As filed with the Securities and Exchange Commission on September 12, 2008.
Registration No. 333-______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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GLACIER BANCORP, INC.
(Exact name of registrant as specified in its charter)
MONTANA 6022 81-0519541
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer
incorporation or organization) classification code number) identification no.)
49 COMMONS LOOP, KALISPELL, MONTANA 59901 (406) 756-4200
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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MICHAEL J. BLODNICK
President and Chief Executive Officer
49 Commons Loop
Kalispell, Montana 59901
(406) 756-4200
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies of communications to:
STEPHEN M. KLEIN KEVIN M. KELLY
WILLIAM E. BARTHOLDT TENNYSON W. GREBENAR
Graham & Dunn PC Rothgerber Johnson & Lyons L.L.P.
Pier 70, 2801 Alaskan Way, Suite 300 1200 Seventeenth Street
Seattle, Washington 98121-1128 Denver, Colorado 80202
Telephone: (206) 340-9648 Telephone: (303) 623-9000
Facsimile: (206) 340-9599 Facsimile: (303) 623- 9222
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE PUBLIC:
The date of mailing of the enclosed proxy statement/prospectus to
shareholders of Bank of the San Juans Bancorporation.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of "large accelerated filer," "accelerated filer" and
"smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer [X] Accelerated Filer [ ]
Non-Accelerated Filer [ ] Smaller reporting Company [ ]
(Do not check if a smaller reporting company)
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 640,000 N/A $3,392,571 $133.33
(1) Represents the maximum number of shares of common stock, $0.01 par value
per share estimated to be issuable by Glacier Bancorp, Inc ("Glacier") upon
consummation of the acquisition of Bank of the San Juans Bancorporation
("SJ Bancorp") by Glacier.
(2) Calculated in accordance with Rule 457(f) under the Securities Act of 1933,
the proposed maximum offering price of $3,392,571 is computed by
subtracting $9,000,000 (the estimated cash to be paid by Glacier) from the
product of (A) $24.79, the per-share book value of SJ Bancorp common stock
on June 30, 2008, times (B) 499,902 (the maximum number of shares of SJ
Bancorp common stock expected to be exchanged for the common stock being
registered).
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 BANK OF THE SAN JUANS BANCORPORATION GLACIER BANCORP, INC.
MERGER PROPOSED - YOUR VOTE IS VERY IMPORTANT
Dear Bank of the San Juans Bancorporation Shareholders:
The boards of directors of Bank of the San Juans Bancorporation and Glacier
Bancorp, Inc. have agreed on a merger of SJ Bancorp with and into Glacier
Bancorp. When the merger occurs, Bank of the San Juans, SJ Bancorp's subsidiary,
will continue to operate as Bank of the San Juans with the same management, but
as a wholly owned subsidiary of Glacier.
Under the terms of the Plan and Agreement of Merger, dated August 19, 2008,
Glacier will pay to SJ Bancorp shareholders, a total of 640,000 shares of
Glacier common stock, plus a cash payment equal to $9,000,000 (the cash portion
of the merger consideration is subject to adjustment as described in the
attached proxy statement/prospectus).
Each outstanding share of SJ Bancorp common stock will be exchanged for a
fixed number of shares of Glacier common stock and a fixed amount of cash. The
total cash portion of the merger consideration will be reduced, on a dollar for
dollar basis, by the amount, if any, that SJ Bancorp's "Closing Capital" is less
than $11,350,000. If SJ Bancorp's Closing Capital exceeds $11,350,000, SJ
Bancorp may distribute the amount of the excess to its shareholders immediately
prior to the closing of the merger. Assuming for purposes of illustration only
that (i) the cash payment made by Glacier is $9,000,000, and (ii) that all SJ
Bancorp stock options are exercised prior to the merger, SJ Bancorp shareholders
will receive $_____ in a combination of cash ($18.004) and Glacier common stock
(1.2803 shares) per SJ Bancorp share, based on the closing price of Glacier
common stock on October __, 2008. Assuming the exercise of all stock options, SJ
Bancorp shareholders will own approximately 1.2% of Glacier's outstanding common
stock following the merger.
Your board of directors believes the terms of the merger are fair and in
the best interest of SJ Bancorp and its shareholders. In reaching this decision,
the board considered numerous factors as described in the attached proxy
statement/prospectus, including the receipt of a fairness opinion from Sandler
O'Neill & Partners, L.P.
THE MERGER CANNOT BE COMPLETED UNLESS YOU APPROVE IT. Approval requires the
affirmative vote of the holders of at least two-thirds (66 2/3%) of the shares
of SJ Bancorp's outstanding common stock. We will hold a special shareholders'
meeting to vote on the merger proposal. THE SJ BANCORP SPECIAL SHAREHOLDERS'
MEETING WILL BE HELD ON ___________, NOVEMBER __, 2008, AT ______ __.M. LOCAL
TIME, AT _____________, DURANGO, COLORADO. 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. IF YOU DO NOT VOTE YOUR SHARES, IT WILL HAVE THE SAME
EFFECT AS VOTING AGAINST THE MERGER.
On behalf of the SJ Bancorp board of directors, I recommend that you vote
FOR approval of the merger.
Arthur C. Chase Jr.
Chief Executive Officer
NEITHER THE FEDERAL DEPOSIT INSURANCE CORPORATION, SECURITIES AND EXCHANGE
COMMISSION, NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THE SECURITIES TO
BE ISSUED BY GLACIER OR DETERMINED IF THIS PROXY STATEMENT/PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OF GLACIER COMMON STOCK TO BE ISSUED IN THE MERGER ARE NOT SAVINGS OR
DEPOSIT ACCOUNTS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL DEPOSIT INSURANCE FUND OR ANY
OTHER GOVERNMENTAL AGENCY. SUCH SHARES ARE NOT GUARANTEED BY GLACIER OR SJ
BANCORP AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
----------
This proxy statement/prospectus is dated October __, 2008, and is first being
mailed to SJ Bancorp's shareholders on October __, 2008.
BANK OF THE SAN JUANS BANCORPORATION
144 EAST EIGHTH STREET
DURANGO, COLORADO 83301
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER __, 2008
TO THE SHAREHOLDERS OF BANK OF THE SAN JUANS BANCORPORATION:
A special meeting of shareholders of Bank of the San Juans Bancorporation
will be held on __________, November __, 2008, at _____ __.m. local time, at
____________________, Durango, Colorado. The special meeting is for the
following purposes:
1. MERGER AGREEMENT. To consider and vote on a proposal to approve the Plan
and Agreement of Merger, dated as of August 19, 2008, between Glacier
Bancorp, Inc. and Bank of the San Juans Bancorporation, under the terms of
which SJ Bancorp 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 SJ Bancorp common stock at the close of business on
_________, 2008, 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 (66 2/3%) of the
shares of SJ Bancorp's outstanding common stock is required for approval of the
merger agreement. As of _________, 2008, there were 492,902 shares of SJ Bancorp
common stock outstanding and entitled to vote at the special meeting.
SJ Bancorp shareholders have the right to dissent from the merger and
obtain payment of the fair value of their SJ Bancorp shares under applicable
provisions of Colorado law. A copy of the provisions regarding dissenters'
rights is attached as APPENDIX B to the accompanying proxy statement/prospectus.
For details of your dissenters' rights and how to exercise them, please see the
discussion under "The Merger - Dissenters' Rights of Appraisal."
YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the special
meeting, please complete, sign, date and promptly return the accompanying proxy
using the enclosed envelope. If for any reason you should desire to revoke your
proxy, you may do so at any time before it is voted at the meeting. IF YOU DO
NOT VOTE YOUR SHARES, IT WILL HAVE THE SAME EFFECT AS VOTING AGAINST THE MERGER.
THE BOARD OF DIRECTORS OF SJ BANCORP HAS DETERMINED THAT THE MERGER
AGREEMENT IS FAIR TO AND IN THE BEST INTERESTS OF SJ BANCORP AND ITS
SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE MERGER
AGREEMENT.
PLEASE DO NOT SEND ANY CERTIFICATES FOR YOUR STOCK AT THIS TIME. YOU WILL
RECEIVE INSTRUCTIONS ON HOW TO EXCHANGE YOUR CERTIFICATES SOON AFTER THE MERGER
IS CONSUMMATED.
By Order of the Board of Directors,
Thomas Melchior, Secretary
Durango, Colorado
October __, 2008
REFERENCES TO ADDITIONAL INFORMATION
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND
FINANCIAL INFORMATION ABOUT GLACIER FROM DOCUMENTS THAT ARE NOT INCLUDED IN OR
DELIVERED WITH THIS DOCUMENT.
You can obtain documents incorporated by reference into this proxy
statement/prospectus by requesting them in writing or by telephone from Glacier
at the following address:
Glacier Bancorp, Inc.
49 Commons Loop
Kalispell, Montana 59901
ATTN: LeeAnn Wardinsky, Corporate Secretary
Telephone: (406) 751-4703
You will not be charged for the documents that you request. If you would
like to request documents, please do so by __________, 2008 in order to receive
them before the SJ Bancorp special shareholders' meeting.
See "Where You Can Find More Information About Glacier" at page __.
TABLE OF CONTENTS
PAGE
-----
QUESTIONS AND ANSWERS ABOUT THIS DOCUMENT AND THE MERGER ............... 1
SUMMARY ................................................................ 5
RISK FACTORS ........................................................... 11
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS ................... 15
SELECTED HISTORICAL FINANCIAL INFORMATION OF GLACIER ................... 16
COMPARATIVE STOCK PRICE AND DIVIDEND INFORMATION ....................... 18
SJ BANCORP SPECIAL SHAREHOLDERS' MEETING ............................... 20
BACKGROUND OF AND REASONS FOR THE MERGER ............................... 21
THE MERGER ............................................................. 36
INFORMATION CONCERNING SJ BANCORP ...................................... 51
DESCRIPTION OF GLACIER'S CAPITAL STOCK ................................. 56
COMPARISON OF CERTAIN RIGHTS OF HOLDERS OF GLACIER AND SJ BANCORP
COMMON STOCK ........................................................ 56
CERTAIN LEGAL MATTERS .................................................. 60
EXPERTS ................................................................ 60
WHERE YOU CAN FIND MORE INFORMATION ABOUT GLACIER ...................... 60
Appendix A - Plan and Agreement of Merger
Appendix B - Article 113, Colorado Business Corporation Act, Regarding
Dissenter's Rights
Appendix C - Opinion of Sandler O'Neill & Partners, L.P., Financial Advisor to
SJ Bancorp
i
QUESTIONS AND ANSWERS ABOUT THIS DOCUMENT AND THE MERGER
WHY AM I RECEIVING THESE MATERIALS?
We are sending you these materials to help you decide how to vote your
shares of SJ Bancorp with respect to the proposed merger with Glacier. The
merger cannot be completed unless SJ Bancorp receives the affirmative vote of
the holders of at least two-thirds (66 2/3%) of the shares of SJ Bancorp's
outstanding common stock. SJ Bancorp is holding a special meeting of
shareholders to vote on the proposals necessary to complete the merger.
Information about the special meeting is contained in this proxy statement of SJ
Bancorp and prospectus of Glacier.
WHAT IS THE PURPOSE OF THIS PROXY STATEMENT/PROSPECTUS?
This document serves as both a proxy statement of SJ Bancorp and a
prospectus of Glacier. As a proxy statement, it is being provided to you by SJ
Bancorp because the board of directors of SJ Bancorp is soliciting your proxy to
vote to approve the proposed merger of SJ Bancorp with and into Glacier. After
the merger, Bank of the San Juans, the subsidiary of SJ Bancorp, will be wholly
owned by Glacier. As a prospectus, it is being provided to you by Glacier
because Glacier is offering you shares of its common stock as part of the
consideration for your SJ Bancorp shares.
WHAT WILL SJ BANCORP SHAREHOLDERS RECEIVE IN THE MERGER?
Under the terms of the Plan and Agreement of Merger, Glacier will issue
shares of its common stock and pay cash in exchange for all outstanding shares
of SJ Bancorp common stock. Glacier will issue a total of 640,000 shares of
common stock, and will pay $9,000,000 in cash, for all of the shares of SJ
Bancorp. The cash portion of the amount to be paid by Glacier will be subject to
adjustment depending on SJ Bancorp's capital at closing. If the "SJ Bancorp
Closing Capital," as defined in the merger agreement, is less than $11,350,000,
then the cash portion will be reduced on a dollar-for-dollar basis. If the SJ
Bancorp Closing Capital exceeds $11,350,000, SJ Bancorp may distribute the
amount of the excess to its shareholders immediately prior to the closing of the
merger.
WHAT WILL I RECEIVE IN THE MERGER?
The merger consideration to be received by shareholders of SJ Bancorp is a
pro rata interest in a pool of merger consideration consisting of 640,000 shares
and $9,000,000 in cash. A shareholder's interest in the pool of merger
consideration is subject to the exercise of the outstanding stock options of SJ
Bancorp. In order for an option holder to secure an interest in the pool of
merger consideration, the option holder must exercise any outstanding options
prior to the closing of the merger. As of the date of this proxy
statement/prospectus, there were 492,902 shares outstanding and 7,000 options
outstanding. Assuming the exercise of all outstanding stock options prior to the
closing of the merger, SJ Bancorp would have 499,902 shares of common stock
outstanding.
Assuming for purposes of illustration only that (i) there is no reduction
of the cash portion of the merger consideration, (ii) all SJ Bancorp stock
options are exercised prior to the closing of the merger, and (iii) the Glacier
common stock is valued at $______ (the closing price for Glacier common stock on
October __, 2008), each share of SJ Bancorp common stock would receive a value
equal to $______, consisting of $18.004 in cash and 1.2803 shares of Glacier
common stock. This value does not include any distributions that may be made to
shareholders prior to the closing of the merger if the SJ Bancorp Closing
Capital exceeds $11,350,000.
WHAT ARE THE TAX CONSEQUENCES OF THE MERGER TO ME?
We expect that for United States federal income tax purposes, SJ Bancorp
shareholders who exchange their shares of SJ Bancorp common stock for shares of
Glacier common stock and cash pursuant to the merger will recognize gain (but
not loss) on the exchange in an amount equal to the lesser of (1) the amount of
gain realized (i.e., the excess of the sum of the amount of cash excluding any
cash received in lieu of fractional shares,
1
and the fair market value of the Glacier common stock received pursuant to the
merger over the shareholder's adjusted tax basis in its shares of SJ Bancorp
common stock surrendered) or (2) the amount of cash (excluding any cash received
in lieu of fractional shares) received pursuant to the merger. We urge you to
consult your tax adviser to fully understand the tax consequences of the merger
to you. Tax matters are very complicated and in many cases tax consequences of
the merger will depend on your particular facts and circumstances.
WILL THE SHARES OF GLACIER THAT I RECEIVE IN THE MERGER BE FREELY TRANSFERABLE?
The Glacier common stock issued in the merger will be transferable free of
restrictions under federal and state securities laws.
WHEN AND WHERE WILL THE SPECIAL MEETING TAKE PLACE?
SJ Bancorp will hold a special meeting of its shareholders on __________,
November __, 2008, at _______ ___.m., at ________________________, Durango,
Colorado.
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 the holders of at least TWO-THIRDS (66 2/3%) of the shares
of SJ Bancorp's outstanding common stock. The directors of SJ Bancorp
beneficially own and have the right to vote 124,889 shares, representing 25.3%
of the shares entitled to be voted at the meeting, and they have each agreed to
vote for the merger.
WHAT HAPPENS IF I RETURN MY PROXY BUT DO NOT INDICATE HOW TO VOTE MY SHARES?
If you sign and return your proxy card, but do not provide instructions on
how to vote your shares, your shares will be voted "FOR" approval of the merger
agreement.
CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?
Yes. You may change your vote at any time before your proxy is voted at the
special meeting. If your shares are held in your own name, you may change your
vote as follows:
- You may send a written notice stating that you would like to revoke
your proxy and provide new instructions on how to vote;
- You may complete and submit a later-dated proxy card; or
- You may attend the meeting and vote in person. If you intend to vote
in person and your shares are held by a broker, you should contact
your broker for instructions.
If you choose either the first or second method above, you must submit your
notice of revocation or your new proxy card to SJ Bancorp's Secretary prior to
the vote.
WHO MAY VOTE AT THE MEETING?
The board of directors of SJ Bancorp has set ________, 2008, as the record
date for the meeting. If you were the owner of SJ Bancorp common stock at the
close of business on ______, 2008, you may vote at the meeting.
2
WHEN WILL THE MERGER OCCUR?
We presently expect to complete the merger during the fourth quarter of
2008. The merger will occur after approval of the shareholders of SJ Bancorp is
obtained and after the merger has received regulatory approval and the other
conditions to the merger are satisfied or waived. Glacier and SJ Bancorp are
working toward completing the merger as quickly as possible. If the merger does
not occur for any reason by February 28, 2009, either Glacier or SJ Bancorp may
terminate the merger agreement.
HOW SOON AFTER THE MERGER IS COMPLETED CAN I EXPECT TO RECEIVE MY CASH OR
GLACIER COMMON STOCK?
Glacier will work with its exchange agent to distribute consideration
payable in the merger as promptly as practicable following the completion of the
merger.
WHAT DO I NEED TO DO NOW?
We encourage you to read this proxy statement/prospectus in its entirety.
Important information is presented in greater detail elsewhere in this document
and documents governing the merger are attached as appendices to this proxy
statement/prospectus. In addition, much of the business and financial
information about Glacier that may be important to you is incorporated by
reference into this document from documents separately filed by Glacier with the
Securities and Exchange Commission ("SEC"). This means that important disclosure
obligations to you are satisfied by referring you to one or more documents
separately filed with the SEC.
- Following review of this proxy statement/prospectus, PLEASE COMPLETE,
SIGN, AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED
ENVELOPE AS SOON AS POSSIBLE so that your shares can be voted at SJ
Bancorp's special meeting of shareholders.
WHAT IF I CHOOSE NOT TO READ THE INCORPORATED DOCUMENTS?
Information contained in a document that is incorporated by reference is
part of this proxy statement/prospectus, unless it is superseded by information
contained directly in this proxy statement/prospectus or in documents filed with
the SEC after the date of this proxy statement/prospectus. Information that is
incorporated from another document is considered to have been disclosed to you
WHETHER OR NOT YOU CHOOSE TO READ THE DOCUMENT.
WHAT RISKS SHOULD I CONSIDER?
