.1 GBCI'S RIGHT TO TERMINATE. By specific action of its board of
directors, GBCI may terminate this Agreement and the Merger by written
notice to First Company on the Business Day immediately following the
Determination Date, if the GBCI Average Closing Price is greater than
$21.00. (If GBCI declares or effects a stock dividend,
reclassification, recapitalization, split-up, combination, exchange of
shares or similar transaction between the Execution Date and the
Determination Date, the price for the GBCI Common Stock will be
appropriately adjusted for the purpose of applying this Section
7.2.1).
36
If GBCI elects to exercise its termination right pursuant to this
Section 7.2.1, the provisions of Section 7.2.2 will apply.
7.2.2 FIRST COMPANY'S RIGHT TO ADJUST CONSIDERATION. If GBCI provides
written notice to First Company in accordance with Section 7.2.1, then
within two Business Days following First Company's receipt of such
notice, First Company may elect by written notice to GBCI to accept an
adjustment to the Total Stock Consideration through the issuance of
fewer GBCI Shares; in such event, the Total Stock Consideration shall
be the number of GBCI Shares equal to the quotient obtained by
dividing $2,100,000 by the GBCI Average Closing Price.
If First Company makes such election to accept such decrease in the
number of GBCI Shares, no termination will occur pursuant to Section
7.2.1, and this Agreement will remain in effect according to its terms
(except as the Total Stock Consideration has been adjusted).
7.3 TERMINATION DUE TO GBCI AVERAGE CLOSING PRICE LESS THAN $14.00.
7.3.1 FIRST COMPANY'S RIGHT TO TERMINATE. By specific action of its board
of directors, First Company may terminate this Agreement and the
Merger by written notice to GBCI on the Business Day immediately
following the Determination Date, if the GBCI Average Closing Price is
less than $14.00. (If GBCI declares or effects a stock dividend,
reclassification, recapitalization, split-up, combination, exchange of
shares or similar transaction between the Execution Date and the
Determination Date, the price for the GBCI Common Stock will be
appropriately adjusted for the purpose of applying this Section 7.3.)
If First Company elects to exercise its termination right pursuant to
this Section 7.3.1, the provisions of Section 7.3.2 will apply.
7.3.2 GBCI'S RIGHT TO ADJUST CONSIDERATION. If First Company provides
written notice to GBCI in accordance with Section 7.3.1, then within
two Business Days following GBCI's receipt of such notice, GBCI may
elect by written notice to First Company to adjust the Total Stock
Consideration through the issuance of additional GBCI Shares; in such
event, the Total Stock Consideration shall be the number of GBCI
Shares equal to the quotient obtained by dividing $1,400,000 by the
GBCI Average Closing Price.
If GBCI makes such election to increase the number of GBCI Shares, no
termination will occur pursuant to Section 7.3.1, and this Agreement
will remain in effect according to its terms (except as the Stock
Consideration has been adjusted).
7.4 OTHER GROUNDS FOR TERMINATION. This Agreement and the Merger may be
terminated at any time before Closing (whether before or after applicable
approval of this Agreement by First Company's shareholders, unless
otherwise provided) as follows:
7.4.1 MUTUAL CONSENT. By mutual consent of First Company and GBCI, if the
board of directors of each party agrees to terminate by a majority
vote of all of its members.
7.4.2 NO REGULATORY APPROVALS. By either party, if the regulatory approvals
required by Section 5.1 are denied (or if any such required approval
is conditioned on a substantial deviation from the Merger); provided,
however, that either party will have fifteen (15)
37
Business Days following receipt of such denial to appeal the decision,
and if such appeal is timely made, either party will have sixty (60)
days to prosecute diligently and overturn such denial, and such other
party may not terminate this Agreement pursuant to this Section 7.4.2
during such period of time; provided further, however, either party
shall be entitled to terminate this Agreement pursuant to Section 7.1
during such period of time.
7.4.3 BREACH OF REPRESENTATION. By either party (provided that the
terminating party is not then in material breach of any of its
representations, warranties, agreements or covenants in this Agreement
if they are not qualified as to materiality and is not then in breach
of any of its representations, warranties, agreements or covenants in
this Agreement if they are qualified as to materiality) if there has
been a material breach of any of the representations or warranties set
forth in this Agreement that are not qualified as to materiality or a
breach of any of the representations or warranties set forth in this
Agreement that are qualified as to materiality on the part of the
other party, which breach is not cured within thirty days following
written notice to the party committing such breach, or which breach,
by its nature, cannot be cured prior to the end of such thirty day
period; provided, however, that neither party will have the right to
terminate this Agreement pursuant to this Section 7.4.3 unless the
breach of such representation or warranty, together with any other
such breaches, would entitle the party receiving such representation
not to consummate the transactions contemplated hereby under Section
5.2.1 (in the case of a breach of a representation or warranty by
First Company) or Section 5.3.1 (in the case of a breach of a
representation or warranty by GBCI). In the event of termination
pursuant to this Section 7.4.3, the terminating party will be entitled
to receive from the other party the Termination Fee.
7.4.4 BREACH OF COVENANT. By either party (provided that the terminating
party is not then in material breach of any of its representations,
warranties, agreements or covenants in this Agreement if they are not
qualified as to materiality and is not then in breach of any of its
representations, warranties, agreements or covenants in this Agreement
if they are qualified as to materiality) if there has been a material
breach of any of the covenants or agreements set forth in this
Agreement that are not qualified as to materiality or a breach of any
of the covenants or agreements set forth in this Agreement that are
qualified as to materiality on the part of the other party, which
breach is not cured within thirty days following written notice to the
party committing such breach, or which breach, by its nature, cannot
be cured prior to the end of such thirty day period. In the event of
termination pursuant to this Section 7.4.4, the terminating party will
be entitled to receive from the other party the Termination Fee;
provided, however, that GBCI will not be entitled to collect the
Termination Fee in the event of a breach of Section 4.1.11 caused by
First Company's inability (after good faith effort) to remove
exceptions to title as provided for in that section.
