As filed with the Securities and Exchange Commission on August 23, 2005
Registration No. 333-______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
GLACIER BANCORP, INC.
(Exact name of registrant as specified in its charter)
MONTANA 6022 81-0579541
(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)
----------
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)
-----------
Copies of communications to:
KIMBERLY F. STEPHAN, ESQ. ROBERT FLETCHER, ESQ.
Graham & Dunn PC Thompson Falls Holding Co.
Pier 70 107 S. Fulton
2910 Alaskan Way, Suite 300 P.O. Box 3500
Seattle, Washington 98121-1128 Thompson Falls, Montana 59873
(206) 340-9615 (406) 827-9227
-----------
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 Thompson Falls Holding 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. [ ]
CALCULATION OF REGISTRATION FEE
Title of Each Proposed Maximum Proposed Maximum Amount of
Class of Securities Amount Being Offering Price Aggregate Registration
Being Registered Registered(1) Per Share Offering Price(2) Fee(2)
------------------- ------------- ---------------- ----------------- ------------
Common Stock,
$0.01 Par Value 734,580 N/A $12,236,000 $1,440.18
(1) Represents the number of shares of common stock, $0.01 par value per
share, to be issuable by Glacier Bancorp, Inc ("Glacier") upon
consummation of the acquisition by Glacier of Thompson Falls Holding Co.
(2) Calculated in accordance with Rule 457(f) under the Securities Act of
1933, the proposed maximum offering price of $12,236,000 is computed by
subtracting $2,100,000 (the cash to be paid by Glacier) from the product
of (A) $2,048, the per-share book value of the Thompson Falls Holding Co.
common stock on June 30, 2005, times (B) 7,000 (the number of shares of
Thompson Falls Holding Co. common stock to be exchanged in the transaction
with Glacier).
-----------
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 THOMPSON FALLS HOLDING COMPANY GLACIER BANCORP, INC.
MERGER PROPOSED - YOUR VOTE IS VERY IMPORTANT
Dear Thompson Falls Holding Company Shareholders:
The boards of directors of Thompson Falls Holding Company and Glacier
Bancorp, Inc. ("Glacier") have agreed on a merger of Thompson Falls Holding
Company into Glacier. When the merger occurs, First State Bank, the subsidiary
of Thompson Falls Holding Company, will merge with and into First Security Bank
of Missoula, a subsidiary bank of Glacier.
If we complete the merger, you will be entitled to elect to receive, in
consideration for your Thompson Falls Holding Company shares, a combination of
cash and shares of Glacier common stock. Under the merger agreement, Glacier
will pay $2.1 million of the total merger consideration in cash and will issue
734,580 shares of Glacier common stock. Each outstanding share of Thompson Falls
Holding Company will be exchanged for either $3,000 in cash or 116.60 shares of
Glacier common stock. Based on the closing price for Glacier common stock as of
September __, 2005, the value of the per share stock consideration is $_______.
A chart setting forth the specific consideration to be received by each
shareholder of Thompson Falls Holding Company is included in the attached proxy
statement/prospectus under the heading "The Merger - Merger Consideration."
After completion of the merger, Thompson Falls Holding Company
shareholders will own approximately 2% of Glacier's outstanding common stock.
Your board of directors believes that the terms of the merger are fair and
in the best interest of Thompson Falls Holding Company and its shareholders. In
reaching this decision, the board considered numerous factors as described in
the attached proxy statement/prospectus. Glacier and First Security Bank of
Missoula intend to continue operating the former First State Bank branches under
the name "First State Bank."
THE MERGER CANNOT BE COMPLETED UNLESS YOU APPROVE IT. Approval requires
the affirmative vote of at least two-thirds of the shares entitled to be cast at
a special meeting of Thompson Falls Holding Company shareholders called to
consider the merger. We will hold a special shareholders' meeting to vote on the
merger proposal. THE THOMPSON FALLS HOLDING COMPANY SPECIAL SHAREHOLDERS'
MEETING WILL BE HELD ON OCTOBER 13, 2005, AT 4:00 P.M. LOCAL TIME, AT THE BANK'S
MAIN OFFICE, LOCATED AT 107 S. FULTON, THOMPSON FALLS, MONTANA 59873. 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 Thompson Falls Holding Company board of directors, I
recommend that you vote FOR approval of the merger.
Robert T. ("Skip") Baxter
President and Chief Executive Officer
NONE OF 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 BANK INSURANCE FUND OR ANY OTHER
GOVERNMENTAL AGENCY. SUCH SHARES ARE NOT GUARANTEED BY GLACIER OR THOMPSON FALLS
HOLDING COMPANY AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS
OF PRINCIPAL.
--------------------------------
This proxy statement/prospectus is dated September ___, 2005, and is first being
mailed to Thompson Falls Holding Company shareholders on September ___, 2005.
THOMPSON FALLS HOLDING COMPANY
107 S. FULTON
P.O. BOX 3500
THOMPSON FALLS, MONTANA 59873
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 13, 2005
TO THE SHAREHOLDERS OF THOMPSON FALLS HOLDING COMPANY
A special meeting of shareholders of Thompson Falls Holding Company will
be held on October 13, 2005, at 4:00 p.m. local time, at the Bank's main office,
located at 107 S. Fulton, Thompson Falls, Montana 59873. The special meeting is
for the following purposes:
1. MERGER AGREEMENT. To consider and vote upon a proposal to approve the Plan
and Agreement of Merger, dated as of July 14, 2005, among Glacier Bancorp,
Inc., First Security Bank of Missoula, Thompson Falls Holding Company and
First State Bank, under the terms of which Thompson Falls Holding 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 Thompson Falls Holding Company common stock at the
close of business on September 16, 2005, 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 two-thirds of the shares entitled to be cast at the Thompson Falls Holding
Company special meeting is required for approval of the merger agreement. As of
September ____, 2005, there were 7,000 shares of Thompson Falls Holding Company
common stock outstanding and entitled to vote at the special meeting.
Thompson Falls Holding Company shareholders have the right to dissent from
the merger and obtain payment of the fair value of their Thompson Falls Holding
Company shares under the applicable provisions of Montana law. A copy of the
applicable statutes 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 heading
"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 THOMPSON FALLS HOLDING COMPANY HAS DETERMINED
THAT THE PLAN AND AGREEMENT OF MERGER IS FAIR TO AND IN THE BEST INTERESTS OF
THOMPSON FALLS HOLDING COMPANY AND ITS SHAREHOLDERS AND RECOMMENDS THAT YOU VOTE
FOR APPROVAL OF THE MERGER AGREEMENT.
By Order of the Board of Directors,
Jeneese Baxter, Secretary
Thompson Falls, Montana
September ___, 2005
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: James H. Strosahl, Corporate Secretary
Telephone: (406) 751-4702
You will not be charged for the documents that you request. If you would
like to request documents, please do so by _____________, 2005 in order to
receive them before the Thompson Falls Holding Company special shareholders'
meeting.
See "Where You Can Find More Information About Glacier."
TABLE OF CONTENTS
PAGE
----
QUESTIONS AND ANSWERS ABOUT THIS DOCUMENT AND THE MERGER............................................ 1
SUMMARY............................................................................................. 4
RISK FACTORS........................................................................................ 9
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS................................................ 10
SELECTED HISTORICAL FINANCIAL AND PER SHARE DATA OF GLACIER......................................... 12
SELECTED UNAUDITED COMPARATIVE PER SHARE DATA....................................................... 14
COMPARATIVE STOCK PRICE AND DIVIDEND INFORMATION.................................................... 15
THOMPSON FALLS HOLDING COMPANY SPECIAL SHAREHOLDERS' MEETING........................................ 16
BACKGROUND OF AND REASONS FOR THE MERGER............................................................ 17
THE MERGER.......................................................................................... 19
INFORMATION CONCERNING THOMPSON FALLS HOLDING COMPANY............................................... 33
DESCRIPTION OF GLACIER'S CAPITAL STOCK.............................................................. 36
COMPARISON OF CERTAIN RIGHTS OF HOLDERS OF GLACIER AND THOMPSON FALLS HOLDING COMPANY COMMON STOCK.. 36
CERTAIN LEGAL MATTERS............................................................................... 40
EXPERTS............................................................................................. 41
WHERE YOU CAN FIND MORE INFORMATION ABOUT GLACIER................................................... 41
Appendix A - Plan and Agreement of Merger
Appendix B - Montana Statutes Regarding Dissenter's Rights
i
QUESTIONS AND ANSWERS ABOUT THIS DOCUMENT AND THE MERGER
WHAT IS THE PURPOSE OF THIS PROXY STATEMENT/PROSPECTUS?
This document serves as both a proxy statement of Thompson Falls Holding
Company and a prospectus of Glacier. As a proxy statement, it is being provided
to you by Thompson Falls Holding Company because the board of directors of
Thompson Falls Holding Company is soliciting your proxy to vote to approve the
proposed merger of Thompson Falls Holding Company with and into Glacier. As a
prospectus, it is being provided to you by Glacier because Glacier is offering
you shares of its common stock as partial consideration for your Thompson Falls
Holding Company shares.
WHAT WILL THOMPSON FALLS HOLDING COMPANY SHAREHOLDERS RECEIVE IN THE MERGER?
Under the merger agreement, Glacier will pay cash and issue shares of its
common stock in exchange for all outstanding shares of Thompson Falls Holding
Company common stock. The merger agreement provides that the total consideration
will be $2.1 million in cash and 734,580 shares of Glacier common stock. Each
outstanding share of Thompson Falls Holding Company will be exchanged for either
$3,000 in cash or 116.60 shares of Glacier common stock. Based on the closing
price for Glacier common stock as of September ____, 2005, the value of the per
share stock consideration is $_______. A chart setting forth the specific
consideration to be received by each shareholder of Thompson Falls Holding
Company is included in the attached proxy statement/prospectus under the heading
"The Merger - Merger Consideration."
WHEN SHOULD I SEND IN MY STOCK CERTIFICATES?
In addition to the proxy card, a letter of transmittal is enclosed -
PLEASE COMPLETE AND RETURN THE LETTER OF TRANSMITTAL AT THIS TIME, EVEN IF YOUR
CERTIFICATES ARE HELD IN SAFEKEEPING WITH FIRST STATE BANK. If you or a
custodian holds your stock certificate(s), please include your certificate(s),
as well. You should send the proxy card, the letter of transmittal and your
stock certificates in the enclosed envelope. In the alternative, you may deliver
your stock certificates directly to the main office of First State Bank, located
at 107 S. Fulton Street, Thompson Falls, Montana.
WHEN AND WHERE WILL THE SPECIAL MEETING TAKE PLACE?
Thompson Falls Holding Company will hold a special meeting of its
shareholders on October 13, 2005, at 4:00 p.m., at the Bank's main office,
located at 107 S. Fulton, Thompson Falls, Montana 59873.
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.
WHY IS MY VOTE IMPORTANT?
If you fail to vote, that will have the same effect as voting against
approval of the merger agreement. Approval of the merger agreement requires the
affirmative vote of at least two-thirds of the shares of Thompson Falls Holding
Company common stock outstanding and entitled to vote a the special meeting.
Robert T. ("Skip") Baxter, Robert Fletcher, and their affiliates beneficially
own and have the right to vote 5,680 shares, representing 81.1% of the shares
entitled to be voted at the meeting, and they have each agreed to vote for the
merger.
1
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 choose either the first or second method above, you must submit
your notice of revocation or your new proxy card to Thompson Falls Holding
Company's secretary prior to the special meeting.
WHO MAY VOTE AT THE MEETING?
The board of directors of Thompson Falls Holding Company has set September
16, 2005, as the record date for the meeting. If you were the owner of Thompson
Falls Holding Company common stock at the close of business on September 16,
2005, you may vote at the meeting.
WHEN WILL THE MERGER OCCUR?
We presently expect to complete the merger during the fourth quarter of
2005. The merger will occur after approval of the shareholders of Thompson Falls
Holding Company is obtained and the other conditions to the merger are satisfied
or waived. The parties are working toward completing the merger as quickly as
possible.
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.
Following review of this proxy statement/prospectus, PLEASE COMPLETE,
SIGN, AND DATE THE ENCLOSED PROXY CARD AND LETTER OF TRANSMITTAL AND RETURN
THEM, AS WELL AS YOUR STOCK CERTIFICATES, IN THE ENCLOSED ENVELOPE as soon as
possible so that your shares can be voted at Thompson Falls Holding Company's
special meeting of shareholders.
2
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 ARE THE TAX CONSEQUENCES OF THE MERGER TO ME?
We expect that for United States federal income tax purposes, the shares
of Thompson Falls Holding Company common stock exchanged for shares of Glacier
common stock generally will not cause you to recognize any taxable gain or loss.
For the shares of Thompson Falls Holding Company stock exchanged for cash in the
merger, you will recognize any gain or loss realized on the disposition of your
Thompson Falls Holding Company shares. 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.
WHAT RISKS SHOULD I CONSIDER?
You should review carefully our discussion of "Risk Factors." You should
also review the factors considered by the Thompson Falls Holding Company board
of directors in approving the merger agreement. See "The Merger - Background of
the Merger" and "Reasons for the Merger - Thompson Falls Holding Company."
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:
Robert T. ("Skip") Baxter, President and CEO
Thompson Falls Holding Company
107 S. Fulton
P.O. Box 3500
Thompson Falls, Montana 59873
(406) 827-9222
e-mail: rbaxter@fsbtf.com
This proxy statement/prospectus does not cover any resale of the
securities to be received by shareholders of Thompson Falls Holding 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 SEPTEMBER ____, 2005.
3
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 Plan and Agreement of Merger is attached as APPENDIX
A to this proxy statement/prospectus. Each item in the summary refers to the
page in this proxy statement/prospectus where that subject is discussed in more
detail.
INFORMATION ABOUT GLACIER AND THOMPSON FALLS HOLDING 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. Glacier is a regional multi-bank
holding company providing commercial banking services in banking offices
throughout Montana, Idaho, Utah, Washington and Wyoming. 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 nine wholly owned subsidiary
commercial banks: Glacier Bank, First Security Bank of Missoula, Western
Security Bank, Big Sky Western Bank, Valley Bank of Helena, Glacier Bank of
Whitefish, all in Montana; Mountain West Bank, headquartered in Idaho with
offices in Utah and Washington; and its most recent acquisitions, First National
Bank--West, headquartered in Evanston, Wyoming, and Citizens Community Bank,
headquartered in Pocatello, Idaho.
As of June 30, 2005, Glacier had total assets of approximately $3.5
billion, total net loans receivable and loans held for sale of approximately
$2.1 billion, total deposits of approximately $2.2 billion and approximately
$297.8 million in shareholders' equity. Glacier common stock trades on the
Nasdaq National Market under the symbol "GBCI."
Financial and other information regarding Glacier is set forth in
Glacier's annual report on Form 10-K for the year ending December 31, 2004, and
the quarterly reports on Form 10-Q for the quarters ending March 31 and June 30,
2005. Information regarding Glacier's executive officers and directors, as well
as additional information, including executive compensation, certain
relationships and related transactions, is set forth or incorporated by
reference in Glacier's annual report on Form 10-K for the year ending December
31, 2004 and Glacier's proxy statement for its 2005 annual meeting of
shareholders, and the Forms 8-K filed by Glacier and incorporated by reference
into this proxy statement/prospectus. See "Where You Can Find More Information
About Glacier."
First Security Bank of Missoula, a wholly owned subsidiary of Glacier, was
incorporated on December 26, 1972. First Security Bank was acquired by Glacier
in 1996. First Security Bank is a Montana state-chartered commercial bank. First
Security Bank is regulated by the Montana Department of Banking and is member of
the Federal Reserve Bank. Therefore, its primary federal regulator is the
Federal Reserve Bank. The deposits held by First Security Bank are insured by
the Federal Deposit Insurance Corporation. First Security Bank offers
full-service community banking through nine banking locations serving Missoula
and Ravalli Counties in Montana. First Security Bank has its main office in
Missoula, Montana and branches located in Missoula and Hamilton, Montana.
4
THOMPSON FALLS HOLDING COMPANY
107 S. Fulton
Thompson Falls, Montana 59873
(406) 827-7000
Thompson Falls Holding Company is headquartered in Thompson Falls, Montana
and is a bank holding company registered under the Bank Holding Company Act of
1956, as amended. Thompson Falls Holding Company was incorporated under the laws
of the State of Montana on October 17, 1986 for the purpose of acquiring all of
the outstanding common stock of First State Bank from Bank of Montana System.
Thereafter, First State Bank became a wholly owned subsidiary of Thompson Falls
Holding Company. At June 30, 2005, Thompson Falls Holding Company had total
consolidated assets of approximately $158 million, net loans of approximately
$117 million, deposits of approximately $121 million, and approximately $14.3
million in shareholders' equity. At June 30, 2005, Thompson Falls Holding
Company had 12 shareholders of record owning 7,000 shares of its common stock.
First State Bank, a wholly owned subsidiary of Thompson Falls Holding
Company, was incorporated on October 24, 1906. First State Bank is a Montana
state-chartered commercial bank. First State Bank is regulated by the Montana
Department of Finance and by the Federal Deposit Insurance Corporation, its
primary federal regulator and the insurer of its deposits. First State Bank
offers full-service community banking through three banking locations serving
Sanders and Beaverhead Counties in Montana. First State Bank has its main office
in Thompson Falls, Montana and one branch located in each of Plains and Dillon,
Montana. First State Bank has entered into a definitive agreement with Stockman
Bank of Montana to sell the Dillon branch. It is anticipated that the sale of
the Dillon branch will be finalized before consummation of the merger between
Thompson Falls Holding Company and Glacier.
First State Bank is a full service bank offering a wide variety of banking
services targeted at all sectors of its community. First State Bank offers
customary types of demand, savings, time, and individual retirement accounts,
installment, commercial and real estate loans, personal and commercial lines of
credit, safe deposit, night depository services, automatic teller machine
services, cashiers checks, money orders, travelers checks, wire transfers and
various other services that may be tailored to fit the needs of a diverse
customer base. First State Bank does not have a trust department.
THOMPSON FALLS HOLDING COMPANY WILL MERGE INTO GLACIER
The merger agreement provides for the merger of Thompson Falls Holding
Company with and into Glacier, with Glacier as the surviving company. First
State Bank, which is now the subsidiary of Thompson Falls Holding Company, will
merge with and into Glacier's subsidiary, First Security Bank of Missoula. In
the merger, your shares of Thompson Falls Holding Company common stock will be
exchanged for a combination of cash and shares of Glacier common stock. After
the merger, you will no longer own shares of Thompson Falls Holding Company.
The merger agreement is attached as APPENDIX A to this document. We
encourage you to read the merger agreement in its entirety.
THOMPSON FALLS HOLDING COMPANY SPECIAL MEETING
The special meeting of shareholders of Thompson Falls Holding Company will
be held at the Bank's main office, located at 107 S. Fulton, Thompson Falls,
Montana 59873, on October 13, 2005 at 4:00 p.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.
5
You will be entitled to vote at the Thompson Falls Holding Company special
meeting if you owned Thompson Falls Holding Company common stock at the close of
business on September 16, 2005. As of that date there were 7,000 shares of
Thompson Falls Holding Company common stock entitled to be voted at the special
meeting.
APPROVAL OF THE MERGER AGREEMENT REQUIRES THE AFFIRMATIVE VOTE OF TWO-THIRDS OF
THE SHARES OF THOMPSON FALLS HOLDING COMPANY COMMON STOCK THAT ARE OUTSTANDING
AND ENTITLED TO VOTE
In order to approve the merger agreement, at least two-thirds of the
outstanding shares of Thompson Falls Holding Company common stock outstanding
and entitled to vote as of the record date 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, Robert T. ("Skip") Baxter, Robert
Fletcher, and their affiliates beneficially own and have the right to vote 5,680
shares of Thompson Falls Holding Company common stock, representing 81.1% of the
shares entitled to be voted at the meeting, and they have each agreed to vote
for the merger.
WHAT THOMPSON FALLS HOLDING COMPANY SHAREHOLDERS WILL RECEIVE IN THE MERGER
Under the merger agreement, Glacier will pay cash and issue shares of its
common stock in exchange for all outstanding shares of Thompson Falls Holding
Company common stock. The merger agreement provides that the total consideration
will be $2.1 million in cash and 734,580 shares of Glacier common stock. Each
outstanding share of Thompson Falls Holding Company will be exchanged for either
$3,000 in cash or 116.60 shares of Glacier common stock. Based on the closing
price for Glacier common stock as of September ____, 2005, the value of the per
share stock consideration is $_______. A chart setting forth the specific
consideration to be received by each shareholder of Thompson Falls Holding
Company is included under the heading "The Merger - Merger Consideration."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Neither Thompson Falls Holding Company nor Glacier is required to complete
the merger unless each of them receive a legal opinion of Glacier's counsel that
the merger will be treated as a "reorganization" for federal income tax
purposes. Assuming such opinion is received, we expect that for United States
federal income tax purposes, Thompson Falls Holding Company shareholders
generally will not recognize any gain or loss on the conversion of shares of
Thompson Falls Holding Company common stock into shares of Glacier common stock
(although the receipt of any cash will be a taxable event). This tax treatment
may not apply to some Thompson Falls Holding Company shareholders. Determining
the actual tax consequences of the merger to you may be complex. They will
depend on your specific situation and on factors not within our control. You
should consult your own tax advisor for a full understanding of the merger's tax
consequences to you.
THE THOMPSON FALLS HOLDING COMPANY BOARD OF DIRECTORS RECOMMENDS SHAREHOLDER
APPROVAL OF THE MERGER
The Thompson Falls Holding Company board of directors believes that the
merger is in the best interests of the Thompson Falls Holding Company
shareholders and has unanimously approved the merger agreement. The Thompson
Falls Holding Company board of directors recommends that Thompson Falls Holding
Company shareholders vote "FOR" approval of the merger agreement.
6
THOMPSON FALLS HOLDING COMPANY OFFICERS AND DIRECTORS HAVE INTERESTS IN THE
MERGER THAT ARE DIFFERENT FROM OR IN ADDITION TO THEIR INTERESTS AS SHAREHOLDERS
Certain members of Thompson Falls Holding Company management have
interests in the merger that are different from, or in addition to, their
interests as Thompson Falls Holding Company shareholders. These interests arise
out of provisions in the merger agreement relating to indemnification and, in
the cases of Robert T. ("Skip") Baxter and Robert Fletcher, consulting
arrangements that will take effect upon consummation of the merger. See "The
Merger--Interests of Certain Persons in the Merger."
The Thompson Falls Holding 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 FOURTH QUARTER OF 2005
We anticipate that the merger will occur in the fourth quarter of 2005.
However, we cannot assure you when or if the merger will occur.