You should review carefully our discussion of "Risk Factors." You should
also review the factors considered by the SJ Bancorp board of directors in
approving the merger agreement. See "Background of and Reasons for the Merger."
SHOULD I SEND IN MY COMMON STOCK CERTIFICATES NOW?
No. Please do not send your stock certificates with your proxy card. You
will receive written instructions from the exchange agent after the merger is
completed on how to exchange your common stock certificates for the merger
consideration.
WHAT DO I DO IF I DO NOT AGREE WITH THE MERGER? DO I HAVE APPRAISAL OR
DISSENTER'S RIGHTS?
If you are an SJ Bancorp shareholder and you do not agree with the merger,
vote against the merger, and take certain other actions required by Colorado
law, you will have dissenter's rights under Article 113 of the Colorado Business
Corporations Act. Exercise of these rights will result in the purchase of your
shares at "fair value," as determined in accordance with Colorado law. Please
read the section entitled "The Merger --Dissenter's Rights of Appraisal" for
additional information.
3
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:
BANK OF THE SAN JUANS BANCORPORATION
144 East Eight Street
Durango, CO 83301
ATTN: Arthur C. Chase, Jr.
Telephone No.: (970) 247-1818
This proxy statement/prospectus does not cover any resale of the securities
to be received by shareholders of SJ Bancorp 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 OCTOBER __, 2008.
4
SUMMARY
This summary, together with the preceding section entitled "Questions and
Answers about this Document and the Merger," highlights selected information
about this proxy statement/prospectus. We urge you to read carefully the entire
proxy statement/prospectus and any other documents to which we refer to fully
understand the merger. The merger agreement is attached as APPENDIX A to this
proxy statement/prospectus.
INFORMATION ABOUT GLACIER AND SJ BANCORP
GLACIER BANCORP, INC.
49 Commons Loop
Kalispell, Montana 59901
(406) 756-4200
Glacier, headquartered in Kalispell, Montana, is a Montana corporation,
initially incorporated in Delaware in 1990, and subsequently incorporated under
Montana law in 2004. Glacier is a regional multi-bank holding company providing
commercial banking services from more than 94 banking offices throughout
Montana, Idaho, Wyoming, Utah and Washington. Glacier offers a wide range of
banking products and services, including transaction and savings deposits,
commercial, consumer and real estate loans, mortgage origination services, and
retail brokerage services. Glacier serves individuals, small to medium-sized
businesses, community organizations and public entities.
Glacier is the parent holding company of ten wholly-owned subsidiary
commercial banks: Glacier Bank of Kalispell, First Security Bank of Missoula;
Valley Bank of Helena, Big Sky Western Bank of Bozeman, Western Security Bank of
Billings, First Bank of Montana, in Lewistown, all located in Montana; Mountain
West Bank, located in Idaho with two branches in Utah and three branches in
Washington; 1st Bank, located in Evanston, Wyoming; Citizens Community Bank,
located in Pocatello, Idaho; and First National Bank of Morgan, Utah. Glacier is
also the holding company of four financing subsidiaries.
As of June 30, 2008, Glacier had total assets of approximately $5.03
billion, total net loans receivable and loans held for sale of approximately
$3.76 billion, total deposits of approximately $3.13 billion and approximately
$549.6 million in shareholders' equity. Glacier common stock trades on The
NASDAQ Global Select Market under the symbol "GBCI."
Financial and other information regarding Glacier, including risks
associated with Glacier's business, is set forth in Glacier's annual report on
Form 10-K for the year ended December 31, 2007, and in its quarterly reports on
Form 10-Q for the quarters ended March 31 and June 30, 2008. Information
regarding Glacier's executive officers and directors, as well as additional
information, including executive compensation and certain relationships and
related transactions, is set forth or incorporated by reference in Glacier's
annual report on Form 10-K for the year ended December 31, 2007, and Glacier's
proxy statement for its 2008 annual meeting of shareholders, and the Forms 8-K
filed by Glacier that are incorporated by reference into this proxy statement/
prospectus. See "Where You Can Find More Information About Glacier."
BANK OF THE SAN JUANS BANCORPORATION
144 East Eighth Street
Durango, Colorado 83301
(970) 247-1818
SJ Bancorp is the holding company of Bank of the San Juans. SJ Bank is a
Colorado state-chartered bank that began operations in 1998. SJ Bank offers a
wide range of banking products and services, including transaction and savings
deposits, commercial, consumer and real estate loans, and mortgage origination
services. SJ Bank serves individuals, small- to medium-sized businesses,
community organizations and public entities.
5
As of June 30, 2008, SJ Bank had total assets of approximately $146
million, total net loans receivable of approximately $130 million, total
deposits of approximately $131 million and approximately $15 million in
shareholders' equity.
For additional information, see "Information Concerning SJ Bancorp."
SJ BANCORP WILL MERGE INTO GLACIER
The merger agreement provides for the merger of SJ Bancorp with and into
Glacier. In the merger, your shares of SJ Bancorp common stock will be exchanged
for a combination of shares of Glacier common stock and cash. After the merger,
you will no longer own shares of SJ Bancorp.
The merger agreement is attached as APPENDIX A to this document. We
encourage you to read the merger agreement in its entirety.
SJ BANCORP SPECIAL MEETING
The special meeting of shareholders of SJ Bancorp will be held
at___________________, Durango, Colorado, on ________, November __, 2008 at ____
__.m., local time. At the meeting you will be asked to consider and vote upon a
proposal to approve the merger agreement and consider and act upon such other
matters as may properly come before the meeting or any adjournment of the
meeting.
You will be entitled to vote at the SJ Bancorp special meeting if you owned
SJ Bancorp common stock at the close of business on _________, 2008, the record
date. As of that date there were 492,902 shares of SJ Bancorp common stock
entitled to be voted at the special meeting.
REQUIRED APPROVAL OF THE MERGER AGREEMENT BY SJ BANCORP'S SHAREHOLDERS
In order to approve the merger agreement, at least two-thirds (66 2/3%) of
the outstanding shares of SJ Bancorp common stock must be voted at the special
meeting in favor of approval. Glacier's shareholders do not have to vote on the
transaction.
As of the record date for the meeting, the directors of SJ Bancorp and
their spouses beneficially owned 124,889 shares, or 25.3%, of SJ Bancorp's
outstanding common stock. The SJ Bancorp directors and their spouses have agreed
to vote their shares in favor of approval of the merger agreement.
SJ BANCORP REASONS FOR THE MERGER
SJ Bancorp's board of directors believes the merger is in your best
interest. The board considered a number of factors in deciding to approve and
recommend the terms of the merger agreement to you. These factors included the
following:
- the value, form and mix of the consideration to be received by SJ
Bancorp's shareholders in the merger;
- Glacier's operating philosophy as a community-oriented bank holding
company with a customer service focus, which is consistent with SJ
Bancorp's operating philosophy;
- the historical and prospective business of SJ Bancorp.
- the likely impact of the merger on the employees and customers of SJ
Bank;
- the strategic goals of SJ Bancorp and SJ Bancorp's financial condition
and prospects;
6
- the fact that Glacier's common stock is widely held and has an active
trading market; whereas, SJ Bancorp's stock is illiquid and is not
publicly traded;
- the likelihood that the merger would provide SJ Bancorp shareholders
with an attractive premium over SJ Bancorp's stand-alone value;
- the additional capital and managerial resources which Glacier will
provide to SJ Bank; and
- the economic, competitive and regulatory environment for SJ Bank and
community banks generally.
SJ Bancorp's board of directors also took into account advice of its
financial advisors, Sandler O'Neill & Partners, L.P., which issued an opinion
that the merger consideration to be received by SJ Bancorp's shareholders in the
merger is fair, from a financial point of view. See "Background of and Reasons
for the Merger - Reasons for the Merger" and "- Opinion of Financial Advisor to
SJ Bancorp" and APPENDIX C "Fairness Opinion of Sandler O'Neill & Partners,
L.P."
WHAT SJ BANCORP SHAREHOLDERS WILL RECEIVE IN THE MERGER
In the merger, Glacier will issue shares of its common stock and pay cash
for all shares of SJ Bancorp common stock outstanding as of the date of the
closing of the merger.
If you do not provide notice of dissent, you will receive, for each share
of SJ Bancorp common stock that you own, a fixed number of shares of Glacier
common stock and a fixed amount of cash, without interest.
The total merger consideration that Glacier will pay for the shares of SJ
Bancorp will be as follows:
- Stock Portion: Glacier will issue a total of 640,000 shares of its
common stock. Assuming that all SJ Bancorp stock options are exercised
prior to the closing of the merger, SJ Bancorp shareholders will
receive 1.2803 shares of Glacier common stock for each share of SJ
Bancorp common stock. (However, Glacier will not issue fractional
shares, and will pay cash in lieu of such fractional shares, as
described under "The Merger -- Fractional Shares").
- Cash Portion: Glacier will pay $9,000,000 in cash, subject to
reduction, on a dollar for dollar basis, by the amount (if any) by
which the "SJ Bancorp Closing Capital," as defined in the merger
agreement, is less than $11,350,000. Generally speaking, the "SJ
Bancorp Closing Capital" means SJ Bancorp's capital stock, surplus and
retained earnings, after giving effect to specified costs, payments,
expenses and other adjustments. Assuming there is no reduction in the
cash portion of the merger consideration and all SJ Bancorp stock
options are exercised prior to the closing of the merger, SJ Bancorp
shareholders will receive $18.004 in cash for each share of SJ Bancorp
common stock.
The amount of consideration to be received for each share of SJ Bancorp
common stock will be determined by dividing the total consideration payable by
the number of shares of SJ Bancorp common stock outstanding immediately prior to
the effective date of the merger.
The actual aggregate amount of cash to be paid cannot be determined until
shortly before the effective date of the merger. Accordingly, the actual amount
of cash that you will receive for each of your SJ Bancorp shares will not be
determined until shortly before the closing of the merger.
In addition, if immediately prior to the closing of the merger the SJ
Bancorp Closing Capital exceeds $11,350,000, SJ Bancorp may make a special
distribution to shareholders in the amount of such excess. The amount of any
such distribution is not included in the merger consideration discussed above.
7
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Neither SJ Bancorp nor Glacier is required to complete the merger unless
each of them receives a legal opinion of Glacier's counsel that the merger will
be treated as a "reorganization" for federal income tax purposes. We expect that
for United States federal income tax purposes, SJ Bancorp shareholders who
exchange their shares of SJ Bancorp common stock for shares of Glacier common
stock and cash pursuant to the merger will recognize gain (but not loss) on the
exchange in an amount equal to the lesser of (1) the amount of gain realized
(i.e., the excess of the sum of the amount of cash excluding any cash received
in lieu of fractional shares, and the fair market value of the Glacier common
stock received pursuant to the merger over the shareholder's adjusted tax basis
in its shares of SJ Bancorp common stock surrendered) or (2) the amount of cash
(excluding any cash received in lieu of fractional shares) received pursuant to
the merger. 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.
SJ BANCORP SHAREHOLDERS HAVE DISSENTERS' RIGHTS
Under Colorado law, SJ Bancorp shareholders have the right to dissent from
the merger and receive cash for the value of their shares of SJ Bancorp common
stock. A shareholder electing to dissent must strictly comply with all the
procedures required by the Colorado statutes. These procedures are described
later in this document, and a copy of the relevant statutory provisions is
attached as APPENDIX B.
THE SJ BANCORP BOARD OF DIRECTORS RECOMMENDS SHAREHOLDER APPROVAL OF THE MERGER
After careful consideration, the SJ Bancorp board of directors believes
that the merger is in the best interests of SJ Bancorp shareholders and has
unanimously approved the merger agreement. The SJ Bancorp board of directors
recommends that SJ Bancorp shareholders vote "FOR" approval of the merger
agreement.
SJ BANCORP FINANCIAL ADVISOR SAYS THE MERGER CONSIDERATION IS FAIR TO SJ BANCORP
SHAREHOLDERS FROM A FINANCIAL POINT OF VIEW
Sandler O'Neill & Partners, L.P. has served as financial advisor to SJ
Bancorp in connection with the merger and has given an opinion to SJ Bancorp's
board of directors that, as of _______, 2008, the consideration that SJ
Bancorp's shareholders will receive for their SJ Bancorp shares in the merger is
fair, from a financial point of view, to SJ Bancorp shareholders. A copy of the
opinion delivered by Sandler O'Neill is attached to this document as APPENDIX C.
SJ Bancorp shareholders should read the opinion carefully to understand the
assumptions made, matters considered and limitations of the review undertaken by
Sandler O'Neill in providing its opinion. The opinion is more fully described
under the heading "Opinion of Financial Advisor to SJ Bancorp" below. SJ Bancorp
agreed to pay Sandler O'Neill a fee for its services and to indemnify it against
certain liabilities arising out of the merger or its engagement.
SJ BANCORP'S OFFICERS AND DIRECTORS HAVE INTERESTS IN THE MERGER THAT ARE
DIFFERENT FROM OR IN ADDITION TO THEIR INTERESTS AS SHAREHOLDERS
When you consider the unanimous recommendation of SJ Bancorp's board of
directors that SJ Bancorp's shareholders approve the merger agreement, you
should be aware that certain members of SJ Bancorp's management have interests
in the merger that are different from, or in addition to, their interests as SJ
Bancorp shareholders. These interests arise out of provisions in the merger
agreement relating to indemnification of directors and employment agreements
with certain executive officers of SJ Bancorp that will be effective upon the
closing of the merger. See "The Merger - Interests of Certain Persons in the
Merger."
The SJ Bancorp board of directors was aware of these interests and took
them into account in its decision to approve the merger agreement.
8
THE MERGER IS EXPECTED TO OCCUR IN THE FOURTH QUARTER OF 2008
Currently, we anticipate that the merger will occur in the fourth quarter
of 2008. However, we cannot assure you when or if the merger will occur. The
merger agreement may be terminated by either Glacier or SJ Bancorp if the merger
does not occur on or before February 28, 2009.
COMPLETION OF THE MERGER IS SUBJECT TO SATISFACTION OR WAIVER OF CERTAIN
CONDITIONS
Completion of the merger is subject to the satisfaction or waiver of
certain conditions including, among others:
- approval of the merger agreement by holders of at least two-thirds (66
2/3%) of the shares of SJ Bancorp's outstanding common stock;
- approval of the merger by federal and state regulatory authorities;
- accuracy of each party's representations in the merger agreement; and
- compliance by each party with all material terms, covenants and
conditions of the merger agreement.
The merger agreement provides that either Glacier or SJ Bancorp may
terminate the merger either before or after the SJ Bancorp special meeting,
under certain circumstances. See "The Merger - Termination of the Merger
Agreement."
WE MAY NOT COMPLETE THE MERGER WITHOUT ALL REQUIRED REGULATORY APPROVALS
The merger must be approved by the Board of Governors of the Federal
Reserve System and the Colorado State Banking Board. 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 SJ BANCORP OR GLACIER, AS THE CASE MAY BE, MUST PAY A TERMINATION FEE
UNDER CERTAIN CIRCUMSTANCES
The merger agreement provides that SJ Bancorp must pay Glacier a
termination fee of $200,000 if Glacier terminates the merger agreement due to a
breach by SJ Bancorp of its representations or covenants.
The merger agreement also provides that Glacier must pay SJ Bancorp a
termination fee of $200,000 if SJ Bancorp terminates the merger agreement due to
a breach by Glacier of its representations or covenants. See "The Merger -
Termination Fees."
SJ BANCORP MUST PAY GLACIER A BREAK-UP FEE UNDER CERTAIN CIRCUMSTANCES
Under the merger agreement, SJ Bancorp must pay Glacier a break-up fee of
$1,000,000, if the merger agreement is terminated due to the failure of the SJ
Bancorp board of directors to recommend approval of the merger to its
shareholders, or due to the receipt of a superior acquisition proposal which is
acted upon by SJ Bancorp.
SJ Bancorp agreed to pay the break-up fee under the circumstances described
above in order to induce Glacier to enter into the merger agreement. This
arrangement could have the effect of discouraging other companies from trying to
acquire SJ Bancorp. See "The Merger - Break-up Fee."
SJ BANCORP SHAREHOLDERS WILL HAVE DIFFERENT RIGHTS AFTER THE MERGER
The rights of SJ Bancorp shareholders are governed by Colorado law, as well
as by SJ Bancorp's articles of incorporation and bylaws. After completion of the
merger, the rights of the former SJ Bancorp shareholders
9
receiving Glacier common stock in the merger will be governed by Montana law,
and by Glacier's articles of incorporation and bylaws. Although Glacier's
articles of incorporation and bylaws are similar in many ways to SJ Bancorp's
articles of incorporation and bylaws, there are some substantive and procedural
differences that will affect the rights of SJ Bancorp shareholders. See
"Comparison of Certain Rights of Holders of Glacier and SJ Bancorp Common
Stock."
10
RISK FACTORS
In addition to the other information contained in or incorporated by
reference into this document, including the matters addressed under the caption
"Cautionary Note Regarding Forward-Looking Statements," you should consider the
matters described below carefully in determining whether to approve the merger
agreement and the transactions contemplated by the merger agreement.
RISKS ASSOCIATED WITH THE PROPOSED MERGER
BECAUSE THE MARKET PRICE OF THE GLACIER COMMON STOCK MAY FLUCTUATE, YOU CANNOT
BE SURE OF THE VALUE OF THE SHARES OF GLACIER COMMON STOCK THAT YOU WILL
RECEIVE.
Although the number of shares of Glacier common stock that will constitute
the stock portion of the merger consideration that will be exchanged for a share
of SJ Bancorp is fixed, at the time of the SJ Bancorp special shareholder
meeting, and prior to the closing of the merger, you will not be able to
determine the value of the Glacier common stock you would receive upon
completion of the merger. Any change in the market price of Glacier common stock
prior to completion of the merger will affect the value of the merger
consideration that SJ Bancorp shareholders will receive upon completion of the
merger. SJ Bancorp is not permitted to terminate the merger agreement or
resolicit the vote of SJ Bancorp shareholders solely because of changes in the
market price of Glacier common stock. Common stock price changes may result from
a variety of factors, including but not limited to general market and economic
conditions, changes in Glacier's business, operations and prospects, and
regulatory considerations. Many of these factors are beyond the control of
Glacier or SJ Bancorp. You should obtain current market prices for Glacier
common stock.
THE MERGER AGREEMENT LIMITS SJ BANCORP'S ABILITY TO PURSUE OTHER TRANSACTIONS
AND PROVIDES FOR THE PAYMENT OF A BREAK UP FEE IF SJ BANCORP DOES SO.