7.4.5 FAILURE TO RECOMMEND OR OBTAIN SHAREHOLDER APPROVAL. By GBCI
(provided that GBCI is not then in material breach of any of its
representations, warranties, covenants or other agreements in this
Agreement), if (a) First Company's Board of Directors (i) fails to
recommend to its shareholders the approval of the Merger or (ii)
modifies, withdraws or changes in a manner adverse to GBCI its
recommendation to shareholders to approve the Merger; or (b)
regardless of whether First Company's Board of Directors recommends to
its shareholders the approval of the Merger, First Company's
shareholders elect not to approve the Merger.
38
7.4.6 IMPRACTICABILITY. By either GBCI or First Company, upon written
notice given to the other party, if the board of directors of the
party seeking termination under this Section 7.4.6 has determined in
its sole judgment, made in good faith and after due consideration and
consultation with counsel, that the Merger has become inadvisable or
impracticable by reason of actions taken by the federal government or
the governments of the States of Montana or Wyoming to restrain or
invalidate the Merger or this Agreement.
7.4.7 DISSENTING SHARES. By GBCI, if holders of 10% or more of the
outstanding shares of First Company Stock are Proposed Dissenting
Shares.
7.4.8 SUPERIOR PROPOSAL - TERMINATION BY FIRST COMPANY. By the board of
directors of First Company upon written notice to GBCI if such board
of directors has in good faith determined that a Takeover Proposal
constitutes a Superior Proposal; provided, however, that First Company
may not terminate this Agreement pursuant to this Section 7.4.8 unless
(i) it has not breached Section 4.1.10, (ii) subsequent to delivering
such notice of termination, it intends to enter into a letter of
intent, acquisition agreement or similar agreement relating to such
Superior Proposal, (iii) it has provided GBCI at least five (5) days'
prior written notice advising GBCI that the board of directors of
First Company is prepared to accept a Superior Proposal and has given
GBCI, if it so elects, an opportunity to amend the terms of this
Agreement (and negotiated with GBCI in good faith with respect to such
terms) in such a manner as would enable First Company's board of
directors to proceed with the Merger, and (iv) simultaneously upon
entering into such letter of intent, acquisition agreement or similar
agreement relating to such Superior Proposal referred to in clause
(ii), it delivers to GBCI the Break-Up Fee.
7.4.9 SUPERIOR PROPOSAL - TERMINATION BY GBCI. By GBCI upon written notice
to First Company if (i) an Acquisition Event will have occurred or
(ii) a third party will have made a proposal to First Company or its
shareholders to engage in or entered into an agreement with respect to
an Acquisition Event, and this Agreement and the Merger are not
approved at the First Company Meeting.
7.5 TERMINATION FEE PAYABLE BY FIRST COMPANY. Due to expenses, direct and
indirect, incurred by GBCI in negotiating and executing this Agreement and
in taking steps to effect the Merger, First Company will pay to GBCI
$200,000 (the "Termination Fee") if GBCI terminates this Agreement pursuant
to Sections 7.4.3 (breach of representation) or 7.4.4 (breach of covenant).
If the Termination Fee becomes payable pursuant to this Section 7.5, it
will be payable on GBCI's demand and must be paid by First Company within
three Business Days following the date of GBCI's demand.
7.6 TERMINATION FEE PAYABLE BY GBCI. Due to expenses, direct and indirect,
incurred by First Company in negotiating and executing this Agreement and
in taking steps to effect the Merger, GBCI will pay to First Company the
Termination Fee if First Company terminates this Agreement pursuant to
Sections 7.4.3 (breach of representation) or 7.4.4 (breach of covenant). If
the Termination Fee becomes payable pursuant to this Section 7.6, it will
be payable on First Company's demand and must be paid by GBCI within three
Business Days following the date of First Company's demand.
7.7 BREAK-UP FEE. If this Agreement is terminated pursuant to Section 7.4.5(a)
(Failure to Recommend), Section 7.4.8 (Superior Proposal - Termination by
First Company), or Section 7.4.9(i) (Superior Proposal - Termination by
GBCI - Immediate Acquisition Event), then First Company will immediately
pay to GBCI $1,000,000 (the "Break-Up Fee"). If this Agreement is
39
terminated pursuant to Section 7.4.9(ii) (Superior Proposal - Termination
by GBCI -Subsequent Acquisition Event) and prior to or within six months
after such termination, First Company or the Bank enters into an agreement,
or publicly announces an intention, to engage in an Acquisition Event, or
within twelve months after such termination an Acquisition Event will have
occurred, then First Company will promptly pay to GBCI the Break-Up Fee.
7.8 COST ALLOCATION UPON TERMINATION. In connection with the termination of
this Agreement under this Section 7, except as provided in Sections 7.5 and
7.6, each party will pay its own out-of-pocket costs incurred in connection
with this Agreement and will have no other liability to the other parties.
The parties agree that the agreements herein with respect to the
Termination are integral parts of the transactions contemplated by this
Agreement and constitute liquidated damages and not a penalty.
SECTION 8.
MISCELLANEOUS
8.1 NOTICES. Any notice, request, instruction or other document to be given
under this Agreement will be in writing and will be delivered personally or
sent by registered or certified mail or overnight Federal Express service,
postage prepaid, addressed as follows:
GBCI: Glacier Bancorp, Inc.
49 Commons Loop
Kalispell, Montana 59901
Attn: Michael J. Blodnick
President and CEO
with a copy to: Graham & Dunn PC
Pier 70
2801 Alaskan Way Suite 300
Seattle, Washington 98121-1128
Attn: Stephen M. Klein, Esq.
Kumi Y. Baruffi, Esq.
First Company First National Bank & Trust
and the Bank:: 245 East 1st Street
Powell, Wyoming 82435
Attn: Richard S. Nelson
Chairman and CEO
with a copy to: Christian Samson Jones & Chisholm
310 West Spruce
Missoula, Montana 59807
Attn: David Chisholm, Esq.
or to such other address or person as any party may designate by written
notice to the other given under this Section.