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 shareholders holding at least
two-thirds of the outstanding shares of Thompson Falls Holding
Company common stock that are outstanding and entitled to vote;
- approval of the merger by federal and state regulatory authorities;
- accuracy of the other party's representations in the merger
agreement; and
- compliance by the other party with all material terms, covenants and
conditions of the merger agreement.
The merger agreement provides that either Glacier or Thompson Falls
Holding Company may terminate the merger either before or after the Thompson
Falls Holding Company special meeting, under certain circumstances. See "The
Merger - Amendment or Termination of the Merger Agreement."
WE MAY NOT COMPLETE THE MERGER WITHOUT ALL REQUIRED REGULATORY APPROVALS
The merger must be approved by the Federal Reserve Bank and the Montana
banking regulators. We have filed applications with these regulatory bodies
seeking such approval. We expect to obtain all such regulatory approvals,
although we cannot be certain if or when we will obtain them.
EITHER THOMPSON FALLS HOLDING COMPANY OR GLACIER, AS THE CASE MAY BE, MUST PAY A
TERMINATION FEE UNDER CERTAIN CIRCUMSTANCES
The merger agreement provides that Thompson Falls Holding Company must pay
Glacier a termination fee of $150,000 if Glacier terminates the merger agreement
due to a breach by Thompson Falls Holding Company of its representations or
covenants, or if the Thompson Falls Holding Company board of directors does not
recommend approval of the merger to Thompson Falls Holding Company shareholders.
7
The merger agreement also provides that Glacier must pay Thompson Falls
Holding Company a termination fee of $150,000 if Thompson Falls Holding Company
terminates the merger agreement due to a breach by Glacier of its
representations or covenants. See "The Merger Agreement - Termination Fees."
THOMPSON FALLS HOLDING COMPANY SHAREHOLDERS WILL HAVE DIFFERENT RIGHTS AFTER THE
MERGER
The rights of Thompson Falls Holding Company shareholders are governed by
Montana law, as well as Thompson Falls Holding Company's articles of
incorporation and bylaws. After completion of the merger, however, the rights of
the former Thompson Falls Holding Company shareholders receiving Glacier common
stock in the merger will be governed by Glacier's articles of incorporation and
bylaws. Although Glacier's articles of incorporation and bylaws are similar in
many ways to Thompson Falls Holding Company's articles of incorporation and
bylaws, there are some substantive and procedural differences that will affect
the rights of Thompson Falls Holding Company shareholders. See "Comparison of
Certain Rights of Holders of Glacier and Thompson Falls Holding Company Stock."
THOMPSON FALLS HOLDING COMPANY SHAREHOLDERS HAVE DISSENTERS' RIGHTS
Under Montana law, Thompson Falls Holding Company shareholders have the
right to dissent from the merger and receive cash for the fair value of their
shares of Thompson Falls Holding Company common stock. A shareholder electing to
dissent must strictly comply with all the procedures required by Montana law.
These procedures are described later in this document, and a copy of the
relevant portions of Montana law is attached as APPENDIX B.
8
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.
THE MERGER AGREEMENT LIMITS THOMPSON FALLS HOLDING COMPANY ABILITY TO
PURSUE OTHER TRANSACTIONS.
While the merger agreement is in effect and subject to very narrow
exceptions, Thompson Falls Holding Company and its directors, officers and
agents are prohibited from initiating or encouraging inquiries with respect to
alternative acquisition proposals. The prohibition limits Thompson Falls Holding
Company's ability to seek offers that may be superior from a financial point of
view from other possible acquirers. Messrs. Robert T. (Skip") Baxter and Robert
Fletcher have entered into agreements to vote the shares of Thompson Falls
Holding Company common stock under their control (81.1% of the outstanding
shares) in favor of the merger. These voting agreements make it less likely that
a third party will make an alternative acquisition proposal.
UNDER CERTAIN CONDITIONS, THE MERGER AGREEMENT REQUIRES THOMPSON FALLS
HOLDING COMPANY TO PAY A TERMINATION FEE.
Under certain circumstances, Glacier can terminate the merger agreement
and require Thompson Falls Holding Company to pay a termination fee of $150,000.
BECAUSE THE MARKET PRICE OF GLACIER COMMON STOCK MAY FLUCTUATE, THE VALUE
OF THE GLACIER COMMON STOCK TO BE RECEIVE BY YOU CANNOT BE DETERMINED UNTIL
CLOSING OF THE TRANSACTION.
At the time of the Thompson Falls Holding Company special meeting, you
will not be able to determine the value at closing of the shares of Glacier
common stock that you would receive upon completion of the merger. We urge you
to obtain current market quotations for Glacier common stock.
COMBINING OUR TWO COMPANIES MAY BE MORE DIFFICULT, COSTLY OR
TIME-CONSUMING THAN WE EXPECT.
Glacier and Thompson Falls Holding Company have operated and, until the
completion of the merger, will continue to operate, independently. It is
possible that the integration process could result in the loss of key employees,
the disruption of First State Bank's ongoing business 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 State Bank.
GLACIER MAY GROW THROUGH FUTURE ACQUISITIONS, WHICH COULD, IN SOME
CIRCUMSTANCES, ADVERSELY AFFECT NET INCOME.
Glacier anticipates engaging in selected acquisitions of financial
institutions and assets in the future. There are risks associated with Glacier's
acquisition strategy that could adversely impact net income. These risks
include, among others, incorrectly assessing the asset quality of a particular
institution being acquired, encountering greater than anticipated costs of
incorporating acquired businesses into Glacier, and being unable to profitably
deploy funds acquired in an acquisition. Furthermore, we can give you no
assurance about the extent to which Glacier can continue to grow through
acquisitions.
9
In the future, Glacier may issue capital stock in connection with
additional acquisitions. These acquisitions and related issuances of stock may
have a dilutive effect on earnings per share and ownership. Glacier does not
currently have any definitive understandings or agreements for any acquisitions
that involve the issuance of Glacier capital stock. However, as noted above,
Glacier anticipates that it will continue to expand by acquisition in the
future.
GLACIER HAS VARIOUS ANTI-TAKEOVER MEASURES THAT COULD IMPEDE A TAKEOVER OF
GLACIER
Glacier has various anti-takeover measures in place, some of which are
listed 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 Thompson Falls Holding Company
Common Stock."
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 Thompson Falls Holding 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:
- 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;
- the interest rate environment may change, causing margins to
compress and adversely affecting net interest income;
- the risks associated with continued diversification of assets and
potential adverse changes in credit quality;
- increased loan delinquency rates;
10
- competition from other financial services companies in our markets;
and
- the risk of an economic slowdown adversely affecting credit quality
and loan originations.
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 Thompson Falls
Holding Company or any person acting on behalf of Glacier or Thompson Falls
Holding Company are expressly qualified in their entirety by the cautionary
statements above. Neither Glacier nor Thompson Falls Holding Company undertake
any obligation to update any forward-looking statements to reflect circumstances
or events that occur after the date the forward-looking statements are made.
11
SELECTED HISTORICAL FINANCIAL AND PER SHARE DATA OF GLACIER
The following selected financial information for the fiscal years ended
December 31, 2004, 2003, 2002, 2001 and 2000 is derived from audited
consolidated financial statements of Glacier. The financial information of and
for the six months ended June 30, 2005 and 2004 are derived from unaudited
financial statements. The unaudited financial statements include all
adjustments, consisting of normal recurring accruals, which Glacier considers
necessary for fair presentation of the financial results of operations for such
periods. The operating results for the six months ended June 30, 2005 are not
necessarily indicative of the results that may be expected for the entire year
ending December 31, 2005. 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."
GLACIER BANCORP, INC. AND SUBSIDIARIES
SELECTED CONDENSED CONSOLIDATED AND OTHER FINANCIAL INFORMATION
($ IN THOUSANDS, EXCEPT PER SHARE DATA)
At or for the Six Months
Ended June 30 At or for the Fiscal Years Ended December 31
----------------------- --------------------------------------------------------------
2005 2004 2004 2003 2002 2001 2000
---- ---- ---- ---- ---- ---- ----
SUMMARY OF OPERATIONS:
Interest income $ 87,052 $ 70,906 $ 147,285 $ 130,830 $ 133,989 $ 137,920 $ 78,837
Interest expense 26,509 18,738 39,892 38,478 47,522 65,546 37,357
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income 60,543 52,168 107,393 92,352 86,467 72,374 41,480
Provision for loan losses 3,042 1,795 4,195 3,809 5,745 4,525 1,864
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income after
provision for loan losses 57,501 50,373 103,198 88,543 80,722 67,849 39,616
Noninterest income 20,621 16,259 34,565 33,562 25,917 23,251 13,294
Noninterest expenses 41,550 35,434 72,133 65,944 57,813 57,385 31,327
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes 36,572 31,198 65,630 56,161 48,826 33,715 21,583
Taxes 11,962 9,825 21,014 18,153 16,424 12,026 7,580
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Income 24,610 21,373 44,616 38,008 32,402 21,689 14,003
STATEMENT OF FINANCIAL CONDITION:
Total assets $3,531,935 $2,915,909 $3,010,737 $2,739,633 $2,281,344 $2,085,747 $1,056,712
Net loans receivable
and loans held for sale 2,122,198 1,571,244 1,701,805 1,430,365 1,300,653 1,322,327 733,561
Total deposits 2,207,855 1,635,755 1,729,708 1,597,625 1,459,923 1,446,064 720,570
Total borrowings 904,858 935,089 900,148 842,280 544,953 399,880 226,320
Shareholder's equity 297,759 242,064 270,184 237,839 212,249 176,983 98,113
Book value per share $ 9.53 $ 7.92 $ 8.80 $ 7.86 $ 7.14 $ 6.10 $ 4.98
12
KEY OPERATING RATIOS:
Return on average assets 1.51% 1.53% 1.54% 1.53% 1.50% 1.10% 1.39%
Return on average shareholders'
equity 17.56% 17.54% 17.61% 16.82% 16.57% 13.49% 15.83%
Average shareholders' equity to
average assets 8.60% 8.71% 8.75% 9.10% 9.08% 8.26% 8.78%
Net interest margin 4.10% 4.17% 4.15% 4.20% 4.51% 4.08% 4.48%
Ratio of non-performing assets
to total assets 0.23% 0.37% 0.32% 0.48% 0.51% 0.53% 0.21%
Dividend payout ratio 36.71% 38.57% 37.36% 38.07% 35.45% 43.48% 48.36%
PER SHARE DATA:
Basic earnings per common share $ 0.79 $ 0.70 $ 1.46 $ 1.26 $ 1.10 $ 0.80 $ 0.71
Diluted earnings per common share $ 0.78 $ 0.69 $ 1.43 $ 1.24 $ 1.08 $ 0.78 $ 0.70
Cash dividends declared per
common share $ 0.29 $ 0.27 $ 0.54 $ 0.48 $ 0.39 $ 0.35 $ 0.34
Ratio of dividends declared to
net income 37.35% 38.73% 37.25% 38.34% 35.59% 45.71% 48.22%
13
SELECTED UNAUDITED COMPARATIVE PER SHARE DATA
The table below also presents the closing prices per share for Glacier and
Thompson Falls Holding Company common stock, respectively, on the day prior to
the announcement of the merger, and as of September ____, 2005, the most recent
practicable trading date prior to the printing of this document, together what
the pro forma equivalent market value of Thompson Falls Holding Company shares
after giving effect to the merger. The pro forma equivalent per share data for
Thompson Falls Holding Company is calculated by multiplying the historical per
share data for Glacier by the implied exchange ratio of 116.6 used to calculate
the merger consideration. See the discussion under the heading "Comparative
Stock Price and Dividend Information" on the next page for important information
about the limited trading in stock of Thompson Falls Holding Company and the
effect that may have on the reliability of the share price data.
MARKET VALUE PER SHARE
-----------------------------------------------------------
Thompson Falls
Glacier Holding Company Glacier Equivalent
------- --------------- ------------------
Market value per share:
July 13, 2005 $ 27.04 $ 765.36 $ 3,152.86
September ___, 2005 $ _____ $ ______ $ ________
(1) The most recent trade of Thompson Falls Holding Company common stock
occurred on October 1, 1997, in which 1,200 shares of stock were redeemed by
Thompson Falls Holding Company at the then-current book value per share. The
only transfers of Thompson Falls Holding Company common stock since that time
have been pursuant to gifts.
14
COMPARATIVE STOCK PRICE AND DIVIDEND INFORMATION
GLACIER COMMON STOCK
Glacier common stock is quoted on the Nasdaq National 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 National Market, and
- dividends per share on Glacier common stock.
CASH
HIGH* LOW* DIVIDENDS DECLARED*
---- --- -------------------
2003
First quarter ............................ $ 17.27 $ 13.60 $ 0.10
Second quarter ........................... $ 16.77 $ 14.69 $ 0.12
Third quarter ............................ $ 18.98 $ 15.65 $ 0.13
Fourth quarter ........................... $ 21.12 $ 17.23 $ 0.13
2004
First quarter ............................ $ 21.63 $ 18.88 $ 0.14
Second quarter ........................... $ 22.60 $ 19.59 $ 0.14
Third quarter ............................ $ 24.28 $ 20.60 $ 0.14
Fourth quarter ........................... $ 28.71 $ 23.12 $ 0.14
2005
First quarter ............................ $ 27.98 $ 23.59 $ 0.14
Second quarter ........................... $ 26.39 $ 21.07 $ 0.15
Third quarter (through September 2005).... $ $ $
-------------
*Adjusted for stock splits and stock dividends.
At September __, 2005, the __________ outstanding shares of Glacier common
stock were held by approximately ________ holders of record.
THOMPSON FALLS HOLDING COMPANY COMMON STOCK
Thompson Falls Holding Company common stock is not quoted on a stock
exchange or market and no broker makes a market in the stock. Stock transfer
records maintained by Thompson Falls Holding Company indicate that there have
been almost no transactions in Thompson Falls Holding Company's stock, and the
ability of holders of Thompson Falls Holding Company common stock is restricted
pursuant to a shareholder agreement. The last trade (excluding gifts) in
Thompson Falls Holding Company common stock occurred in 1997, in which 1,200
shares of common stock were redeemed at the then-current book value per share of
$765.36.
At September 16, 2005, the 7,000 outstanding shares of Thompson Falls
Holding Company common stock were held by 12 holders of record. Thompson Falls
Holding Company historically has paid a biannual dividend of $5.00 per share.
Such biannual dividends were paid in each of 2003 and 2004, and one dividend of
$5.00 per share has been paid to date in 2005.
15
THOMPSON FALLS HOLDING COMPANY SPECIAL SHAREHOLDERS' MEETING
DATE, TIME, PLACE
The Thompson Falls Holding Company special meeting of shareholders will be
held on October 13, 2005, at 4:00 p.m. local time, at the Bank's main office,
located at 107 S. Fulton, Thompson Falls, Montana 59873.
As described below under "Vote Required," approval of the merger agreement
requires the affirmative vote of at least two-thirds of the shares of Thompson
Falls Holding Company common stock that are outstanding and entitled to vote on
the record date. 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, Thompson Falls Holding Company may adjourn or postpone
the meeting in order to permit further solicitation of proxies by Thompson Falls
Holding 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, Thompson Falls Holding 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 Thompson Falls Holding Company board of directors has fixed 5:00 p.m.
on September 16, 2005 as the record date for determining the holders of shares
of Thompson Falls Holding Company common stock entitled to notice of and to vote
at the special meeting. At the close of business on the Thompson Falls Holding
Company record date, there were 7,000 shares of common stock issued and
outstanding held by 12 holders of record. Holders of record of Thompson Falls
Holding 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.
Messrs. Robert T. (Skip") Baxter and Robert Fletcher have entered into
agreements to vote the shares of Thompson Falls Holding Company common stock
under their control (81.1% of the outstanding shares) in favor of the merger.
See "The Merger - Voting Agreement."
VOTE REQUIRED
The affirmative vote of at least two-thirds of all shares of Thompson
Falls Holding Company common stock outstanding and entitled to vote on the
record date is required to approve the merger. At least fifty percent (50%) of
the outstanding shares of Thompson Falls Holding Company common stock must be
present, either in person or by proxy, in order to constitute a quorum for the
meeting. For this purpose, 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
16
agreement is approved by the holders of Thompson Falls Holding Company common
stock. As a result, abstentions and broker nonvotes, if any, will have the same
effect as votes against approval of the merger agreement.
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'S DISCRETION ON ANY
OTHER MATTER COMING BEFORE THE MEETING. Any proxy given by a shareholder may be
revoked before its exercise by:
- written notice to the Secretary of Thompson Falls Holding Company;
- a later-dated proxy; or
- appearing and voting at the special meeting in person.
Thompson Falls Holding Company is soliciting the proxy for the special
meeting on behalf of the Thompson Falls Holding Company board of directors.
Thompson Falls Holding Company will bear the cost of solicitation of proxies
from its shareholders. In addition to using the mails, Thompson Falls Holding
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. Thompson Falls Holding
Company does not expect to pay any compensation for the solicitation of proxies.
However, Thompson Falls Holding 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.
BACKGROUND OF AND REASONS FOR THE MERGER
BACKGROUND OF THE MERGER
Glacier, through its subsidiaries, currently offers community banking
services from offices throughout Western Montana, but does not serve the Sanders
County market. Consistent with its historical acquisition strategy, Glacier is
interested in partnering with attractive financial institutions in markets that
fit within or expand Glacier's existing geographic footprint. In March 2005,
Glacier contacted Thompson Falls Holding Company expressing Glacier's interest
in expanding its community banking presence through a merger with Thompson Falls
Holding Company. On March 29, 2005, Robert Baxter and Michael Baxter from
Thompson Falls Holding Company met with Michael Blodnick of Glacier, to further
explore the prospect of a merger.
On April 5, 2005, Michael Blodnick met with Robert and Michael Baxter and
the Fletcher Family in Thompson Falls to discuss the possible acquisition. On
May 2, 2005, Robert and Michael Baxter met with Michael Blodnick and James
Strosahl to share information about their respective companies, discuss market
conditions and prospects in Western Montana, share financial information, review
operating practices and corporate strategies, and discuss the potential benefits
of a merger to shareholders, employees, and customers. In the course of the
meeting, the representatives agreed that Glacier and Thompson Falls Holding
Company shared similar community banking philosophies and that the parties
should further explore the prospect of a merger.
Throughout the month of May, Thompson Falls Holding Company shared
additional information with Glacier, including management's expectations for
financial performance in 2005 and 2006. The parties also engaged in negotiations
regarding the value and terms of a merger transaction.
17
On June 6, 2005, following a meeting of its board of directors, Michael
Blodnick and James Strosahl met with Robert and Michael Baxter and Robert
Fletcher of Thompson Falls Holding Company to present a formal proposal setting
forth the proposed terms of the merger. On June 7, 2005, the directors of
Thompson Falls Holding Company approved the terms of the formal proposal.
In June, Glacier conducted due diligence reviews (with most of Glacier's
due diligence review occurring between June 18th and June 25th), discussed
operating and strategic plans and post-closing, and began drafting the merger
agreement and related documents.
On July 13, 2005, the board of directors of Glacier and First Security
Bank of Missoula met to consider approval of the merger. Matters discussed
included the fiduciary duties of the directors, the results of due diligence
reviews, the terms of the merger agreement and related documents, the pro forma
financial impact of the merger, expansion opportunities available in Sanders
County, and the timing and process for consummation of the merger. After due
consideration of these matters, the Glacier and First Security Bank of Missoula
boards approved the merger by unanimous vote.
Also on July 13, 2005, the Boards of Directors of Thompson Falls Holding
Company and First State Bank met to consider approval of the merger with Glacier
and First Security Bank of Missoula. The Boards of Directors discussed their
fiduciary duty to the shareholders of Thompson Falls Holding Company, questions
about the definitive agreement, the form of consideration to be received by the
shareholders, the current stock price of Glacier and its dividend history, and
the implications to Thompson Falls Holding Company, its shareholders, employees
and customers. Also discussed were the reasons for completing the merger and the
implications to Thompson Falls Holding Company if First State Bank continued
without an affiliation with Glacier and First Security Bank of Missoula. The
Boards then voted unanimously to approve the merger.
Representatives of Glacier, First Security Bank of Missoula, Thompson
Falls Holding Company and First State Bank then executed the merger agreement
and related documents. After the close of business on July 14, 2005, the parties
issued a joint press release announcing the execution of the merger agreement.
REASONS FOR THE MERGER - THOMPSON FALLS HOLDING COMPANY
The Board of Directors of Thompson Falls Holding Company believes that the
merger is in the best interests of Thompson Falls Holding Company, its
shareholders and First State Bank, its wholly owned subsidiary. The Thompson
Falls Holding Company board has concluded that in addition to providing an
attractive return for Thompson Falls Holding Company shareholders, the purposed
merger will have long-term benefits for Thompson Falls Holding Company
shareholders, customers and employees.
In reaching the determination to approve the merger agreement, the
Thompson Falls Holding Company board of directors consulted with bank
management, and considered a number of factors, including the following:
- Strengths of Glacier. The strengths of Glacier that the Thompson Falls
Holding Company board considered relevant to the proposed merger include the
following:
- A history of strong financial performance in terms of capital,
earnings and growth.
- Geographic diversification into which Thompson Falls Holding Company
offices fit appropriately.
- A unique business model that combines the efficiencies of
centralized services for individual banks while providing
considerable autonomy to those banks in their day to day operations.
- Broader range of products and services than could be offered by
Thompson Falls Holding Company independently.
18
- Merger terms and consideration. The terms of the merger provide consideration
which the board of Thompson Falls Holding Company believes is fair, in the
form of approximately ten percent (10%) cash and ninety percent (90%)
registered stock in Glacier, with the exchange of stock qualifying as a tax
free reorganization under Section 368(a) of the Internal Revenue Code.
- Directorships. Glacier has agreed that its subsidiary First Security Bank of
Missoula, through which First State Bank's current branches will continue to
operate, will appoint to its board a member of First State Bank's current
board of directors.
- Administrative support. The merger will provide administrative support for or
relief from a number of operational responsibilities that are increasingly
difficult for independent rural banks to provide. These areas of support, or
relief, include the following:
- Data processing and information technology support.
- Salary and benefit administration.
- Human resource management.
- Regulatory compliance.
- Bank investments.
- Corporate values. Thompson Falls Holding Company's board of directors
considers Glacier's corporate culture to be compatible with Thompson Falls
Holding Company's values. Both organizations had a strong commitment to
community service and event sponsorship, including support of employee
involvement in volunteer organizations.
- Employee matters. With the exception of two executives who are expected to
retire after assisting with the transition into a consulting capacity, no lay
offs are anticipated and the Thompson Falls Holding Company board believes
for opportunities for employee advancement will be enhanced by the merger.