While the merger agreement is in effect and subject to very narrow
exceptions, SJ Bancorp and its directors, officers and agents are prohibited
from initiating or encouraging inquiries with respect to alternative acquisition
proposals. The prohibition limits SJ Bancorp's ability to seek offers that may
be superior from a financial point of view from other possible acquirers. If SJ
Bancorp receives an unsolicited proposal from a third party that is superior
from a financial point of view to that made by Glacier and the merger agreement
is terminated, SJ Bancorp may be required to pay a $1,000,000 break-up fee. This
fee makes it less likely that a third party will make an alternative acquisition
proposal.
UNDER CERTAIN CONDITIONS, THE MERGER AGREEMENT REQUIRES SJ BANCORP TO PAY A
TERMINATION FEE.
Under certain circumstances (generally involving SJ Bancorp's breach of its
representations and covenants in the merger agreement), Glacier can terminate
the merger agreement and require SJ Bancorp to pay a termination fee of
$200,000.
COMBINING OUR TWO COMPANIES MAY BE MORE DIFFICULT, COSTLY OR TIME-CONSUMING THAN
WE EXPECT.
Glacier and SJ Bancorp have operated and, until the completion of the
merger, will continue to operate, independently. Even though SJ Bank will
continue to be operated separately, it is possible that the integration process
could result in the loss of key employees, the disruption of the ongoing
business of SJ Bank or inconsistencies in standards, controls, procedures and
policies that adversely affect our ability to maintain relationships with
customers and employees or to achieve the anticipated benefits of the merger. As
with any merger of banking institutions, there also may be disruptions that
cause us to lose customers or cause customers to take their deposits out of SJ
Bank.
11
UNANTICIPATED COSTS RELATING TO THE MERGER COULD REDUCE GLACIER'S FUTURE
EARNINGS PER SHARE.
Glacier believes that it has reasonably estimated the likely costs of
integrating the operations of SJ Bank into Glacier, and the incremental costs of
operating as a combined company. However, it is possible that unexpected
transaction costs or future operating expenses, as well as other types of
unanticipated adverse developments, could have a material adverse effect on the
results of operations and financial condition of Glacier after the merger. If
the merger is completed and unexpected costs are incurred, the merger could have
a significant dilutive effect on Glacier's earnings per share, meaning earnings
per share could be less than if the merger had not been completed.
GLACIER HAS VARIOUS ANTI-TAKEOVER MEASURES THAT COULD IMPEDE A TAKEOVER.
Glacier has various anti-takeover measures in place, which are described
elsewhere in this document. Any one or more of these measures may impede the
takeover of Glacier without the approval of the Glacier board of directors and
may prevent you from taking part in a transaction in which you could realize a
premium over the current market price of Glacier common stock. See "Comparison
of Certain Rights of Holders of Glacier and SJ Bancorp Common Stock."
RISKS ASSOCIATED WITH GLACIER'S BUSINESS
GLACIER HAS A HIGH CONCENTRATION OF LOANS SECURED BY REAL ESTATE.
Glacier has a high concentration of loans secured by real estate and a
downturn in the real estate market, for any reason, could hurt its business and
prospects. In particular, if the nationwide economic decline migrates further to
the markets Glacier serves, Glacier could be exposed to additional risk of
losses from real estate related loans. Business activities and credit exposure
are concentrated in loans secured by real estate. A further downturn in the
economies or real estate values in the markets Glacier serves could have a
material adverse effect on borrowers' ability to repay their loans, as well as
the value of the real property held as collateral securing such loans. Glacier's
ability to recover on defaulted loans by foreclosing and selling the real estate
collateral would then be diminished and Glacier would be more likely to suffer
losses on defaulted loans.
GLACIER'S LOAN PORTFOLIO MIX COULD RESULT IN INCREASED CREDIT RISK IN AN
ECONOMIC DOWNTURN.
Glacier's loan portfolio contains a high percentage of commercial,
commercial real estate, real estate acquisition and development loans in
relation to the total loans and total assets. These types of loans generally are
viewed as having more risk of default than residential real estate loans or
certain other types of loans or investments. In fact, the FDIC has issued
pronouncements alerting banks of its concern about banks with a heavy
concentration of commercial real estate loans. These types of loans also
typically are larger than residential real estate loans and other commercial
loans. Because Glacier's loan portfolio contains a significant number of
commercial and commercial real estate loans with relatively large balances, the
deterioration of one or a few of these loans may cause a significant increase in
Glacier's non-performing loans. An increase in non-performing loans could result
in a loss of earnings from these loans, an increase in the provision for loan
losses, or an increase in loan charge-offs, which could have an adverse impact
on the results of operations and financial condition.
CHANGES IN ECONOMIC CONDITIONS, IN PARTICULAR AN ECONOMIC SLOWDOWN IN IDAHO,
MONTANA, WASHINGTON, WYOMING, UTAH OR COLORADO, COULD HURT THE BANKING BUSINESS
GENERALLY.
Glacier's business is directly affected by factors such as economic, market
and political conditions in its service areas, broad trends in industry and
finance, legislative and regulatory changes, changes in government monetary and
fiscal policies and inflation, all of which are beyond its control. A further
deterioration in economic conditions in the states served by Glacier's banks
could result in the following consequences, any of which could hurt Glacier's
business materially:
- loan delinquencies may increase;
12
- problem assets and foreclosures may increase;
- collateral for loans made may decline in value, in turn reducing
customers' borrowing power, reducing the value of assets and
collateral associated with existing loans;
- demand for banking products and services may decline; and
- low cost or non-interest bearing deposits may decrease.
GLACIER'S ALLOWANCE FOR LOAN AND LEASE LOSSES (ALLL) MAY NOT BE ADEQUATE TO
COVER ACTUAL LOAN LOSSES, WHICH COULD ADVERSELY AFFECT EARNINGS.
Glacier maintains an ALLL in an amount that is believed adequate to provide
for losses inherent in the portfolio. While Glacier strives to carefully monitor
credit quality and to identify loans that may become non-performing, at any time
there are loans in the portfolio that will result in losses that have not been
identified as non-performing or potential problem loans. Glacier cannot be sure
that it will be able to identify deteriorating loans before they become
non-performing assets, or that it will be able to limit losses on those loans
that are identified. As a result, future significant additions to the ALLL may
be necessary. Additionally, future additions to the ALLL may be required based
on changes in the composition of the loans comprising the portfolio and changes
in the financial condition of borrowers, such as may result from changes in
economic conditions or as a result of incorrect assumptions by management in
determining the ALLL. Additionally, federal banking regulators, as an integral
part of their supervisory function, periodically review the Company's ALLL.
These regulatory agencies may require the Company to increase the ALLL which
could have a negative effect on the Company's financial condition and results of
operation. A critical element in determining the adequacy of the ALLL is the
maintenance of the underlying collateral values, most of which are in real
estate.
FLUCTUATING INTEREST RATES CAN ADVERSELY AFFECT GLACIER'S PROFITABILITY.
Glacier's profitability is dependent to a large extent upon net interest
income, which is the difference (or "spread") between the interest earned on
loans, securities and other interest-earning assets and interest paid on
deposits, borrowings, and other interest-bearing liabilities. Because of the
differences in maturities and repricing characteristics of Glacier's
interest-earning assets and interest-bearing liabilities, changes in interest
rates do not produce equivalent changes in interest income earned on
interest-earning assets and interest paid on interest-bearing liabilities.
Accordingly, fluctuations in interest rates could adversely affect Glacier's
interest rate spread, and, in turn, its profitability. Glacier cannot provide
assurance that it can minimize interest rate risk. In addition, interest rates
also affect the amount of money Glacier can lend. When interest rates rise, the
cost of borrowing also increases. Accordingly, changes in levels of market
interest rates could materially and adversely affect the net interest spread,
asset quality, loan origination volume, business and prospects.
A TIGHTENING OF THE CREDIT MARKET MAY MAKE IT DIFFICULT TO OBTAIN AVAILABLE
MONEY TO FUND LOAN GROWTH, WHICH COULD ADVERSELY AFFECT OUR EARNINGS.
A tightening of the credit market and the inability to obtain adequate
money to fund continued loan growth may negatively affect asset growth and,
therefore, earnings capability. In addition to any deposit growth, maturity of
investment securities and loan payments, Glacier also relies on alternative
funding sources through correspondent banking and a borrowing line with the FHLB
of Seattle to fund loans. In the event of a downturn in the economy,
particularly in the housing market, these resources could be negatively
affected, which would limit the funds available to Glacier.
COMPETITION IN GLACIER'S MARKET AREAS MAY LIMIT ITS FUTURE SUCCESS.
Commercial banking is a highly competitive business. Glacier competes with
other commercial banks, savings and loan associations, credit unions, finance,
insurance and other non-depository companies operating in Glacier's market
areas. Glacier is subject to substantial competition for loans and deposits from
other financial
13
institutions. Some of Glacier's competitors are not subject to the same degree
of regulation and restriction as it is. Some of its competitors have greater
financial resources than Glacier. If Glacier is unable to effectively compete in
its market areas, its business and results of operations could be adversely
affected.
THE FDIC LIKELY WILL INCREASE INSURANCE PREMIUMS TO REBUILD AND MAINTAIN THE
FEDERAL DEPOSIT INSURANCE FUND.
Based on recent events and the state of the economy, it is likely that the
FDIC may increase federal deposit insurance premiums in the near future.
Depending on the circumstances, this increase may be relatively significant and
will add to Glacier's cost of operations. Glacier cannot predict the exact
amount of any premium increase or the impact on Glacier.
GLACIER HAS AN INVESTMENT IN FREDDIE MAC AND FANNIE MAE STOCK THAT MAY BE
ADVERSELY AFFECTED BY RECENT GOVERNMENT ACTIONS.
Glacier owns 150,000 shares of Series O preferred stock of the Federal Home
Loan Mortgage Corporation ("Freddie Mac") and 1,200 shares of common stock of
the Federal National Mortgage Association ("Fannie Mae"). As of June 30, 2008,
Glacier had a combined investment of $7,593,000 in such securities, with a
temporary unrealized loss of $2,322,000, or $1,408,000 after tax. Based on the
value of such shares as of ________________, 2008, the unrealized loss has
increased to $_________, or $________ after tax ($___ per fully diluted share).
As previously disclosed in its SEC filings, Glacier continues to evaluate the
possibility of an "other than temporary impairment" charge with respect to its
investments in Freddie Mac and Fannie Mae. The term "other than temporary
impairment" is not intended to mean that the decline in value is permanent. On
September 7, 2008, the Federal Housing Financing Agency announced a federal
bailout of Freddie Mac and Fannie Mae. The effect of the federal bailout on
Glacier's investment in Freddie Mac and Fannie Mae cannot be predicted at this
time. [TO BE UPDATED TO MAILING DATE]
GLACIER MAY BE UNABLE TO RECRUIT AND RETAIN QUALIFIED EMPLOYEES.
Glacier's continued growth will be dependent in part on its ability to
recruit and retain qualified and motivated employees. Glacier expects to
experience substantial competition in its efforts to hire experienced banking
professionals, particularly in the commercial lending area. Glacier's inability
to recruit and retain qualified employees could impair its ability to grow,
create compliance or operational challenges, and adversely impact its financial
condition and results of operations.
GLACIER'S BUSINESS WOULD BE HARMED IF IT LOST THE SERVICES OF ANY OF ITS SENIOR
MANAGEMENT TEAM.
Glacier believes that its success to date has been substantially dependent
on its senior management team, including its Chief Executive Officer, its Chief
Operating Officer, its Chief Financial Officer, and the Presidents of its
subsidiary banks. The loss of any of these persons could have an adverse affect
on Glacier's business and future growth prospects.
14
GLACIER MAY GROW THROUGH FUTURE ACQUISITIONS, WHICH COULD, IN SOME
CIRCUMSTANCES, ADVERSELY AFFECT ITS NET INCOME.
Glacier anticipates engaging in selected acquisitions of financial
institutions 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, Glacier cannot provide any
assurance as to the extent to which it can continue to grow through
acquisitions.
Glacier anticipates issuing capital stock in connection with additional
acquisitions, either directly or through raising capital to fund the cash
portion of such acquisitions. These acquisitions and related issuances of stock
may have a dilutive effect on earnings per share and the percentage ownership of
current shareholders.
GLACIER OPERATES IN A HIGHLY REGULATED ENVIRONMENT AND MAY BE ADVERSELY AFFECT
BY CHANGES IN FEDERAL, STATE AND LOCAL LAWS AND REGULATIONS.
Glacier is subject to extensive regulation, supervision and examination by
federal and state banking authorities. Any change in applicable regulations or
federal, state or local legislation could have a substantial impact on Glacier
and its operations. Additional legislation and regulations that could
significantly affect Glacier's powers, authority and operations may be enacted
or adopted in the future, which could have a material adverse effect on
Glacier's financial condition and results of operations. Further, regulators
have significant discretion and authority to prevent or remedy unsafe or unsound
practices or violations of laws by financial institutions and holding companies
in the performance of their supervisory and enforcement duties. The exercise of
regulatory authority may have a negative impact on our results of operations and
financial condition.
GLACIER'S TRUST PREFERRED SECURITIES HAVE A PRIORITY RIGHT TO PAYMENT OF
DIVIDENDS.
Glacier has periodically supported its continued growth through the
issuance of trust preferred securities from special purpose trusts and
accompanying debt. Trust preferred securities have a priority right to
distributions and payment over the common stock. At June 30, 2008, Glacier had
trust preferred securities and accompanying debt totaling approximately $119
million.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This document, including information included or incorporated by reference
in this document may contain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These forward-looking
statements include, but are not limited to, (i) statements about the benefits of
the merger, including future financial and operating results, cost savings,
enhancements to revenue and accretion to reported earnings that may be realized
from the merger; (ii) statements about our respective plans, objectives,
expectations and intentions and other statements that are not historical facts;
and (iii) other statements identified by words such as "expects," "anticipates,"
"intends," "plans," "believes," "seeks," "estimates," or words of similar
meaning. These forward-looking statements are based on current beliefs and
expectations of management and are inherently subject to significant business,
economic and competitive uncertainties and contingencies, many of which are
beyond Glacier's and SJ Bancorp's control. In addition, these forward-looking
statements are subject to assumptions with respect to future business strategies
and decisions that are subject to change.
The following factors, among others, could cause actual results to differ
materially from the anticipated results or other expectations in the
forward-looking statements:
- the risks associated with continued diversification of assets and
potential adverse changes in credit quality;
- increased loan delinquency rates;
15
- competition from other financial services companies in our markets;
- the risks presented by the current economic slowdown, which could
adversely affect credit quality, collateral values and loan
originations;
- 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;
- demand for banking products and services may decline;
- adverse governmental or regulatory policies may be enacted; and
- the interest rate environment may change, causing margins to compress
and adversely affecting net interest income.
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 SJ Bancorp or
any person acting on behalf of Glacier or SJ Bancorp are expressly qualified in
their entirety by the cautionary statements above. Neither Glacier nor SJ
Bancorp 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.
SELECTED HISTORICAL FINANCIAL INFORMATION OF GLACIER
The following selected financial information for the fiscal years ended
December 31, 2007, 2006, 2005, 2004 and 2003 is derived from audited
consolidated financial statements of Glacier. The financial information of and
for the six months ended June 30, 2008 and 2007 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, 2008 are not
necessarily indicative of the results that may be expected for the entire year
ending December 31, 2008. The financial data below should be read in conjunction
with the financial statements and notes thereto, incorporated by reference in
this proxy statement/prospectus. See "Where You Can Find More Information About
Glacier."
AT OR FOR THE SIX
MONTHS ENDED JUNE 30 AT OR FOR THE FISCAL YEARS ENDED DECEMBER 31
----------------------- --------------------------------------------------------------
2008 2007 2007 2006 2005 2004 2003
---------- ---------- ---------- ---------- ---------- ---------- ----------
SUMMARY OF OPERATIONS: DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
Interest income $ 150,589 $ 147,213 $ 304,760 $ 253,326 $ 189,985 $ 147,285 $ 130,830
Interest expense 49,660 58,926 121,291 95,038 59,978 39,892 38,478
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income 100,929 88,287 183,469 158,288 130,007 107,393 92,352
Provision for loan losses 7,542 2,405 6,680 5,192 6,023 4,195 3,809
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income after provision
for loan losses 93,387 85,882 176,789 153,096 123,984 103,198 88,543
Noninterest income 33,643 32,103 64,818 51,842 44,626 34,565 33,562
Noninterest expenses 72,056 68,257 137,917 112,550 90,926 72,133 65,944
---------- ---------- ---------- ---------- ---------- ---------- ----------
Pre-tax net income 54,974 49,728 103,690 92,388 77,684 65,630 56,161
Taxes 19,116 16,910 35,087 31,257 25,311 21,014 18,153
---------- ---------- ---------- ---------- ---------- ---------- ----------
16
AT OR FOR THE SIX
MONTHS ENDED JUNE 30 AT OR FOR THE FISCAL YEARS ENDED DECEMBER 31
----------------------- --------------------------------------------------------------
2008 2007 2007 2006 2005 2004 2003
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income 35,858 32,818 68,603 61,131 52,373 44,616 38,008
========== ========== ========== ========== ========== ========== ==========
Basic earnings per share* $ 0.67 $ 0.62 $ 1.29 $ 1.23 $ 1.12 $ 0.97 $ 0.84
Diluted earnings per share* $ 0.66 $ 0.61 $ 1.28 $ 1.21 $ 1.09 $ 0.96 $ 0.83
Cash dividends per share* $ 0.26 $ 0.24 $ 0.50 $ 0.45 $ 0.40 $ 0.36 $ 0.32
STATEMENT OF FINANCIAL CONDITIONS:
Total assets $5,027,868 $4,672,955 $4,817,330 $4,471,298 $3,708,975 $3,013,213 $2,740,716
Net loans receivable and LHFS 3,760,145 3,331,854 3,557,122 3,165,524 2,397,187 1,701,805 1,430,365
Total deposits 3,125,923 3,354,685 3,184,478 3,207,533 2,534,712 1,729,708 1,597,625
Total borrowings 1,189,859 651,004 940,570 646,508 719,413 900,148 842,280
Shareholder's equity 549,643 499,671 528,576 456,143 333,239 270,184 237,839
Book value per share* $ 10.18 $ 9.34 $ 9.85 $ 8.72 $ 6.91 $ 5.87 $ 5.24
KEY OPERATING RATIOS:
Return on average assets 1.48% 1.47% 1.49% 1.52% 1.52% 1.54% 1.53%
Average equity to average assets 11.20% 10.61% 10.78% 9.52% 8.61% 8.75% 9.10%
Net interest margin(1) 4.65% 4.49% 4.50% 4.44% 4.25% 4.18% 4.22%
Non-performing over assets 0.58% 0.25% 0.27% 0.19% 0.26% 0.32% 0.48%
Dividend payout ratio 38.81% 38.71% 38.76% 36.59% 35.93% 37.36% 38.07%
(1) Calculated on a tax equivalent basis.