8.2 WAIVERS AND EXTENSIONS. Subject to Section 9, any party may grant waivers
or extensions to the other parties, but only through a written instrument
executed by the President and/or CEO of the party granting the waiver or
extension. Waivers or extensions that do not comply with the preceding
sentence are not effective. In accordance with this Section 8.2, a party
may extend the
40
time for the performance of any of the obligations or other acts of any
other party, and may waive:
(a) any inaccuracies of any other party in the representations and
warranties contained in this Agreement or in any document delivered in
connection with this Agreement;
(b) compliance with any of the covenants of any other party; and
(c) any other party's performance of any obligations under this Agreement
and any other condition precedent set out in Section 5.
8.3 CONSTRUCTION AND EXECUTION IN COUNTERPARTS. Except as otherwise expressly
provided in this Agreement, this Agreement: (i) covers the entire
understanding of the Parties, and no modification or amendment of its terms
or conditions will be effective unless in writing and signed by the Parties
or their respective duly authorized agents; (ii) will not be interpreted by
reference to any of the titles or headings to the Sections or Subsections
of this Agreement, which have been inserted for convenience only and are
not deemed a substantive part of this Agreement; (iii) is deemed to include
all amendments to this Agreement, each of which is made a part of this
Agreement by this reference; and (iv) may be executed in one or more
counterparts, each of which will be deemed an original, but all of which
taken together will constitute one and the same document. References in
this Agreement to Recitals, Sections, Subsections or Schedules are
references to the Recitals, Sections, Subsections and Schedules of and to
this Agreement unless expressly stated otherwise.
8.4 SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS. Except as set forth
below, the representations, warranties, agreements and covenants set forth
in this Agreement will not survive Closing or termination of this
Agreement, except that (1) Section 4.8 (Confidentiality), Sections 7.5 and
7.6 (Termination-Related Fees), Section 7.7 (Break-Up Fee), Section 7.8
(Cost Allocation Upon Termination), and Sections 8.3 through 8.8 will
survive termination; and (2) the covenants and other agreements in this
Agreement that impose duties or obligations on the parties following
Closing, including Section 6.3 (Employee Benefit Issues) and Section 6.4
(Indemnification), will survive Closing. Except as specifically set forth
in the preceding sentences, none of the representations, warranties,
agreements or covenants contained in this Agreement shall survive Closing,
and neither GBCI, First Company nor the Bank shall have any rights or
remedies after Closing with respect to any breach of any such
representations, warranties, agreements or covenants.
8.5 ATTORNEYS' FEES AND COSTS. In the event of any dispute or litigation with
respect to the terms and conditions or enforcement of rights or obligations
arising by reason of this Agreement or the Merger, the substantially
prevailing party in any such litigation will be entitled to reimbursement
from the other party of its costs and expenses, including reasonable
attorneys' fees.
8.6 ARBITRATION. At either party's request, the parties must submit any
dispute, controversy or claim arising out of or in connection with, or
relating to, this Agreement or any breach or alleged breach of this
Agreement, to arbitration under the American Arbitration Association's
rules then in effect (or under any other form of arbitration mutually
acceptable to the parties). A single arbitrator agreed on by the parties
will conduct the arbitration. If the parties cannot agree on a single
arbitrator, each party must select one arbitrator and those two arbitrators
will select a third arbitrator. This third arbitrator will hear the
dispute. The arbitrator's decision is final (except as otherwise
specifically provided by law) and binds the parties, and either party may
request any court having jurisdiction to enter a judgment and to enforce
the arbitrator's decision. The
41
arbitrator will provide the parties with a written decision naming the
substantially prevailing party in the action. This prevailing party is
entitled to reimbursement from the other party for its costs and expenses,
including reasonable attorneys' fees. Any arbitration or related
proceedings will take place in Billings, Montana.
8.7 GOVERNING LAW AND VENUE. This Agreement will be governed by and construed
in accordance with the laws of the State of Montana, except to the extent
that federal law may govern certain matters. The parties must bring any
legal proceeding arising out of this Agreement in federal court in
Billings, Montana. Each party consents to and submits to the jurisdiction
of any such federal court.
8.8 SEVERABILITY. If a court determines that any term of this Agreement is
invalid or unenforceable under applicable law, the remainder of this
Agreement will not be affected thereby, and each remaining term will
continue to be valid and enforceable to the fullest extent permitted by
law.
8.9 NO ASSIGNMENT. Neither this Agreement nor any of the rights, interests or
obligations under this Agreement may be assigned by any of the parties
(whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns. Except as
otherwise expressly provided, this Agreement (including the documents and
instruments referred to in this Agreement) is not intended to confer upon
any person other than the parties any rights or remedies under this
Agreement.
SECTION 9.
AMENDMENTS
Subject to applicable law, this Agreement and the form of any attached
Exhibit or Schedule may be amended upon authorization of the boards of directors
of the parties, whether before or after the First Company Meeting; provided,
however, that after approval by First Company's shareholders, no amendment will
be made changing the form or reducing the amount of consideration to be received
by the shareholders of First Company without the further approval of such
shareholders. All amendments, modifications, extensions and waivers must be in
writing and signed by the party agreeing to the amendment, modification,
extension or waiver.
SECTION 10.
POST-CLOSING COVENANT
The parties shall report the Merger for federal income tax purposes
(including, without limitation, making such filings and retaining such records
required by Section 1.368-3 of the Treasury Regulations promulgated under the
IRC) as a reorganization under Section 368(a)(1) of the IRC. The parties shall
consult with one another with respect to any tax audit, tax controversy or tax
litigation arising from or relating to the Merger. Neither of the parties shall
take or agree to take any position that is inconsistent with the treatment of
the Merger as a reorganization under Section 368(a)(1)(A) of the IRC in
connection with any tax audit, tax controversy or tax litigation without first
notifying the other party in writing of its intent to do so and obtaining such
other party's prior written consent.
[signatures on next page]
42
This Plan and Agreement of Merger is dated as of the date first written above.
GLACIER BANCORP, INC.