The foregoing discussion of the information considered by the Thompson
Falls Holding Company board of directors is not intended to be exhaustive or to
prioritize factors considered by the Thompson Falls Holding Company board. It is
intended to summarize the material factors considered by the Thompson Falls
Holding Company board.
After careful evaluation of the factors outlined above, Thompson Falls
Holding Company's board of directors has determined that the merger agreement is
in the best interest of Thompson Falls Holding Company and its shareholders and
has unanimously approved the merger.
RECOMMENDATION OF THE THOMPSON FALLS HOLDING COMPANY BOARD
The Thompson Falls Holding Company board of directors unanimously
recommends that its shareholders vote for 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.
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BASIC TERMS OF THE MERGER
The merger agreement provides for the merger of Thompson Falls Holding
Company with and into Glacier, with Glacier as the surviving company. In
addition, First State Bank will merge with and into Glacier's subsidiary, First
Security Bank of Missoula, and its current branches will operate under the name
"First State Bank, a division of First Security Bank of Missoula."
In the merger, Thompson Falls Holding Company shareholders will receive a
combination of cash and Glacier common stock for their Thompson Falls Holding
Company common stock, as described below. While Glacier and Thompson Falls
Holding 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
Completion of the Merger" and "--Regulatory Requirements."
MERGER CONSIDERATION
The merger agreement provides that as of the effective date of the merger,
each share of Thompson Falls Holding Company common stock issued and outstanding
immediately prior to the effective date will be converted into the right to
receive either 116.60 shares of Glacier common stock or $3,000 cash. The merger
agreement provides that the total consideration will be $2.1 million in cash and
734,580 shares of Glacier common stock. Each outstanding share of Thompson Falls
Holding Company will be exchanged for either $3,000 in cash or 116.60 shares of
Glacier common stock. Based on the closing price for Glacier common stock as of
September ____, 2005, the value of the per share stock consideration is
$_______. A chart setting forth the specific consideration to be received by
each shareholder of Thompson Falls Holding Company is set forth below.
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Shares of TFHC Shares to be exchanged for Shares to be exchanged
Name of Shareholder Common Stock Glacier Shares(1) for cash(2)
------------------- ------------ ----------------- -----------
Robert T. Baxter 860 774 86
Robert T. Baxter
Irrevocable Trust 1800 1620 180
Susan J. Baxter 1000 900 100
Brian Fletcher Trust 334 334 0
Lindsey Fletcher Trust 334 334 0
Robert K. & Evelyn P. 453 453 0
Fletcher Trust
Robert L. Fletcher 557 557 0
IRA Trust Corp. for Robert 210 8 202
L. Fletcher
Leslie H. Fletcher 132 132 0
Wallner Family LLP 800 720 80
Buddy J. and Judy
Leufkens 400 360 40
Daniel W. Whittenburg 120 108 12
TOTALS 7000 6300 700
LETTER OF TRANSMITTAL
A letter of transmittal is included with this proxy statement/prospectus.
This document contains instructions on how to surrender shares of Thompson Falls
Holding Company common stock in exchange for the merger consideration the holder
is entitled to receive under the merger agreement.
All shares of Glacier common stock issued to the holders of Thompson Falls
Holding Company common stock pursuant to the merger will be deemed issued as of
the effective date. Until you surrender your Thompson Falls Holding Company
stock certificates for exchange, you will accrue, but will not be paid, any
dividends or other distributions declared after the effective date with respect
to Glacier common stock into which any of your shares may 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, there will be no transfers on the
stock transfer books of Thompson Falls Holding Company of any shares of Thompson
Falls Holding Company common stock. If certificates representing shares of
----------
(1) Each share of TFHC common stock to be exchanged for Glacier common stock
will be entitled to receive 116.60 Glacier Shares (with cash in lieu paid for
any resulting fractional shares, as provided in the Merger Agreement).
(2) Each share of TFHC common stock to be exchanged for cash will be entitled to
receive $3,000.00.
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Thompson Falls Holding 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 Thompson Falls Holding Company common
stock represented by those certificates shall have been converted.
If a certificate for Thompson Falls Holding 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 Thompson Falls
Holding Company, and appropriate and customary identification.
PLEASE COMPLETE AND RETURN THE ENCLOSED LETTER OF TRANSMITTAL, EVEN IF
YOUR THOMPSON FALLS HOLDING COMPANY TOCK CERTIFICATES ARE HELD IN SAFEKEEPING AT
FIRST STATE BANK.
FRACTIONAL SHARES
Glacier will not issue fractional shares in the merger. Instead, a cash
payment will be paid in an amount equal to the product of the fractional part of
a share of Glacier common stock multiplied by $25.73.
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 on October 31, 2005. Either Glacier or Thompson
Falls Holding Company may, subject to certain conditions, terminate the merger
agreement if the effective date does not occur on or before January 31, 2006.
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 holders of Thompson
Falls Holding Company common stock who are citizens of, reside in or are
organized under the laws of the United States. 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 the Thompson Falls Holding Company
shareholders hold their shares of Thompson Falls Holding Company common stock as
a capital asset within the meaning of section 1221 of the Code. Further, the
discussion does not address all aspects of federal income taxation that may be
relevant to Thompson Falls Holding 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 in securities or
insurance companies;
- tax-exempt organizations;
- S corporations or other pass-through entities;
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- non-United States persons;
- Thompson Falls Holding Company shareholders 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
- Thompson Falls Holding Company shareholders who received their
Thompson Falls Holding Company common stock through the exercise of
employee stock options or otherwise as compensation or through a
tax-qualified retirement plan.
Consummation of the merger is conditioned upon the receipt by Thompson
Falls Holding Company of the opinion of Graham & Dunn PC, counsel to Glacier,
dated as of the effective date of the merger, substantially to the effect that,
on the basis of facts, representations and assumptions set forth or referred to
in the opinion, which are consistent with the state of facts existing as of the
effective date of the merger, 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. The tax opinions to be delivered in connection with the
merger are not binding on the Internal Revenue Service ("IRS") or the courts,
and neither Thompson Falls Holding Company nor Glacier intends to request a
ruling from the IRS with respect to the United States federal income tax
consequences of the merger.
Assuming consummation of the merger on the basis of facts, representations
and assumptions as set forth in the opinion referred to above, the United States
federal income tax consequences of the merger to a holder generally will depend
on whether the holder exchanges such shareholder's Thompson Falls Holding
Company common stock for cash, Glacier common stock or a combination of cash and
Glacier common stock.
Exchange Solely for Glacier Common Stock. If pursuant to the merger a
holder exchanges all of its shares of Thompson Falls Holding Company common
stock solely for shares of Glacier common stock, the holder will not recognize
any gain or loss on the exchange. The aggregate tax basis of Glacier common
stock received by the holder will be equal to the aggregate adjusted tax basis
of the shares of Thompson Falls Holding company common stock surrendered for the
Glacier common stock. The holding period of the Glacier common stock will
include the holding period of the shares of Thompson Falls Holding Company
common stock surrendered. If a holder has differing bases or holding periods in
respect of its Thompson Falls Holding Company common stock, the holder should
consult its tax advisor prior to the exchange with regard to identifying the
bases or holding periods of the particular shares of Glacier common stock
received in the exchange.
Exchange for Glacier Common Stock and Cash. If pursuant to the merger a
holder exchanges all of its shares of Thompson Falls Holding Company common
stock for a combination of Glacier common stock and cash, the holder will
generally recognize gain (but not loss) in an amount equal to the lesser of (1)
the amount of gain realized (i.e., the excess of the sum of the amount of cash
and the fair market value of the Glacier common stock received pursuant to the
merger over the holder's adjusted tax basis in its shares of Thompson Falls
Holding Company common stock surrendered) and (2) the amount of cash 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. Any recognized gain will generally be
long-term capital gain if the holder's holding period with respect to the
Thompson Falls Holding 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 holder's ratable
share of accumulated earnings and profits as calculated for federal income tax
purposes. See "--Possible Treatment of Cash as a Dividend" below.
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The aggregate tax basis of Glacier common stock received by a holder that
exchanges its shares of Thompson Falls Holding Company common stock for a
combination of Glacier common stock and cash pursuant to the merger will be
equal to the aggregate adjusted tax basis of the shares of Thompson Falls
Holding Company common stock surrendered for Glacier common stock and cash,
reduced by the amount of cash received by the holder pursuant to the merger, 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 holder on
the exchange. The holding period of the Glacier common stock will include the
holding period of the shares of Thompson Falls Holding Company common stock
surrendered. If a holder has differing bases or holding periods in respect of
its shares of Thompson Falls Holding Company common stock, the holder should
consult its tax advisor prior to the exchange with regard to identifying the
bases 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 holder's deemed percentage stock ownership of
Glacier. For purposes of this determination, the holder is treated as if it
first exchanged all of its shares of Thompson Falls Holding 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 holder 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 holder, or (2) not
essentially equivalent to a dividend.
The deemed redemption, generally, will be substantially disproportionate
with respect to a holder if, immediately after the deemed redemption, the holder
owns less than 50% of the total combined voting power of all classes of Glacier
stock entitled to vote and the percentage described in (2) below is less than
80% of the percentage described in (1) below. Whether the deemed redemption is
not essentially equivalent to a dividend with respect to a holder will depend
upon the particular circumstances of the holder. 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 holder'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 holder is deemed to actually and constructively own
immediately before the deemed redemption and (2) the percentage of the
outstanding stock of Glacier the holder actually and constructively owns
immediately after the deemed redemption. In applying the foregoing tests, a
holder is deemed to own stock owned and, in some cases, constructively owned, by
certain family members, by certain estates and trusts of which the holder is a
beneficiary, and by certain affiliated entities. As these rules are complex,
each holder 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.
Cash Received in Lieu of a Fractional Share. Cash, if any, received by a
holder of Thompson Falls Holding Company common stock 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 holder's aggregate adjusted tax
basis of the share of Thompson Falls Holding 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 Thompson Falls
Holding Company common stock is more than one year.
Dissenting Shareholders. Holders of Thompson Falls Holding Company common
stock who dissent with respect to the merger, as discussed in "Dissenters'
Rights," and who receive cash in respect of their shares of Thompson Falls
Holding Company common stock will be treated, generally, in the same manner as
holders who
24
exchange their shares of Thompson Falls Holding Company common stock solely for
cash in accordance with the discussion above.
Backup Withholding. Non-corporate shareholders of Thompson Falls Holding
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 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 holder's federal income
tax return for the year in which the merger takes place a statement setting
forth certain facts relating to the merger. Thompson Falls Holding Company
shareholders will be responsible for the preparation of their own tax returns.
Graham & Dunn PC has delivered an opinion to the foregoing effect to
Glacier. The opinion has been filed as an exhibit to the registration statement
of which this proxy statement/prospectus is a part. The foregoing is only a
summary of the tax consequences of the merger as described in the opinion. The
opinion is based on assumptions, representations made by officers of Glacier and
Thompson Falls Holding Company to Graham & Dunn PC, and contains qualifications
appropriate to the subject matter.
An opinion of counsel only represents counsel's best legal judgment, and
has no binding effect or official status of any kind. No assurance can be given
that contrary positions will not be taken by the Internal Revenue Service or a
court considering the issues. Neither Thompson Falls Holding Company nor Glacier
has requested or will request a ruling from the IRS with regard to the federal
income tax consequences of the merger.
THE FOREGOING IS A GENERAL SUMMARY OF THE MATERIAL FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER TO THOMPSON FALLS HOLDING 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 DEPENDING ON THE PARTICULAR
CIRCUMSTANCES OF EACH SHAREHOLDER, EACH THOMPSON FALLS HOLDING 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.
DISSENTERS' RIGHTS OF APPRAISAL
Under Montana law, Thompson Falls Holding Company shareholders have the
right to dissent from the merger and to receive payment in cash for the "fair
value" of their shares of Thompson Falls Holding Company common stock.
Thompson Falls Holding Company shareholders electing to exercise
dissenters' rights must comply with the provisions of the Montana appraisal laws
in order to perfect their rights. The following is intended as a brief summary
of the material provisions of the procedures that a Thompson Falls Holding
Company shareholder must
25
follow in order to dissent from the merger and perfect dissenters' rights. THIS
SUMMARY, HOWEVER, IS NOT A COMPLETE STATEMENT OF ALL APPLICABLE REQUIREMENTS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MONTANA APPRAISAL LAWS, THE
FULL TEXT OF WHICH IS SET FORTH IN APPENDIX B TO THIS DOCUMENT.
A shareholder who wishes to assert dissenters' rights must:
- deliver to Thompson Falls Holding Company before the special meeting
written notice of the shareholder's intent to demand payment for the
shareholder's shares if the merger is completed, and
- not vote the shares in favor of the merger.
A shareholder wishing to deliver a notice asserting dissenters' rights
should hand deliver or mail the notice to the following address:
Thompson Falls Holding Company
107 South Fulton
P.O. Box 3500
Thompson Falls, Montana 59873
Attention: Robert T. Baxter, President
A shareholder who wishes to exercise dissenters' rights generally must
dissent with respect to all of the shares the shareholder owns or over which the
shareholder has the power to direct the vote. However, if a record shareholder
is a nominee for several beneficial shareholders, some of whom wish to dissent
and some of whom do not, then the record holder may dissent with respect to all
the shares beneficially owned by any one person by notifying Thompson Falls
Holding Company in writing of the name and address of each person on whose
behalf the record shareholder asserts dissenters' rights. A beneficial
shareholder may assert dissenters' rights directly by submitting to Thompson
Falls Holding Company the record shareholder's written consent and by dissenting
with respect to all the shares of which the shareholder is the beneficial
shareholder or over which the shareholder has power to direct the vote.
A SHAREHOLDER WHO DOES NOT, PRIOR TO THE SPECIAL SHAREHOLDERS MEETING,
DELIVER TO THOMPSON FALLS HOLDING COMPANY A WRITTEN NOTICE OF THE SHAREHOLDER'S
INTENT TO DEMAND PAYMENT FOR THE "FAIR VALUE" OF THE SHARES WILL LOSE THE RIGHT
TO EXERCISE DISSENTERS' RIGHTS. IN ADDITION, ANY SHAREHOLDER ELECTING TO
EXERCISE DISSENTERS' RIGHTS MUST EITHER VOTE AGAINST THE MERGER OR ABSTAIN FROM
VOTING.
If the merger is completed, Glacier (as the surviving corporation) will,
within 10 days after the effective date of the merger, deliver a written notice
to all Thompson Falls Holding Company shareholders who properly gave notice of
their intent to exercise dissenters' rights. The notice will, among other
things:
- supply a form for demanding payment;
- set a date by which Glacier must receive the payment demand, which
date will be between 30 and 60 days after notice is delivered;
- state Glacier's estimate of the "fair value" for the shares and the
date by which any notice to withdraw (discussed below) must be
received; and
- provide a copy of the dissenters' rights provisions of the Montana
Code Annotated, Sections 35-1-826 through 35-1-839).
26
A shareholder wishing to exercise dissenters' rights must at that time
file the payment demand and deliver share certificates as required in the
notice. Failure to do so will cause that person to lose their dissenters'
rights.
A shareholder who has complied with the requirements summarized in the
previous paragraph may nevertheless decline to exercise dissenters' rights and
withdraw from the appraisal process by notifying Glacier by the date set forth
in the written notice provided by Glacier following consummation of the merger.
If the shareholder does not withdraw from the appraisal process by the specified
date, he or she may not do so thereafter unless Glacier consents to such
withdrawal in writing.
Upon completion of the merger or receipt of the payment demand, whichever
is later, Glacier will pay each dissenter with properly perfected dissenters'
rights Glacier's estimate of the "fair value" of the shareholder's shares, plus
accrued interest from the effective date of the merger. With respect to a
dissenter who did not beneficially own shares of Thompson Falls Holding Company
prior to the public announcement of the merger, Glacier is not required to make
the payment until the dissenter has agreed to accept the payment in full
satisfaction of the dissenter's demands. "Fair value" means the value of the
shares immediately before the effective date of the merger. The rate of interest
is required to be the rate on judgments in the state of Montana.
Within 30 days of Glacier's payment (or offer of payment in the case of
shares acquired after public announcement of the merger) to a dissenting
shareholder, a dissenter dissatisfied with Glacier's estimate of the fair value
may notify Glacier of the dissenter's own estimate of the fair value and demand
payment of that amount. If Glacier does not accept the dissenter's estimate and
the parties do not otherwise settle on a fair value, then Glacier must, within
60 days of receiving the estimate and demand, petition a court to determine the
fair value.
In view of the complexity of the Montana statutes governing dissenters'
rights of appraisal, Thompson Falls Holding Company shareholders who wish to
dissent from the merger and pursue appraisal rights should consult their legal
advisors.
THE FAILURE OF A THOMPSON FALLS HOLDING COMPANY SHAREHOLDER TO COMPLY
STRICTLY WITH THE MONTANA STATUTORY REQUIREMENTS WILL RESULT IN A LOSS OF
DISSENTERS' RIGHTS. A COPY OF THE RELEVANT STATUTORY PROVISIONS IS ATTACHED AS
APPENDIX B. YOU SHOULD REFER TO THIS APPENDIX FOR A COMPLETE STATEMENT
CONCERNING DISSENTERS' RIGHTS AND THE FOREGOING SUMMARY OF SUCH RIGHTS IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THAT APPENDIX.
CONDITIONS TO THE MERGER; REGULATORY APPROVALS
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 Thompson Falls Holding Company, are
as follows:
- approval of the merger by Thompson Falls Holding 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;
27
- 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;
- Glacier's receipt of a tax opinion from Graham & Dunn PC; and
- the registration statement filed with the SEC, required to register
the Glacier common stock to be issued to shareholders of Thompson
Falls Holding Company in the merger 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:
- Thompson Falls Holding Company's transaction fees (as defined in the
merger agreement) have not exceeded specified levels;
- First State Bank's allowance for loan and lease losses will be
adequate to absorb anticipated loan losses; and
- The aggregate amount of the cash to be paid to proposed dissenting
shares will not exceed 10% of the cash value of the merger
consideration.
Additionally, either Glacier or Thompson Falls Holding Company may
terminate the merger if certain conditions applicable to the other party are not
satisfied or waived. Those conditions are discussed below under "- Amendment or
Termination of the Merger Agreement."
Either Glacier or Thompson Falls Holding Company may waive any of the
other party's conditions, except those that are required by law (such as receipt
of regulatory and Thompson Falls Holding Company shareholder approval). Either
Glacier or Thompson Falls Holding Company may also grant extended time to the
other party to complete an obligation or condition.
AMENDMENT OR TERMINATION OF THE MERGER AGREEMENT
The merger agreement may be amended or supplemented at any time by written
agreement of the parties, whether before or after the Thompson Falls Holding
Company special meeting. To the extent permitted under applicable law, the
parties may make any amendment or supplement without further approval of
Thompson Falls Holding Company shareholders. However, after shareholder
approval, any amendments that would reduce the amount or change the form of
consideration Thompson Falls Holding Company shareholders will receive in the
merger or the allocation of the cash percentage and stock percentage would
require further Thompson Falls Holding Company shareholder approval.
The merger agreement contains several provisions entitling either Glacier
or Thompson Falls Holding Company to terminate the merger agreement under
certain circumstances. The following briefly describes these provisions:
Lapse of Time. If the merger has not closed by January 31, 2006, then at
any time after that date, the board of directors of either Glacier or Thompson
Falls Holding Company may terminate the merger agreement.
28
Mutual Consent. The parties may terminate the merger agreement at any time
before closing, whether before or after approval by Thompson Falls Holding
Company shareholders, by mutual consent.
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 Warranty. 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 other agreements in the merger
agreement) if there has been a material breach of any of the representations or
warranties set forth in the merger agreement on the part of the other party,
which breach is not cured within 30 days following written notice to such party,
or which breach cannot, by its nature, be cured prior to the closing of the
merger.
Breach of 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.
Thompson Falls Holding Company Fails to Recommend 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) before Thompson Falls Holding Company's
shareholders approve the merger, if the Thompson Falls Holding Company board of
directors fails to recommend to its shareholders approval of the merger, or
modifies, withdraws or changes in a manner adverse to Glacier its
recommendation.
Thompson Falls Holding Company Shareholders Fail to Approve Merger. Either
party may terminate the merger agreement (so long as such party is not then in
material breach of any of its representations, warranties, covenants or
agreements in the merger agreement) if the required vote of Thompson Falls
Holding Company shareholders required for the consummation of the merger is not
obtained, regardless of whether the Thompson Falls Holding Company board of
directors recommends such approval.
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 the institution of litigation by the
federal government or the government of the State of Montana to restrain or
invalidate the merger.
Potential Dissenting Shares. Glacier may terminate the merger agreement if
holders of 10% or more of the outstanding shares of Thompson Falls Holding
Company common stock are proposed dissenting shares (as defined in the merger
agreement).
TERMINATION FEES
Subject to certain exceptions, Thompson Falls Holding Company will pay
Glacier a termination fee of $150,000 if Glacier terminates the merger agreement
based on a Thompson Falls Holding Company breach of its representations or
breach of its covenants. Glacier will pay Thompson Falls Holding Company a
termination fee of $150,000 if Thompson Falls Holding Company terminates the
merger agreement based on a Glacier breach of its representations or breach of
its warranties.
29
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
Thompson Falls Holding 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,
Thompson Falls Holding Company and First State Bank will conduct their
respective businesses only in the ordinary and usual course. The merger
agreement also provides that, unless Glacier otherwise consents in writing,
Thompson Falls Holding Company and First State Bank will refrain from engaging
in various activities such as:
- effecting any stock split or other recapitalization with respect to
Thompson Falls Holding Company or the shares of First State Bank, or
pledge or encumber any shares of such stock or grant any options for
such stock;
- declaring or paying dividends or 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;
- soliciting or accepting deposit accounts of a different type than
previously accepted by First State Bank or at rates materially in
excess of prevailing interest rates, or 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 State Bank, or offering
or making a loan or extension of credit in an amount greater than
$200,000 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 $10,000
with a term of one year or more;
- with certain exceptions, entering into or amending any contract
calling for a payment of more than $10,000, 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;
- 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 $10,000,
or transferring investment securities between portfolios;
- amending or materially changing its operations, policies or
procedures;
- with specified exceptions, making capital expenditures in excess of
$10,000 per project or $25,000 in the aggregate;
- entering into transactions or making any expenditures other than in
the ordinary course of business.
30
RESULTING BOARD OF DIRECTORS; OFFICERS OF SURVIVING CORPORATIONS
The board of directors of Glacier as the surviving corporation in the
merger will include all members of the Glacier board prior to the merger. The
board of directors of First Security Bank of Missoula after the bank merger will
be the same as prior to the merger, with the addition of Michael Baxter.