* Revised for stock splits and dividends.
17
COMPARATIVE STOCK PRICE AND DIVIDEND INFORMATION
GLACIER COMMON STOCK
Glacier common stock is quoted on The NASDAQ Global Select Market under the
symbol "GBCI." The following table sets forth for the periods indicated:
- the high and low sale prices for Glacier common stock as reported on
The NASDAQ Global Select Market, and
- dividends per share on Glacier common stock.
CASH
HIGH* LOW* DIVIDENDS DECLARED
------ ------ ------------------
2006
First quarter............................ $21.81 $19.72 $0.11
Second quarter........................... $21.20 $18.69 $0.11
Third quarter............................ $23.24 $18.55 $0.11
Fourth quarter........................... $25.25 $21.99 $0.12
2007
First quarter............................ $25.39 $22.76 $0.12
Second quarter........................... $24.61 $19.55 $0.12
Third quarter............................ $24.00 $18.41 $0.13
Fourth quarter........................... $23.85 $17.57 $0.13
2008
First quarter............................ $20.18 $15.31 $0.13
Second quarter........................... $21.60 $15.86 $0.13
Third quarter (through ____________).....
----------
* Adjusted for stock splits and stock dividends.
At _________, 2008, ______________outstanding shares of Glacier common
stock were held by approximately __________holders of record.
18
SJ BANCORP COMMON STOCK
Presently, no active trading market exists for the SJ Bancorp common stock.
If SJ Bancorp were to remain independent, management of SJ Bancorp does not
expect that a market for SJ Bancorp common stock would develop. No registered
broker/dealer makes a market in SJ Bancorp common stock, and SJ Bancorp common
stock is not listed or quoted on any stock exchange or automated quotation
system. SJ Bancorp acts as its own transfer agent and registrar.
Occasionally, management of SJ Bancorp becomes aware of trades of private
sales of its common stock and the prices at which these trades were executed.
The following table sets forth information regarding the trades of common stock
known to SJ Bancorp, the high and low sales prices (if known) at which such
trades were executed, and dividends declared for the periods indicated:
NUMBER OF TRADING DIVIDENDS
LOW HIGH TRADES VOLUME PER SHARE
------ ------ --------- ------- ---------
2006
First Quarter............ $18.25 $18.25 2 866 none
Second Quarter........... -- -- -- -- none
Third Quarter............ $18.25 $18.25 2 1,102 none
Fourth Quarter........... $18.50 $18.50 2 750 none
2007
First Quarter............ $19.40 $19.40 1 1,045 none
Second Quarter........... -- -- -- -- none
Third Quarter............ -- -- -- -- none
Fourth Quarter........... $21.02 $21.02 1 250 none
2008
First Quarter............ $22.95 $22.95 3 4,592 none
Second Quarter........... $22.95 $22.95 1 200 none
Third Quarter............ -- -- -- -- none
The prices given above represent actual trades but may not include all
trades that occurred during the reported period. In addition, the table does not
reflect transfers by gift or the exercise of stock options. The prices given are
the result of limited trading and may not be representative of the actual fair
market value of the SJ Bancorp common stock.
At ___________, 2008, the 492,902 outstanding shares of SJ Bancorp common
stock were held by approximately 237 holders of record.
19
SJ BANCORP SPECIAL SHAREHOLDERS' MEETING
DATE, TIME, PLACE
The SJ Bancorp special meeting of shareholders will be held on ________,
November __, 2008, at ____ ___.m. local time, at ____________________, Colorado.
As described below under "Vote Required," approval of the merger agreement
requires the affirmative vote of at least two-thirds (66 2/3%) of the shares of
SJ Bancorp's outstanding common stock. If there are not sufficient votes
represented at the special meeting, either in person or by proxy, to approve the
merger agreement, or if a quorum is not present, SJ Bancorp may adjourn or
postpone the meeting in order to permit further solicitation of proxies by SJ
Bancorp. 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, SJ Bancorp 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 SJ Bancorp board of directors has fixed 5:00 p.m. on _________, 2008 as
the record date for determining the holders of shares of SJ Bancorp common stock
entitled to notice of and to vote at the special meeting. At the close of
business on the SJ Bancorp record date, there were 492,902 shares of common
stock issued and outstanding and held by approximately 237 holders of record.
Holders of record of SJ Bancorp 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.
The directors of SJ Bancorp and SJ Bank and their spouses have agreed to
vote all shares held or controlled by them in favor of approval of the merger. A
total of 124,889 outstanding shares, or 25.3% of the outstanding shares of SJ
Bancorp common stock, are covered by the voting agreement. See "The Merger -
Voting Agreement."
VOTE REQUIRED AND QUORUM
The affirmative vote of the holders of at least two-thirds (66 2/3%) of the
shares of SJ Bancorp's outstanding common stock is required to approve the
merger. At least a majority of the total outstanding shares of SJ Bancorp common
stock must be present, either in person or by proxy, in order to constitute a
quorum for the meeting. For purposes of determining a quorum, abstentions and
broker nonvotes (that is, proxies from brokers or nominees, indicating that such
person has not received instructions from the beneficial owners or other persons
entitled to vote shares as to a matter with respect to which the broker or
nominees do not have discretionary power to vote) are counted in determining the
shares present at a meeting.
For voting purposes, however, only shares actually voted FOR the approval
of the merger agreement, and neither abstentions nor broker nonvotes, will be
counted as favorable votes in determining whether the merger agreement is
approved by the holders of SJ Bancorp common stock. AS A RESULT, ABSTENTIONS AND
BROKER NONVOTES WILL HAVE THE SAME EFFECT AS VOTES AGAINST APPROVAL OF THE
MERGER AGREEMENT.
20
If you hold your shares in "street name" with a broker, you must instruct
your broker to vote your shares by following the directions provided to you by
your broker. Your broker may not vote your shares on the merger agreement
without instructions from you. Your failure to instruct your broker to vote on
the adoption of the merger agreement will result in a broker non-vote, which
will be equivalent of voting against 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 HOLDER'S DISCRETION
ON ANY OTHER MATTER PROPERLY COMING BEFORE THE MEETING. Any proxy given by a
shareholder may be revoked before its exercise by:
- written notice to the Secretary of SJ Bancorp;
- a later-dated proxy; or
- appearing and voting at the special meeting in person.
SJ Bancorp is soliciting the proxy for the special meeting on behalf of the
SJ Bancorp board of directors. SJ Bancorp will bear the cost of solicitation of
proxies from its shareholders. In addition to using the mails, SJ Bancorp 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. SJ Bancorp does not expect to
pay any compensation for the solicitation of proxies. However, SJ Bancorp will,
upon request, pay the standard charges and expenses of banks, brokerage houses,
other institutions, nominees, and fiduciaries for forwarding proxy materials to
and obtaining proxies from their principals.
VOTING IN PERSON AT THE SPECIAL MEETING
Shareholders of Record. Shares held directly in your name as the
shareholder of record may be voted in person at the special meeting. If you
choose to vote your shares in person, please bring the enclosed proxy card or
proof of identification. Even if you plan to attend the special meeting, we
recommend that you vote your shares in advance as described above so that your
vote will be counted if you later decide not to attend the special meeting.
Beneficial Owner. Shares held in street name may be voted in person by you
only if you bring an account statement or letter from the nominee indicating
that you were the beneficial owner of the shares on the record date.
BACKGROUND OF AND REASONS FOR THE MERGER
BACKGROUND OF THE MERGER
During the normal course of its business, the management and Board of
Directors of SJ Bancorp has periodically reviewed and assessed its market,
operational and growth strategy. Consistent with its fiduciary obligations to
its shareholders, SJ Bancorp has considered strategic options including
strategies to grow and enhance SJ Bancorp's business through internal and
external means. Those discussions have included analyses of the financial
institution merger market on a national and regional basis, the potential value
of the SJ Bancorp based on current merger market fundamentals and the potential
market value of the SJ Bancorp stock assuming the execution of its current
business plan under various scenarios. The board of directors and management of
SJ Bancorp also routinely have discussed the economic climate, increasing level
of net interest margin compression,
21
competition, continuing consolidation, regulatory burden, and related costs and
other developments in the financial services industry as such issues relate to
its on-going strategic direction.
Consistent with its continuing assessment of the SJ Bancorp strategy, in
the spring of 2007, the Board of Directors decided to explore what strategic
alternatives may be available to SJ Bancorp, including an exploration of the
merger and acquisition market for community banks. In connection with this
assessment, SJ Bancorp interviewed potential financial advisors, including the
investment banking firm of Sandler O'Neill. During May 2007, the board and
management of SJ Bancorp discussed available strategic alternatives with Sandler
O'Neill, including those available to address the board's concerns over the
ability of SJ Bancorp to continue to compete for certain loans in its market
given that the size of SJ Bancorp's capital base relative to some of its larger
competitors, as well as loan diversification issues relating to the types of
loans generally available in its market.
In June 2007, SJ Bancorp formally engaged Sandler O'Neill to assist and
advise it in exploring strategic alternatives, including a possible strategic
business combination transaction while maintaining the option of remaining an
independent entity. During the ensuing four weeks, Sandler O'Neill evaluated the
merger market available to SJ Bancorp and assembled a list of prospective
institutions that might be interested in reviewing information concerning SJ
Bancorp and pursuing a business combination with the SJ Bancorp. In late July
2007, Sandler O'Neill met with the Chairman and the President of SJ Bancorp to
discuss the list of prospective parties that Sandler O'Neill had assembled. The
discussion of the list included a discussion on how a transaction with each of
the prospective parties would impact the interested constituencies of SJ Bancorp
and the Bank, including their shareholders, employees, customers and local
community. As a result of this meeting a list of initial parties to be contacted
was decided upon, as well as a secondary list. During August and September 2007,
SJ Bancorp and Sandler O'Neill assembled information and marketing materials to
provide to interested parties on a confidential basis.
During September 2007, Sandler O'Neill contacted fifteen parties. From
those fifteen contacts, ten confidentiality agreements were executed and
information packages were sent to those parties who executed confidentiality
agreements with a request for a formalized proposal from any interested parties.
Glacier was one of the ten parties that executed a confidentiality agreement and
received information on SJ Bancorp during this time period.
During the ensuing six weeks, problems in the United States capital markets
continued to mount and the beginnings of national credit problems began to
become widely recognized. As a result of this situation in the financial
institutions industry, the merger and acquisition environment for banks came to
a near standstill. All but one of the prospective parties contacted declined any
interest in making a proposal, generally citing market conditions and the
decline of their own stock prices. One prospective party provided initial
indications that it may be interested in pursuing a transaction, but ultimately
no formal proposal was ever received from that party.
In early December 2007, Sandler O'Neill prepared a presentation for SJ
Bancorp setting forth the declines in the overall market as well as the
significant declines in the market for bank stocks. Among other issues, the
presentation showed that as a result of the decline in overall equity markets
for bank stocks, merger and acquisition activity in the fourth quarter of 2007
was down by two-thirds from the previous quarter and down a similar amount when
viewed over the prior twelve to eighteen months, and that the overall valuation
of banks in a merger and acquisition context was also down significantly. After
considering the information contained in this presentation, SJ Bancorp decided
to terminate any further discussions with interested parties. On January 15,
2008 SJ Bancorp issued a letter to Sandler O'Neill terminating the engagement as
it related to a possible sale transaction.
In mid-March 2008, Michael Blodnick, the Chief Executive Officer of
Glacier, approached a representative of Sandler O'Neill at a banking conference
that both were attending to inquire as to whether SJ Bancorp may be interested
in receiving a proposal from Glacier with respect to an acquisition of SJ
Bancorp. In early April 2008, representatives of SJ Bancorp contacted Mr.
Blodnick to express interest in renewing
22
discussions. On April 10th and 11th, the Chairman and President of SJ Bancorp
visited the Glacier offices in Kalispell, Montana to provide updated financial
information, discuss the Glacier business model and confirm SJ Bancorp's
interest in receiving a proposal from Glacier.
On May 1, 2008, Glacier provided SJ Bancorp with a term sheet setting forth
proposed terms for an acquisition by Glacier. Between May 1st and May 19th, the
Board of Directors of SJ Bancorp and its advisors reviewed the proposed term
sheet and negotiated with Glacier on the terms contained therein. On May 19,
2008, Glacier submitted a revised term sheet which reflected proposed merger
consideration consisting of $9,000,000 in cash and 640,000 shares of Glacier
common stock. On May 20, 2008, after discussions among the board and its
advisors, SJ Bancorp approved and executed that term sheet. Between May 26, 2008
and July 9, 2008, each of Glacier and SJ Bancorp conducted on-site and off-site
due diligence on each other and the parties and their advisors drafted and
negotiated the definitive merger agreement and related ancillary agreements.
On July 10, 2008 representatives of SJ Bancorp held discussions with
representatives of Glacier concerning the recent precipitous decline in the
market value of financial institution stock, including the decline in price for
Glacier common stock, since the signing of the term sheet on May 20th. On July
15, 2008, the Board of Directors of SJ Bancorp met with its financial and legal
advisors to get an update on the state of the current merger and acquisition
market for financial institutions and the status of the negotiations with
Glacier. As a result of the meeting, the Board of Directors of SJ Bancorp
decided that based on the then current state of the overall equity market, and
in particular the equity market for financial institutions, that the
negotiations with Glacier should be suspended, while at the same time giving
authority to SJ Bancorp management and advisors to renew the negotiations with
Glacier if the equity market for financial institutions showed improvement.
On July 29, 2008, based upon the improvement in the equity market for
financial institutions, and in particular for Glacier common stock,
representatives of SJ Bancorp renewed discussions with Glacier, and between July
29th and August 15th, the parties proceeded to negotiate and finalize definitive
transaction documents and update their due diligence.
On August 18, 2008, the board of directors of Glacier met to consider
approval of the merger. Matters discussed included the results of due diligence
reviews, the terms of the merger agreement and related documents, the pro forma
financial impact of the merger, and the timing and process for consummation of
the merger. After due consideration of these and other matters, the Glacier
board approved the merger by unanimous vote.
On August 18, 2008, the Board of Directors of SJ Bancorp met to consider
approval of the merger agreement with Glacier. Among other matters discussed,
the Board of Directors held in-depth discussions on the specifics of the merger
agreement, the form and value of consideration to be received by the
shareholders of SJ Bancorp, the break-up fee, potential price adjustments, the
current stock price of Glacier and its dividend history, the timing and process
for consummation of the merger, the likelihood of consummation of the merger,
the implications to SJ Bancorp's shareholders and the implications to the
employees and customers of SJ Bank as well as the community SJ Bank serves.
After due consideration of these and other matters, and taking into
consideration the fairness opinion delivered by Sander O'Neill, the Board of
Directors voted unanimously to approve the merger.
Glacier and SJ Bancorp executed the merger agreement and related documents
on August 19, 2008 and after the close of business on August 19, 2008, the
parties issued a joint press release announcing the execution of the merger
agreement.
REASONS FOR THE MERGER - SJ BANCORP
At a special meeting held on August 18, 2008, the SJ Bancorp board of
directors unanimously determined that the terms of the merger agreement were in
the best interests of SJ Bancorp and its shareholders. In the course of reaching
its decision to approve the merger agreement, the SJ Bancorp board of directors
consulted with
23
Sandler O'Neill, its financial advisor, and Rothgerber Johnson & Lyons L.L.P.,
its legal counsel. In reaching its determination, SJ Bancorp's board of
directors considered a number of factors. Such factors also constituted the
reasons that the board of directors determined to approve the merger and to
recommend that SJ Bancorp's shareholders vote in favor of the merger. Such
reasons included the following:
- the terms of the merger agreement and the form of the consideration,
and the historical trading ranges for Glacier common stock;
- the alternatives of SJ Bancorp's continuing as an independent
community bank or combining with other potential merger partners
versus the determination that the merger with Glacier presented the
best opportunity for maximizing shareholder value and serving the
banking needs of the communities in which SJ Bancorp operates;
- information concerning Glacier's financial condition and results of
operations as well as the likelihood that Glacier would be able to
obtain regulatory approval for the merger;
- the financial terms of recent business combinations in the financial
services industry and a comparison of the multiples of selected
combinations with the terms of the proposed acquisition by with
Glacier;
- the opinion of Sandler O'Neill that the merger consideration to be
received by SJ Bancorp's shareholders in the merger is fair from a
financial point of view;
- Glacier's operating philosophy as a community-oriented bank holding
company with a customer service focus, which is consistent with SJ
Bancorp's operating philosophy;
- the expectation that SJ Bancorp shareholders would have the
opportunity to continue to participate in the growth of the combined
company and would also greatly benefit from the significantly greater
liquidity of the trading market for Glacier common stock;
- that Glacier has historically paid cash dividends on its common stock;
- the effects of the economic, regulatory and market pressures facing SJ
Bancorp and community banks generally and SJ Bank's prospects as an
independent bank;
- the determination that a business combination with Glacier would
extend SJ Bank's lending capabilities and increase the range of
financial products and services available to SJ Bank's customers;
- the provisions in the merger agreement that provide for the ability of
the board of directors to respond to an unsolicited acquisition
proposal that the board of directors determines in good faith is a
superior proposal as defined in the merger agreement;
- the provisions of the merger agreement that provide for the ability of
the SJ Bancorp board of directors to terminate the merger agreement,
subject to certain conditions including the payment of a break-up fee,
if SJ Bancorp has entered into a letter of intent or other agreement
with respect to a superior proposal;
- the broad experience of Glacier's management team and its particular
experience in managing and supporting subsidiary banks that have an
emphasis on local decision making and authority; and
24
- the likelihood of the merger being approved by applicable regulatory
authorities without undue conditions or delay;
- SJ Bancorp's board's understanding of the business, operations,
financial conditions, earnings, management and future prospects of
Glacier, taking into account SJ Bancorp's due diligence investigation
of Glacier, including, but not limited to, debt service and other
existing financial obligations, the financial obligations to be
incurred in connection with the proposed transaction and other likely
financial obligations of Glacier and the possible effects of such
obligations; and
- the current and prospective economic and competitive environment
facing the financial services industry generally, including continued
consolidation in the industry and the increased importance of
operational scale and financial resources in maintaining efficiency
and remaining competitive over the long-term.