By: /s/ Michael J. Blodnick
--------------------------------------
Michael J. Blodnick, President and CEO
FIRST COMPANY
By: /s/ Richard S. Nelson
--------------------------------------
Richard S. Nelson, Chairman
FIRST NATIONAL BANK & TRUST
By: /s/ Richard S. Nelson
--------------------------------------
Richard S. Nelson, CEO
43
STATE OF MONTANA )
) ss.
COUNTY OF FLATHEAD )
On this 6th day of February, 2009, before me personally appeared Michael J.
Blodnick, to me known to be the President and CEO of GLACIER BANCORP, INC., a
corporation that executed the foregoing instrument, who acknowledged said
instrument to be the free and voluntary act and deed of said corporation, for
the uses and purposes mentioned there, and who stated on oath that he was
authorized to execute said instrument, and that the seal affixed (if any) was
the official seal of said corporation.
IN WITNESS OF THE FOREGOING, I have set my hand and official seal to this
document as of the day and year first written above.
/s/ LeeAnn Wardinsky
----------------------------------------
NOTARY PUBLIC in and for the State of
Montana, residing at Kalispell
My Commission expires: 7-21-2011
STATE OF WYOMING )
) ss.
COUNTY OF PARK )
On this 6th day of February, 2009, before me personally appeared Richard S.
Nelson, to me known to be the Chairman of First Company and the CEO of First
National Bank & Trust, the corporations that executed the foregoing instrument,
who acknowledged said instrument to be the free and voluntary act and deed of
said corporations, for the uses and purposes mentioned there, and who stated on
oath that he was authorized to execute said instrument, and that the seal
affixed (if any) was the official seal of said corporation.
IN WITNESS OF THE FOREGOING, I have set my hand and official seal to this
document as of the day and year first written above.
/s/ C. Warner
----------------------------------------
NOTARY PUBLIC in and for the State of
Wyoming, residing at Powell
My Commission expires: 11-26-2010
44
TABLE OF CONTENTS
PAGE
----
AGREEMENT....................................................................... 2
DEFINITIONS..................................................................... 2
SECTION 1. TERMS OF TRANSACTION................................................. 8
1.1 Effect of Merger........................................................ 8
1.2 Merger Consideration.................................................... 8
1.3 No Fractional Shares.................................................... 9
1.4 Payment to Dissenting Shareholders...................................... 9
1.5 Deposit of Cash and Shares.............................................. 9
1.6 Certificates............................................................ 9
SECTION 2. CLOSING OF TRANSACTION............................................... 11
2.1 Effective Date.......................................................... 11
2.2 Events of Closing....................................................... 11
2.3 Manner and Time of Closing.............................................. 11
2.4 Capital Contribution.................................................... 11
SECTION 3. REPRESENTATIONS AND WARRANTIES....................................... 11
3.1 Representations and Warranties of First Company and the Bank............ 11
3.2 Representations and Warranties of GBCI.................................. 20
SECTION 4. CONDUCT AND TRANSACTIONS PRIOR TO CLOSING............................ 23
4.1 Conduct of First Company's and the Bank's Businesses Prior to Closing... 23
4.2 Registration Statement.................................................. 28
4.3 Submission to Regulatory Authorities.................................... 29
4.4 Public Announcements.................................................... 30
4.5 Consents................................................................ 30
4.6 Further Actions......................................................... 30
4.7 Notice.................................................................. 30
4.8 Confidentiality......................................................... 30
4.9 Availability of GBCI's Books, Records and Properties.................... 31
4.10 Blue Sky Filings........................................................ 31
4.11 Conduct of GBCI's Business Before Closing............................... 31
4.12 First Company Closing Capital........................................... 31
4.13 Best Efforts............................................................ 32
SECTION 5. APPROVALS AND CONDITIONS............................................. 32
5.1 Required Approvals...................................................... 32
5.2 Conditions to Obligations of GBCI....................................... 32
5.3 Conditions to Obligations of First Company.............................. 34
SECTION 6. DIRECTORS, OFFICERS AND EMPLOYEES.................................... 35
6.1 Director and Shareholder Agreements; Indemnification Agreement.......... 35
6.2 Employment Contract..................................................... 35
6.3 Employee Benefit Issues................................................. 35
i
6.4 Indemnification of Directors and Executive Officers..................... 36
SECTION 7. TERMINATION OF AGREEMENT AND ABANDONMENT OF TRANSACTION.............. 36
7.1 Termination by Reason of Lapse of Time.................................. 36
7.2 Termination Due To GBCI Average Closing Price Greater Than $21.00....... 36
7.3 Termination Due To GBCI Average Closing Price Less than $14.00.......... 37
7.4 Other Grounds for Termination........................................... 37
7.5 Termination Fee Payable By First Company................................ 39
7.6 Termination Fee Payable By GBCI......................................... 39
7.7 Break-Up Fee............................................................ 39
7.8 Cost Allocation Upon Termination........................................ 40
SECTION 8. MISCELLANEOUS........................................................ 40
8.1 Notices................................................................. 40
8.2 Waivers and Extensions.................................................. 40
8.3 Construction and Execution in Counterparts.............................. 41
8.4 Survival of Representations, Warranties, and Covenants.................. 41
8.5 Attorneys' Fees and Costs............................................... 41
8.6 Arbitration............................................................. 41
8.7 Governing Law and Venue................................................. 42
8.8 Severability............................................................ 42
8.9 No Assignment........................................................... 42
SECTION 9. AMENDMENTS........................................................... 42
SECTION 10. POST-CLOSING COVENANT............................................... 42
ii
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES:
Schedule 1 Anticipated Excluded Assets as of Execution Date
Schedule 2 Loan Participations
Schedule 3.1.1 Offices of First Company/the Bank
Schedule 3.1.2 Third Party Consents Required by First Company/the Bank
Schedule 3.1.3 Capital Stock - First Company/the Bank
Schedule 3.1.4 First Company Subsidiaries
Schedule 3.1.5 First Company Financial Statements
Schedule 3.1.6 First Company Properties
Schedule 3.1.7 First Company Environmental Matters
Schedule 3.1.8(iv) Taxes
Schedule 3.1.9 Absence of Regulatory Action
Schedule 3.1.10 First Company Material Contracts
Schedule 3.1.11 Compliance With Laws
Schedule 3.1.12 Knowledge as to Conditions
Schedule 3.1.15 Asset Classifications
Schedule 3.1.16 First Company Litigation
Schedule 3.1.17 First Company Insurance Policies
Schedule 3.1.19 First Company Benefit Plans
iii
APPENDIX B
WYOMING STATUTES TITLE 17, CHAPTER 16, ARTICLE 1
SECTIONS 17-16-1302 THROUGH 17-16-1331
17-16-1302. RIGHT TO DISSENT.