The principal executive officer of Glacier after the merger will continue
to be Michael J. Blodnick, President and CEO. William L. Bouchee, CEO of First
Security Bank of Missoula, and Scott Burke, President of First Security Bank of
Missoula, will continue in their respective offices after the merger. The other
executive officers of First Security Bank of Missoula will also continue as
officers after the merger.
EMPLOYEE BENEFIT PLANS
The merger agreement confirms Glacier's intent that Glacier's current
personnel policies will apply to any members of Thompson Falls Holding Company
and First State Bank who are retained in the service of Glacier following the
closing of the merger. Such retained employees will be eligible to participate
in all of the benefit plans of Glacier that are generally available to similarly
situated employee of Glacier. For purposes of participation in such plans,
service with Thompson Falls Holding Company or First State Bank will constitute
prior service with Glacier for purposes of determining eligibility and vesting.
If any persons who are First State Bank employees are terminated within three
months of the closing of the merger as a result of the consolidation of staff
functions, such persons will be entitled to receive the severance payment
specified in Glacier's severance plan for employees as then in effect.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of the Thompson Falls Holding Company board of directors
and management may be deemed to have interests in the merger, in addition to
their interests as shareholders of Thompson Falls Holding Company generally. The
Thompson Falls Holding Company board of directors was aware of these factors and
considered them, among other things, in approving the merger agreement.
Stock Ownership. The directors, executive officers and principal
shareholders of Thompson Falls Holding Company, together with their affiliates,
beneficially owned, as of the record date for the special meeting, a total of
6,600 shares of Thompson Falls Holding Company common stock representing
approximately 94.3% of all outstanding Thompson Falls Holding Company shares.
The directors, executive officers and principal shareholders of Thompson Falls
Holding Company will receive the same consideration in the merger for their
shares as other shareholders of Thompson Falls Holding Company.
Voting Agreements. Messrs. Robert T. (Skip") Baxter and Robert Fletcher
have entered into agreements to vote the shares of Thompson Falls Holding
Company common stock under their control (81.1% of the outstanding shares) in
favor of the merger.
First Security Bank of Missoula Employment Agreements. First Security Bank
of Missoula has entered into employment agreements, effective upon completion of
the merger, with Mr. Baxter and Ms. Kovarik.
Mr. Baxter's employment agreement is for a term beginning upon completion
of the merger and continuing for five (5) years thereafter. Mr. Baxter will
serve as Vice President and Branch Manager of First State Bank, a division of
First Security Bank of Missoula.
Mr. Baxter's agreement provides for an initial salary of $84,000 per year,
eligibility for bonuses pursuant to First State Bank's existing bonus plan for
2005, and commencing in 2006, eligibility to participate in First Security
Bank's bonus plan and other incentives.
31
Mr. Baxter's employment agreement provides that if he is terminated
without Cause (as described below) or he terminates his agreement for Good
Reason (as described below), he will receive a severance payment equal to one
times his current base salary at the time of termination. If Mr. Baxter is
terminated for Cause or terminates his employment without Good Reason, First
Security Bank will be responsible only for salary earned and expenses
reimbursable through the date of termination.
For purposes of the agreement:
"Cause" means any one or more of the following: (i) willful misfeasance or
gross negligence in the performance of Mr. Baxter's duties; (ii) conviction of a
crime in connection with such duties; or (iii) conduct demonstrably and
significantly harmful to the financial First Security Bank of Missoula or
Glacier.
"Good Reason" means any of the following: (i) reduction of salary or
elimination of any compensation or benefit plan; (ii) diminution of Mr. Baxter's
duties; or (iii) relocation or transfer of place of employment of more than 60
miles (one way) in Mr. Baxter's commute if he does not agree to move.
Mr. Baxter has agreed while employed by First Security Bank of Missoula
and for one year after his employment has ended, he will not, directly or
indirectly, as a shareholder, director, officer, employee, partner, agent,
consultant, lessor, creditor or otherwise, provide management, supervisory or
other similar services to any person or entity engaged in any business within
Sanders and Missoula Counties, Montana, which is competitive with the business
of First Security Bank of Missoula or Glacier. He has also agreed not to solicit
any employees or customers of Glacier, TFHC or related entities for a period of
one year following termination of his employment. Mr. Baxter's agreement also
includes provisions regarding nondisclosure of confidential information.
Ms. Kovarik's employment agreement is also for a term beginning upon
completion of the merger and continuing for five (5) years thereafter. Ms.
Kovarik will serve as assistant vice president and operations officer for First
State Bank, a division of First Security Bank of Missoula, and her initial
salary will be $60,000. The other provisions of the employment agreements for
Mr. Kovarik are substantially similar to those of Mr. Baxter's employment
agreement, with the exception that Ms. Kovarik will not be a director of First
Security Bank and of the area of non-compete covers only Sanders County,
Montana.
First State Bank Board of Directors. The merger agreement provides that
Michael Baxter will be appointed to the First Security Bank board of directors
following closing of the merger.
Life Insurance Agreements. Robert T. and Susan Baxter and the Robert T.
Fletcher Irrevocable Life Insurance Trust are parties to split-dollar life
insurance agreements with First State Bank, pursuant to which (i) First State
Bank is obligated to pay the premiums on a bank-owned life insurance policy and
(ii) beneficiaries of the directors will receive a certain portion of any
benefits upon the death of the directors. Pursuant to the plan and agreement of
merger, Glacier and First Security Bank of Missoula have agreed to assume and
discharge the obligations of First State Bank under the split-dollar life
insurance agreements.
Non-competition Agreements. Robert T. Baxter and Robert T. Fletcher have
entered into a non-competition agreement with Glacier. Except under certain
limited circumstances, the noncompetition agreement prohibits directors of TFHC
from competing with Glacier and/or First Security Bank of Missoula within
Sanders County, Montana. The term begins on the effective date of the merger and
ends the later of (a) three years after Closing or (b) two year following
termination of status as a consultant of First Security Bank of Missoula. It is
anticipated that Messrs. Baxter and Fletcher will become consultants of First
Security Bank of Missoula following the merger, and that the parties will enter
into appropriate consulting agreements prior to the closing of the merger.
32
Indemnification of Directors and Officers; Insurance. The merger agreement
provides that Glacier will, for a period of six years following the closing of
the merger, indemnify the present and former directors and officers of Thompson
Falls Holding Company and First State 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. The scope of this indemnification is to the same extent that such
persons would have been entitled to indemnification under Montana law or the
articles of incorporation or bylaws of Thompson Falls Holding Company and/or
First State Bank.
The merger agreement also provides that for a period of six 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.
ACCOUNTING TREATMENT OF THE MERGER
The acquisition of Thompson Falls Holding Company will be accounted for
using the purchase method of accounting by Glacier under generally accepted
accounting principles. Accordingly, using the purchase method of accounting, the
assets and liabilities of Thompson Falls Holding 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 is 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 Thompson Falls Holding Company will be included in
Glacier's consolidated statement of operations after the date of the merger. The
identifiable intangible assets will be amortized against the combined company's
earnings following completion of the merger.
STOCK RESALES BY THOMPSON FALLS HOLDING COMPANY AFFILIATES
The Glacier common stock to be issued in the merger will be transferable
free of restrictions under the Securities Act of 1933 ("1933 Act"), except for
shares received by persons, including directors and executive officers of
Thompson Falls Holding Company, who may be deemed to be "affiliates" of Thompson
Falls Holding Company, as that term is defined in the rules under the 1933 Act.
Affiliates may not sell their shares of Glacier common stock acquired in the
merger, except (a) pursuant to an effective registration statement under the
1933 Act covering those shares, (b) in compliance with Rule 145, or (c) in
accordance with an opinion of counsel reasonably satisfactory to Glacier, under
other applicable exemptions from the registration requirements of the 1933 Act.
Glacier will obtain customary agreements with all Thompson Falls Holding Company
directors, officers, and affiliates of Thompson Falls Holding Company, under
which such persons will represent that they will not dispose of their shares of
Glacier received in the merger or the shares of capital stock of Thompson Falls
Holding Company or Glacier held by them before the merger, except in compliance
with the 1933 Act and the rules and regulations promulgated under the 1933 Act.
This proxy statement/prospectus does not cover any resales of the Glacier common
stock received by affiliates of Thompson Falls Holding Company.
INFORMATION CONCERNING THOMPSON FALLS HOLDING COMPANY
Thompson Falls Holding Company is a bank holding company organized under
the laws of the State of Montana, incorporated on October 17, 1986. Thompson
Falls Holding Company is located in Thompson Falls, Montana, and conducts its
operations through its subsidiary, First State Bank, which commenced operations
in 1906. Thompson Falls Holding Company does not engage in any substantial
activities other than acting as a bank holding company for First State Bank. As
of June 30, 2005, Thompson Falls Holding Company had consolidated assets of
approximately $158 million, total deposits of approximately $121 million, and
total shareholders' equity of approximately $14.3 million.
33
First State Bank is regulated by the Banking and Financial Institutions
Division of the Montana Department of Administration. Its primary federal
regulator is the Federal Deposit Insurance Corporation, the insurer of its
deposits. First State Bank offers full service banking through three Montana
banking locations. First State Bank's main office is in Thompson Falls, Montana.
It operates a branch in Plains Montana. Both Thompson Falls and Plains offices
are in Sanders County. First State Bank also operates another branch, under the
name of Beaverhead Bank in Dillon, Beaverhead County, Montana.
MARKET AREA AND COMPETITION
First State Bank competes with other commercial banks, a credit union and
mortgage companies in Sanders County. In Sanders County First State Bank
maintains the largest share of commercial bank business by providing personal
service and competitive rates for loans and deposits.
The Beaverhead Bank facility in Dillon opened in 2002. While it has grown
satisfactorily, it still has a relatively small market share. It competes with
other commercial banks, a savings and loan, a credit union and mortgage
companies. First State Bank has entered into a definitive agreement with
Stockman Bank of Montana for the sale of the Dillon branch. It is anticipated
that the sale of the Dillon branch will be finalized before consummation of the
merger between Thompson Falls Holding Company and Glacier.
PRODUCTS AND SERVICES
Deposit Services. First State Bank offers a full range of deposit services
that are typically available from banks, including a wide variety of personal
and commercial checking and savings, certificates of deposit, and IRA accounts.
Accounts are tailored to meet customer needs and competitive pressures.
Loans. First State Bank offers consumer loans, commercial loans for
business development and operation, mortgage loan both held "in-house" and sold
on the secondary market, agricultural loans, and real estate development and
construction loans. First State Bank has a current lending limit of $2,000,000.
From time to time First State Bank sells and purchases participation in loans
made by other banks. Loans are made in accordance with established loan policies
and in accordance with federal regulations and guidelines.
Other Services. First State Bank's other products and services, provided
at each location, include credit cards, debit cards, letters of credit, safe
deposit boxes, ATMs, merchant credit card services, savings bonds, travelers
checks, and night deposit, telephone banking and internet banking.
EMPLOYEES
First State Bank has 49 employees, several of which are part time.
Thompson Falls Holding Company has no employees in addition to those of First
State Bank.
PROPERTIES
First State Bank's Thompson Falls office is at 107 South Fulton Street and
consists of a building with approximately 7500 square feet. The building and
real estate are owned by First State Bank. TFCH owns a an adjacent parcel of
real property for future expansion and another adjacent property used by First
State Bank for a parking lot.
First State Bank owns its facility in Plains. It consists of approximately
two acres with a building of approximately 4000 square feet.
34
The Dillon facility is owned by First State Bank and consists of city lots
and a building of approximately 6,500 square feet.
LEGAL PROCEEDINGS
Thompson Falls Holding Company is not a party to any pending or threatened
proceedings. First State Bank currently is, and from time to time may continue
to be, a party to various legal actions in the ordinary course of business. Two
such actions are now pending. In only one is First State Bank a defendant, and
management believes that resolving the matter will not have a material adverse
impact on First State Bank's financial position or operations.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following tables set forth information as of September ___, 2005,
regarding all the shares of Thompson Falls Holding Company common stock, which
shares are beneficially owned by (i) persons (other than executive officers or
directors whose stock ownership is listed below), known by Thompson Falls
Holding Company to own beneficially more than 5% of Thompson Falls Holding
Company's common stock, (ii) directors of Thompson Falls Holding Company, and
(iii) all directors and executive officers of Thompson Falls Holding Company as
a group. Except as noted below, each holder has sole voting and investment power
with respect to shares of Thompson Falls Holding Company common stock listed as
owned by such person or entity.
PRINCIPAL SHAREHOLDERS (5% OWNERS EXCLUSIVE OF DIRECTORS AND OFFICERS)
Percentage of
Number of Shares of Outstanding
Name Address Common Stock Owned Common Stock
---- ------- ------------------ ------------
Wallner Family LLP c/o Valesca Walker 800 11.43%
Frederick Wallner, General 50 Scovel Lane
Partner Kalispell, MT 59901
Buddy J. and Judy Leufkens P.O. Box 1030 400 5.71%
Thompson Falls, MT 59873
DIRECTORS AND EXECUTIVE OFFICERS
Percentage of
Number of Shares of Outstanding
Name and Position Common Stock Owned Common Stock
----------------- ------------------ ------------
Robert T. Baxter, Director, President and CEO 3,660 (1) 52.29%
Robert L. Fletcher, Director and Executive Officer 2,020 (2) 28.86%
Daniel W. Whittenburg, Director 120 1.71%
OFFICERS & DIRECTORS AS A GROUP 5,800 82.86%
(3 INDIVIDUALS)
(1) Includes 1,800 held in the Robert T. Baxter Irrevocable Trust, for which
Mr. Baxter is the trustee; and 1,000 shares held by Mr. Baxter's spouse.
(2) Includes 334 shares held in the Brian Fletcher Trust, for which Mr.
Fletcher is the trustee; 334 shares held in the Lindsey Fletcher Trust,
for which Mr. Fletcher is the trustee; 453 shares held in the Robert K. &
Evelyn P. Fletcher Trust, for which Mr. Fletcher is the trustee; 210
shares held in an IRA for the benefit of Mr. Fletcher; and 132 shares held
by Mr. Fletcher's spouse.
35
DESCRIPTION OF GLACIER'S CAPITAL STOCK
Glacier's authorized capital stock consists of 78,125,000 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 National Market
under the symbol "GBCI."
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 Thompson Falls Holding
Company Common Stock."
COMPARISON OF CERTAIN RIGHTS OF HOLDERS OF
GLACIER AND THOMPSON FALLS HOLDING 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 Thompson Falls
Holding Company shareholders who become shareholders of Glacier as a result of
the merger. The rights of Thompson Falls Holding Company shareholders are
currently governed by Montana law and by Thompson Falls Holding Company's
Articles of Incorporation and Bylaws. The following is a brief summary of
certain differences between the rights of Glacier and Thompson Falls Holding
Company shareholders. This summary does not purport to be complete and is
qualified by the documents and statutes referenced and by other applicable law.
See also "Where You Can Find More Information About Glacier."
GLACIER THOMPSON FALLS HOLDING CO.
AUTHORIZED CAPITAL STOCK
Common Stock. 78,150,000 shares Common Stock. 100,000 shares
authorized, $0.01 par value per authorized, $1.00 par value per
share. share.
Preferred Stock. 1,000,000 shares Preferred Stock. No shares of
authorized, $0.01 par value per preferred stock are authorized.
share.
DIVIDEND RIGHTS
Dividends may be paid on Glacier Dividends may be paid on Thompson
common stock as and when declared Falls Holding Company common stock
by the Glacier board of directors as and when declared by the
out of funds legally available for Thompson Falls Holding Company
the payment of dividends. The board of directors out of funds
Glacier board of directors may legally available for the payment
issue preferred stock that is of dividends. The ability of
entitled to such dividend rights as Thompson Falls Holding Company to
the board of directors may pay dividends is essentially
determine, including priority over subject to the same factors
the common stock in the payment of applicable to Glacier, as discussed
dividends. The ability of Glacier at left.
to pay dividends basically depends
on the amount of dividends paid to
it by its subsidiaries.
36
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 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 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.
BOARD OF DIRECTORS
Glacier's articles of incorporation Thompson Falls Holding Company's
provide that the number of bylaws set the number of directors
directors may not be less than at not less than three (3) nor more
seven (7) or more than seventeen than eleven (11). The number of
(17). The articles further provide directors is currently set at three
that the board must generally be (3).
staggered if there are nine (9) or
more members. Glacier's board
currently consists of nine (9)
members, each of whom has a
staggered three-year term.
PREEMPTIVE RIGHTS
Glacier's shareholders do not have Thompson Falls Holding Company's
preemptive rights to subscribe to articles of incorporation grant
additional securities that may be Thompson Falls Holding Company's
issued. shareholders preemptive rights that
allows for the purchase of a
proportional number of shares of
any future issue of common stock.
LIQUIDATION RIGHTS
If Glacier is liquidated, the If Thompson Falls Holding Company
holders of Glacier common stock are is liquidated, the holders of
entitled to share, on a pro rata Thompson Falls Holding Company
basis, Glacier's remaining assets common stock are entitled to share,
after provision for liabilities. on a pro rata basis, Thompson Falls
The Glacier board of directors is Holding Company's remaining assets
authorized to determine the after provision for liabilities.
liquidation rights of any preferred All outstanding shares of Thompson
stock that may be issued. All Falls Holding Company common stock
outstanding shares of Glacier are, and the shares to be issued in
common stock are, and the shares to the merger will be, fully paid and
be issued in the merger will be, nonassesable.
fully paid and nonassesable.
37
AMENDMENT OF ARTICLES OF INCORPORATION AND BYLAWS
The Montana Business Corporation Thompson Falls Holding Company is
Act ("MBCA") authorizes a also governed by the MBCA and the
corporation's board of directors to Thompson Falls Holding Company
make various changes of an board of directors may, by a
administrative nature to its majority vote, amend Thompson Falls
articles of incorporation, Holding Company's bylaws.
including increasing the number of
outstanding shares in proportion to
a stock split or stock dividend in
the corporation's own shares. 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 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, be a majority vote,
amend Glacier's bylaws.
APPROVAL OF CERTAIN TRANSACTIONS
The MBCA does not contain any The MBCA does not contain any
"anti-takeover" provisions imposing "anti-takeover" provision imposing
specific requirements or specific requirements or
restrictions on transactions restrictions on transactions
between a corporation and between a corporation and
significant shareholders. Glacier's significant shareholders. Unlike
articles of incorporation contain a Glacier's articles, Thompson Falls
provision requiring that specified Holding Company's articles of
transactions with an "interested incorporation do not contain any
shareholder" be approved by 80% of "anti-takeover" provisions.
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.
BOARD OF DIRECTORS
Glacier's articles of incorporation Thompson Falls Holding Company's
provide that the number of bylaws set the number of directors
directors may not be less than at not less than three (3) nor more
seven (7) nor more than seventeen than eleven (11). The number of
(17). The articles further provide directors is currently set at three
that the board must generally be (3).
staggered if there are nine (9) or
more members. Glacier's board
currently consists of nine (9)
members, each of whom has a
staggered three-year term.
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INDEMNIFICATION AND LIMITATION OF LIABILITY
Under the MBCA, indemnification of The MBCA indemnification of
directors and officers is directors also applies to Thompson
authorized to cover judgments, Falls Holding Company, and Thompson
amounts paid in settlement, and Falls Holding Company's bylaws
expenses arising out of actions provide that Thompson Falls Holding
where the director or officer acted Company shall indemnify its
in good faith and in or not opposed directors and officers to the
to the best interests of the fullest extent not prohibits by
corporation, and in criminal cases, law, including for derivative
where the director or officer had actions.
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 of 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 OF TRANSFER OF SHARES
Glacier's articles and bylaws do In order to maintain Thompson Falls
not provide any specific limitation Holding Company as a close
on its ability to transfer shares, corporation, which was the original
nor require the company's shares to intention, Thompson Falls Holding
bear a restrictive legend. Company's bylaws restrict the
transfer of shares by a shareholder
in that the shareholder may not
sell his or her shares on the open
market or to the public without
having first offered that same to
Thompson Falls Holding Company If
Thompson Falls Holding Company does
not elect to purchase those shares
then it shall be offered on a pro
rata basis in proportion to the
shares held by those shareholders.
If no shareholder accepts the offer
of sale the stock may be sold to
other parties. This is generally
referred to as a "right of first
refusal."
For purposes of the Merger, the
shareholders of Thompson Falls
Holding Company have agreed in
writing to waive this right of
first refusal.
39
POTENTIAL "ANTI-TAKEOVER PROVISIONS"
Glacier's articles of incorporation Thompson Falls Holding Company's
include certain provisions that articles of incorporation do not
could make more difficult the contain the potential
acquisition of Glacier by means of "anti-takeover" provisions that are
a tender offer, a proxy contest, found in Glacier's articles.
merger or otherwise. These
provisions include: (i) the
"staggered board," whereby only
one-third of the members of the
board of directors are elected in
any particular year; and (ii) 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 staggered board structure of
the board of directors, 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.
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.
40
EXPERTS
The consolidated financial statements of Glacier Bancorp, Inc. and
subsidiaries as of December 31, 2004 and 2003, and for each of the years in the
three-year period ended December 31, 2004, and management's assessment of the
effectiveness of internal control over financial reporting as of December 31,
2004, have been incorporated by reference herein and in the registration
statement in reliance upon the reports of KPMG LLP, independent registered
public accounting firm, and upon the authority of said firm as experts in
accounting and auditing.
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
450 Fifth Street, N.W., 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 Thompson Falls
Holding 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 Thompson Falls Holding Company for the
Thompson Falls Holding 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,
2004;
- Quarterly Reports on Form 10-Q for the quarters ended March 31
and June 30, 2005;
- Proxy Statement for Glacier's 2005 Annual Meeting of
Shareholders; and
- Current Reports on Form 8-K filed February 1, 2005, March 1,
2005, April 29, 2005, June 17, 2005, and July 15, 2005; and on
Form 8-K/A filed June 24, 2005.
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 Thompson Falls Holding Company
shareholders (other than current reports furnished under Item 2.01 or Item 7.01
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: JAMES H. STROSAHL, CORPORATE SECRETARY. IF YOU
41
WOULD LIKE TO REQUEST DOCUMENTS FROM GLACIER, PLEASE DO SO BY _________, 2005 TO
RECEIVE THEM BEFORE THE THOMPSON FALLS HOLDING 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 Thompson Falls Holding 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 September ___, 2005. 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
Thompson Falls Holding Company shareholders nor the issuance of Glacier common
stock in the merger will create any implication to the contrary.
42
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.
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.
II - 1
(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.