The SJ Bancorp board of directors also considered a number of uncertainties
and risks in its deliberations concerning the transactions contemplated by the
merger agreement, including the following:
- that a portion of the merger consideration will be paid through the
issuance of a fixed number of shares of Glacier common stock and any
decrease in the market price of Glacier common stock will result in a
reduction in the aggregate merger consideration to be received by SJ
Bancorp shareholders at the time of completion of the merger;
- that SJ Bancorp will not have the right to terminate the merger
agreement for decreases in price of the Glacier common stock prior to
completion of the merger;
- that SJ Bancorp shareholders will not necessarily know or be able to
calculate the actual value of the merger consideration which they
would receive upon completion of the merger;
- that the "break-up" fee provisions in the merger agreement could have
the effect of discouraging superior proposals for a business
combination between SJ Bancorp and third parties;
- the possible disruption to SJ Bancorp's business that may result from
the announcement of the merger and the resulting distraction of
management's attention from the day-to-day operations of SJ Bancorp's
business; and
- the restrictions contained in the merger agreement on the operation of
SJ Bancorp's business during the period between signing of the merger
agreement and completion of the merger, as well as the other covenants
and agreements of SJ Bancorp contained in the merger agreement.
The foregoing discussion of the reasons that led the SJ Bancorp board of
directors to approve the merger and recommend that SJ Bancorp's shareholders
vote in favor of the merger is not intended to be exhaustive, but is believed to
include all of the material reasons for the board of directors' decision. In
reaching its determination to approve and recommend the transaction, the SJ
Bancorp board based its recommendation on the totality of the information
presented to it and did not assign any relative or specific weights to the
reasons considered in reaching that determination. Individual directors may have
given differing weights to different reasons. After deliberating with respect to
the merger with Glacier, considering, among other things, the matters discussed
above and the opinion of Sandler O'Neill referred to above, the SJ Bancorp board
of directors unanimously approved and adopted the merger agreement and the
merger with Glacier as being in the best interests of SJ Bancorp and its
shareholders.
25
OPINION OF FINANCIAL ADVISOR TO SJ BANCORP
OPINION OF SANDLER O'NEILL & PARTNERS, L.P.
By letter dated June 8, 2007, SJ Bancorp retained Sandler O'Neill to act as
its financial advisor in connection with a possible business combination. On
January 15, 2008 SJ Bancorp terminated its engagement with Sandler O'Neill and
subsequently reinstated and affirmed the original terms of Sandler O'Neill's
engagement in a letter to Sandler O'Neill dated May 21, 2008. Sandler O'Neill is
a nationally recognized investment banking firm whose principal business
specialty is financial institutions. In the ordinary course of its investment
banking business, Sandler O'Neill is regularly engaged in the valuation of
financial institutions and their securities in connection with mergers and
acquisitions and other corporate transactions.
Sandler O'Neill acted as financial advisor to SJ Bancorp in connection with
the proposed transaction and participated in certain of the negotiations leading
to the execution of a definitive merger agreement on August 19, 2008. At the
August 18, 2008 meeting at which SJ Bancorp's board considered and approved the
merger agreement Sandler O'Neill delivered to the board its oral opinion which
was subsequently affirmed in written form on August 19, 2008, that, as of such
date, the merger consideration was fair to SJ Bancorp shareholders from a
financial point of view. Sandler O'Neill has updated its fairness opinion as of
the date of this proxy statement/prospectus. THE FULL TEXT OF SANDLER O'NEILL'S
UPDATED OPINION IS ATTACHED AS APPENDIX C TO THIS PROXY STATEMENT/PROSPECTUS.
THE OPINION OUTLINES THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE, MATTERS
CONSIDERED AND QUALIFICATIONS AND LIMITATIONS ON THE REVIEW UNDERTAKEN BY
SANDLER O'NEILL IN RENDERING ITS OPINION. THE DESCRIPTION OF THE OPINION SET
FORTH BELOW IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE
OPINION. SJ BANCORP'S SHAREHOLDERS ARE URGED TO READ THE ENTIRE OPINION
CAREFULLY IN CONNECTION WITH THEIR CONSIDERATION OF THE PROPOSED MERGER.
SANDLER O'NEILL'S OPINION SPEAKS ONLY AS OF THE DATE OF THE OPINION. THE
OPINION WAS DIRECTED TO THE SJ BANCORP BOARD AND IS DIRECTED ONLY TO THE
FAIRNESS OF THE MERGER CONSIDERATION TO SJ BANCORP SHAREHOLDERS FROM A FINANCIAL
POINT OF VIEW. IT DOES NOT ADDRESS THE UNDERLYING BUSINESS DECISION OF SJ
BANCORP TO ENGAGE IN THE MERGER OR ANY OTHER ASPECT OF THE MERGER AND IS NOT A
RECOMMENDATION TO ANY SJ BANCORP SHAREHOLDER AS TO HOW SUCH SHAREHOLDER SHOULD
VOTE AT THE SPECIAL MEETING WITH RESPECT TO THE MERGER OR ANY OTHER MATTER.
In connection with rendering its August 19, 2008 opinion and its updated
opinion, Sandler O'Neill reviewed and considered, among other things:
- the agreement;
- certain publicly available financial statements and other historical
financial information of SJ Bancorp that Sandler O'Neill deemed
relevant;
- certain publicly available financial statements and other historical
financial information of Glacier that Sandler O'Neill deemed relevant;
- internal financial projections for SJ Bancorp for the year ending
December 31, 2008 and growth and performance estimates for SJ Bancorp
for the years ending December 31, 2009, 2010, 2011 and 2012 as
provided by and reviewed with management of SJ Bancorp;
- publicly available consensus earnings estimates for Glacier for the
years ending December 31, 2008 and 2009 and a long-term growth rate
provided by senior of management of Glacier for the years thereafter;
26
- the pro forma financial impact of the merger on Glacier, based on
assumptions relating to transaction expenses, purchase accounting
adjustments and cost savings determined by the senior managements of
SJ Bancorp and Glacier;
- the publicly reported historical price and trading activity for
Glacier's common stock, including a comparison of certain financial
and stock market information for Glacier with similar publicly
available information for certain other companies the securities of
which are publicly traded;
- the financial terms of certain recent business combinations in the
commercial banking industry, to the extent publicly available;
- the current market environment generally and the banking environment
in particular; and
- such other information, financial studies, analyses and investigations
and financial, economic and market criteria as Sandler O'Neill
considered relevant.
Sandler O'Neill also discussed with certain members of senior management of
SJ Bancorp the business, financial condition, results of operations and
prospects of SJ Bancorp and held similar discussions with certain members of
senior management of Glacier regarding the business, financial condition,
results of operations and prospects of Glacier.
In performing its reviews and analyses and in rendering its opinion,
Sandler O'Neill relied upon the accuracy and completeness of all the financial
and other information that was available to them from public sources, that was
provided to Sandler O'Neill by SJ Bancorp or Glacier or their respective
representatives or that was otherwise reviewed by Sandler O'Neill and has
assumed such accuracy and completeness for purposes of rendering this opinion.
Sandler O'Neill further relied on the assurances of the management of each SJ
Bancorp and Glacier that they are not aware of any facts or circumstances that
would make any of such information inaccurate or misleading. Sandler O'Neill has
not been asked to undertake, and has not undertaken, an independent verification
of any of such information and Sandler O'Neill does not assume any
responsibility or liability for the accuracy or completeness thereof. Sandler
O'Neill did not make an independent evaluation or appraisal of the specific
assets, the collateral securing the assets or the liabilities (contingent or
otherwise) of SJ Bancorp or Glacier or any of their subsidiaries, or the
collectibility of any such assets, nor has Sandler O'Neill been furnished with
any such evaluations or appraisals. Sandler O'Neill did not make an independent
evaluation of the adequacy of the allowance for loan losses of SJ Bancorp or
Glacier nor has Sandler O'Neill reviewed any individual credit files relating to
SJ Bancorp or Glacier. Sandler O'Neill assumed, with SJ Bancorp's consent, that
the respective allowances for loan losses for both SJ Bancorp and Glacier were
adequate to cover such losses and will be adequate on a pro forma basis for the
combined entity.
The projections and estimates used and relied upon by Sandler O'Neill in
its analyses of SJ Bancorp and the publicly available earnings and growth
estimates for Glacier were discussed with SJ Bancorp senior management and
Glacier, respectively who confirmed to Sandler O'Neill that those projections
and estimates reflected the best currently available estimates and judgments of
the future financial performance of SJ Bancorp and Glacier. With respect to the
projections, earnings estimates and estimated growth rates for SJ Bancorp and
Glacier, Sandler O'Neill used and relied on the projections provided by the
senior management of Glacier and SJ Bancorp. All projections of transaction
costs, purchase accounting adjustments and expected cost savings related to the
merger were provided by or reviewed with senior managements of Glacier and SJ
Bancorp and such senior managements confirmed to Sandler O'Neill that those
projections reflected to best currently available estimates and judgments of
such senior managements. Sandler O'Neill assumed that the financial performances
reflected in all projections and estimates used by it in its analyses would be
achieved. Sandler O'Neill expressed no opinion as to such projections or
estimates or the assumptions on which they were based. Sandler O'Neill also
assumed that there has been no material change in the assets, financial
condition, results of operations, business or
27
prospects of SJ Bancorp or Glacier since the date of the last financial
statements made available to them and that SJ Bancorp and Glacier will remain as
going concerns for all periods relevant to the analyses.
With respect to the merger agreement, Sandler O'Neill assumed that all of
the representations and warranties contained in the merger agreement and all
related agreements are true and correct, that each party to such agreements will
perform all of the covenants required to be performed by such party under the
agreements, that the conditions precedent in the merger agreement are not waived
and that the merger will qualify as a tax-free reorganization for federal income
tax purposes and Sandler O'Nieill renders no opinion and make no statement
herein as to the tax liabilities of individual shareholders. Sandler O'Neill's
opinion was approved by Sandler O'Neill's fairness opinion committee. Sandler
O'Neill did not express any opinion as to the fairness of the amount or nature
of the compensation to be received in the merger by SJ Bancorp's officers,
directors, or employees, or class of such persons, relative to the compensation
to be received in the merger by any other shareholders of SJ Bancorp. Finally,
with SJ Bancorp's consent, Sandler O'Neill relied upon the advice received from
SJ Bancorp's legal, accounting and tax advisors as to all legal, accounting and
tax matters relating to the merger agreement and the other transactions
contemplated by the agreement.
Sandler O'Neill's opinion was necessarily based upon financial, economic,
market and other conditions as they existed on, and could be evaluated as of,
the date of its opinion. Events occurring after the date of the opinion could
materially affect the opinion. Sandler O'Neill has not undertaken to update,
revise, reaffirm or withdraw its opinion or otherwise comment upon events
occurring after the date hereof. Sandler O'Neill expressed no opinion as to what
the value of Glacier's common stock will be when issued to SJ Bancorp's
shareholders pursuant to the agreement or the prices at which the common stock
of Glacier or SJ Bancorp may trade at any time.
In rendering its August 19, 2008 opinion, Sandler O'Neill performed a
variety of financial analyses. The following is a summary of the material
analyses performed by Sandler O'Neill, but is not a complete description of all
the analyses underlying Sandler O'Neill's opinion. The summary includes
information presented in tabular format. IN ORDER TO FULLY UNDERSTAND THE
FINANCIAL ANALYSES, THESE TABLES MUST BE READ TOGETHER WITH THE ACCOMPANYING
TEXT. THE TABLES ALONE DO NOT CONSTITUTE A COMPLETE DESCRIPTION OF THE FINANCIAL
ANALYSES. The preparation of a fairness opinion is a complex process involving
subjective judgments as to the most appropriate and relevant methods of
financial analysis and the application of those methods to the particular
circumstances. The process, therefore, is not necessarily susceptible to a
partial analysis or summary description. Sandler O'Neill believes that its
analyses must be considered as a whole and that selecting portions of the
factors and analyses to be considered without considering all factors and
analyses, or attempting to ascribe relative weights to some or all such factors
and analyses, could create an incomplete view of the evaluation process
underlying its opinion. Also, no company included in Sandler O'Neill's
comparative analyses described below is identical to SJ Bancorp or Glacier and
no transaction is identical to the merger. Accordingly, an analysis of
comparable companies or transactions involves complex considerations and
judgments concerning differences in financial and operating characteristics of
the companies and other factors that could affect the public trading values or
merger transaction values, as the case may be, of SJ Bancorp and Glacier and the
companies to which they are being compared.
In performing its analyses, Sandler O'Neill also made numerous assumptions
with respect to industry performance, business and economic conditions and
various other matters, many of which cannot be predicted and are beyond the
control of SJ Bancorp, Glacier and Sandler O'Neill. The analysis performed by
Sandler O'Neill is not necessarily indicative of actual values or future
results, both of which may be significantly more or less favorable than
suggested by such analyses. Sandler O'Neill prepared its analyses solely for
purposes of rendering its opinion and provided such analyses to SJ Bancorp's
board at the board's August 18, 2008 meeting. Estimates on the values of
companies do not purport to be appraisals or necessarily reflect the prices at
which companies or their securities may actually be sold. Such estimates are
inherently subject to uncertainty and actual values may be materially different.
Accordingly, Sandler O'Neill's analyses do not necessarily reflect the value of
the SJ Bancorp common stock or the prices at which SJ Bancorp common stock may
be sold at any time. The combined analysis of Sandler O'Neill and the opinions
provided by each were among a number of factors taken
28
into consideration by SJ Bancorp's board in making its determination to adopt
the plan of merger contained in the merger agreement and the analyses described
below should not be viewed as determinative of the decision of SJ's board or
management with respect to the fairness of the merger.
At the August 18, 2008 meeting of SJ Bancorp's board of directors, Sandler
O'Neill presented certain financial analyses of the merger. The summary below is
not a complete description of the analyses underlying the opinions of Sandler
O'Neill or the presentation made by Sandler O'Neill to SJ Bancorp's board, but
is instead a summary of the material analyses performed and presented in
connection with the opinion.
In arriving at its opinion Sandler O'Neill did not attribute any particular
weight to any analysis or factor that it considered. Rather it made qualitative
judgments as to the significance and relevance of each analysis and factor. The
financial analyses summarized below include information presented in tabular
format. Sandler O'Neill did not form an opinion as to whether any individual
analysis or factor (positive or negative) considered in isolation supported or
failed to support their respective opinions; rather Sandler O'Neill made its
determination as to the fairness of the per share consideration on the basis of
its experience and professional judgment after considering the results of all
their analyses taken as a whole. Accordingly, Sandler O'Neill believes that the
analysis and the summary of the analysis must be considered as a whole and that
selecting portions of the analysis and factors or focusing on the information
presented below in tabular format, without considering all analyses and factors
or the full narrative description of the financial analyses, including
methodologies and assumptions underlying the analyses, could create a misleading
or incomplete view of the process underlying their analyses and opinions. The
tables alone do not constitute complete descriptions of the financial analyses
presented in such tables.
SUMMARY OF PROPOSAL. Sandler O'Neill reviewed the financial terms of the
proposed transaction. Based upon: (i) a fixed pool of 640,000 shares to be
distributed to shareholders; (ii) an aggregate cash payment of $9.0 million; and
(iii) the exercise of all SJ Bancorp options prior to closing and the closing
price of Glacier's common stock on August 15, 2008 of $23.03 per share, Sandler
O'Neill calculated an implied transaction value of $47.49 per share, or an
aggregate transaction value of approximately $23.7 million. Based upon financial
information for SJ Bancorp as of and for the twelve month period ended June 30,
2008, Sandler O'Neill calculated the following transaction ratios:
TRANSACTION RATIOS
Transaction Value/Last Twelve Months' Net Income 12.7x
Transaction Value/Tangible Book Value 192%
Tangible Book Premium/ Core Deposits(1) 11.0%
----------
(1) Core deposits exclude time deposits with account balances greater than
$100,000. Tangible book premium/core deposits calculated by dividing the excess
of the aggregate transaction value over tangible book value by core deposits.
The aggregate transaction value was approximately $23.7 million, based upon
the offer price per share of $47.59, 492,902 SJ Bancorp common shares
outstanding and 7,000 in-the-money stock options of SJ Bancorp common stock at a
weighted-average exercise price of $13.79.
COMPARABLE COMPANY ANALYSIS. Sandler O'Neill used publicly available
information to perform a comparison of selected financial and market trading
information for SJ Bancorp and two groups of financial institutions selected by
Sandler O'Neill: an Intermountain West regional peer group and a Construction
Lending peer group.
The Intermountain West regional peer group consisted of the following
publicly traded commercial banks headquartered in Arizona, Colorado, Idaho,
Montana, New Mexico, Nevada, Utah, and Wyoming with total assets
29
between $100 million and $1 billion:
Bank Holdings Idaho Bancorp
Idaho Independent Bank CBOA Financial, Inc.
State Bank Corp. Denver Bankshares, Inc.
Syringa Bancorp Towne Bancorp, Inc.
Great Basin Financial Corporation
The analysis compared publicly available financial information for SJ
Bancorp and the median financial and market trading data for the SJ Bancorp peer
group as of and for the twelve months ended June 30, 2008. The table below sets
forth the data for SJ Bancorp as of and for the twelve months ended June 30,
2008 and the median data for the SJ Bancorp's peer group as of and for the
twelve months ended June 30, 2008 if available, otherwise as of and for the
twelve month period ended March 31, 2008, with pricing data as of August 15,
2008.
INTERMOUNTAIN WEST REGIONAL COMPARABLE GROUP ANALYSIS
INTERMOUNTAIN WEST REGIONAL
COMPARABLE GROUP
SJ BANCORP MEDIAN RESULT
---------- ---------------------------
Total Assets (in millions) $ 145 $ 282
Tangible Equity / Tangible Assets 8.45% 10.11%
NPAs / Assets 0.01% 1.38%
LLR / Loans 0.61% 1.38%
Texas Ratio 0.1% 15.3%
C&D / Loans 40.7% 28.2%
Return on Average Assets 1.38% 0.51%
Return on Average Equity 17.6% 7.8%
Net Interest Margin 5.36% 4.46%
Efficiency Ratio 57% 70%
Market Capitalization (in millions) NA $ 25
Price / Tangible Book Value NA 105%
Price / Last Twelve Months Earnings per Share NA 15.7x
The Construction Lending peer group consisted of the following publicly
traded commercial banks headquartered nationwide with total assets between $100
million and $500 million and loan portfolios consisting of more than 35%
construction and development (C&D) loans:
Cape Fear Bank Corporation First Commerce Community Bankshares,
Inc.