(a) A shareholder is entitled to dissent from, and to obtain payment of the
fair value of his shares in the event of, any of the following corporate
actions:
(i) Consummation of a plan of merger or consolidation to which the
corporation is a party if:
(A) Shareholder approval is required for the merger or the
consolidation by W.S. 17-16-1103 or 17-16-1111 or the articles of incorporation
and the shareholder is entitled to vote on the merger or consolidation; or
(B) The corporation is a subsidiary that is merged with its
parent under W.S. 17-16-1104.
(ii) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, if the shareholder
is entitled to vote on the plan;
(iii) Consummation of a sale or exchange of all, or substantially all,
of the property of the corporation other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange,
including a sale in dissolution, but not including a sale pursuant to court
order or a sale for cash pursuant to a plan by which all or substantially all of
the net proceeds of the sale will be distributed to the shareholders within one
(1) year after the date of sale;
(iv) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:
(A) Alters or abolishes a preferential right of the shares;
(B) Creates, alters or abolishes a right in respect of
redemption, including a provision respecting a sinking fund for the redemption
or repurchase, of the shares;
(C) Alters or abolishes a preemptive right of the holder of the
shares to acquire shares or other securities;
(D) Excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution through
issuance of shares or other securities with similar voting rights; or
(E) Reduces the number of shares owned by the shareholder to a
fraction of a share if the fractional share so created is to be acquired for
cash under W.S. 17-16-604.
B-1
(v) Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws, or a resolution of the board of
directors provides that voting or nonvoting shareholders are entitled to dissent
and obtain payment for their shares.
(b) A shareholder entitled to dissent and obtain payment for his shares
under this article may not challenge the corporate action creating his
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
17-16-1303. DISSENT BY NOMINEES AND BENEFICIAL OWNERS.
(a) A record shareholder may assert dissenters' rights as to fewer than all
the shares registered in his name only if he dissents with respect to all shares
beneficially owned by any one (1) person and notifies the corporation in writing
of the name and address of each person on whose behalf he asserts dissenters'
rights. The rights of a partial dissenter under this subsection are determined
as if the shares as to which he dissents and his other shares were registered in
the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares
held on his behalf only if:
(i) He submits to the corporation the record shareholder's written
consent to the dissent not later than the time the beneficial shareholder
asserts dissenters' rights; and
(ii) He does so with respect to all shares of which he is the
beneficial shareholder or over which he has power to direct the vote.
17-16-1320. NOTICE OF DISSENTERS' RIGHTS.
(a) If proposed corporate action creating dissenters' rights under W.S.
17-16-1302 is submitted to a vote at a shareholders' meeting, the meeting notice
shall state that shareholders are or may be entitled to assert dissenters'
rights under this article and be accompanied by a copy of this article.
(b) If corporate action creating dissenters' rights under W.S. 17-16-1302
is taken without a vote of shareholders, the corporation shall notify in writing
all shareholders entitled to assert dissenters' rights that the action was taken
and send them the dissenters' notice described in W.S. 17-16-1322.
17-16-1321. NOTICE OF INTENT TO DEMAND PAYMENT.
(a) If proposed corporate action creating dissenters' rights under W.S.
17-16-1302 is submitted to a vote at a shareholders' meeting, a shareholder who
wishes to assert dissenters' rights shall deliver to the corporation before the
vote is taken written notice of his intent to demand payment for his shares if
the proposed action is effectuated and shall not vote his shares in favor of the
proposed action.
(b) A shareholder who does not satisfy the requirements of subsection (a)
of this section is not entitled to payment for his shares under this article.
B-2
17-16-1322. DISSENTERS' NOTICE.
(a) If proposed corporate action creating dissenters' rights under W.S.
17-16-1302 is authorized at a shareholders' meeting, the corporation shall
deliver a written dissenters' notice to all shareholders who satisfied the
requirements of W.S. 17-16-1321.
(b) The dissenters' notice shall be sent no later than ten (10) days after
the corporate action was taken, and shall:
(i) State where the payment demand shall be sent and where and when
certificates for certificated shares shall be deposited;
(ii) Inform holders of uncertificated shares to what extent transfer
of the shares will be restricted after the payment demand is received;
(iii) Supply a form for demanding payment that includes the date of
the first announcement to news media or to shareholders of the terms of the
proposed corporate action and requires that the person asserting dissenters'
rights certify whether or not he acquired beneficial ownership of the shares
before that date;
(iv) Set a date by which the corporation shall receive the payment
demand, which date may not be fewer than thirty (30) nor more than sixty (60)
days after the date the notice required by subsection (a) of this section is
delivered; and
(v) Be accompanied by a copy of this article.
17-16-1323. DUTY TO DEMAND PAYMENT.
(a) A shareholder sent a dissenters' notice described in W.S. 17-16-1322
shall demand payment, certify whether he acquired beneficial ownership of the
shares before the date required to be set forth in the dissenters' notice
pursuant to W.S. 17-16-1322(b)(iii), and deposit his certificates in accordance
with the terms of the notice.
(b) The shareholder who demands payment and deposits his share certificates
under subsection (a) of this section retains all other rights of a shareholder
until these rights are cancelled or modified by the taking of the proposed
corporate action.
(c) A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under this article.
17-16-1324. SHARE RESTRICTIONS.
(a) The corporation may restrict the transfer of uncertificated shares from
the date the demand for their payment is received until the proposed corporate
action is taken or the restrictions released under W.S. 17-16-1326.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are cancelled or modified by the taking of the proposed corporate action.