II - 2
SIGNATURES
Pursuant to the requirements of the 1933 Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Kalispell, State of
Montana August 23, 2005.
GLACIER BANCORP, INC.
By: /s/ Michael J. Blodnick
-------------------------------------
Michael J. Blodnick President and
Chief Executive Officer
Each person whose individual signature appears below hereby authorizes and
appoints Michael J. Blodnick and James H. Strosahl, and each of them, with full
power of substitution and full power to act without the other, as his true and
lawful attorney-in-fact and agent to act in his name, place and stead and to
execute in the name and on behalf of each person, individually and in each
capacity stated below, and to file any and all amendments to this Registration
Statement, including any and all post-effective amendments.
SIGNATURE AND TITLE
By: /s/ Michael J. Blodnick
---------------------------------------
Michael J. Blodnick, President and Chief
Executive Officer and Director
(Principal Executive Officer)
By: /s/ James H. Strosahl
--------------------------------------
James H. Strosahl, Executive Vice
President and Chief Financial Officer
(Principal Financial Officer)
By: /s/ John S. MacMillan
--------------------------------------
John S. MacMillan, Chairman of the
Board and Director
By: /s/ William L. Bouchee
--------------------------------------
William L. Bouchee, Director
By: /s/ James M. English
---------------------------------------
James M. English, Director
By: /s/ Allen J. Fetscher
--------------------------------------
Allen J. Fetscher, Director
II - 3
By: /s/ Fred J. Flanders
---------------------------------------
Fred J. Flanders, Director
By: /s/ Jon W. Hippler
--------------------------------------
Jon W. Hippler, Director
By: /s/ L. Peter Larson
--------------------------------------
L. Peter Larson, Director
By: /s/ Everit A. Sliter
--------------------------------------
Everit A. Sliter, Director
II - 4
EXHIBIT INDEX
Exhibit No. Description of Exhibit
2 Plan and Agreement of Merger dated as of July 15, 2005, by and
among Glacier Bancorp, Inc., First Security Bank of Missoula,
Thompson Falls Holding Company and First State Bank (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.
8 Opinion of Graham & Dunn PC regarding federal income tax matters.
10.1 Non-Competition and Voting Agreement.
10.2 Director Resignation Agreement.
10.3 Employment Agreement for Michael Baxter.
10.4 Employment Agreement for Kate Kovarik.
23.1 Consent of Christensen, Moore, Cockrell, Cummings & Axelberg,
P.C. (contained in its opinion filed as Exhibit 5).
23.2 Consent of Graham & Dunn PC as to its tax opinion (contained in
its opinion filed as Exhibit 8).
23.3 Consent of KPMG LLP, independent registered public accounting
firm.
24 Power of Attorney (contained on the signature page of the
registration statement).
99.1 Form of proxy to be mailed to shareholders of Thompson Falls
Holding Company.
99.2 Letter of Transmittal to be mailed to shareholders of Thompson
Falls Holding Company.
II - 5
APPENDIX A
CONFIDENTIAL
================================================================================
PLAN AND AGREEMENT OF MERGER
AMONG
GLACIER BANCORP, INC., FIRST SECURITY BANK OF MISSOULA,
THOMPSON FALLS HOLDING CO. AND FIRST STATE BANK
DATED AS OF JULY 14, 2005
================================================================================
PLAN AND AGREEMENT OF MERGER
AMONG
GLACIER BANCORP, INC., FIRST SECURITY BANK OF MISSOULA,
THOMPSON FALLS HOLDING CO. AND FIRST STATE BANK
This Plan and Agreement of Merger (the "Agreement"), dated as of July 14,
2005, is made by and among GLACIER BANCORP, INC. ("Glacier"), FIRST SECURITY
BANK OF MISSOULA ("FSB-Missoula"), THOMPSON FALLS HOLDING CO. ("TFHC") and FIRST
STATE BANK ("FSB-Thompson Falls").
PREAMBLE
The management and boards of directors of Glacier, FSB-Missoula, TFHC and
FSB-Thompson Falls, respectively, believe that the proposed Mergers, to be
accomplished in the manner set forth in this Agreement, are in the best
interests of the respective corporations and their shareholders.
RECITALS
A. THE PARTIES. The parties to the Mergers are as follows:
(1) Glacier 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"). Glacier's
principal office is located in Kalispell, Montana. Glacier owns all
of the outstanding common stock of FSB-Missoula.
(2) FSB-Missoula is a state-chartered banking corporation duly organized
and validly existing under Montana law with its principal office
located in Missoula, Montana.
(3) TFHC is a corporation duly organized and validly existing under
Montana law and is a registered bank holding company under the BHC
Act. TFHC's principal office is located in Thompson Falls, Montana.
TFHC owns all of the outstanding common stock of FSB-Thompson Falls.
(4) FSB-Thompson Falls is a state-chartered banking corporation duly
organized and validly existing under Montana law with its principal
office located in Thompson Falls, Montana.
B. THE MERGERS. On the Effective Date, (i) TFHC will merge with and into
Glacier, with Glacier as the surviving entity; (ii) FSB-Thompson Falls
will merge with and into FSB-Missoula, with FSB-Missoula surviving as a
wholly owned subsidiary of Glacier; and (iii) FSB-Thompson Falls will
operate as "First State Bank, a division of First Security Bank of
Missoula."
C. BOARD APPROVALS. The respective boards of directors of Glacier,
FSB-Missoula, TFHC and FSB-Thompson Falls have approved this Agreement and
authorized its execution and delivery.
D. OTHER APPROVALS. The Mergers are subject to:
(1) Satisfaction of the conditions described in this Agreement;
(2) Approval by TFHC's shareholders; and
1
(3) Approval or acquiescence, as appropriate, by (a) the Board of
Governors of the Federal Reserve System ("Federal Reserve"), (b) the
State of Montana Division of Banking and Financial Institutions, and
(c) any other agencies having jurisdiction over the Mergers
(collectively, "Regulatory Approvals").
E. EMPLOYMENT AGREEMENTS. FSB-Missoula has entered into employment
agreements, each of which will take effect as of the Effective Date, with
Michael Baxter and Kate Kovarik.
F. CONTROLLING SHAREHOLDER AGREEMENTS. In connection with the parties'
execution of this Agreement, Robert ("Skip") Baxter and Robert Fletcher
have entered into agreements, pursuant to which, among other things, each
agrees to vote his shares of TFHC common stock in favor of the actions
contemplated by this Agreement and to refrain from competing with Glacier
and/or FSB-Missoula for a period of time.
G. DIRECTOR RESIGNATIONS. Each TFHC and FSB-Thompson Falls director has
entered into an agreement that he or she will resign as of the Effective
Date of the Mergers.
H. BANK MERGER AGREEMENT. Concurrent with the parties' execution of this
Agreement, FSB-Thompson Falls and FSB-Missoula have entered into a merger
agreement, providing for the Bank Merger (the "Bank Merger Agreement").
I. INTENTION OF THE PARTIES -- TAX TREATMENT. The parties intend the Holding
Company Merger to qualify, for federal income tax purposes, as a tax-free
reorganization under IRC Section 368(a), and the parties hereto hereby
adopt this Agreement as a plan of reorganization within the meaning of
Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury
Regulations.
AGREEMENT
In consideration of the mutual agreements set forth in this Agreement,
Glacier, FSB-Missoula, TFHC and FSB-Thompson Falls 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 TFHC or any successor, (ii) a
purchase, lease or other acquisition in one or a series of related transactions
of assets of TFHC or any of its Subsidiaries representing 25 percent or more of
the consolidated assets of TFHC 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 percent or more of the voting
power of TFHC or its Subsidiaries, in each case with or by a person or entity
other than Glacier or one of its Subsidiaries.
"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
3.1.16 of this Agreement.
"Bank Merger" means the merger of FSB-Thompson Falls with and into
FSB-Missoula.
2
"Bank Merger Agreement" means the merger agreement described in Recital H.
"Banking Act" means the Montana Bank Act, Title 32 of the Montana Code.
"BHC Act" has the meaning assigned to such term in Recital A of this
Agreement.
"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 are
required by law to remain closed.
"Capital" means TFHC's capital stock, surplus and undivided profits
determined in accordance with GAAP, applied on a consistent basis, without
giving any effect to any impact from gains or losses on available for sale
securities between the date of this Agreement and Closing.
"Certificate" has the meaning assigned to such term in Section 1.8.1 of
this Agreement.
"Closing" means the closing of the Mergers contemplated by this Agreement,
which will occur on the Effective Date, as more fully specified in Section 2.1
of this Agreement.
"Compensation Plans" has the meaning assigned to such term in Section
3.1.20 of this Agreement.
"Dillon Branch" means the office of FSB-Thompson Falls located in Dillon,
Montana.
"Dillon Branch Additional Consideration" means the consideration
contemplated by Section 1.4 of this Agreement.
"Director" means the Director of the Division of Banking and Financial
Institutions for the State of Montana.
"Effective Date" means the date on which all conditions to Closing have
occurred and on which the Mergers take place, as more fully specified in Section
2.1 of this Agreement.
"Employees" has the meaning assigned to such term in Section 3.1.20 of
this Agreement.
"Environmental Laws" has the meaning assigned to such term in Section
3.1.7 of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means, with respect to TFHC, any other entity that is
considered one employer with TFHC 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 of
this Agreement.
"Exchange Agent" means American Stock Transfer and Trust.
"Exchange Fund" has the meaning assigned to such term in Section 1.7 of
this Agreement.
"Execution Date" means the date of this Agreement.
"Executive Officers," with respect to FSB-Missoula, means William Bouchee
and Scott Burke.
"Executive Officers," with respect to Glacier, means Michael J. Blodnick
and James H. Strosahl.
3
"Executive Officers," with respect to TFHC and/or FSB-Thompson Falls,
means Robert ("Skip") Baxter, Michael Baxter, Robert Fletcher and Kate Kovarik.
"FDIC" means the Federal Deposit Insurance Corporation.
"Federal Reserve" means the Board of Governors of the Federal Reserve
System.
"FSB-Missoula" means First Security Bank of Missoula, a Montana state
chartered banking corporation, that has its head office in Missoula, Montana,
and that is wholly owned by Glacier.
"FSB-Thompson Falls" is First State Bank, a Montana state chartered bank,
that has its head office in Thompson Falls, Montana, and that is wholly owned by
TFHC.
"GAAP" means generally accepted accounting principles.
"Glacier" 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.
"Glacier Common Stock" means the shares of Glacier common stock, $0.01 par
value per share, issued and outstanding from time to time.
"Glacier Contract" has the meaning assigned to such term in Section 3.2.2
of this Agreement.
"Glacier Financial Statements" means Glacier's (i) audited consolidated
balance sheet as of December 31, 2004, 2003 and 2002 and the related audited
consolidated statements of income, cashflows and changes in shareholders' equity
for each of the years ended December 31, 2004, 2003 and 2002; (ii) unaudited
consolidated balance sheet as of the end of each fiscal quarter following
December 31, 2004 but preceding the Execution Date, and the related unaudited
consolidated statements of income, cashflows 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.
"Glacier Shares" means the shares of Glacier Common Stock to be issued to
the holders of TFHC Common Stock in accordance with Section 1.3.2 of this
Agreement.
"Hazardous Substances" has the meaning assigned to such term in Section
3.1.7 of this Agreement.
"Holding Company Merger" means the merger of TFHC with and into Glacier.
"IRC" means the Internal Revenue Code of 1986, as amended.
"Leased Real Property" means the real Properties subject to Leases as
identified in Schedule 6 to this Agreement.
"Leases" means the terms and conditions governing the leasehold interests
in the Leased Real Property as identified in Schedule 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.
4
"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 Mergers on or by January 31, 2006 or to perform its material obligations
under this Agreement; or (iii) enables any persons to prevent the consummation
on or by January 31, 2006 of the Mergers.
"MBCA" means the Montana Business Corporations Act, as amended.
"Merger Consideration" means the aggregate consideration contemplated by
Section 1.3.2 of this Agreement.
"Mergers" means the Holding Company Merger and the Bank Merger.
"Net Proceeds," with respect to a possible divestiture of the Dillon
Branch, means net after tax proceeds on the gain on sale, if any, in excess of
the difference between (i) the book value of the assets attributed to the Dillon
Branch in the TFHC Financial Statements and (ii) any amounts paid or payable
pursuant to the employment agreement between FSB-Thompson Falls and Craig Rehm,
dated as of February 1, 2003.
"PCAOB" means the Public Company Accounting Oversight Board.
"Pension Plan" has the meaning assigned to such term in Section 3.1.20 of
this Agreement.
"Person" includes an individual, corporation, partnership, association,
limited liability company, trust or unincorporated organization.
"Plan" has the meaning assigned to such term in Section 3.1.20 of this
Agreement.
"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.
"Proposed Dissenting Shares" means those shares of TFHC Common Stock as to
which shareholders have given notice of their intent to assert appraisal rights
pursuant to Section 35-1-830 of the MBCA.
"Prospectus/Proxy Statement" means the Prospectus/Proxy Statement referred
to in Section 4.2.1 of this Agreement, to be provided to each shareholder of
TFHC in connection with their consideration and approval of the Holding Company
Merger.
"Registration Statement" has the meaning assigned in Section 4.2.1 of this
Agreement.
"Reports" has the meaning assigned to such term in Section 3.1.5 of this
Agreement.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" has the meaning assigned to such term in Section 3.1.5 of
this Agreement.
"Securities Laws" has the meaning assigned to such term in Section 3.1.5
of this Agreement.
"Subject Property" has the meaning assigned to such term in Section 3.1.7
of this Agreement.
5
"Subsequent Glacier Financial Statements" means Glacier Financial
Statements for each fiscal quarter ending after the Execution Date and prior to
Closing.
"Subsequent TFHC Financial Statements" means TFHC Financial Statements for
each month ending after the Execution Date and prior to Closing.
"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.
"Termination Date" has the meaning assigned to such term in Section 7.1 of
this Agreement.
"Termination Fee" has the meaning assigned to such term in Section 7.3 of
this Agreement.
"TFHC" is Thompson Falls Holding Co., a Montana corporation that has its
principal place of business in Thompson Falls, Montana, and that is a bank
holding company registered pursuant to the BHC Act.
"TFHC Common Stock" means the shares of TFHC common stock, $1.00 par value
per share, issued and outstanding from time to time.
"TFHC Contract" has the meaning assigned to such term in Section 3.1.2 of
this Agreement.
"TFHC Financial Statements" means Thompson Falls' (i) audited consolidated
balance sheet as of December 31, 2004, 2003 and 2002 and the related audited
consolidated statements of income, cashflows and changes in shareholders' equity
for each of the years ended December 31, 2004, 2003 and 2002; (ii) unaudited
consolidated balance sheet as of the end of each fiscal quarter following
December 31, 2004 but preceding the Execution Date, and the related unaudited
consolidated statements of income, cashflows 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.
"TFHC Meeting" has the meaning assigned in Section 4.2.2 of this
Agreement.
"TFHC Transaction Fees" has the meaning assigned to such term in Section
5.2.3 of this Agreement.
SECTION 1.
TERMS OF TRANSACTION
1.1 TRANSACTION. Subject to the terms and conditions set forth in this
Agreement and in the Schedules and Exhibits, TFHC will merge with and into
Glacier in the Holding Company Merger pursuant to this Agreement, and
FSB-Thompson Falls will merge with and into FSB-Missoula in the Bank
Merger pursuant to the Bank Merger Agreement.
1.2 MERGERS.
1.2.1 HOLDING COMPANY MERGER. Upon Closing of the Holding Company Merger,
pursuant to the provisions of the MBCA, all shares of TFHC Common
Stock issued and outstanding immediately prior to Closing, except
for Proposed Dissenting Shares, will, by virtue of the Holding
Company Merger and without any action on the part of any holder
6
of shares of TFHC Common Stock, be converted into the right to
receive the Merger Consideration described in Section 1.3 of this
Agreement.
1.2.2 BANK MERGER. Pursuant to the terms and conditions of the Bank Merger
Agreement, FSB-Thompson Falls will be merged into FSB-Missoula, with
FSB-Missoula as the resulting bank.
1.3 MERGER CONSIDERATION. Subject to the provisions of this Agreement, on the
Effective Date:
1.3.1 OUTSTANDING GLACIER COMMON STOCK. The shares of Glacier 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 Glacier Common Stock.
1.3.2 OUTSTANDING TFHC COMMON STOCK. Each share of TFHC Common Stock
issued and outstanding immediately prior to the Execution Date 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 Glacier, either Glacier Shares, cash, or a combination thereof
as set forth on Schedule 1 to this Agreement (collectively, the
"Merger Consideration").
1.3.3 CHANGE IN EQUITY CAPITAL. If, after the date of this Agreement but
before the Effective Date, the number of shares of Glacier Common
Stock or TFHC Common Stock issued and outstanding increases or
decreases in number or is changed into or exchanged for a different
kind or number of securities, through a recapitalization,
reclassification, stock dividend, stock split, reverse stock split
or other similar change in capitalization (not including increases
in number due to issuances of shares upon exercise of any
outstanding options) of Glacier or TFHC, as the case may be, then,
as appropriate, a proportionate adjustment will be made to the
Merger Consideration.
1.4 DILLON BRANCH ADDITIONAL CONSIDERATION.
1.4.1 DIVESTITURE PRIOR TO EFFECTIVE DATE. If the divestiture of the
Dillon Branch is consummated prior to the Effective Date, Net
Proceeds from the divestiture of the Dillon Branch will be
distributed in cash to the TFHC shareholders, on a pro rata basis,
on or prior to the Effective Date.
1.4.2 DEFINITIVE AGREEMENT PRIOR TO EFFECTIVE DATE. If a definitive
agreement for the divestiture of the Dillon Branch is entered into
prior to the Effective Date, but the divestiture is not yet
consummated by that time, it is the intention of the parties to use
their best efforts to agree upon estimated Net Proceeds. Such
estimated Net Proceeds will be distributed in cash to the TFHC
shareholders, on a pro rata basis, on or prior to the Effective
Date. The subsequent actual Net Proceeds will be retained by
FSB-Missoula.
1.4.3 NO DIVESTITURE OR DEFINITIVE AGREEMENT PRIOR TO EFFECTIVE DATE. If
prior the Effective Date, the divestiture of the Dillon Branch has
not been consummated and no definitive agreement for the divestiture
been entered into by that time, then subsequent Net Proceeds, if
any, will be retained by FSB-Missoula.
1.5 NO FRACTIONAL SHARES. No fractional shares of Glacier Common Stock will be
issued. In lieu of fractional shares, if any, each holder of TFHC Common
Stock who is otherwise entitled to receive a fractional share of Glacier
Common Stock will receive an amount of cash equal to the
7
product of such fractional share times $25.73. Such fractional share
interests will not include the right to vote or receive dividends or any
interest on dividends.
1.6 PAYMENT TO DISSENTING SHAREHOLDERS. Proposed Dissenting Shares will have
the rights provided by Title 35, Chapter 1, Part 8 of the MBCA.
1.7 DEPOSIT OF CASH AND SHARES. On or before the Effective Date, Glacier will
deposit, or will cause to be deposited, with the Exchange Agent, for the
benefit of the holders of certificates representing TFHC Common Stock, for
exchange in accordance with this Section 1.7, (i) certificates
representing the Glacier Shares; (ii) the aggregate cash consideration of
$2.1 million to be paid in accordance with Section 1.3.2; and (iii) the
cash in lieu of fractional shares to be paid in accordance with Section
1.4. Such cash and certificates for Glacier Shares, together with any
dividends or distributions with respect thereto, are referred to in this
Agreement as the "Exchange Fund."
1.8 CERTIFICATES.
1.8.1 LETTER OF TRANSMITTAL. Glacier will cause the Exchange Agent to mail
to each holder of record of a certificate evidencing TFHC Common
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 1.8.2 of this Agreement.
1.8.2 SURRENDER OF CERTIFICATES. Subject to Section 1.6, 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 (or to receive the cash for fractional shares)
to which the TFHC Common Stock shares converted in accordance with
the provisions of this Section 1.8.2. Following the Effective Date,
holders of Certificates will exchange their Certificates in
accordance with instructions provided by the Exchange Agent pursuant
to Section 1.8.1 of this Agreement and together with a properly
completed and executed form of transmittal letter in order to effect
their exchange for, as applicable, (i) certificates representing
Glacier Common Stock; (ii) a check representing the cash
consideration to be received pursuant to Section 1.3.2 and Schedule
2 to this Agreement; 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 or her
portion of the Merger Consideration.
1.8.3 ISSUANCE OF CERTIFICATES IN OTHER NAMES. Any person requesting that
any certificate evidencing Glacier Shares be issued in a name other
than the name in which the surrendered Certificate is registered,
must: (1) establish to the Exchange Agent's satisfaction the right
to receive the certificate evidencing Glacier Shares and (2) either
pay to the Exchange Agent any applicable transfer or other taxes or
establish to the Exchange Agent's satisfaction that all applicable
taxes have been paid or are not required.
1.8.4 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
TFHC Common Stock and that the certificate representing this
ownership is lost, stolen, or destroyed, (2)
8
any appropriate affidavit the Exchange Agent may require, and (3)
any reasonable assurances that the Exchange Agent or Glacier may
require.
1.8.5 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
Glacier Common Stock on any date after the Effective Date, unless
the holder (1) is entitled by this Agreement to receive a
certificate representing Glacier Common Stock and (2) has
surrendered in accordance with this Agreement his or her
Certificates (or has met the requirements of Section 1.8.4 above) in
exchange for certificates representing Glacier 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 TFHC Common Stock on a date before the Effective Date.
When the holder surrenders his or her Certificates in exchange for
Glacier 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 Glacier
Shares into which the holder's TFHC Common Stock was converted at
the Effective Date.
1.8.6 CHECKS IN OTHER NAMES. Any person requesting that a check for cash
to be received in the Holding Company 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.
1.8.7 AFFILIATES. Certificates that are surrendered for exchange by any
person constituting an "affiliate" of TFHC for purposes of Rule 145
of the Securities Act will not be exchanged for certificates
representing Glacier Shares until Glacier has received a written
agreement from such person as specified in Section 4.3.1.
1.8.8 UNDELIVERED CERTIFICATES. Any portion of the Exchange Fund that
remains unclaimed by shareholders of TFHC for six months after the
Effective Date may be paid to Glacier. To the extent so paid,
holders of TFHC Common Stock who have not, prior to such time,
complied with the provisions of this Section 1.8 will, from such
time forward, look only to Glacier for payment of the Merger
Consideration, the cash in lieu of fractional shares, and/or unpaid
dividends and distributions on the Glacier Shares deliverable with
respect to each share of TFHC Common Stock held by such holder as
determined pursuant to this Agreement, in each case, without any
interest. Neither Glacier nor TFHC will be liable to any holder of
TFHC Common Stock for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or
similar laws.