Coastal Banking Company, Inc. Cherokee Banking Company
Columbia Commercial Bancorp USA Bank
CommunitySouth Financial Corporation Cornerstone Bancorp
Park Sterling Bank Silver Falls Bank
The analysis compared publicly available financial information for SJ
Bancorp and the median financial and market trading data for the SJ Bancorp peer
group as of and for the twelve months ended June 30, 2008. The table below sets
forth the data for SJ Bancorp as of and for the twelve months ended June 30,
2008 and the median data for the SJ Bancorp's peer group as of and for the
twelve months ended June 30, 2008 if available, otherwise as of and for the
twelve month period ended March 31, 2008, with pricing data as of August 15,
2008.
30
CONSTRUCTION LENDING COMPARABLE GROUP ANALYSIS
CONSTRUCTION LENDING
COMPARABLE GROUP
SJ BANCORP MEDIAN RESULT
---------- --------------------
Total Assets (in millions) $ 145 $ 288
Tangible Equity / Tangible Assets 8.45% 8.33%
NPAs / Assets 0.01% 1.69%
LLR / Loans 0.61% 1.32%
Texas Ratio 0.1% 23.6%
C&D / Loans 40.7% 42.8%
Return on Average Assets 1.38% 0.50%
Return on Average Equity 17.6% 5.2%
Net Interest Margin 5.36% 3.72%
Efficiency Ratio 57% 74%
Market Capitalization (in millions) NA $ 20
Price / Tangible Book Value NA 81%
Price / Last Twelve Months Earnings per Share NA 10.1x
Sandler O'Neill used publicly available information to compare selected
financial and market trading information for Glacier and a 2 groups of financial
institutions selected by Sandler O'Neill: a regional peer group and a
High-Performing peer group.
Glacier's Regional peer group consisted of the following publicly traded
commercial banks headquartered in Arizona, Washington, Oregon, California,
Nevada, Colorado, Montana, Idaho, Utah, New Mexico with total assets between
$2.5 billion and $10.0 billion:
Umpqua Holdings Corporation Frontier Financial Corporation
Pacific Capital Bancorp Hanmi Financial Corporation
SVB Financial Group First State Bancorporation
CVB Financial Corp. Columbia Banking System, Inc.
Western Alliance Bancorporation West Coast Bancorp
Banner Corporation Nara Bancorp, Inc.
PacWest Bancorp CoBiz Financial Inc.
Westamerica Bancorporation
The analysis compared publicly available financial and market trading
information for Glacier and the median data for Glacier peer group as of and for
the twelve months ended June 30, 2008. The table below sets forth the data for
Glacier and the median data for the Glacier peer group as of and for the twelve
months ended June 30, 2008, with pricing data as of August 15, 2008.
REGIONAL COMPARABLE GROUP ANALYSIS
REGIONAL COMPARABLE GROUP
GLACIER MEDIAN RESULT
------- -------------------------
Total Assets (in millions) $5,028 $4,189
Tangible Equity / Tangible Assets 8.14% 6.71%
NPAs / Assets 0.52% 1.35%
LLR / Loans 1.59% 1.52%
Texas Ratio 4.3% 13.5%
C&D / Loans 28.6% 17.1%
Return on Average Assets 1.49% 0.73%
Return on Average Tangible Equity 13.6% 8.8%
Net Interest Margin 4.59% 4.29%
Efficiency Ratio 52% 56%
Market Capitalization (in millions) $1,243 $ 480
Price / Tangible Book Value 313% 140%
Price / Last Twelve Months Earnings per Share 17.3x 15.3x
Price / Estimated 2008 Earnings per Share(1) 16.8x 16.1x
Price / Estimated 2009 Earnings per Share(1) 15.2x 12.4x
----------
(1) Based on Thomson First Call consensus estimates outstanding
31
Glacier's High-Performing peer group consisted of the following publicly
traded commercial banks listed on NYSE or NASDAQ with assets between $2.5 and
10.0 billion and ROAE greater than 12.5% and NPAs less than 1%:
Old National Bancorp Westamerica Bancorporation
SVB Financial Group BancFirst Corporation
CVB Financial Corp. First Financial Bankshares, Inc.
Hancock Holding Company Bank of the Ozarks, Inc.
NBT Bancorp Inc. Republic Bancorp, Inc.
S&T Bancorp, Inc. Washington Trust Bancorp, Inc.
The analysis compared publicly available financial and market trading
information for Glacier and the median data for Glacier peer group as of and for
the twelve months ended June 30, 2008. The table below sets forth the data for
Glacier and the median data for the Glacier peer group as of and for the twelve
months ended June 30, 2008, with pricing data as of August 15, 2008.
HIGH-PERFORMING COMPARABLE GROUP ANALYSIS
HIGH-PERFORMING
COMPARABLE GROUP
GLACIER MEDIAN RESULT
------- ----------------
Total Assets (in millions) $5,028 $4,271
Tangible Equity / Tangible Assets 8.14% 6.71%
NPAs/Assets 0.52% 0.36%
LLR/Loans 1.59% 1.30%
Texas Ratio 4.3% 3.7%
C&D/Loans 28.6% 7.5%
Return on Average Assets 1.49% 1.24%
Return on Average Equity 13.6% 15.0%
Net Interest Margin 4.59% 3.93%
Efficiency Ratio 52% 55%
Market Capitalization (in millions) $1,243 $ 983
Price / Tangible Book Value 313% 269%
Price / Last Twelve Months Earnings per Share 17.3x 15.7x
Price / Estimated 2008 Earnings per Share(1) 16.8x 16.0x
Price / Estimated 2009 Earnings per Share(1) 15.2x 15.4x
----------
(1) Based on Thomson First Call consensus estimates outstanding
STOCK TRADING HISTORY. Sandler O'Neill reviewed the history of the reported
trading prices and volume of Glacier common stock for the one-year and
three-year period ended August 15, 2008. Sandler O'Neill then compared the
relationship between the movements in the price of Glacier common stock against
the movements in the prices of the Standard & Poor's 500 Index, the NASDAQ Bank
Index, the Standard & Poor's Bank Index and the median performance of the
High-Performing peer group - a weighted average (by market capitalization)
composite of publicly traded comparable depository institutions selected by
Sandler O'Neill. The composition of the peer group for Glacier is discussed
under the relevant section under "Comparable Group Analysis" above.
During the one-year period ended August 15, 2008, Glacier common stock
outperformed NASDAQ Bank Index, S&P 500 Index and S&P Bank Index but
underperformed when compared to the composite peer group. During the three-year
period ended August 15, 2008, Glacier common stock outperformed when compared to
the
32
High-Performing composite peer group, S&P Bank Index, NASDAQ Bank Index and S&P
500 index.
GLACIER'S ONE-YEAR STOCK PERFORMANCE
BEGINNING INDEX VALUE ENDING INDEX VALUE
AUGUST 15, 2007 AUGUST 15, 2008
--------------------- ------------------
Glacier 100.0% 111.3%
Selected Peer Group(1) 100.0 120.0
NASDAQ Bank Index 100.0 82.3
S&P Bank Index 100.0 65.2
S&P 500 Index 100.0 91.9
(1) Refers to the peer group outlined in the Comparable Group Analysis section
above.
GLACIER'S THREE-YEAR STOCK PERFORMANCE
BEGINNING INDEX VALUE ENDING INDEX VALUE
AUGUST 15, 2005 AUGUST 15, 2008
--------------------- ------------------
Glacier 100.0% 112.7%
Selected Peer Group(1) 100.0 102.4
NASDAQ Bank Index 100.0 73.9
S&P Bank Index 100.0 61.7
S&P 500 Index 100.0 104.2
(1) Refers to the High-Performing peer group outlined in the Comparable Group
Analysis section above.
ANALYSIS OF SELECTED MERGER TRANSACTIONS. Sandler O'Neill reviewed 25
merger transactions announced nationwide from January 1, 2008 through August 15,
2008 involving community banks as acquired institutions with announced
transaction values between $10 million and $50 million. Sandler O'Neill reviewed
the following multiples: transaction price at announcement to last twelve
months' net income, transaction value to tangible book value, tangible book
premium to core deposits and premium to market price and then computed high,
low, mean, median multiples and premiums for the transactions. The median
multiples were applied to SJ Bancorp's financial information as of and for the
twelve months ended June 30, 2008. As illustrated in the following tables,
Sandler O'Neill derived an imputed range of values for a share of SJ Bancorp
common stock of $43.45 to $100.96 based upon the median multiples for the
Nationwide transactions. The implied transaction value of the merger as
calculated by Sandler O'Neill was $47.49 per share.
TRANSACTION MULTIPLES
NATIONWIDE 2008
DEALS (1)
------------------------
Median
Multiple Value Implied
-------------- -------
Price per Share / Last twelve months Net Income 26.9x $100.96
Price per Share / Book Value 175% $ 43.45
Price per Share / Tangible Book Value 180% $ 44.57
Core Deposit Premium(2) 9.7% $ 45.41
(1) Nationwide commercial bank deals announced since Jan. 1, 2008 with deal
values between $10 and $50 million
(2) Core deposits are defined as total deposits less time deposits over
$100,000. The core deposit premium is calculated by taking transaction
value, less tangible book value, divided by core deposits
NET PRESENT VALUE ANALYSIS. Sandler O'Neill performed an analysis that
estimated the net present value
33
per share of SJ Bancorp common stock under various circumstances. In the
analysis, Sandler O'Neill assumed SJ Bancorp performed in accordance with the
2008 net income projection and estimated growth rate for the years ended
December 31, 2009 through 2012 provided by SJ Bancorp management. To approximate
the terminal value of SJ Bancorp common stock at December 31, 2012, Sandler
O'Neill applied price to last twelve months earnings multiples of 8.0x to 18.0x
and multiples of tangible book value ranging from 50% to 175%. The terminal
values were then discounted to present values using different discount rates
ranging from 12.0% to 16.0% chosen to reflect different assumptions regarding
required rates of return of holders or prospective buyers of SJ Bancorp's common
stock. In addition, the net present value of SJ Bancorp common stock at December
31, 2012 was calculated using the same range of price to last twelve months
earnings multiples (8.0x - 18.0x) applied to a range of discounts and premiums
to budget projections. The range applied to the budgeted net income was 25%
under budget to 25% over budget, using a discount rate of 14.08% for the
analysis.
As illustrated in the following tables, the analysis indicated an imputed
range of values per share for SJ Bancorp common stock of $24.21 to $58.62 when
applying the price/earnings multiples to the matched budget, $13.30 to $44.38
when applying multiples of tangible book value to the matched budget, and $20.39
to $66.69 when applying the price/earnings multiples to the -25% / +25% budget
range.
EARNINGS PER SHARE MULTIPLES
DISCOUNT RATE 8.0X 10.0X 12.0X 14.0X 16.0X 18.0X
--------------- ------ ------ ------ ------ ------ ------
12.00% $28.14 $34.24 $40.33 $46.43 $52.53 $58.62
13.00% $27.09 $32.95 $38.80 $44.66 $50.52 $56.37
14.00% $26.08 $31.71 $37.34 $42.97 $48.60 $54.23
15.00% $25.13 $30.54 $35.95 $41.36 $46.77 $52.19
16.00% $24.21 $29.42 $34.62 $39.83 $45.03 $50.24
EARNINGS PER SHARE MULTIPLES
BUDGET VARIANCE 8.0X 10.0X 12.0X 14.0X 16.0X 18.0X
--------------- ------ ------ ------ ------ ------ ------
(25.0%) $20.39 $24.60 $28.81 $33.02 $37.23 $41.44
(20.0%) $21.52 $26.01 $30.49 $34.98 $39.47 $43.96
(15.0%) $22.64 $27.41 $32.18 $36.95 $41.72 $46.49
(10.0%) $23.76 $28.81 $33.86 $38.91 $43.96 $49.01
(5.0%) $24.88 $30.21 $35.55 $40.88 $46.21 $51.54
0.0% $26.01 $31.62 $37.23 $42.84 $48.45 $54.06
5.0% $27.13 $33.02 $38.91 $44.80 $50.70 $56.59
10.0% $28.25 $34.42 $40.60 $46.77 $52.94 $59.11
15.0% $29.37 $35.83 $42.28 $48.73 $55.19 $61.64
20.0% $30.49 $37.23 $43.96 $50.70 $57.43 $64.16
25.0% $31.62 $38.63 $45.65 $52.66 $59.68 $66.69
TANGIBLE BOOK VALUE PER SHARE MULTIPLES
DISCOUNT RATE 50% 75% 100% 125% 150% 175%
--------------- ------ ------ ------ ------ ------ ------
12.50% $15.37 $21.17 $26.97 $32.78 $38.58 $44.38
13.00% $14.81 $20.39 $25.97 $31.54 $37.12 $42.69
14.00% $14.28 $19.64 $25.00 $30.36 $35.72 $41.08
15.00% $13.78 $18.93 $24.09 $29.24 $34.39 $39.55
16.00% $13.30 $18.26 $23.21 $28.17 $33.12 $38.08
34
Sandler O'Neill also performed an analysis that estimated the net present
value per share of Glacier common stock under various circumstances. In the
analysis Sandler O'Neill assumed Glacier performed in accordance with the
publicly available consensus earnings estimates for 2008 and 2009 and estimated
growth rate for the years ended December 31, 2010 through 2012 provided by
Glacier management. To approximate the terminal value of Glacier common stock at
December 31, 2012, Sandler O'Neill applied price to last twelve months earnings
multiples of 12.0x to 20.0x and multiples of tangible book value ranging from
150% to 350%. The terminal values were then discounted to present values using
different discount rates ranging from 9.00% to 15.00% chosen to reflect
different assumptions regarding required rates of return of holders or
prospective buyers of Glacier common stock. In addition, the net present value
of Glacier common stock at December 31, 2012 was calculated using the same range
of price to last twelve months earnings multiples (12.0x - 20.0x) applied to a
range of underperformance and outperformance to budget projections. The range
applied to the budgeted net income was 25% under budget to 25% over budget,
using a discount rate of 12.94% for the analysis.
As illustrated in the following tables, the analysis indicated an imputed
range of values per share for Glacier common stock of $14.95 to $29.69 when
applying the price/earnings multiples to the matched budget, $11.68 to $30.90
when applying multiples of tangible book value to the matched budget, and $12.65
to $31.25 when applying the price/earnings multiples to the -25% / +25% budget
range.
EARNINGS PER SHARE MULTIPLES
DISCOUNT RATE 12.0X 14.0X 16.0X 18.0X 20.0X
--------------- ------ ------ ------ ------ ------
9.00% $18.78 $21.51 $24.23 $26.96 $29.69
10.00% $18.06 $20.68 $23.30 $25.91 $28.53
11.00% $17.38 $19.89 $22.40 $24.92 $27.43
12.00% $16.72 $19.14 $21.55 $23.97 $26.38
13.00% $16.10 $18.42 $20.74 $23.06 $25.38
14.00% $15.51 $17.74 $19.97 $22.20 $24.43
15.00% $14.95 $17.09 $19.23 $21.38 $23.52
EARNINGS PER SHARE MULTIPLES
BUDGET VARIANCE 12.0X 14.0X 16.0X 18.0X 20.0X
--------------- ------ ------ ------ ------ ------
(25.0%) $12.65 $14.40 $16.14 $17.88 $19.63
(20.0%) $13.35 $15.21 $17.07 $18.93 $20.79
(15.0%) $14.05 $16.02 $18.00 $19.98 $21.95
(10.0%) $14.75 $16.84 $18.93 $21.02 $23.12
(5.0%) $15.44 $17.65 $19.86 $22.07 $24.28
0.0% $16.14 $18.47 $20.79 $23.12 $25.44
5.0% $16.84 $19.28 $21.72 $24.16 $26.60
10.0% $17.54 $20.09 $22.65 $25.21 $27.77
15.0% $18.23 $20.91 $23.58 $26.25 $28.93
20.0% $18.93 $21.72 $24.51 $27.30 $30.09
25.0% $19.63 $22.53 $25.44 $28.35 $31.25
TANGIBLE BOOK VALUE PER SHARE MULTIPLES
DISCOUNT RATE 150% 200% 250% 300% 350%
--------------- ------ ------ ------ ------ ------
9.00% $14.62 $18.69 $22.76 $26.83 $30.90
10.00% $14.07 $17.97 $21.88 $25.79 $29.69
11.00% $13.54 $17.29 $21.04 $24.79 $28.54
12.00% $13.04 $16.65 $20.25 $23.85 $27.45
13.00% $12.57 $16.03 $19.49 $22.95 $26.41
14.00% $12.11 $15.44 $18.77 $22.09 $25.42
15.00% $11.68 $14.88 $18.08 $21.27 $24.47
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In connection with its analyses, Sandler O'Neill considered and discussed
with the SJ Bancorp board how the present value analyses would be affected by
changes in the underlying assumptions, including variations with respect to net
income. Sandler O'Neill noted that the terminal value analysis is a widely used
valuation methodology, but the results of such methodology are highly dependent
upon the numerous assumptions that must be made, and the results thereof are not
necessarily indicative of actual values or future results
PRO FORMA MERGER ANALYSIS. Sandler O'Neill analyzed certain potential pro
forma effects of the merger, assuming the following: (1) the merger closes in
the 4th quarter of 2008; (2) the deal value per share is equal to a $47.49 per
SJ Bancorp share; (3) all options for SJ Bancorp common stock will be exercised
prior to close and any unexercised options will be cancelled; (4) SJ Bancorp
performs in accordance with an estimated earnings per share growth rate for the
year ending December 31, 2008 as discussed with senior management of SJ Bancorp
and an estimated growth rate for the years ended December 31, 2009 through 2012
as discussed with senior management of SJ Bancorp; and (5) Glacier performs in
accordance with the publicly available consensus earnings estimates for 2008 and
2009 and estimated growth rate for the years ended December 31, 2010 through
2012 provided by Glacier management. The analyses indicated that for the year
ending December 31, 2009, the merger would be accretive to Glacier's projected
earnings per share and, at December 31, 2008 the merger would be dilutive to
Glacier's tangible book value per share. The actual results achieved by the
combined company may vary from projected results and the variations may be
material
MISCELLANEOUS. SJ Bancorp has agreed to pay Sandler O'Neill a transaction
fee in connection with the merger of approximately $355,000, of which $100,000
became due when Sandler O'Neill rendered its opinion, and the balance of which
is contingent, and payable, upon closing of the merger. SJ Bancorp has also
agreed to reimburse certain of Sandler O'Neill reasonable out-of-pocket expenses
incurred in connection with its engagement and to indemnify Sandler O'Neill and
its affiliates and their respective partners, directors, officers, employees,
agents, and controlling persons against certain expenses and liabilities,
including liabilities under the securities laws.