B-3
17-16-1325. PAYMENT.
(a) Except as provided in W.S. 17-16-1327, as soon as the proposed
corporate action is taken, or upon receipt of a payment demand, the corporation
shall pay each dissenter who complied with W.S. 17-16-1323 the amount the
corporation estimates to be the fair value of his shares, plus accrued interest.
(b) The payment shall be accompanied by:
(i) The corporation's balance sheet as of the end of a fiscal year
ending not more than sixteen (16) months before the date of payment, an income
statement for that year, a statement of changes in shareholders' equity for that
year, and the latest available interim financial statements, if any;
(ii) A statement of the corporation's estimate of the fair value of
the shares;
(iii) An explanation of how the interest was calculated;
(iv) A statement of the dissenter's right to demand payment under W.S.
17-16-1328; and
(v) A copy of this article.
17-16-1326. FAILURE TO TAKE ACTION.
(a) If the corporation does not take the proposed action within sixty (60)
days after the date set for demanding payment and depositing share certificates,
the corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it shall send a new
dissenters' notice under W.S. 17-16-1322 and repeat the payment demand
procedure.
17-16-1327. AFTER-ACQUIRED SHARES.
(a) A corporation may elect to withhold payment required by W.S. 17-16-1325
from a dissenter unless he was the beneficial owner of the shares before the
date set forth in the dissenters' notice as the date of the first announcement
to news media or to shareholders of the terms of the proposed corporate action.
(b) To the extent the corporation elects to withhold payment under
subsection (a) of this section, after taking the proposed corporate action, it
shall estimate the fair value of the shares, plus accrued interest, and shall
pay this amount to each dissenter who agrees to accept it in full satisfaction
of his demand. The corporation shall send with its offer a statement of its
estimate of the fair value of the shares, an explanation of how the interest was
calculated, and a statement of the dissenter's right to demand payment under
W.S. 17-16-1328.
17-16-1328. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.
(a) A dissenter may notify the corporation in writing of his own estimate
of the fair value of his shares and amount of interest due, and demand payment
of his estimate, less any payment under W.S. 17-16-1325, or reject the
corporation's offer under W.S. 17-16-1327 and demand payment of the fair value
of his shares and interest due, if:
B-4
(i) The dissenter believes that the amount paid under W.S. 17-16-1325
or offered under W.S. 17-16-1327 is less than the fair value of his shares or
that the interest due is incorrectly calculated;
(ii) The corporation fails to make payment under W.S. 17-16-1325
within sixty (60) days after the date set for demanding payment; or
(iii) The corporation, having failed to take the proposed action, does
not return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within sixty (60) days after the date set for
demanding payment.
(b) A dissenter waives his right to demand payment under this section
unless he notifies the corporation of his demand in writing under subsection (a)
of this section within thirty (30) days after the corporation made or offered
payment for his shares.
17-16-1330. COURT ACTION.
(a) If a demand for payment under W.S. 17-16-1328 remains unsettled, the
corporation shall commence a proceeding within sixty (60) days after receiving
the payment demand and petition the court to determine the fair value of the
shares and accrued interest. If the corporation does not commence the
proceeding within the sixty (60) day period, it shall pay each dissenter whose
demand remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding in the district court of
the county where a corporation's principal office, or if none in this state, its
registered office, is located. If the corporation is a foreign corporation
without a registered office in this state, it shall commence the proceeding in
the county in this state where the registered office of the domestic corporation
merged with or whose shares were acquired by the foreign corporation was
located.
(c) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled parties to the proceeding as in an
action against their shares and all parties shall be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) of this section is plenary and exclusive. The court may
appoint one (1) or more persons as appraisers to receive evidence and recommend
decision on the question of fair value. The appraisers have the powers
described in the order appointing them, or in the amendment to it. The
dissenters are entitled to the same discovery rights as parties in other civil
proceedings.
(e) Each dissenter made a party to the proceeding is entitled to judgment
for:
(i) The amount, if any, by which the court finds the fair value of his
shares, plus interest, exceeds the amount paid by the corporation; or
(ii) The fair value, plus accrued interest, of his after-acquired
shares for which the corporation elected to withhold payment under W.S.
17-16-1327.
B-5
17-16-1331. COURT COSTS AND COUNSEL FEES.
(a) The court in an appraisal proceeding commenced under W.S. 17-16-1330
shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court shall
assess the costs against the corporation, except that the court may assess costs
against all or some of the dissenters, in amounts the court finds equitable, to
the extent the court finds the dissenters acted arbitrarily, vexatiously, or not
in good faith in demanding payment under W.S. 17-16-1328.
(b) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable:
(i) Against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of W.S. 17-16-1320 through 17-16-1328; or
(ii) Against either the corporation or a dissenter, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by this article.
(c) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to these counsel reasonable fees to be paid out of the amounts awarded the
dissenters who were benefited.
B-6
[SHESHUNOFF & CO. LETTERHEAD]
APPENDIX C
February 6, 2009
Board of Directors
First Company
1426 Sheridan Avenue
Cody, Wyoming 82414
Members of the Board:
You have requested Sheshunoff & Co. Investment Banking, LP's ("Sheshunoff")
opinion as to the fairness, from a financial point of view, to the holders of
the outstanding shares of common stock of First Company, Cody, Wyoming, a
Wyoming corporation, ("First Company") of the Plan and Agreement of Merger, as
defined below, in the proposed merger with Glacier Bancorp, Inc., Kalispell,
Montana, a Montana corporation, ("Glacier"). Capitalized terms not defined
herein shall have the meaning set out in the Merger Agreement.
Pursuant to the Agreement and Plan of Merger dated February 6, 2009 (the "Merger
Agreement"), Glacier has agreed to pay the aggregate of $450,000 in cash,
100,000 shares of Glacier common stock (GBCI), and certain other loans and Loan
Participations as well as a distribution of certain investments for al of the
outstanding shares of common stock of First Company (the "Total Merger
Consideration") with certain adjustments. The Loan Participations, as defined in
the Merger Agreement, and certain other loans to be distributed to First Company
shareholders have a total net book value of approximately $15.4 million.