SECTION 2.
CLOSING OF TRANSACTION
2.1 CLOSING. The Closing will occur on the Effective Date. The Holding Company
Merger shall be consummated by the filing 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. The Bank
Merger shall be consummated by the filing by the Director and Montana
Secretary of State of Articles of Merger. Unless Glacier and TFHC agree
upon a different date, the Effective Date will be the final Business Day
of the month in which the fulfillment or waiver of each condition
precedent set forth in, and the granting of each approval (and expiration
of any waiting period) required by, Section 5 of this Agreement. If
Closing does not occur on or prior to January 31, 2006 and the
9
parties do not mutually agree in writing to extend the Closing, either
party may terminate this Agreement in accordance with Section 7.1 of this
Agreement.
2.2 EVENTS OF CLOSING. On the Effective Date, all properly executed documents
required by this Agreement will be delivered to the proper party, in form
consistent with this Agreement. If any party fails to deliver a required
document on the Effective Date or otherwise defaults under this Agreement
on or prior to the Effective Date, then no Mergers will occur unless the
adversely affected party waives the default.
2.3 PLACE AND TIME OF CLOSING. The Closing will take place at the office of
Glacier Bancorp, Inc., 49 Commons Loop, Kalispell, Montana 59901, or such
other place as the parties agree, at 6:00 p.m. Mountain Time on the
Effective Date, or such other time as the parties agree.
SECTION 3.
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES. TFHC and FSB-Thompson Falls each represent
and warrant to Glacier and FSB-Missoula that, except as disclosed in a
Schedule to this Agreement:
3.1.1 ORGANIZATION AND GOOD STANDING. TFHC 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 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. The locations of all offices,
including approved and unopened offices of its Subsidiaries, are
listed in Schedule 2.
3.1.2 CORPORATE AUTHORITY. The execution, delivery and performance of this
Agreement does not and will not, and the consummation by TFHC and/or
FSB-Thompson Falls of the Mergers 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 "TFHC 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 TFHC Contracts. Schedule 3
contains a list of all consents TFHC and/or FSB-Thompson Falls must
obtain from third parties under any TFHC Contracts before
consummation of the Mergers.
3.1.3 CAPITAL STOCK.
(i) The authorized capital stock of TFHC consists of 100,000
shares of TFHC Common Stock, par value $1.00 per share. A
total of 7,000 shares of TFHC Common Stock are issued and
outstanding as of the date of this Agreement, all of which
were validly issued and are fully paid and nonassessable.
10
(ii) FSB-Thompson Falls's authorized capital stock consists of
7,000 shares of common stock, par value $100.00 per share, of
which 6,000 shares currently are issued and outstanding, all
of which are validly issued to TFHC, fully paid and
nonassessable, except to the extent of any assessment required
under Section 32-1-506 of the Banking Act.
(iii) No unissued shares of common stock or any other securities of
TFHC or FSB-Thompson Falls, or any of their Subsidiaries, are
subject to any warrants, options, conversion privileges,
rights or commitments of any character, kind or nature, except
as set forth in Schedule 4, and neither TFHC nor FSB-Thompson
Falls 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. Except as listed in Schedule 5, TFHC has no
Subsidiaries. The shares of capital stock of each of its
Subsidiaries are owned by it free and clear of all liens, claims,
encumbrances and restrictions on transfer.
3.1.5 REPORTS AND FINANCIAL STATEMENTS.
(i) Filing of Reports. Since January 1, 2002, TFHC and each of its
Subsidiaries has filed and will file 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 FDIC, and (3) 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. TFHC and FSB-Thompson
Falls have delivered or otherwise made available to Glacier a
copy of each 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 either of them with
respect to periods since January 1, 2002, 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 TFHC's balance sheets included
in the TFHC Financial Statements fairly presents (or, in the
case of TFHC Financial Statements for periods ending on a date
following the Execution Date, will fairly
11
present) the financial position of TFHC 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
TFHC Financial Statements fairly presents (or, in the case of
TFHC Financial Statements to be prepared in accordance with
Section 4.1.9, if required, or 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 TFHC and its Subsidiaries for the periods set
forth in these statements (subject, in the case of unaudited
statements, to normal year-end audit adjustments), in each
case in accordance with GAAP, except as may be noted in these
statements.
3.1.6 PROPERTIES.
(i) TFHC and its Subsidiaries are not a party to any real property
lease, whether as landlord, tenant, guarantor or otherwise,
except as disclosed in Schedule 6. Except as disclosed or
reserved against in the TFHC Financial Statements or in
Schedule 6, TFHC and/or one of its Subsidiaries have good and
marketable title, free and clear of all Liens (other than
Liens for taxes not yet delinquent or pledges to secure
deposits) to all of the properties and assets, tangible or
intangible, reflected in the TFHC Financial Statements as
being owned or leased by any of them as of the Execution Date.
Except as disclosed in Schedule 6, all buildings and
structures on the Property owned and the equipment located
thereon are in all material respects in good operating
condition and repair and conform in all respects to all
applicable laws, ordinances and regulations.
(ii) To the knowledge of TFHC's Executive Officers, all buildings
and all fixtures, equipment and other property and assets that
are material to TFHC'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 equity principles).
(iii) Schedule 2 lists all of its existing branches and offices and
all new branches or offices that FSB-Thompson Falls has
applied to establish or purchase, along with the estimated
cost to establish or purchase those new branches.
(iv) TFHC has provided to Glacier copies of existing title
policies, if any, held in its files relating to the Property,
and to the knowledge of its Executive Officers, no exceptions,
reservations, or encumbrances have arisen or been created
since the date of issuance of those policies (other than Liens
for taxes not yet delinquent).
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
property; and (iii) all other real property that, for
purposes of any
12
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, local or
foreign law, regulation, order, decree, judgment,
judicial opinion, or any agreement between TFHC or any
of its Subsidiaries and any Governmental Entity,
presently in effect or subsequently adopted relating to:
(i) the manufacture, generation, transport, use,
treatment, storage, recycling, disposal, release,
threatened release or presence of Hazardous Substances,
or (ii) the preservation, restoration or protection of
the environment, natural resources or human health.
(3) "Hazardous Substances" means any 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," "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 TFHC and/or
FSB-Thompson Falls for general office purposes will not
be deemed to be Hazardous Substances for the purposes of
this Agreement.
(ii) Except as disclosed in Schedule 7 and to the knowledge of its
Executive Officers, TFHC, its Subsidiaries and the Subject
Property are, and have been, in compliance with all applicable
Environmental Laws, and no circumstances exist that with the
passage of time or the giving of notice would be reasonably
likely to result in noncompliance with such Environmental
Laws.
(iii) Except as disclosed in Schedule 7 and to the knowledge of its
Executive Officers, none of the following, and no reasonable
basis for any of the following, exists: pending or threatened
claims, actions, investigations, notices of non-compliance,
information requests or notices of potential responsibility or
proceedings involving TFHC, any of its Subsidiaries or any
Subject Property, relating to:
(1) an asserted liability of TFHC 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 property related to or
arising out of exposure to Hazardous Substances.
13
(iv) Except as disclosed in Schedule 7, 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. With respect to any Subject Property, neither TFHC 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.
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.
(v) Except as disclosed in Schedule 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 7, to the knowledge of its
Executive Officers, no condition from, on or under the
Subject Property exists with respect to the Subject Property
that would require remediation under applicable
Environmental Laws.
3.1.8 TAXES. All tax returns and reports required by law to be filed by
TFHC and its Subsidiaries have been duly filed, and all taxes,
assessments, fees and other government charges upon TFHC 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 TFHC 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
TFHC 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 set forth in
Schedule 8 or 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.
3.1.9 ABSENCE OF REGULATORY ACTION. Neither TFHC nor any of its
Subsidiaries is, to the knowledge of its Executive Officers, 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 TFHC 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 ALLOWANCE FOR LOAN LOSSES. In the opinion of its management, the
ALLL shown in the latest TFHC Financial Statements is, and that
which will be stated in the Subsequent TFHC Financial Statements
prior to Closing will be, adequate to absorb its anticipated loan
losses.
14
3.1.11 MATERIAL AGREEMENTS.
(i) Except for arrangements made after the date and in
accordance with the terms of this Agreement, TFHC 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
9.
(ii) Neither TFHC nor any of its Subsidiaries is in default under
any contract, agreement, commitment, arrangement, lease,
insurance policy, or other instrument.
3.1.12 COMPLIANCE WITH LAWS. TFHC 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 TFHC 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 best knowledge
of its Executive Officers, no suspension or cancellation of any of
them is threatened.
3.1.13 KNOWLEDGE AS TO CONDITIONS. The Executive Officers of TFHC and
FSB-Thompson Falls know of no reason why the approvals, consents
and waivers of governmental authorities referred to in Section 5.1
of this Agreement can not be obtained.
3.1.14 NO MATERIAL ADVERSE EFFECT. Since December 31, 2004, (i) TFHC 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 TFHC or any of its
Subsidiaries.
3.1.15 COMPLETENESS OF REPRESENTATIONS. No representation or warranty
made by or with respect to TFHC 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.
3.1.16 ASSET CLASSIFICATION.
(i) Schedule 10 sets forth a list, accurate and complete, 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 TFHC and its Subsidiaries that have been
criticized or classified by any governmental or regulatory
authority, by any outside auditor, or by any internal audit.
(ii) Except as shown in Schedule 10, 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,"
15
"Doubtful," "Loss" or words of similar effect are excluded
from the amounts disclosed in the Asset Classification,
other than amounts of loans, extensions of credit or other
assets that were paid off or charged off by TFHC or its
Subsidiaries before the date of this Agreement.
3.1.17 LITIGATION. Except as disclosed in Schedule 11, 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 TFHC 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 Mergers, and, to the best knowledge of TFHC's
Executive Officers after reasonable inquiry, no such litigation,
proceeding, controversy, claim or action has been threatened or is
contemplated.
3.1.18 INSURANCE. TFHC 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 12 lists all directors'
and officers' liability insurance policies and other material
insurance policies maintained by TFHC or its Subsidiaries.
3.1.19 LABOR MATTERS. Neither TFHC 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 TFHC 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 TFHC or its Subsidiaries is
pending or, to the knowledge of its Executive Officers,
threatened. Its Executive Officers are not aware of any activity
involving its employees seeking to certify a collective bargaining
unit or engaging in any other organizational activity.
3.1.20 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
TFHC or FSB-Thompson Falls, as the case may be. TFHC 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 13 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 TFHC 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,
16
"Employees"), including Plans and related amendments, have
been made available to Glacier.
(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 received a
favorable determination letter from the Internal Revenue
Service, and TFHC 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 the knowledge of its Executive Officers, threatened.
Neither TFHC 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 TFHC 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
TFHC 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 TFHC 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 TFHC Financial Statements or in
Schedule 13, neither TFHC nor any of its Subsidiaries has
any obligations for retiree health and life benefits.
(vi) No provision of the documents governing any Plan contains
restrictions on the rights of TFHC 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 TFHC Financial Statements or
otherwise disclosed in this Agreement or in Schedule 13, the
Mergers 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 13, neither TFHC nor
FSB-Thompson Falls maintains an executive supplemental
retirement plan or similar arrangement.
3.1.21 BROKER'S OR FINDER'S FEES. No agent, broker, person or firm acting
on behalf of TFHC or FSB-Thompson Falls, or under its authority,
is or will be entitled to any commission, broker's, finder's or
financial advisory fee in connection with the Mergers.
3.2 REPRESENTATIONS AND WARRANTIES OF GLACIER AND FSB-MISSOULA. Except as
disclosed in a schedule to this Agreement, Glacier and FSB-Missoula each
represent and warrant to TFHC:
17
3.2.1 ORGANIZATION AND GOOD STANDING. Glacier 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 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 of
this Agreement does not and will not, and the consummation by
Glacier and/or FSB-Missoula of the Mergers 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 "Glacier 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 Glacier Contracts.
3.2.3 CAPITAL STOCK.
(i) The authorized capital stock of Glacier consists of
78,125,000 shares of Glacier Common Stock, par value $0.01
per share. A total of 31,256,750 shares of Glacier Common
Stock were issued and outstanding as of June 30, 2005, all
of which were validly issued and are fully paid and
nonassessable. As of June 30, 2005, options to acquire
1,849,656 shares of Glacier Common Stock have been granted
and are outstanding.
(ii) FSB-Missoula's authorized capital stock consists of 358,610
shares of common stock, par value $25.00 per share, of which
72,820 shares currently are issued and outstanding, all of
which are validly issued to Glacier, fully paid and
nonassessable, except to the extent of any assessment
required under Section 32-1-506 of the Banking Act.
(iii) No unissued shares of common stock or any other securities
of Glacier or FSB-Missoula are subject to any warrants,
options, conversion privileges, rights or commitments of any
character, kind or nature, except as set forth in Glacier's
Reports, and neither Glacier nor FSB-Missoula 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.
3.2.4 REPORTS AND FINANCIAL STATEMENTS.
(i) Filing of Reports. Since January 1, 2002, Glacier and each
of its Subsidiaries has filed and will file 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
18
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. Glacier and FSB-Missoula
have made available to TFHC a copy of each Report under the
Securities Laws filed, used or circulated by either of them
with respect to periods since January 1, 2002, 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 Glacier's balance sheets
included in the Glacier Financial Statements fairly presents
(or, in the case of Glacier Financial Statements for periods
ending on a date following the Execution Date, will fairly
present) the financial position of Glacier 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 Glacier Financial Statements fairly
presents (or, in the case of Glacier Financial Statements to
be prepared in accordance with Section 4.10 of this
Agreement 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 Glacier and its Subsidiaries for the periods set
forth in these statements, in each case in accordance with
GAAP, except as may be noted in these statements.
3.2.5 FINANCING AND SHARES AVAILABLE. Glacier has, and at the Effective
Date will have, (i) sufficient cash and cash equivalents on hand
to pay the $2.1 million aggregate cash 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
Glacier Shares.
3.2.6 ABSENCE OF REGULATORY ACTION. Neither Glacier nor any of its
Subsidiaries is, to the knowledge of its Executive Officers, 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 Glacier 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.
19
3.2.7 COMPLIANCE WITH LAWS. Glacier 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 Glacier 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 best knowledge
of Glacier's Executive Officers, no suspension or cancellation of
any of them is threatened.
3.2.8 KNOWLEDGE AS TO CONDITIONS. The Executive Officers of Glacier or
FSB-Missoula know of no reason why the approvals, consents and
waivers of governmental authorities referred to in Section 5.1 of
this Agreement can not be obtained.
3.2.9 LITIGATION. Except as disclosed in Glacier'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 Glacier 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 Mergers and, to the best knowledge of
Glacier's Executive Officers after reasonable inquiry, no such
litigation, proceeding, controversy, claim or action has been
threatened or is contemplated.
3.2.10 TAXES. All tax returns and reports required by law to be filed by
Glacier and its Subsidiaries have been duly filed, and all taxes,
assessments, fees and other government charges upon Glacier 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 Glacier 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 Glacier 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.
3.2.11 NO MATERIAL ADVERSE EFFECT. Since December 31, 2004, (i) Glacier
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
Glacier or any of its Subsidiaries.
3.2.12 COMPLETENESS OF REPRESENTATIONS. No representation or warranty
made by or with respect to Glacier 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.
3.2.13 SUBSIDIARIES. Except as identified in its Reports, Glacier has no
Subsidiaries. The shares of capital stock of each of its
Subsidiaries are owned by it free and clear of all liens, claims,
encumbrances and restrictions on transfer.
20
3.2.14 BROKER'S OR FINDER'S FEES. No agent, broker, person or firm acting
on behalf of Glacier or FSB-Missoula, or under its authority, is
or will be entitled to any commission, broker's, finder's, or
financial advisory fee in connection with the Mergers.
SECTION 4.
CONDUCT AND TRANSACTIONS PRIOR TO CLOSING
4.1 CONDUCT OF TFHC'S AND FSB-THOMPSON FALLS'S BUSINESS PRIOR TO CLOSING. The
parties each covenant that, prior to Closing:
4.1.1 AVAILABILITY OF BOOKS, RECORDS AND PROPERTIES.
(i) With prior notice to TFHC, the books, records, properties,
contracts and documents of TFHC and FSB-Thompson Falls
will be available at all reasonable times to Glacier,
FSB-Missoula and their 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 Glacier or FSB-Missoula deem reasonably
relevant to the Mergers. TFHC and FSB-Thompson Falls will
cooperate fully in such inspection and audit, and will
make available all information reasonably requested by or
on behalf of Glacier or FSB-Missoula.
(ii) Upon request by Glacier or FSB-Missoula, TFHC and
FSB-Thompson Falls will request that any third parties
involved in the preparation or review of the TFHC
Financial Statements or TFHC Subsequent Financial
Statements disclose to Glacier and FSB-Missoula the work
papers or any similar materials related to such financial
statements.
4.1.2 ORDINARY AND USUAL COURSE. Without prior written consent of
Glacier or FSB-Missoula and except as required by the Director,
the FDIC or the Federal Reserve (so long as Glacier and
FSB-Missoula receive prior written notice of such required
action), TFHC and FSB-Thompson Falls will conduct their respective
business only in the ordinary and usual course and will not do any
of the following (provided, however, that nothing in this Section
4.1.2 shall be deemed to prevent FSB-Thompson Falls from entering
into an agreement to transfer the Dillon Branch):
(i) effect any stock split or other recapitalization with
respect to TFHC Common Stock or the shares of FSB-Thompson
Falls; issue (except for issuances upon the exercise of
TFHC Options), pledge or encumber in any way any shares of
such capital stock; or grant any option for shares of such
capital stock;
(ii) other than in the ordinary course of business, consistent
with past practice, and as necessary to pay TFHC
Transaction Fee expenses consistent with this Agreement,
declare or pay any dividend, or make any other
distribution, either directly or indirectly, with respect
to TFHC Common Stock or the shares of FSB-Thompson Falls;
(iii) acquire, sell, transfer, assign, encumber or otherwise
dispose of assets or make any commitment other than in the
ordinary and usual course of business (provided, however,
that FSB-Thompson Falls may sell to its employees
21
automobiles currently being used by such employees at a
price no less than the present book value for such
automobiles on the TFHC Financial Statements);
(iv) solicit or accept deposit accounts of a different type
from accounts previously accepted by FSB-Thompson Falls or
at rates materially in excess of prevailing interest
rates, or incur any indebtedness for borrowed money;
(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 FSB-Thompson
Falls, or offer or make a loan or extension of credit in
an amount greater than $200,000 without prior consultation
with FSB-Missoula;
(vi) except for the transfer of the Leased Real Property,
cancellation of Leases and satisfaction of obligations as
contemplated by Section 4.1.12, acquire an ownership
interest or a leasehold interest in any real property,
except those disclosed in Schedule 6, whether by
foreclosure or otherwise, without making an appropriate
environmental evaluation in advance of obtaining such
interest and without providing to Glacier such evaluation
and at least 30 days' advance notice;
(vii) enter into, renew, or terminate any contracts calling for
a payment by either of them of more than $10,000
(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, (2) consistent with past practices, and (3)
providing for not less (in the case of loans) or more (in
the case of deposits) than prevailing market rates of
interest;
(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
either of them of more than $10,000, 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, investment advisory, or tax services entered
into to directly facilitate the Mergers;
(x) (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 $10,000 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) implement or adopt any material changes in its operations,
policies, or procedures, including loan loss reserve
policies, unless the changes are requested
22
by Glacier 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
Glacier, make any capital expenditures in excess of
$10,000 per project or related series of projects or
$25,000 in the aggregate, except for TFHC Transaction Fee
expenses, which expenses may not exceed $50,000;
(xv) enter into any other transaction or make any expenditure
other than in the ordinary and usual course of its
business except for expenses reasonably related to
completion of the Mergers; or
(xvi) take any action which would materially and adversely
affect or delay their ability or the ability of Glacier
and FSB-Missoula to obtain any necessary approvals,
consents or waivers of any governmental authority required
for the Mergers or to perform their respective covenants
and agreements under this Agreement.
4.1.3 CONTINUING REPRESENTATION AND WARRANTY. They will not do or cause
to be done anything that would cause any representation or
warranty in Section 3.1 of this Agreement to be untrue or
inaccurate if made at Closing, except as otherwise contemplated or
required by this Agreement or consented to in writing by Glacier
or FSB-Missoula.
4.1.4 MAINTENANCE OF PROPERTIES. Each will maintain its respective
properties and equipment (and related insurance or its equivalent)
in accordance with good business practice.
4.1.5 PRESERVATION OF BUSINESS ORGANIZATION. Each will use its
reasonable efforts to:
(i) Preserve its respective business organization.
(ii) Retain the services of management and employees consistent
with such program for consolidation of redundant
employment positions resulting from the Mergers as will be
developed in cooperation with Glacier.
(iii) Preserve the goodwill of suppliers, customers and others
with whom TFHC and FSB-Thompson Falls have business
relations.
4.1.6 SENIOR MANAGEMENT. Without prior consultation with Glacier or
FSB-Missoula, neither TFHC nor FSB-Thompson Falls will make any
change with respect to present management personnel having the
rank of vice-president or higher.
4.1.7 COMPENSATION. TFHC and FSB-Thompson Falls will not permit any
increase in the current or deferred compensation payable or to
become payable by TFHC or FSB-Thompson Falls to any of its
directors, officers, employees, agents or consultants other than
normal increments in compensation in accordance with TFHC's and
FSB-Thompson Falls's established policies with respect to the
timing and amounts of such increments.
23
Without the prior written approval of Glacier and FSB-Missoula,
TFHC and FSB-Thompson Falls will not commit to, execute or deliver
any employment agreement with any party not terminable without
expense with two weeks notice.
4.1.8 AUDITED FINANCIAL STATEMENTS. If required by the SEC or otherwise
reasonably requested by Glacier, TFHC will cause to be conducted
an audit of its consolidated financial statements, conducted by a
firm registered with the PCAOB, that satisfies all applicable
rules and regulations promulgated by the SEC in order for such
audited financial statements to be included in the Form S-4
Registration Statement contemplated by Section 4.2 of this
Agreement. All fees and costs associated with such audit will be
paid by Glacier.
4.1.9 UPDATE OF FINANCIAL STATEMENTS. TFHC will deliver unaudited
balance sheets and related statements of income and shareholders'
equity 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. The Subsequent TFHC Financial
Statements:
(i) will be prepared from the books and records of TFHC and
its subsidiaries;
(ii) will present fairly the financial position and operating
results of TFHC 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 with the regulations promulgated by
applicable regulatory authorities, to the extent then
applicable; and
(iv) will reflect all liabilities, contingent or otherwise, of
TFHC 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 not recorded on the Subsequent TFHC Financial
Statements will be disclosed in writing to Glacier.