In the ordinary course of its respective broker and dealer businesses,
Sandler O'Neill may purchase securities from and sell securities to SJ Bancorp
and Glacier and their affiliates. Sandler O'Neill may also actively trade the
debt and/or equity securities of SJ and Glacier or their affiliates for its own
accounts and for the accounts of their customers and, accordingly, may at any
time hold a long or short position in such securities.
RECOMMENDATION OF THE SJ BANCORP BOARD
The board of directors of SJ Bancorp has concluded that the proposed merger
as described in the merger agreement is in the best interest of SJ Bancorp and
its shareholders. AFTER CAREFULLY CONSIDERING THE PROPOSED MERGER, THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF SJ BANCORP VOTE "FOR"
THE APPROVAL OF THE MERGER AGREEMENT.
THE MERGER
The following is a brief description of the material aspects of the merger.
There are other aspects of the merger that are not discussed below but that are
contained in the merger agreement. You are being asked to approve the merger in
accordance with the terms of the merger agreement, and you are urged to read the
merger agreement carefully. The merger agreement is attached to this proxy
statement/prospectus as APPENDIX A.
36
BASIC TERMS OF THE MERGER
The merger agreement provides for the merger of SJ Bancorp with and into
Glacier. Following the merger, SJ Bank will operate as a wholly owned subsidiary
of Glacier.
In the merger, SJ Bancorp shareholders will receive a combination of
Glacier common stock and cash for their SJ Bancorp common stock, as described
below.
While Glacier and SJ Bancorp believe that they will receive the necessary
regulatory approvals for the merger, there can be no assurance that such
approvals will be received or, if received, as to the timing of such approvals
or as to the ability to obtain such approvals on satisfactory terms. See
"--Conditions to the Merger" and "--Regulatory Requirements."
MERGER CONSIDERATION
The merger agreement provides that as of the effective date of the merger,
each share of SJ Bancorp common stock will be converted into the right to
receive an amount of merger consideration consisting of a combination of Glacier
common stock and cash, as described below.
The total merger consideration consists of a stock portion and a cash
portion, which will be determined in the following manner:
Stock Portion of Merger Consideration
The total stock consideration payable by Glacier is fixed at 640,000 shares
of Glacier common stock.
Cash Portion of Merger Consideration
The total cash consideration payable by Glacier is $9,000,000. This amount
is subject to reduction, on a dollar for dollar basis, by the amount by which
the "SJ Bancorp Closing Capital" is less than $11,350,000.
The "SJ Bancorp Closing Capital" is defined in the merger agreement as an
amount, as of the closing date of the merger, equal to SJ Bancorp's capital
stock, surplus and retained earnings determined in accordance with generally
accepted accounting principles ("GAAP"), after giving effect to:
- the payment of all SJ Bancorp "Transaction Fees" (as defined in the
merger agreement);
- the payment due to Mr. John Stolfa under an Incentive Bonus Agreement
dated August 21, 2007;
- the impact of an increase in the SJ Bancorp allowance for possible
loan and lease losses to $2,050,000 as provided for in the merger
agreement; and
- adjustments, calculated in accordance with GAAP, for accumulated other
comprehensive income or loss as reported on SJ Bancorp's balance
sheet.
The value of the consideration (in a combination of Glacier stock and cash)
that an SJ Bancorp shareholder will receive for each share of SJ Bancorp common
stock is the sum of (i) the per-share cash consideration and (ii) the per-share
stock consideration, referred to collectively in the merger agreement as the
"merger consideration." The per-share cash consideration is the amount obtained
by dividing the $9,000,000 total cash consideration (reduced for any SJ Bancorp
Closing Capital adjustment) by the number of shares of SJ Bancorp common stock
outstanding on the effective date of the merger. The per-share stock
consideration is the
37
number of Glacier shares determined by dividing 640,000 by the number of shares
of SJ Bancorp common stock outstanding on the effective date of the merger.
Assuming for purposes of illustration only that (i) there is no reduction
of the cash portion of the merger consideration, (ii) all SJ Bancorp stock
options are exercised prior to the closing of the merger, and (iii) the Glacier
common stock is valued at $______ (the closing price for Glacier common stock on
October __, 2008), each share of SJ Bancorp common stock would receive a value
equal to $_______, consisting of $18.004 in cash and 1.2803 shares of Glacier
common stock. This value does not include any distributions that may be made to
shareholders prior to the closing of the merger if the SJ Bancorp Closing
Capital exceeds $11,350,000.
POSSIBLE PAYMENT OF DIVIDEND
As described immediately above, if the SJ Bancorp Closing Capital is less
than $11,350,000, the cash portion of the merger consideration payable by
Glacier will be reduced by a corresponding amount. The merger agreement provides
that if the SJ Bancorp Closing Capital exceeds $11,350,000, SJ Bancorp may,
effective immediately prior to the closing of the merger, declare and pay a
dividend to its shareholders in the amount of such excess.
FRACTIONAL SHARES
No fractional shares of Glacier common stock will be issued to any holder
of SJ Bancorp common stock in the merger. For each fractional share that would
otherwise be issued, Glacier will pay cash in an amount equal to the fraction
multiplied by the "Glacier Average Closing Price" calculated as provided in the
merger agreement. No interest will be paid or accrued on cash payable in lieu of
fractional shares of Glacier common stock.
EFFECTIVE DATE OF THE MERGER
Subject to the conditions to the obligations of the parties to complete the
merger as set forth in the merger agreement, the effective date of the merger
will occur as soon as practicable after such conditions have been satisfied or
waived. Subject to the foregoing, it is currently anticipated that the merger
will be consummated during the fourth quarter of 2008. Either Glacier or SJ
Bancorp may terminate the merger agreement if the effective date does not occur
on or before February 28, 2009.
LETTER OF TRANSMITTAL
Prior to the closing of the merger, Glacier's exchange agent will send a
letter of transmittal to each person who was an SJ Bancorp shareholder at the
effective time of the merger. This mailing will contain instructions on how to
surrender shares of SJ Bancorp common stock in exchange for the merger
consideration that the holder is entitled to receive under the merger agreement.
All shares of Glacier common stock issued to the holders of SJ Bancorp
common stock pursuant to the merger will be deemed issued as of the effective
date. Until you surrender your SJ Bancorp stock certificates for exchange, you
will accrue, but will not be paid, any dividends or other distributions declared
after the effective date of the merger with respect to Glacier common stock into
which your shares have been converted. When you surrender your certificates,
Glacier will pay any unpaid dividends or other distributions, as well as any
merger consideration payable in cash, without interest. After the effective time
of the merger, there will be no transfers on the stock transfer books of SJ
Bancorp of any shares of SJ Bancorp common stock. If certificates representing
shares of SJ Bancorp 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 SJ Bancorp common stock represented by
those certificates shall have been converted.
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If a certificate for SJ Bancorp 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 SJ Bancorp, and
appropriate and customary identification.
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following is a discussion of the material federal income tax
consequences of the merger that are generally applicable to holders of SJ
Bancorp 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 SJ Bancorp shareholders hold their shares
of SJ Bancorp 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 SJ Bancorp 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;
- non-United States persons;
- SJ Bancorp 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
- SJ Bancorp shareholders who received their SJ Bancorp 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 SJ Bancorp
and Glacier of the opinion of Graham & Dunn PC, counsel to Glacier,
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 date of such opinion, 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 SJ Bancorp nor Glacier intends to request a
ruling from the IRS with respect to the United States federal income tax
consequences of the merger.
If upon the consummation of the merger a holder exchanges all of his, hers
or its shares of SJ Bancorp 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 (excluding any cash received in lieu of
fractional shares) and the fair market value of the Glacier common stock
(including any fractional shares deemed received and exchanged for cash)
received pursuant to the merger over the holder's adjusted tax basis in its
shares of SJ Bancorp common stock surrendered) or (2) the
39
amount of cash (excluding any cash received in lieu of fractional shares)
received pursuant to the merger. For this purpose, gain or loss must be
calculated separately for each identifiable block of shares surrendered in the
exchange, and a loss realized on one block of shares may not be used to offset a
gain realized on another block of shares with a different holding period. Any
recognized gain will generally be long-term capital gain if the holder's holding
period with respect to the SJ Bancorp 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.
The aggregate tax basis of Glacier common stock received by a holder that
exchanges his, hers or its shares of SJ Bancorp common stock for a combination
of Glacier common stock and cash pursuant to the merger (before reduction for
the basis in any fraction shares deemed received and exchanged for cash) will be
equal to the aggregate adjusted tax basis of the shares of SJ Bancorp common
stock surrendered for Glacier common stock and cash, reduced by the amount of
cash received by the holder pursuant to the merger (other than cash received in
lieu of a fractional share), and increased by the amount of gain (including any
portion of the gain that is treated as a dividend as described below), if any,
recognized by the holder on the exchange (other than gain recognized as a result
of cash received in lieu of a fractional share). The holding period of the
Glacier common stock will include the holding period of the shares of SJ Bancorp
common stock surrendered. If a holder has differing bases or holding periods in
respect of its shares of SJ Bancorp 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 his, hers or its shares of SJ Bancorp 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 the holder owns, actually and constructively, (i)
less than 50% of the total combined voting power of all classes of Glacier stock
entitled to vote and (ii) less than 80% of the percentage of Glacier stock the
holder actually and constructively owned before the deemed redemption. 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 determining
whether the deemed redemption is substantially disproportionate or not
essentially equivalent to a dividend, a holder is deemed to own stock actually
owned and, in some cases, constructively owned, by certain family members, by
certain estates and trusts of which the 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.
40
Cash Received in Lieu of a Fractional Share. Cash received by a holder of
SJ Bancorp 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 SJ Bancorp 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 SJ
Bancorp common stock is more than one year.
Dissenting Shareholders. Holders of SJ Bancorp common stock who dissent
with respect to the merger, as discussed in "Dissenters' Rights," and who
receive cash in respect of their shares of SJ Bancorp common stock, and who own
such shares as a capital asset and who do not actually or constructively own
shares of Glacier after the merger, will recognize gain or loss in an amount
equal to the difference between the amount of cash received in the exchange and
the holder's aggregate tax basis in his or her shares of SJ Bancorp common
stock. The gain or loss will be long-term capital gain or loss if the shares of
SJ Bancorp were held for more than one year.
Backup Withholding. Non-corporate shareholders of SJ Bancorp may be subject
to information reporting and backup withholding on any cash payments they
receive. Shareholders will not be subject to backup withholding, however, if
they:
- furnish a correct taxpayer identification number and certify under
penalty of perjury that they are not subject to backup withholding on
the substitute Form W-9 or successor form included in the election
form/letter of transmittal they will receive; or
- are otherwise exempt from backup withholding.
Any amounts withheld under the backup withholding rules will be allowed as
a refund or credit against a shareholder's federal income tax liability,
provided he or she furnishes the required information to the IRS.
Reporting Requirements. Shareholders who receive Glacier common stock as a
result of the merger will be required to retain records pertaining to the merger
and each shareholder will be required to file with such 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. SJ Bancorp 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 and SJ Bancorp. 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 and on representations made
by officers of Glacier and SJ Bancorp 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 SJ Bancorp 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 SJ BANCORP 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 SJ BANCORP SHAREHOLDER SHOULD CONSULT HIS, HERS OR 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.
41
SJ BANCORP STOCK OPTIONS
The merger agreement provides that if any holder of a stock option granted
under the Bank of the San Juans 1998 Incentive Stock Option Plan ("SJ Option
Plan") exercises such option after the date of the merger agreement and before
the effective date of the merger, the SJ Bancorp shares issued upon exercise
will be entitled to receive merger consideration on the same terms as all other
outstanding SJ Bancorp shares. All unexercised stock options will be canceled on
the effective date of the merger in accordance with the SJ Option Plan.
VOTING AGREEMENT
The directors of SJ Bancorp and their spouses have entered into a Voting
Agreement, dated as of August 19, 2008. In the Voting Agreement, each director
and his spouse agrees, among other things, to vote the shares of SJ Bancorp
common stock that he or she owns or controls in favor of the merger. The
directors who have entered into this Voting Agreement are entitled to vote a
total of 124,889 outstanding shares of SJ Bancorp common stock, which is 25.3%
of the total shares outstanding.
DISSENTERS' RIGHTS OF APPRAISAL
Under provisions of Colorado law, SJ Bancorp shareholders have the right to
dissent from the merger and to receive payment in cash of the "fair value" of
their shares of SJ Bancorp common stock.
FAILURE OF A SHAREHOLDER TO COMPLY STRICTLY WITH THE STATUTORY REQUIREMENTS
WILL RESULT IN LOSS OF HIS OR HER DISSENTER'S RIGHTS. No advice can be given as
to the ultimate value that an appraiser may place upon the shares held by those
who choose to dissent. Accordingly, we strongly encourage you to consult with a
knowledgeable professional advisor before exercising your dissenters' rights.
SJ Bancorp shareholders electing to exercise dissenters' rights must comply
with the applicable provisions of Colorado law in order to perfect their rights.
The following is intended as a brief summary of the material provisions of the
procedures that an SJ Bancorp shareholder must follow in order to dissent from
the merger and perfect dissenters' rights. THIS SUMMARY, HOWEVER, IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO THE APPLICABLE PROVISIONS OF ARTICLE 113 OF THE
COLORADO BUSINESS CORPORATION ACT, THE FULL TEXT OF WHICH ARE SET FORTH IN
APPENDIX B TO THIS DOCUMENT.
Shareholders of SJ Bancorp as of the record date may exercise dissenters'
rights as to all of the shares registered in such record holder's name in
connection with the merger by strictly complying with Article 113 of the
Colorado Business Corporation Act (the "CBCA"). Shareholders may exercise
dissenter's rights as to fewer than all of their shares only if the narrow
exceptions of Section 7-113-203 of the CBCA are applicable to them. By
perfecting dissenters' rights, you will be entitled to receive, if the merger is
consummated, the "fair value" of the shares of SJ Bancorp common stock that you
owned upon the effective time of the merger, plus accrued interest from the time
the merger is effectuated to the time payment is made. The following is a
summary of the statutory procedures that you must follow in the event you elect
to exercise your dissenters' rights under the CBCA. This summary is not complete
and is qualified in its entirety by reference to Article 113 of the CBCA, the
text of which is set forth in full in Appendix B to this proxy statement.
How to exercise and perfect your right to dissent. In order to be eligible
to exercise your right to dissent to the merger and to receive, upon compliance
with the statutory requirements summarized below, the fair value of your shares
of SJ Bancorp common stock upon the effective time of the merger:
- You must, prior to the vote on the merger at the special meeting,
provide SJ Bancorp with a written notice that states that you intend
to exercise your right to dissent if the merger is consummated; and
- You must not vote your shares of SJ Bancorp common stock in favor of
the merger agreement.
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Any written notice of intent to exercise the right of dissent should be
signed and addressed as follows:
BANK OF THE SAN JUANS BANCORPORATION
144 East Eight Street
Durango, CO 83301
ATTN: Arthur C. Chase, Jr.
A shareholder who executes and returns an unmarked proxy will have his or
her shares voted "FOR" the merger agreement and, as a consequence thereof, such
shareholder will be foreclosed from exercising rights as a dissenting
shareholder.
Your demand for payment. If you comply with the two bulleted items
described above and the merger is completed, SJ Bancorp, as the surviving
corporation in the merger, will, within 10 days of the completion of the merger,
deliver or mail to all holders of SJ Bancorp common stock who satisfied the
foregoing requirements, a written notice containing all of the information
required by Colorado law. In order to preserve your rights as a dissenting
shareholder, you must deposit those share certificates representing the
dissenting shares together with your demand for payment pursuant to the
provisions set forth in Article 113 of the CBCA. The date upon which to base the
determination of the fair value of your shares of SJ Bancorp common stock will
be the date upon which the merger shall become effective. If you should fail to
strictly comply with all of the conditions set forth in this section for
asserting your rights as a dissenting shareholder, you will lose the right to
dissent and will be bound by the terms of the merger agreement.
SJ Bancorp's action upon receipt of your demand for payment. SJ Bancorp
will pay you, if eligible and if you have properly exercised your rights as a
dissenting shareholder under Article 113 of the CBCA, SJ Bancorp's estimate of
the fair value of the shares, plus interest from the date of the merger to the
date that such payment is made. SJ Bancorp will also provide the information as
required by Article 113 of the CBCA, to you as the holder of record of the
dissenting shares.
Payment of the fair value of your shares of SJ Bancorp common stock upon
agreement of an estimate. If you and SJ Bancorp agree on the fair value of your
shares of SJ Bancorp common stock, SJ Bancorp shall then proceed to pay the
amount of the fair value to you upon receipt of your duly endorsed share
certificates, plus accrued interest, as provided for under Article 113 of the
CBCA. Upon payment of the agreed fair value, you will cease to have any interest
to the merger consideration provided for in the merger agreement with respect to
such shares.
Procedure if you are dissatisfied with SJ Bancorp's estimate. If you and SJ
Bancorp disagree on the fair value of your shares of SJ Bancorp common stock,
and you wish to demand payment of the fair value of your shares, or your
estimate of the fair value of your shares and the amount of interest due, you
must give notice in writing of such demand and such notice must be received by
SJ Bancorp within 30 days after SJ Bancorp made or offered payment to you as the
holder of record for the dissenting shares.
Commencement of legal proceedings if a demand for payment remains
unsettled. If you have complied and properly exercised your rights under
Articles 113 of the CBCA, and believe that (i) the amount offered or paid is
less than the fair value of your shares or that the interest is incorrectly
calculated; (ii) we have failed to make payment within the 60 day deadline for
receiving payment demand; or (iii) we do not return the deposited share
certificates, then you may, within 60 days of the expiration of the 60 days
after the effective time of the merger, give written notice to SJ Bancorp of
your estimate of the fair value and the interest due, less any payment
previously made by SJ Bancorp or you may also reject our offer and demand
payment of the fair value of the shares and interest due. If your demand for
payment remains unresolved, then SJ Bancorp may, within 60 days receipt thereof,
commence a proceeding and petition the court to determine the fair value of your
shares and interest due. If we do not make such a timely request, we must pay
you the amount set forth on your demand for payment.