As outlined in the Merger Agreement, the value of the Total Merger Consideration
will be adjusted by any difference between the Book Value of First Company as of
the Determination Date and $15,250,000. The principal adjustments to Book Value
that could affect the value of the Total Merger Consideration pursuant to the
Merger Agreement include without limitation net income, dividends,
transaction-related expenses, and pre-closing actions including a transfer of
certain investments from First Company. The approximate value of the Total
Merger Consideration to be received for the outstanding shares taking into
account the estimated adjustments identified to Sheshunoff as of the date of the
opinion is approximately $17.8 million. The Merger, as defined in the Merger
Agreement, is subject to termination by the parties under certain conditions as
detailed in the Merger Agreement.
Sheshunoff is regularly engaged in the valuation of securities in connection
with mergers and acquisitions and valuations for estate, corporate and other
purposes. Sheshunoff is experienced in these activities and has performed
assignments similar in nature to that requested by First Company on numerous
occasions.
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First Company
February 6, 2009
Page 2
In connection with rendering the opinion, Sheshunoff, among other things:
1. Reviewed the Merger Agreement dated February 6, 2009;
2. Reviewed First Company's financial statements for the period ending
September 30, 2008 and preliminary statements for the period ending
December 31, 2008;
3. Evaluated First Company's subsidiary bank's regulatory reports as of
September 30, 2008 and preliminary reports for the period ending
December 31, 2008;
4. Evaluated First Company's consolidated results based upon a review of
its regulatory reports for the five-year period ending December 31,
2007;
5. Conducted conversations regarding recent and projected financial
performance of First Company with members of executive management;
6. Compared First Company's recent operating results and pricing
multiples for First Company in the Merger with those of certain other
banks in the U.S. with assets between $50 million and $500 million
that have recently been acquired;
7. Compared First Company's recent operating results and the pricing
multiples for First Company in the Merger to the public stock trading
levels of certain other banks in the western U.S. along with
consideration of recent control premiums paid for public bank stocks
in recent acquisitions of banks in the U.S.;
8. Reviewed the historical stock price data and trading volume of
Glacier's common stock;
9. Compared the historical stock price data and trading volume of
Glacier's common stock with that of certain other comparable publicly
traded companies;
10. Compared certain financial characteristics and performance measures of
Glacier with that of certain other comparable publicly traded
companies;
11. Compared the historical stock price performance of Glacier's common
stock with that of selected indices Sheshunoff deemed relevant;
12. Held various on-site meetings with First Company's management to
discuss the potential sale of First Company; and
13. Performed such other analyses as we deemed appropriate.
Sheshunoff assumed and relied upon, without independent verification, the
accuracy and completeness of the information provided to it by First Company and
Glacier for the purposes of this opinion. Sheshunoff assumed that any
projections provided by First Company were
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First Company
February 6, 2009
Page 3
reasonably prepared on a basis reflecting the best currently available estimates
and judgments of First Company management and Sheshunoff has assumed such
forecasts and projections will be realized in the amounts and at the times
contemplated thereby. Sheshunoff assumes no responsibility for and expresses no
opinion on any such projections or the assumptions on which they are based. In
addition, where appropriate, Sheshunoff relied upon publicly available
information that it believes to be reliable, accurate, and complete; however,
Sheshunoff cannot guarantee the reliability, accuracy, or completeness of any
such publicly available information.
Sheshunoff did not make an independent evaluation of the assets or liabilities
(including any contingent, derivative or off-balance-sheet assets or
liabilities) of First Company or Glacier, nor was Sheshunoff furnished with any
such appraisals. Sheshunoff assumed that any off-balance sheet activities of
First Company or Glacier will not materially and adversely impact the future
financial position or results of operation of First Company and Glacier.
Sheshunoff is not an expert in the evaluation of loan portfolios and has assumed
that loan losses have been adequately reflected. In addition, Sheshunoff has not
reviewed any individual credit files or made an independent evaluation,
appraisal or physical inspection of the assets or individual properties of First
Company or Glacier, nor has Sheshunoff been furnished with any such evaluations
or appraisals.
Sheshunoff assumed that al required regulatory and third-party approvals will be
received in a timely fashion and without any conditions or requirements that
could adversely affect First Company, Glacier, the Merger or Glacier's
operations following the Merger.
Sheshunoff's opinion is necessarily based on economic, market, and other
conditions as they existed on the date hereof, and the information made
available to it as of the date hereof. Events occurring after the date hereof
could materially affect the assumptions used in preparing this opinion and the
resulting conclusion, and Sheshunoff assumes no responsibility for advising any
person of any change in any mater affecting this opinion. First Company's
management has informed Sheshunoff that it knows of no additional information,
other than the estimated adjustments and pre-closing actions identified to us as
of the date of the opinion that could have a material effect on its opinion.
Other than for the proxy statement and at the Effective Date as defined in the
Merger Agreement, Sheshunoff is not obligated to update, revise, or affirm this
opinion.
Sheshunoff's opinion is not an appraisal or opinion of value but is limited to
the fairness of the Total Merger Consideration, from a financial point of view,
to al holders of First Company common stock. Sheshunoff expresses no opinion on
the underlying decision by First Company to engage in the Merger or the relative
merits of the Merger as compared to the other transactions or business
strategies that might be available to First Company. Moreover, this letter and
the opinion expressed herein do not constitute a recommendation to any
shareholder as to any approval of the Merger or the Merger Agreement. The
analyses and results thereof upon which this opinion is based and this opinion
were reviewed and approved by a fairness committee of the firm.
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First Company
February 6, 2009
Page 4
Sheshunoff is acting as financial advisor to First Company in the Merger and
will receive compensation for our services, a substantial portion of which is
contingent upon the closing of the Merger. A portion of our fee, which is not
contingent upon the closing of the Merger, is also payable upon the rendering of
this opinion. In addition, First Company has agreed to reimburse our expenses
and to indemnify us for certain liabilities that may arise out of this
engagement.