4.1.10 UPDATE SCHEDULES. From the date of this Agreement until Closing,
TFHC will promptly revise and supplement the Schedules to this
Agreement prepared by or on behalf of TFHC or its Subsidiaries to
ensure that such Schedules remain 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 TFHC's or
FSB-Thompson Falls's representations or warranties contained in
this Agreement.
4.1.11 ACQUISITION PROPOSAL. TFHC agrees that neither it nor any of its
Subsidiaries will, and TFHC will direct and use its best efforts
to cause its 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 TFHC) with respect to a merger,
consolidation or similar transaction involving, or any purchase of
all or any significant portion of the assets or equity securities
of, TFHC or any of its Subsidiaries (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
24
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. TFHC 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. TFHC 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 4.1.11. TFHC will notify
Glacier 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 TFHC or
its Subsidiaries.
4.1.12 STATUS OF TITLE/LEASEHOLD INTERESTS. No later than 15 days after
the Execution Date, TFHC will provide Glacier with title reports
for each FSB-Thompson Falls' Property, issued by Stewart Title
(with regard to the Thompson Falls and Plains offices) and First
American Title Corporation (with regard to the Dillon Property),
or such other title insurance companies reasonably satisfactory to
the parties. These title reports must show the current status of
title to each such Property. Within 15 days after the date on
which TFHC delivers all of the title reports to Glacier for its
review, Glacier will inform TFHC in writing whether, and in what
manner, it objects to any of the exceptions to title shown on any
of the title reports. Glacier may not object to any item on the
title reports that was also shown on the title policies delivered
pursuant to Section 3.1.6(iv) unless set forth in Schedule 14.
TFHC will, within 10 days of the date on which it receives the
written notice of objection from Glacier, inform Glacier if there
are any objections that it is unable to remove at or prior to
Closing. TFHC will not, however, be obligated to remove exceptions
that are non-monetary exceptions that do not interfere with the
use of the properties as bank branch locations. At Closing, TFHC
will provide Glacier with title policies issued with respect to
each of the Properties, in an amount commensurate with the value
of each such Property as agreed upon by Glacier and TFHC, dated as
of the Effective Date, insuring fee title in Glacier or
FSB-Missoula, as so designated by Glacier, and that each such
Property is unencumbered by any Liens, other than Liens for taxes
not yet delinquent and other exceptions to title as set forth in
the title reports as approved by Glacier.
4.1.13 DIRECTORS' AND OFFICERS' LIABILITY. Immediately prior to the
Effective Date, TFHC will notify its directors' and officers'
liability insurers of the Mergers and of all pending or, to the
knowledge of its Executive Officers, threatened claims, actions,
suits, proceedings or investigations asserted or claimed against
any Person entitled to indemnification pursuant to Section 6.5 of
this Agreement and known to TFHC, or circumstances reasonably
deemed by Glacier to be likely to give rise thereto, in accordance
with terms and conditions of the applicable policies.
4.1.14 REVIEW OF LOANS. TFHC and FSB-Thompson Falls will permit Glacier
to conduct an examination of FSB-Thompson Falls's loans to
determine credit quality and the adequacy of FSB-Thompson Falls's
ALLL. Glacier will have continued access to FSB-Thompson Falls's
loans through Closing to update the examination. At Glacier's
reasonable request, FSB-Thompson Falls will provide Glacier with
current reports updating the information set forth in Schedule 10.
25
4.1.15 CONDUCT OF GLACIER'S BUSINESS BEFORE CLOSING. Glacier and
FSB-Missoula will:
(i) provide TFHC with prompt written notice of any events,
individually or in the aggregate, that could have a
Material Adverse Effect with respect to Glacier and/or
FSB-Missoula;
(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 Glacier Financial Statements, except
for changes in such principles and practices required
under GAAP.
4.2 REGISTRATION STATEMENT.
4.2.1 PREPARATION OF REGISTRATION STATEMENT.
(i) A Registration Statement on Form S-4 (together with any
amendments or supplements, the "Registration Statement")
will be filed by Glacier with the SEC under the Securities
Act for registration of the Glacier Shares to be issued in
the Holding Company Merger, and the parties will prepare a
related prospectus/proxy statement ("Prospectus/Proxy
Statement") to be mailed together with any amendments and
supplements to TFHC's shareholders.
(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 TFHC
Meeting), all information set forth in the Registration
Statement that is or to be furnished by or on behalf of
Glacier relating to Glacier and by or on behalf of TFHC
relating to TFHC, (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) Glacier will pay all fees and costs associated with the
preparation by Glacier's counsel (and other professional
advisors) and the filing of the Registration
26
Statement. TFHC will pay all costs associated with its
review and preparation of the Registration Statement and
the Prospectus/Proxy. TFHC 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) Glacier and TFHC 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) TFHC 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 "TFHC Meeting"). The TFHC Meeting will be held on the
earliest practical date after the date the
Prospectus/Proxy Statement may first be sent to TFHC's
shareholders without objection by applicable governmental
authorities. TFHC's board of directors and officers will
recommend approval of the Holding Company Merger to TFHC's
shareholders.
4.3 AFFILIATE LETTERS.
4.3.1 AFFILIATE LIST. Certain persons may be deemed "affiliates" of TFHC
under Rule 145 of the Securities Act. Set forth in Schedule 15 is
a list of names and addresses of TFHC's "affiliates" with respect
to the Mergers within the meaning of Rule 145. Prior to when the
Registration Statement is filed with the SEC, TFHC will deliver,
or cause to be delivered, to Glacier a letter, dated as of the
date of its delivery and in the form attached as Exhibit A, from
each of these "affiliates" and from any additional person who
becomes an "affiliate" before the Effective Date and after the
Execution Date of this Agreement.
4.3.2 RESTRICTIVE LEGENDS. Glacier will place a restrictive legend on
all certificates representing Glacier Shares to be received by an
"affiliate," so as to preclude their transfer or disposition in
violation of the affiliate letters. Glacier will also instruct its
transfer agent not to permit the transfer of those shares, and to
take any other steps reasonably necessary to ensure compliance
with Rule 145.
4.4 SUBMISSION TO REGULATORY AUTHORITIES. Representatives of Glacier and
FSB-Missoula will prepare and file with applicable regulatory agencies,
applications for approvals, waivers or other actions deemed necessary or
desirable, in the opinion of their counsel, in order to consummate the
Mergers. Glacier will provide copies of such applications for review by
TFHC prior to their submission to the applicable regulatory authorities.
These applications are expected to include:
(i) An application (or request for waiver) to the Federal
Reserve and related filings regarding the Holding Company
Merger.
(ii) An application to the Federal Reserve and Director and
related filings regarding the Bank Merger.
27
(iii) Filings and coordination with the offices of the Montana
Director and Montana Secretary of State with respect to
the Mergers.
4.5 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 Mergers will occur upon, and be determined by, the mutual consent of
TFHC and Glacier.
4.6 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 Glacier, FSB-Missoula, TFHC and FSB-Thompson
Falls to consummate the Mergers.
4.7 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 Mergers promptly.
4.8 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 TFHC and FSB-Thompson Falls only,
acquisition of an ownership or leasehold interest in any
real property (except as disclosed in Schedule 6), as
specified in Section 4.1.2 of this Agreement.
4.9 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 Mergers, or (iv) is or becomes public without fault of the
subject party. If this Agreement is terminated or the Mergers otherwise
fail 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 Mergers.
4.10 UPDATE OF GLACIER FINANCIAL STATEMENTS. Glacier will make Subsequent
Glacier Financial Statements available to TFHC by the earlier of: (1) five
(5) days after Glacier prepares and issues them or (2) the date that such
financial statements are filed with the SEC pursuant to Glacier's
reporting obligations under the Exchange Act. The Subsequent Glacier
Financial Statements will:
(a) be prepared from the books and records of Glacier and its
Subsidiaries;
28
(b) present fairly the financial position and operating results of
Glacier and its Subsidiaries at the times indicated and for the
periods covered;
(c) be prepared in accordance with GAAP (except for the absence of
notes) and with the regulations promulgated by applicable
regulatory authorities, to the extent then applicable, subject to
normal year-end adjustments; and
(d) reflect all liabilities, contingent or otherwise, of Glacier on
the respective dates and for the respective periods covered,
except for liabilities not required to be so reflected in
accordance with GAAP or not significant in amount.
4.11 AVAILABILITY OF GLACIER'S BOOKS, RECORDS AND PROPERTIES.
(a) Glacier will make its books, records, properties, contracts and
documents available during business hours with reasonable advance
notice to TFHC 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. Glacier 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 Glacier.
(b) At TFHC's request, Glacier will request any third parties involved
in the preparation or review of (1) Glacier Financial Statements
or (2) any audits of Glacier's operations, loan portfolios or
other assets, to disclose to TFHC the work papers or any similar
materials related to these items.
4.12 BLUE SKY FILINGS. Glacier 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.
4.13 TAX TREATMENT. Neither Glacier and its Subsidiaries nor TFHC and its
Subsidiaries will take or cause to be taken any action that would or could
reasonably be expected to prevent the Merger from qualifying as a
reorganization under Section 368(a) of the Code.
4.14 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 Mergers by October 31, 2005, and to
otherwise enable consummation of the transactions contemplated by this
Agreement.
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 Bank Merger Agreement and
the Mergers by all appropriate regulatory agencies having jurisdiction
with respect to the Mergers; 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 Glacier, would
deprive Glacier of the material economic or business benefits of the
Mergers.
5.2 CONDITIONS TO OBLIGATIONS OF GLACIER AND FSB-MISSOULA. All obligations of
Glacier and FSB-Missoula pursuant to this Agreement are subject to
satisfaction of the following conditions at or before Closing:
29
5.2.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of TFHC and FSB-Thompson Falls contained in this Agreement or in
any certificate or other instrument delivered in connection with
this Agreement will be true and correct at Closing, 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 as of such date. TFHC and
FSB-Thompson Falls will have delivered to Glacier and FSB-Missoula
their respective certificates to that effect, executed by a duly
authorized officer of TFHC and dated as of Closing.
5.2.2 COMPLIANCE. TFHC and FSB-Thompson Falls each will have performed
and complied in all material respects with all terms, covenants
and conditions of this Agreement on or before Closing. TFHC and
FSB-Thompson Falls will have delivered to Glacier and FSB-Missoula
their respective certificates to that effect, executed by a duly
authorized officer of TFHC and dated as of Closing.
5.2.3 TRANSACTION FEES. TFHC Transaction Fees have not exceeded $50,000.
"TFHC Transaction Fees" means all costs and expenses incurred by
TFHC or owed or paid by TFHC to investment advisors, 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 Mergers,
excluding, however, fees or costs paid or payable to TFHC's and
FSB-Thompson Falls's accountants with regard to these Mergers,
including any fees and costs incurred pursuant to Section 4.1.8 of
this Agreement.
5.2.4 TRANSACTION FEES STATEMENTS. TFHC has delivered to Glacier a
statement, in a form reasonably satisfactory to Glacier, from each
third party to whom TFHC has paid or owes TFHC Transaction Fees.
Each statement must set forth the total costs and expenses paid or
owing to the third party in connection with the consummation of
the Mergers. TFHC has delivered to Glacier its certificate,
executed by a duly authorized officer of TFHC and dated as of
Closing, stating the total TFHC Transaction Fees and certifying
that TFHC is in compliance with Section 5.2.3 and this Section
5.2.4.
5.2.5 NO MATERIAL ADVERSE EFFECT. Since December 31, 2004, 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
TFHC or FSB-Thompson Falls.
5.2.6 FINANCIAL CONDITION. The following will be true and the
certificates of TFHC and FSB-Thompson Falls referred to in Section
5.2.2 will so state:
(i) In the opinion of the Executive Officers of Glacier,
FSB-Missoula and FSB-Thompson Falls, FSB-Thompson Falls'
ALLL is adequate to absorb FSB-Thompson Falls' anticipated
loan losses, and such determination of adequacy will be
made in consultation with Glacier and FSB-Missoula.
(ii) The reserves set aside for any contingent liabilities of
TFHC and FSB-Thompson Falls will be adequate to absorb all
reasonably anticipated losses.
30
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 Mergers.
5.2.8 EXECUTION OF ADDITIONAL AGREEMENT. The Bank Merger Agreement will
have been executed and delivered to FSB-Missoula.
5.2.9 REAL PROPERTY MATTERS.
(i) Glacier has received all title insurance policies required
under Section 4.1.12 (or irrevocable commitments by the
title insurance company to issue such policies).
(ii) TFHC or FSB-Thompson Falls, as the case may be, has
executed, and Glacier has received, such deeds or other
documents as are necessary to transfer title from TFHC or
FSB-Thompson Falls, as the case may be, to Glacier or
FSB-Missoula, as the case may be (or to indicate, as a
matter of record, that the beneficial ownership of the
Property has changed) to all Property owned by TFHC or
FSB-Thompson Falls.
5.2.10 CORPORATE AND SHAREHOLDER ACTION. Each of the following will have
approved the Mergers:
(i) The Boards of Directors of TFHC and FSB-Thompson Falls;
(ii) TFHC, as shareholder of FSB-Thompson Falls; and
(iii) The shareholders of TFHC.
5.2.11 RESIGNATION OF DIRECTORS. The directors of TFHC and FSB-Thompson
Falls will have tendered their written resignations from the Board
of Directors of each respective company to be effective upon
consummation of the Mergers.
5.2.12 TAX OPINION. Glacier has, at Glacier's expense, obtained from
Graham & Dunn PC and delivered to TFHC, an opinion addressed to
TFHC and Glacier (in form and substance reasonably satisfactory to
TFHC and its counsel, and subject to reasonable limitations,
conditions and assumptions) substantially to the effect that:
(i) The Merger will qualify as a reorganization within the
meaning of IRC Section 368(a)(1)(A).
(ii) A holder of TFHC Common Stock who receives both Glacier
Shares and cash consideration in exchange for his or her
shares of TFHC Common Stock will recognize gain, but not
loss, to the extent of the lesser of the gain realized by
such shareholder in the exchange or the amount of cash
received by such shareholder in the exchange. Any gain
recognized by a shareholder who owns his or her shares of
TFHC Common Stock as capital assets will be treated as
capital gain, if the exchange is, with respect to such
shareholder, either "substantially disproportionate" or
"not essentially equivalent to a dividend," each within
the meaning of IRC Section 302(b).
The exchange will be "substantially disproportionate" with
respect to a shareholder if the percentage of shares of
outstanding Glacier Common Stock
31
(actually and constructively) owned by the shareholder
immediately after the Holding Company Merger is less than
80% of the percentage of the outstanding shares of Glacier
Common Stock (actually and constructively) owned by the
shareholder immediately before the Holding Company Merger.
For purposes of determining the percentage of the
outstanding shares of Glacier Common Stock (actually and
constructively) owned by the shareholder immediately
before the Holding Company Merger, the shareholder is
treated as if (1) all such shareholder's shares of TFHC
Common Stock were first exchanged in the Holding Company
Merger for shares of Glacier Common Stock, and (2) a
portion of those shares of Glacier Common Stock were then
redeemed for the cash actually received in the Holding
Company Merger.
The exchange will be "not essentially equivalent to a
dividend" with respect to a shareholder if the reduction
in such shareholder's stock ownership is a "meaningful
reduction," given his or her particular facts and
circumstances. The Internal Revenue Service has ruled that
a reduction in the stock ownership of a minority
shareholder who owns a small number of shares in a
publicly and widely held corporation, and who exercises no
control over the affairs of the corporation, will meet
this test.
5.2.13 AFFILIATE LETTERS. Glacier has received the affiliate list and
letters specified in Section 4.3.1.
5.2.14 REGISTRATION STATEMENT. The Registration Statement, as it may have
been amended, required in connection with the Glacier Shares, and
as described in Section 4.2, has become effective, and no
stop-order suspending the effectiveness of such Registration
Statement has been issued or remains in effect, and no proceedings
for that purpose have been initiated or threatened by the SEC the
basis for which still exists.
5.2.15 CASH PAID. The aggregate amount of the cash to be paid for
Proposed Dissenting Shares will not exceed ten percent (10%) of
the cash value of the Merger Consideration, as it may be adjusted
under this Agreement. For purposes of this Section 5.2.15, the
assumed cash value per Proposed Dissenting Share will be
$3,000.00.
5.2.16 NO CHANGE IN LOAN REVIEW. TFHC and FSB-Thompson Falls have
provided to Glacier the reports reasonably requested by Glacier
under Section 4.1.14, and neither these reports nor any
examinations conducted by Glacier under Section 4.1.14 reveal a
change in either: (i) the information set forth in Schedule 10 or
(ii) information revealed during Glacier's previous examinations
of the FSB-Thompson Falls's loans, which change constitutes a
Material Adverse Effect.
5.2.17 CONSENTS. TFHC has obtained the consents as indicated in Schedule
3.
5.2.18 RIGHT OF FIRST REFUSAL. With regard to the transaction
contemplated by this Agreement, each shareholder of TFHC has
waived his or her right of first refusal, as set forth in Section
7 of the Pre-Incorporation Agreement entered into in 1986 and in
Article VI, Section 3 of the bylaws for TFHC.
5.3 CONDITIONS TO OBLIGATIONS OF TFHC AND FSB-THOMPSON FALLS. All obligations
of TFHC and FSB-Thompson Falls pursuant to this Agreement are subject to
satisfaction of the following conditions at or before Closing:
32
5.3.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Glacier and FSB-Missoula contained in this Agreement or in any
certificate or other instrument delivered in connection with this
Agreement will be true and correct at Closing, 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 as of such date. Glacier
and FSB-Missoula will have delivered to TFHC and FSB-Thompson
Falls their respective certificates to that effect, executed by a
duly authorized officer of Glacier and dated as of Closing.
5.3.2 COMPLIANCE. Glacier and FSB-Missoula each will have performed and
complied with all terms, covenants and conditions of this
Agreement on or before Closing. Glacier and FSB-Missoula will have
delivered to TFHC and FSB-Thompson Falls their respective
certificates to that effect, executed by a duly authorized officer
of Glacier 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 Mergers.
5.3.4 NO MATERIAL ADVERSE EFFECT. Since December 31, 2004, 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
Glacier or FSB-Missoula.
5.3.5 TAX OPINION. The tax opinion specified in Section 5.2.12 has been
delivered to TFHC.
5.3.6 CORPORATE AND SHAREHOLDER ACTION. Each of the following will have
approved the Mergers:
(i) The Boards of Directors of Glacier and FSB-Missoula.
(ii) Glacier, as shareholder of FSB-Missoula.
5.3.7 REGISTRATION STATEMENT. The Registration Statement will have
become effective as specified in Section 5.2.14.
5.3.8 BLUE SKY FILINGS. Glacier has received the state securities laws
or "blue sky" permits and approvals specified in Section 4.12.
5.3.9 EXECUTION OF ADDITIONAL AGREEMENT. FSB-Missoula will have executed
and delivered the Bank Merger Agreement.
5.3.10 PAYMENTS TO THE EXCHANGE AGENT. Glacier will have deposited the
Merger Consideration with the Exchange Agent.
5.3.11 APPOINTMENT TO MISSOULA BANK BOARD OF DIRECTORS. The board of
directors of FSB-Missoula will have appointed Michael Baxter to
serve as a director of FSB-Missoula, effective upon consummation
of the Bank Merger.
5.3.12 ASSUMPTION OF SALARY CONTINUATION AGREEMENTS AND SPLIT DOLLAR LIFE
INSURANCE POLICIES. Glacier or FSB-Missoula will have assumed the
salary continuation
33
agreements, in effect as of the Execution Date, for Robert
("Skip") Baxter, Robert Fletcher, Daniel Whittenburg and Barbara
Wooden and the Split Dollar Agreements for Messrs. Baxter and
Fletcher.
SECTION 6.
DIRECTORS, OFFICERS AND EMPLOYEES
6.1 CONTROLLING SHAREHOLDERS. As a condition to the execution of this
Agreement, Robert ("Skip") Baxter and Robert Fletcher have entered into
the written agreements described in Recital F on or before the Execution
Date. Such agreements will take effect at the Effective Date. The parties
will use their best efforts to negotiate and enter into consulting
agreements for Messrs. Baxter and Fletcher prior to the Effective Date.
Such consulting agreements will set forth the general terms of Messrs.
Baxter's and Fletcher's on-going involvement with FSB-Missoula.
6.2 OFFICER'S EMPLOYMENT CONTRACT. At the Effective Date, the Employment
Agreements described in Recital E will take effect.
6.3 FSB-MISSOULA BOARD OF DIRECTORS. From and after the Effective Date, the
board of directors of FSB-Missoula will include the members of the board
of directors of FSB-Missoula as constituted immediately prior to the
Effective Date, together with Michael Baxter, who will hold office until
his successor is elected and qualified.
6.4 EMPLOYEE BENEFIT ISSUES.
6.4.1 COMPARABILITY OF BENEFITS. Glacier and FSB-Missoula intend that
their current personnel policies will apply to any current
employees of TFHC and FSB-Thompson Falls who are retained in the
service of Glacier and FSB-Missoula after Closing. Such retained
employees will be eligible to participate in all of the benefit
plans of Glacier and FSB-Missoula that are generally available to
similarly situated employees of Glacier and FSB-Missoula in
accordance with and subject to the terms of such plans. Glacier
and FSB-Missoula intend that, as soon as practicable after
consummation of the Mergers, TFHC's and FSB-Thompson Falls'
existing benefit plans will be terminated.
6.4.2 TREATMENT OF PAST SERVICE. For purposes of such participation,
current employees' prior service with TFHC and/or FSB-Thompson
Falls will constitute prior service with Glacier and/or
FSB-Missoula for purposes of determining eligibility and vesting
(including but not limited to vacation time).
6.4.3 SEVERANCE PAYMENTS. If individuals who are FSB-Thompson Falls
employees as of the Execution Date are terminated within three
months of the Effective Date as a result of a consolidation of
staff functions, such employees will be entitled to receive the
severance payment specified in Glacier's Severance Plan for
Employees, as in effect at the time of such termination.
6.4.4 EMPLOYEE BONUSES. For 2005, individuals who are FSB-Thompson Falls
employees as of the Execution Date will be eligible to receive a
bonus pursuant to FSB-Thompson Falls's bonus criteria in effect as
of the Execution Date. On the Effective Date, the TFHC Financial
Statements will reflect accruals for anticipated bonuses to be
paid after Closing. Commencing in 2006, such employees who remain
employed by FSB-Missoula will be eligible to participate in the
bonus plans administered by FSB-Missoula's board
34
of directors. Nothing in this Section 6.4.4 shall be construed as
guaranteeing specific bonus payments for individual employees.