Sheshunoff or its affiliates may also provide other services to First Company in
connection with the Merger or for Glacier in the future for which it may receive
compensation.
It is understood that this opinion is for the information of the Board of
Directors of First Company and may not be used for any other purpose without
Sheshunoff's prior written consent, except as may be required by law or by a
court of competent jurisdiction and except that this opinion may be included in
its entirety in any filing, if required, with respect to the Merger with the
Securities and Exchange Commission or proxy statement sent to First Company
shareholders.
For the purposes of this opinion, Sheshunoff had conversations with Glacier
management and received assurances that Glacier has sufficient financing to
complete the Merger in a timely manner and without terms and conditions that
would adversely affect the Merger.
Based on the foregoing, subject to the conditions noted above, and such other
maters that Sheshunoff deemed relevant, it is Sheshunoff's opinion, as of the
date hereof, that the Total Merger Consideration to be received by the First
Company shareholders pursuant to the Merger is fair, from a financial point of
view.
Very truly yours,
/s/ Sheshunoff & Co.
SHESHUNOFF & CO.
INVESTMENT BANKING, LP
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 35-1-451 through 35-1-459 of the Montana Business Corporation
Act ("MBCA") contain specific provisions relating to indemnification of
directors and officers of Montana corporations. In general, the statute provides
that (i) a corporation must indemnify a director or officer who is wholly
successful in his defense of a proceeding to which he is a party because of his
status as such, unless limited by the articles of incorporation, and (ii) a
corporation may indemnify a director or officer if he is not wholly successful
in such defense, if it is determined as provided in the statute that the
director meets a certain standard of conduct, provided that when a director is
liable to the corporation, the corporation may not indemnify him. The statute
also permits a director or officer of a corporation who is a party to a
proceeding to apply to the courts for indemnification or advance of expenses,
unless the articles of incorporation provide otherwise, and the court may order
indemnification or advancement of expenses under certain circumstances set forth
in the statute. The statute further provides that a corporation may in its
articles of incorporation or bylaws or by resolution provide indemnification in
addition to that provided by statute, subject to certain conditions set forth in
the statute.
The articles of incorporation of Glacier provide, among other things,
that the personal liability of the directors and officers of the corporation for
monetary damages shall be eliminated to the fullest extent permitted by the
MBCA. Glacier's bylaws provide that the corporation shall indemnify its
directors and officers to the fullest extent not prohibited by law, including
indemnification for payments in settlement of actions brought against a director
or officer in the name of the corporation.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The exhibits are listed on the accompanying "Exhibit Index".
(b) Financial Statement Schedules. None.
(c) The opinion of the financial advisor is set forth as APPENDIX C to
this proxy statement/prospectus
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to;
(i) Include any prospectus required by Section 10(a)(3) of
the 1933 Act;
(ii) Reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement; and
(iii) Include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
1933 Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of the securities at that time shall be deemed to be the initial bona
fide offering thereof.
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(3) To file a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of the
offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at the time shall be deemed to be the initial bona fide offering thereof..
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to Item 4, 10(b), 11, or 13 of this form, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the Effective Date of the registration statement
through the date of responding to the request.
(e) The undersigned registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
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SIGNATURES
Pursuant to the requirements of the 1933 Act, the Registrant has duly
caused this Pre Effective Amendment No. 1 to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Kalispell, State of Montana, on March 27, 2009.
GLACIER BANCORP, INC.
By: /s/ Michael J. Blodnick
------------------------------------
Michael J. Blodnick President and
Chief Executive Officer
Pursuant to the agreements to the Securities act of 1933, the Pre
Effective Amendment No. 1 to the Registration Statement has been signed by the
following persons in the capacities indicated on March 27, 2009.
SIGNATURE AND TITLE
By: /s/ Michael J. Blodnick
------------------------------------
Michael J. Blodnick, President and
Chief Executive Officer and Director
(Principal Executive Officer)
By: /s/ Ron J. Copher
------------------------------------
Ron J. Copher, Senior Vice President
and Chief Financial Officer
(Principal Financial and Principal
Accounting Officer)
By: Everit A. Sliter *
------------------------------------
Everit A. Sliter, Chairman of the
Board and Director
By: James M. English *
------------------------------------
James M. English, Director
By:
------------------------------------
Allen J. Fetscher, Director
By: Dalllas I. Herron *
------------------------------------
Dallas I. Herron, Director
By: Jon W. Hippler *
------------------------------------
Jon W. Hippler, Director
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By: Craig A. Langel *
------------------------------------
Craig A. Langel, Director
By: L. Peter Larson *
------------------------------------
L. Peter Larson, Director
By: Douglas J. McBride *
------------------------------------
Douglas J. McBride, Director
By: John W. Murdoch *
------------------------------------
John W. Murdoch, Director
* By: /s/ Michael J. Blodnick
------------------------------
Michael J. Blodnick
Attorney-in-Fact
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
2* Plan and Agreement of Merger dated as of February 6, 2009, by and
among Glacier Bancorp, Inc., First Company and First National Bank
& Trust (contained in Appendix A to the proxy statement/prospectus
which is included in the registration statement).
5* Opinion of Christensen, Moore, Cockrell, Cummings & Axelberg,
P.C., regarding legality of securities.
10.1* Form of Voting Agreement.
10.2* Form of Non-Competition Agreement.
10.3* Form of Indemnification Agreement.
10.4* Employment Agreement for Richard T. Nelson.
23.1* Consent of Christensen, Moore, Cockrell, Cummings & Axelberg, P.C.
(contained in its opinion filed as Exhibit 5).
23.2* Consent of BKD, LLP, Glacier Bancorp's independent registered
public accounting firm.
23.3* Consent of Sheshunoff & Co. Investment Banking, First Company's
financial adviser.
24* Power of Attorney (contained on the signature page of the
registration statement).
99.1* Form of proxy to be mailed to shareholders of First Company.
99.2* Opinion of Financial Advisor to First Company (contained in
Appendix C to the proxy statement/prospectus which is included in
the registration statement).
* Previously filed
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