6.4.5 NO CONTRACT CREATED. Except as provided in Section 6.2 of this
Agreement, nothing in this Agreement will give any employee a
right to continuing employment.
6.5 INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS. For a period of six
(6) years from and after the Effective Date, Glacier will indemnify and
defend each present and former director and officer of TFHC and
FSB-Thompson Falls 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 Mergers contemplated by this Agreement, to the fullest extent that
TFHC and/or FSB-Thompson Falls are permitted to indemnify (and advance
expenses to) its directors and officers under applicable 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 TFHC's or FSB-Thompson Falls's Articles of Incorporation or
bylaws will be made by independent counsel (which will not be counsel that
provides any services to Glacier or any of its Subsidiaries) selected by
Glacier and reasonably acceptable to such officer or director. For a
period of six (6) years after the Effective Date, Glacier 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 Glacier 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 January 31, 2006 (the "Termination Date"), either Glacier or TFHC
may terminate this Agreement and the Mergers if both of the following
conditions are satisfied:
(a) the terminating party's board of directors decides to terminate by a
majority vote 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 OTHER GROUNDS FOR TERMINATION. This Agreement and the Mergers may be
terminated at any time before Closing (whether before or after applicable
approval of this Agreement by TFHC's shareholders, unless otherwise
provided) as follows:
7.2.1 MUTUAL CONSENT. By mutual consent of TFHC and Glacier, if the
boards of directors of each party agrees to terminate by a
majority vote of its members.
7.2.2 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 Mergers); provided, however, that either party will have
fifteen (15) 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
35
such denial, and such other party may not terminate this Agreement
pursuant to this Section 7.2.2 during such period of time.
7.2.3 BREACH OF REPRESENTATION. By either party (provided that the
terminating party is not then in material breach of any of its
representations, warranties, covenants or other agreements in this
Agreement) if there has been a material breach of any of the
representations or warranties set forth in this Agreement 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 7.2.3 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 TFHC) or Section
5.3.1 (in the case of a breach of a representation or warranty by
Glacier). In the event of termination pursuant to this Section
7.2.3, the terminating party will be entitled to receive from the
other party the Termination Fee.
7.2.4 BREACH OF COVENANT. By either party, (provided that the
terminating party is not then in material breach of any of its
representations, warranties, covenants or other agreements in this
Agreement) if there has been a material breach of any of the
covenants or agreements set forth in this Agreement 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 7.2.4, the terminating party will be entitled to
receive from the other party the Termination Fee; provided,
however, that Glacier will not be entitled to collect the
Termination Fee in the event of a breach of Section 4.1.12 of this
Agreement caused by TFHC's inability (after good faith effort) to
remove exceptions to title as provided for in that section.
7.2.5 FAILURE TO RECOMMEND OR OBTAIN SHAREHOLDER APPROVAL. By Glacier
(provided that Glacier is not then in material breach of any of
its representations, warranties, covenants or other agreements in
this Agreement), if (a) TFHC's Board of Directors (i) fails to
recommend to its shareholders the approval of the Holding Company
Merger or (ii) modifies, withdraws or changes in a manner adverse
to Glacier its recommendation to shareholders to approve the
Holding Company Merger; or (b) regardless of whether TFHC's Board
of Directors recommends to its shareholders the approval of the
Holding Company Merger, TFHC's shareholders elect not to approve
the Holding Company Merger.
7.2.6 IMPRACTICABILITY. By either Glacier or TFHC, upon written notice
given to the other party, if the board of directors of the party
seeking termination under this Section 7.2.6 has determined in its
sole judgment, made in good faith and after due consideration and
consultation with counsel, that the Mergers have become
inadvisable or impracticable by reason of the institution of
litigation by the federal government or the government of the
State of Montana to restrain or invalidate the Mergers or this
Agreement.
7.2.7 DISSENTING SHARES. By Glacier, if holders of 10% or more of the
outstanding shares of TFHC Common Stock are Proposed Dissenting
Shares.
36
7.3 TERMINATION FEE PAYABLE BY TFHC. Due to expenses, direct and indirect,
incurred by Glacier in negotiating and executing this Agreement and in
taking steps to effect the Mergers, TFHC will pay to Glacier $150,000 (the
"Termination Fee"), if Glacier terminates this Agreement pursuant to
Sections 7.2.3 (breach of representation) or 7.2.4 (breach of covenant).
If the Termination Fee becomes payable pursuant to this Section 7.3, it
will be payable on Glacier's demand and must be paid by TFHC within three
business days following the date of Glacier's demand.
7.4 TERMINATION FEE PAYABLE BY GLACIER. Due to expenses, direct and indirect,
incurred by TFHC in negotiating and executing this Agreement and in taking
steps to effect the Mergers, Glacier will pay to TFHC the Termination Fee
if TFHC terminates this Agreement pursuant to Sections 7.2.3 (breach of
representation) or 7.2.4 (breach of covenant). If the Termination Fee
becomes payable pursuant to this Section 7.4, it will be payable on TFHC's
demand and must be paid by Glacier within three business days following
the date of TFHC's demand.
7.5 COST ALLOCATION UPON TERMINATION. In connection with the termination of
this Agreement under this Section 7, except as provided in Sections 7.3
and 7.4, Glacier and TFHC will each pay their own out-of-pocket costs
incurred in connection with this Agreement, and will have no other
liability to the other party. 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:
Glacier/FSB-Missoula Glacier Bancorp, Inc.
49 Commons Loop
Kalispell, Montana 59901
Attn: Michael J. Blodnick, President
and CEO
with a copy to: Kimberly F. Stephan, Esq.
Graham & Dunn PC
Pier 70
2801 Alaskan Way Suite 300
Seattle, Washington 98121-1128
TFHC/FSB-Thompson Falls Thompson Falls Holding Co.
107 S. Fulton
P.O. Box 3500
Thompson Falls, Montana 59873
Attn: Robert L. Fletcher, Vice
President and Legal Counsel
or to such other address or person as any party may designate by written
notice to the other.
37
8.2 WAIVERS AND EXTENSIONS. Subject to Section 9 of this Agreement, Glacier or
TFHC may grant waivers or extensions to the other party, but only through
a written instrument executed by the President and 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 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.
8.4 SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS. The
representations and covenants in this Agreement will not survive Closing
or termination of this Agreement, except that (1) Section 4.9
(Confidentiality), Sections 7.3 and 7.4 (Termination-Related Fees),
Section 7.5 (expense allocation), 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 without limitation, Section 6.5 (Indemnification), will
survive Closing.
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 Mergers, 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 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 Missoula County,
Montana.
38
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 Missoula County,
Montana. Each party consents to and submits to the jurisdiction of any
local state or federal court located in Missoula County, Montana.
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 a or after the TFHC Meeting; provided, however,
that after approval by TFHC's shareholders, no amendment will be made changing
the form or reducing the amount of consideration to be received by the
shareholders of TFHC 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.
[signatures on next page]
39
This Plan and Agreement of Merger is dated as of the 14th day of July,
2005.
GLACIER BANCORP, INC.
By: /s/ Michael J. Blodnick
--------------------------------------
Michael J. Blodnick, President and CEO
FIRST SECURITY BANK OF MISSOULA
By: /s/ William L. Bouchee
--------------------------------------
William L. Bouchee, CEO
THOMPSON FALLS HOLDING CO.
By: /s/ Robert T. Baxter
--------------------------------------
Its: President
FIRST STATE BANK
By: /s/ Robert T. Baxter
--------------------------------------
Its: President/CEO
40
STATE OF MONTANA )
) ss.
COUNTY OF FLATHEAD )
On this 13th day of July, 2005, 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: 7-21-2007
STATE OF MONTANA )
) ss.
COUNTY OF MISSOULA )
On this 13th day of July, 2005, before me personally appeared William L.
Bouchee, to me known to be the Chief Executive Officer of FIRST SECURITY BANK OF
MISSOULA, 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/ Cindy Good
------------------------------------------
NOTARY PUBLIC in and for the State of
Montana, residing at Missoula
My Commission expires: 4-18-2007
41
STATE OF MONTANA )
) ss.
COUNTY OF SANDERS )
On this 14th day of July, 2005, before me personally appeared Robert T.
Baxter, to me known to be the President of THOMPSON FALLS HOLDING CO., 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/ M.E. Taylor
------------------------------------------
NOTARY PUBLIC in and for the State of
Montana, residing at Thompson Falls
My Commission expires: 02/04/2008
STATE OF MONTANA )
) ss.
COUNTY OF SANDERS )
On this 14th day of July, 2005, before me personally appeared Robert T.
Baxter, to me known to be the President/CEO of FIRST STATE BANK, 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/ M.E. Taylor
------------------------------------------
NOTARY PUBLIC in and for the State of
Montana, residing at Thompson Falls
My Commission expires: 02/04/2008
42
TABLE OF CONTENTS
PAGE
----
DEFINITIONS............................................................................................. 2
SECTION 1. TERMS OF TRANSACTION......................................................................... 6
1.1 Transaction........................................................................... 6
1.2 Mergers............................................................................... 6
1.3 Merger Consideration.................................................................. 7
1.4 Dillon Branch Additional Consideration................................................ 7
1.5 No Fractional Shares.................................................................. 7
1.6 Payment to Dissenting Shareholders.................................................... 8
1.7 Deposit of Cash and Shares............................................................ 8
1.8 Certificates.......................................................................... 8
SECTION 2. CLOSING OF TRANSACTION....................................................................... 9
2.1 Closing............................................................................... 9
2.2 Events of Closing..................................................................... 10
2.3 Place and Time of Closing............................................................. 10
SECTION 3. REPRESENTATIONS AND WARRANTIES............................................................... 10
3.1 Representations and Warranties........................................................ 10
3.2 Representations and Warranties of Glacier and FSB-Missoula............................ 17
SECTION 4. CONDUCT AND TRANSACTIONS PRIOR TO CLOSING.................................................... 21
4.1 Conduct of TFHC's and FSB-Thompson Falls's Business Prior to Closing.................. 21
4.2 Registration Statement................................................................ 26
4.3 Affiliate Letters..................................................................... 27
4.4 Submission to Regulatory Authorities.................................................. 27
4.5 Public Announcements.................................................................. 28
4.6 Consents.............................................................................. 28
4.7 Further Actions....................................................................... 28
4.8 Notice................................................................................ 28
4.9 Confidentiality....................................................................... 28
4.10 Update of Glacier Financial Statements................................................ 28
4.11 Availability of Glacier's Books, Records and Properties............................... 29
4.12 Blue Sky Filings...................................................................... 29
4.13 Tax Treatment......................................................................... 29
4.14 Best Efforts.......................................................................... 29
SECTION 5. APPROVALS AND CONDITIONS..................................................................... 29
5.1 Required Approvals.................................................................... 29
5.2 Conditions to Obligations of Glacier and FSB-Missoula................................. 29
5.3 Conditions to Obligations of TFHC and FSB-Thompson Falls.............................. 32
i
SECTION 6. DIRECTORS, OFFICERS AND EMPLOYEES............................................................ 34
6.1 Controlling Shareholders.............................................................. 34
6.2 Officer's Employment Contract......................................................... 34
6.3 FSB-Missoula Board of Directors....................................................... 34
6.4 Employee Benefit Issues............................................................... 34
6.5 Indemnification of Directors and Executive Officers................................... 35
SECTION 7. TERMINATION OF AGREEMENT AND ABANDONMENT OF TRANSACTION...................................... 35
7.1 Termination by Reason of Lapse of Time................................................ 35
7.2 Other Grounds for Termination......................................................... 35
7.3 Termination Fee Payable By TFHC....................................................... 37
7.4 Termination Fee Payable By Glacier.................................................... 37
7.5 Cost Allocation Upon Termination...................................................... 37
SECTION 8. MISCELLANEOUS................................................................................ 37
8.1 Notices............................................................................... 37
8.2 Waivers and Extensions................................................................ 38
8.3 Construction and Execution in Counterparts............................................ 38
8.4 Survival of Representations, Warranties, and Covenants................................ 38
8.5 Attorneys' Fees and Costs............................................................. 38
8.6 Arbitration........................................................................... 38
8.7 Governing Law and Venue............................................................... 39
8.8 Severability.......................................................................... 39
8.9 No Assignment......................................................................... 39
SECTION 9. AMENDMENTS................................................................................... 39
ii
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES:
Schedule 1 Merger Consideration
Schedule 2 Offices of FSB-Thompson Falls
Schedule 3 Third Party Consents Required by TFHC/FSB-Thompson Falls
Schedule 4 Obligations to Issue Stock - TFHC/FSB-Thompson Falls
Schedule 5 TFHC Subsidiaries
Schedule 6 TFHC Properties
Schedule 7 TFHC Environmental Matters
Schedule 8 Taxes - TFHC
Schedule 9 TFHC Material Contracts
Schedule 10 Asset Classification of FSB-Thompson Falls
Schedule 11 TFHC Litigation
Schedule 12 TFHC Insurance Policies
Schedule 13 TFHC Benefit Plans
Schedule 14 Title Policies
Schedule 15 TFHC Rule 145 Affiliates
EXHIBITS:
Exhibit A Form of Affiliate Letter
iii
APPENDIX B
MONTANA STATUTES
TITLE 35
CHAPTER 1. BUSINESS CORPORATIONS
PART 8. MERGER, CONSOLIDATION, SHARE EXCHANGE, AND SALE OF ASSETS
SECTIONS 35-1-826 THROUGH 35-1-839 - DISSENTERS RIGHTS
35-1-826. DEFINITIONS. As used in 35-1-826 through 35-1-839, the following
definitions apply:
(1) "Beneficial shareholder" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record shareholder.
(2) "Corporation" includes the issuer of the shares held by a dissenter
before the corporate action, or the surviving or acquiring corporation by merger
or share exchange of that issuer.
(3) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under 35-1-827 and who exercises that right when and in the
manner required by 35-1-829 through 35-1-837.
(4) "Fair value", with respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of the corporate action to which
the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action unless exclusion would be inequitable.
(5) "Interest" means interest from the effective date of the corporate
action until the date of payment at the average rate currently paid by the
corporation on its principal bank loans or, if the corporation has no loans, at
a rate that is fair and equitable under all the circumstances.
(6) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial shareholder to the
extent of the rights granted by a nominee certificate on file with a
corporation.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
35-1-827. RIGHT TO DISSENT. (1) A shareholder is entitled to dissent from
and obtain payment of the fair value of the shareholder's shares in the event of
any of the following corporate actions:
B-1
(a) consummation of a plan of merger to which the corporation is a party
if:
(i) shareholder approval is required for the merger by 35-1-815 or the
articles of incorporation and the shareholder is entitled to vote on the merger;
or
(ii) the corporation is a subsidiary that is merged with its parent
corporation under 35-1-818;
(b) 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;
(c) 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 1 year
after the date of sale;
(d) an amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:
(i) alters or abolishes a preferential right of the shares;
(ii) creates, alters, or abolishes a right in respect of redemption,
including a provision with respect to a sinking fund for the redemption or
repurchase of the shares;
(iii) alters or abolishes a preemptive right of the holder of the shares
to acquire shares or other securities;
(iv) excludes or limits the right of the shares to be voted 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
(v) reduces the number of shares owned by the shareholder to a fraction of
a share if the fractional share created is to be acquired for cash under
35-1-621; or
(e) 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 to obtain payment for their shares.
(2) A shareholder entitled to dissent and to obtain payment for shares
under 35-1-826 through 35-1-839 may not challenge the corporate action creating
the shareholder's entitlement unless the action is unlawful or fraudulent with
respect to the shareholder or the corporation.
35-1-828. DISSENT BY NOMINEES AND BENEFICIAL OWNERS. (1) A record
shareholder may assert dissenters' rights as to fewer than all the shares
registered in his name only if he dissents
B-2
with respect to all shares beneficially owned by any one 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.
(2) A beneficial shareholder may assert dissenters' rights as to shares
held on his behalf only if:
(a) 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
(b) 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.
35-1-829. NOTICE OF DISSENTERS' RIGHTS. (1) If a proposed corporate action
creating dissenters' rights under 35-1-827 is submitted to a vote at a
shareholders' meeting, the meeting notice must state that shareholders are or
may be entitled to assert dissenters' rights under 35-1-826 through 35-1-839 and
must be accompanied by a copy of 35-1-826 through 35-1-839.
(2) If a corporate action creating dissenters' rights under 35-1-827 is
taken without a vote of shareholders, the corporation shall give written
notification to all shareholders entitled to assert dissenters' rights that the
action was taken and shall send them the dissenters' notice described in
35-1-831.
35-1-830. NOTICE OF INTENT TO DEMAND PAYMENT. (1) If proposed corporate
action creating dissenters' rights under 35-1-827 is submitted to a vote at a
shareholders' meeting, a shareholder who wishes to assert dissenters' rights:
(a) 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
(b) may not vote his shares in favor of the proposed action.
(2) A shareholder who does not satisfy the requirements of subsection
(1)(a) is not entitled to payment for his shares under 35-1-826 through
35-1-839.
35-1-831. DISSENTERS' NOTICE. (1) If proposed corporate action creating
dissenters' rights under 35-1-827 is authorized at a shareholders' meeting, the
corporation shall deliver a written dissenters' notice to all shareholders who
satisfied the requirements of 35-1-830.
(2) The dissenters' notice must be sent no later than 10 days after the
corporate action was taken and must:
(a) state where the payment demand must be sent and where and when
certificates for certified shares must be deposited;
B-3
(b) inform shareholders of uncertificated shares to what extent transfer
of the shares will be restricted after the payment is received;
(c) 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 that requires the person asserting dissenters' rights to
certify whether or not he acquired beneficial ownership of the shares before
that date;
(d) set a date by which the corporation must receive the payment demand,
which may not be fewer than 30 nor more than 60 days after the date the required
notice under subsection (1) is delivered; and
(e) be accompanied by a copy of 35-1-826 through 35-1-839.
35-1-832. DUTY TO DEMAND PAYMENT. (1) A shareholder sent a dissenters'
notice described in 35-1-831 shall demand payment, certify whether the
shareholder acquired beneficial ownership of the shares before the date required
to be set forth in the dissenters' notice pursuant to 35-1-831(2)(c), and
deposit his certificates in accordance with the terms of the notice.
(2) The shareholder who demands payment and deposits his certificates
under subsection (1) retains all other rights of a shareholder until these
rights are canceled or modified by taking of the proposed corporate action.
(3) A shareholder who does not demand payment or deposit his certificates
where required, each by the date set in the dissenters' notice, is not entitled
to payment for his shares under 35-1-826 through 35-1-839.
35-1-833. SHARE RESTRICTIONS. (1) 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 are
released under 35-1-835.
(2) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are canceled or modified by the taking of the proposed corporate action.
35-1-834. PAYMENT. (1) Except as provided in 35-1-836, 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 35-1-832 the amount the
corporation estimates to be the fair value of the dissenter's shares plus
accrued interest.
(2) The payment must be accompanied by:
(a) the corporation's balance sheet as of the end of a fiscal year ending
not more than 16 months before the date of payment, an income statement for that
year, a statement of changes
B-4
in shareholders' equity for that year, and the latest available interim
financial statements, if any;
(b) a statement of the corporation's estimate of the fair value of the
shares;
(c) an explanation of how the interest was calculated;
(d) a statement of the dissenter's right to demand payment under 35-1-837;
and
(e) a copy of 35-1-826 through 35-1-839.
35-1-835. FAILURE TO TAKE ACTION. (1) If the corporation does not take the
proposed action within 60 days after the date set for demanding payment and
depositing certificates, the corporation shall return the deposited certificates
and release the transfer restrictions imposed on uncertificated shares.
(2) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it shall send a new
dissenters' notice under 35-1-831 and repeat the payment demand procedure.
35-1-836. AFTER-ACQUIRED SHARES. (1) A corporation may elect to withhold
payment required by 35-1-834 from a dissenter unless the dissenter 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.
(2) To the extent the corporation elects to withhold payment under
subsection (1), after taking the proposed corporate action, the corporation
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
35-1-837.
35-1-837. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER. (1)
A dissenter may notify the corporation in writing of the dissenter's own
estimate of the fair value of the dissenter's shares and the amount of interest
due and may demand payment of the dissenter's estimate, less any payment under
35-1-834, or reject the corporation's offer under 35-1-836 and demand payment of
the fair value of the dissenter's shares and the interest due if:
(a) the dissenter believes that the amount paid under 35-1-834 or offered
under 35-1-836 is less than the fair value of the dissenter's shares or that the
interest due is incorrectly calculated;
(b) the corporation fails to make payment under 35-1-834 within 60 days
after the date set for demanding payment; or
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(c) 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 60 days after the date set for demanding
payment.
(2) A dissenter waives the right to demand payment under this section
unless he notifies the corporation of his demand in writing under subsection (1)
within 30 days after the corporation made or offered payment for his shares.
35-1-838. COURT ACTION. (1) If a demand for payment under 35-1-837 remains
unsettled, the corporation shall commence a proceeding within 60 days after
receiving the payment demand and shall petition the court to determine the fair
value of the shares and accrued interest. If the corporation does not commence
the proceeding within the 60-day period, it shall pay each dissenter whose
demand remains unsettled the amount demanded.
(2) The corporation shall commence the proceeding in the district court of
the county where a corporation's principal office or, if its principal office is
not located in this state, where 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.
(3) The corporation shall make all dissenters whose demands remain
unsettled, whether or not residents of this state, parties to the proceeding as
in an action against their shares, and all parties must be served with a copy of
the petition. Nonresidents may be served by certified mail or by publication as
provided by law.
(4) The jurisdiction of the district court in which the proceeding is
commenced under subsection (2) is plenary and exclusive. The court may appoint
one 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 any amendment to it. The dissenters are entitled to
the same discovery rights as parties in other civil proceedings.
(5) Each dissenter made a party to the proceeding is entitled to judgment:
(a) for the amount, if any, by which the court finds the fair value of the
dissenter's shares plus interest exceeds the amount paid by the corporation; or
(b) for the fair value plus accrued interest of his after-acquired shares
for which the corporation elected to withhold payment under 35-1-836.
35-1-839. COURT COSTS AND ATTORNEY FEES. (1) The court in an appraisal
proceeding commenced under 35-1-838 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
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dissenters, in amounts the court finds equitable, to the extent the court finds
dissenters acted arbitrarily, vexatiously, or not in good faith in demanding
payment under 35-1-837.
(2) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable:
(a) 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 35-1-829 through 35-1-837; or
(b) 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 35-1-826 through 35-1-839.
(3) 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 the counsel reasonable attorney fees to be paid out of the amounts awarded
the dissenters who were benefited.
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