43
Federal income tax consequences. See " The Merger-Federal Income Tax
Consequences of the Merger," for a discussion on the federal income tax
consequences of the merger to you, if you should elect to dissent from the
merger.
THE FAILURE OF A SHAREHOLDER TO COMPLY STRICTLY WITH THE APPLICABLE
REQUIREMENTS OF COLORADO LAW WILL RESULT IN A LOSS OF HIS OR HER DISSENTER'S
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
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 SJ Bancorp, are as follows:
- approval of the merger by SJ Bancorp shareholders;
- accuracy of the other party's representations in the merger agreement
and any certificate or other instrument delivered in connection with
the merger agreement;
- compliance by the other party of all material terms, covenants, and
conditions of the merger agreement;
- that there shall have been no damage, destruction, or loss, or other
event or sequence of events, that has had or potentially may have a
material adverse effect with respect to the other party;
- that no action or proceeding has been commenced or threatened by any
governmental agency to restrain or prohibit or invalidate the merger;
- the parties shall have agreed on the amount of the SJ Bancorp Closing
Capital;
- Glacier's and SJ Bancorp'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 SJ Bancorp,
has become effective, and no stop-order suspending such effectiveness
has been issued and no proceedings for that purpose have been
initiated or threatened by the SEC.
In addition to the above, the obligations of Glacier under the merger
agreement are subject to conditions that include the following:
- employment agreements between SJ Bank and Arthur C. Chase Jr. and John
Stolfa shall have become effective;
- that in the opinion of the management of SJ Bancorp (and as evidenced
by a certificate from SJ Bancorp to such effect), SJ Bancorp's
allowance for loan and lease losses, as adjusted pursuant to the terms
of the merger agreement, is adequate to absorb SJ Bancorp's
anticipated loan losses;
- that the SJ Bancorp Closing Capital will not be less that $11,200,000
at the closing of the merger; and
44
- that the aggregate deposits of SJ Bancorp, excluding certificates of
deposit (or equivalents) of $100,000 or more and brokered deposits, is
not less than $90 million at the closing of the merger.
Additionally, either Glacier or SJ Bancorp may terminate the merger if
certain conditions applicable to the other party are not satisfied or waived.
Those conditions are discussed below under "-Termination of the Merger
Agreement."
Either Glacier or SJ Bancorp may waive any of the other party's conditions,
except those that are required by law (such as receipt of regulatory approvals
and SJ Bancorp shareholder approval). Either Glacier or SJ Bancorp may also
grant extended time to the other party to complete an obligation or condition.
AMENDMENT OF THE MERGER AGREEMENT
The merger agreement may be amended upon authorization of the boards of
directors of the parties, whether before or after the SJ Bancorp special meeting
of the shareholders. To the extent permitted under applicable law, the parties
may make any amendment or supplement without further approval of SJ Bancorp
shareholders. However, after shareholder approval, any amendments that would
reduce the amount or change the form of consideration SJ Bancorp shareholders
will receive in the merger would require further SJ Bancorp shareholder
approval.
TERMINATION OF THE MERGER AGREEMENT
The merger agreement contains several provisions entitling either Glacier
or SJ Bancorp to terminate the merger agreement under certain circumstances. The
following briefly describes these provisions:
Lapse of Time. If the merger has not been consummated on or before February
28, 2009, then at any time after that date, the board of directors of either
Glacier or SJ Bancorp may terminate the merger agreement and the merger if (i)
the terminating party's board of directors decides to terminate by a majority
vote of all if its members, and (ii) the terminating party delivers to the other
party written notice that its board of directors has voted in favor of
termination.
Mutual Consent. The parties may terminate the merger agreement at any time
before closing, whether before or after approval by SJ Bancorp shareholders, by
mutual consent. if the board of directors of each party agrees to terminate by a
majority vote of all of its members.
No Regulatory Approvals. Either party may terminate the merger agreement if
the regulatory approvals required to be obtained are denied, or if any such
approval is conditioned on a substantial deviation from the transactions
contemplated by the merger agreement, subject to certain rights granted in the
merger agreement to appeal the denial of such regulatory approval.
Breach of Representation or Covenant. Either party may terminate the merger
agreement (so long as the terminating party is not then in material breach of
any of its representations, warranties, covenants or agreements in the merger
agreement) if there has been a material breach of any covenants or agreements
set forth in the merger agreement by the other party, which is not cured within
30 days following written notice to the party committing such breach, or which
breach, by its nature, cannot be cured prior to the closing of the merger.
Failure to Recommend or Obtain Shareholder Approval. Glacier may terminate
the merger agreement (so long as it is not then in material breach of any of its
representations, warranties, covenants or agreements in the merger agreement),
if (i) the SJ Bancorp board of directors fails to recommend to its shareholders
approval of the merger, or (ii) modifies, withdraws or changes in a manner
adverse to Glacier its recommendation to shareholders to approve the merger.
Additionally, regardless of whether the SJ Bancorp board of directors recommends
approval of the merger to its shareholders, Glacier may terminate the merger
agreement if SJ Bancorp shareholders elect not to approve the merger.
45
Impracticability. Either party may terminate the merger agreement upon
written notice to the other party if the board of directors of the party seeking
termination has determined in its sole judgment, made in good faith and after
due consideration and consultation with counsel, that the merger has become
inadvisable or impracticable by reason of actions taken by the federal
government or the government of the States of Montana or Colorado to restrain or
invalidate the merger or the merger agreement.
Potential Dissenting Shares. Glacier may terminate the merger agreement if
holders of 10% or more of the outstanding shares of SJ Bancorp common stock are
proposed dissenting shares (as defined in the merger agreement).
Superior Proposal --Termination by SJ Bancorp. SJ Bancorp may terminate the
merger agreement if its board of directors determines in good faith that SJ
Bancorp has received a "Superior Proposal" as defined in the merger agreement.
This right is subject to the requirement that SJ Bancorp may terminate the
merger agreement only if SJ Bancorp (i) has not breached its covenants regarding
the initiation or solicitation of acquisition proposals from third parties; and
(ii) subsequent to delivering the notice of termination to Glacier, SJ Bancorp
intends to enter into a letter of intent, acquisition agreement or similar
agreement relating to such Superior Proposal, (iii) SJ Bancorp has provided
Glacier with at least five business days prior notice that SJ Bancorp intends to
accept a Superior Proposal and given Glacier, if it so elects, an opportunity to
amend the terms of the merger agreement (negotiated in good faith between
Glacier and SJ Bancorp) in such a manner as would enable SJ Bancorp to proceed
with the merger and (iv) simultaneously upon entering into a letter of intent or
agreement relating to the Superior Proposal, it delivers to Glacier the break-up
fee described below.
Superior Proposal -- Termination by Glacier. Glacier may terminate the
merger agreement if (i) an "Acquisition Event" (as defined in the merger
agreement) has occurred or (ii) a third party has made a proposal to SJ Bancorp
or its shareholders to engage in, or has entered into an agreement with respect
to, an Acquisition Event, and the merger agreement and the merger are not
approved at the special meeting of SJ Bancorp shareholders.
TERMINATION FEES
Subject to certain exceptions, SJ Bancorp will pay Glacier a termination
fee of $200,000 if Glacier terminates the merger agreement based on an SJ
Bancorp breach of its representations or breach of its covenants. Glacier will
pay SJ Bancorp a termination fee of $200,000 if SJ Bancorp terminates the merger
agreement based on a Glacier breach of its representations or breach of its
covenants.
BREAK-UP FEE
If the merger agreement is terminated because (i) the SJ Bancorp board of
directors fails to recommend shareholder approval of the merger agreement; or
(ii) SJ Bancorp terminates the merger agreement after receiving a "Superior
Proposal" (as defined in the merger agreement) and Glacier declines the
opportunity to amend the terms of the merger agreement to enable SJ Bancorp's
board of directors to proceed with the merger; or (iii) Glacier terminates the
merger agreement after SJ Bancorp 's receipt of a Superior Proposal followed by
an immediate Acquisition Event, then SJ Bancorp will immediately pay Glacier a
break-up fee of $1,000,000. If the merger agreement is terminated by Glacier due
to SJ Bancorp's receipt of a proposal to enter into an Acquisition Event and the
merger agreement and merger are not approved at the shareholders' meeting, and
prior to or within six months after such termination, SJ Bancorp or SJ Bank
enters into an agreement, or publicly announces an intention, to engage in an
Acquisition Event, or within 12 months after such termination an Acquisition
Event has occurred, then SJ Bancorp will promptly pay to Glacier the break-up
fee in the amount of $1,000,000.
ALLOCATION OF COSTS UPON TERMINATION
If the merger agreement is terminated (except under circumstances that
would require the payment of a termination fee or break-up fee) Glacier and SJ
Bancorp will each pay their own out-of-pocket expenses incurred in
46
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, SJ
Bancorp will conduct its business only in the ordinary and usual course. The
merger agreement also provides that, unless Glacier otherwise consents in
writing, and except as required by applicable regulatory authorities, SJ Bancorp
will refrain from engaging in various activities such as:
- effecting any stock split or other recapitalization with respect to SJ
Bancorp or SJ Bank, or pledge or encumber any shares of SJ Bancorp
stock or grant any options for such stock;
- other than in the ordinary course of business and consistent with past
practices declaring or paying any dividends, or making any other
distributions;
- acquiring, selling, transferring assigning or encumbering or otherwise
disposing of assets or making any commitment other than in the
ordinary course of business;
- soliciting or accepting deposit accounts of a different type than
previously accepted by SJ Bank or at rates materially in excess of
prevailing interest rates, or, with specified exceptions, incurring
any indebtedness for borrowed money;
- offering or making loans or other extensions of credit of a different
type, or applying different underwriting standards, from those
previously offered or applied by SJ Bank, or offering or making a loan
or extension of credit in an amount greater than $1,000,000 without
prior consultation with Glacier;
- with specified exceptions, acquiring an ownership or leasehold
interest in real property without conducting an appropriate
environmental evaluation;
- with specified exceptions, entering into, renewing, amending or
terminating any contracts calling for a payment of more than $25,000,
with a term of one year or more;
- with specified exceptions, entering into or amending any contract
calling for a payment of more than $25,000, unless the contract may be
terminated without cause or penalty upon 30 days notice or less;
- with specified exceptions, entering into any personal services
contract;
- selling any securities other than in the ordinary course of business,
or selling any securities even in the ordinary course of business if
the aggregate gain or loss realized from all sales after the date of
execution of the merger agreement would exceed $25,000, or
transferring investment securities between portfolios;
- amending or materially changing its operations, policies or
procedures;
- other than in accordance with binding existing commitments, making
capital expenditures in excess of $25,000 per project or related
series of projects or $50,000 in the aggregate;
- entering into material transactions or making any material
expenditures other than in the ordinary course of business except for
expenses reasonably related to the completion of the merger.
47
SJ BANCORP MANAGEMENT AND OPERATIONS AFTER THE MERGER
Effective at the closing of the merger, the board of directors of SJ
Bancorp will tender their resignations. The current board of directors is
composed of seven individuals, each of whom is also a director of SJ Bank.
Subsequent to the closing of the merger, the board of directors of SJ Bank will
continue to have a majority of its directors to be residents of Colorado, and
will include certain current members of the existing board of directors.
As described below under "-Interests of Certain Persons in the Merger,"
Arthur C. Chase Jr., President and Chief Executive Officer of SJ Bancorp and SJ
Bank, has entered into an employment agreement with SJ Bank, effective upon the
closing of the merger, pursuant to which he will serve as President and Chief
Executive Officer of SJ Bank. Additionally, John Stolfa, Chief Operating Officer
and Chief Financial Officer of SJ Bancorp and SJ Bank, has entered into an
employment agreement with SJ Bank, effective upon the closing of the merger,
pursuant to which he will serve as Chief Operating Officer and Chief Financial
Officer of SJ Bank.
EMPLOYEE BENEFIT PLANS
The merger agreement confirms Glacier's intent that Glacier's current
personnel policies and benefits will apply to any employees of SJ Bancorp and SJ
Bank who remain employed following the closing of the merger. Such employees
will be eligible to participate in all of the benefit plans of Glacier that are
generally available to similarly-situated employees of Glacier. For purposes of
participation in such plans, service with SJ Bancorp or SJ Bank prior to the
merger will constitute prior service with Glacier for purposes of determining
eligibility and vesting. For purposes of such participation, current employees'
prior service with SJ Bancorp and/or SJ Bank will constitute prior service with
Glacier for purposes of determining eligibility and vesting, including vacation
time and participation and benefits under Glacier's Severance Plan for employees
in effect at the time of any termination.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of the SJ Bancorp board of directors and management may be
deemed to have interests in the merger, in addition to their interests as
shareholders of SJ Bancorp generally. The SJ Bancorp board of directors was
aware of these factors and considered them, among other things, in approving the
merger agreement.
Stock Ownership. The SJ Bancorp directors and their spouses beneficially
owned, as of the record date for the special meeting, 124,889 shares of SJ
Bancorp common stock, representing 25.3% of all outstanding SJ Bancorp shares.
The directors of SJ Bancorp will receive the same consideration in the merger
for their shares as other shareholders of SJ Bancorp.
Voting Agreements. The directors of SJ Bancorp have entered into a Voting
Agreement, dated as of the date of the merger agreement. Pursuant to the voting
agreement, each director agrees to vote the shares of SJ Bancorp common stock
that he or she owns or controls in favor of the merger.
Employment Agreements.
Arthur C. Chase, Jr.
Mr. Chase, SJ Bancorp's and SJ Bank's President and Chief Executive
Officer, has entered into an employment agreement, ratified by Glacier, with SJ
Bank. The employment agreement provides that Mr. Chase will maintain his current
titles and responsibilities at SJ Bank following the merger. The employment
agreement, which becomes effective on the date of the closing of the merger,
expires on December 31, 2011. The employment agreement supercedes prior
employment agreements to which Mr. Chase is a party, including a Change in
Control Severance Agreement dated August 21, 2007.
48
The employment agreement provides for an annualized salary of $183,750, and
bonuses and incentive compensation as determined by SJ Bank's board of
directors.
The employment agreement provides that if Mr. Chase's employment is
terminated without cause (as defined in the agreement) or resigns with good
reason (as defined in the agreement), SJ Bank will pay him a lump-sum payment
equal to one times his annual base salary at the time of termination
("Termination Payment").
Additionally, if during the term of the agreement Glacier or SJ Bank enters
into an agreement for a change in control (as defined in the agreement) or any
party announces such a prospective change in control, and SJ Bank or its
successor terminates Mr. Chase's employment (other than by reason of death,
disability or cause), or Mr. Chase terminates his employment for good reason
following the change in control, then SJ Bank will pay Mr. Chase a "Change in
Control Payment" in an amount equal to (i) three times his salary for the
calendar year prior to the change in control, plus (ii) the annual bonus paid to
Mr. Chase for the calendar year prior to the change in control. The total amount
of such payment is subject to limitations imposed by Section 280G of the
Internal Revenue Code relating to "parachute payments." If Mr. Chase has
received a Termination Payment under the circumstances described above and
within six months of the date of the termination that gave rise to that payment
a change in control of SJ Bank is announced, then upon the consummation of such
change in control, Mr. Chase will receive the Change in Control Payment, less
the amount of any Termination Payment previously received.
The employment agreement provides that during the term of the agreement and
for a period of one year after termination of employment (unless termination
occurs upon or after expiration of the agreement), Mr. Chase will not engage in
specified activities within La Plata or Archuleta Counties in Colorado that are
competitive with the business of SJ Bank or Glacier.
John Stolfa
Mr. Stolfa, SJ Bancorp's and SJ Bank's Chief Operating Officer and Chief
Financial Officer, has entered into an employment agreement, ratified by
Glacier, with SJ Bank. The employment agreement provides that Mr. Stolfa will
maintain his current titles and responsibilities with SJ Bank following the
merger. The employment agreement becomes effective on the date of the closing of
the merger and expires on the third anniversary of such date.
The employment agreement provides for an annualized salary of $113,500, and
bonuses and incentive compensation as determined by SJ Bank's board of
directors.
If Mr. Stolfa's employment is terminated without cause or if Mr. Stolfa
resigns with good reason, SJ Bank will pay him a lump-sum payment equal to one
times his annual base salary at the time of termination.
The employment agreement provide that during the term of employment and for
a period of one year after termination of employment, Mr. Stolfa will not engage
in specified activities within La Plata or Archuleta Counties in Colorado that
are competitive with the business of SJ Bank or Glacier.
Mr. Stolfa has previously entered into an Incentive Bonus Agreement with SJ
Bancorp and SJ Bank, effective August 21, 2007. The Incentive Bonus Agreement
provides that SJ Bank will pay Mr. Stolfa a retention bonus in the amount of
$200,000 upon the occurrence of specified "Bonus Events" (which include a change
in control such as the merger) if he remains in continuous employment with SJ
Bank for 90 days following such Bonus Event, or if he is involuntarily
terminated (as defined in the agreement) at any time on or after the Bonus Event
but on or prior to the 90th day following the date of the Bonus Event.
SJ Bancorp Director Non-Competition Agreement. All members of the board of
directors of SJ Bancorp and SJ Bank have entered into a non-competition
agreement with Glacier and SJ Bank.. Except under certain limited
49
circumstances, the non-competition agreement prohibits directors from competing
with Glacier and SJ Bank within La Plata or Archuleta Counties in Colorado. The
term of the non-competition agreement commences upon the effective date of the
merger and continues until the later of (i) three years following the closing of
the merger or (ii) one year following termination of a director's service on the
board of directors of SJ Bank.
Indemnification of Directors and Officers; Insurance. The merger agreement
provides that Glacier will, for a period of four years following the closing of
the merger, indemnify the present and former directors and officers of SJ
Bancorp and SJ 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 fullest extent that such persons would
have been entitled to indemnification under applicable law and the articles of
incorporation or bylaws of SJ Bancorp and SJ Bank, as applicable.
The merger agreement also provides that for a period of four years
following the closing of the merger, Glacier will use reasonable efforts to
cause to be maintained in effect, director and officer liability insurance
substantially similar to that maintained by Glacier with respect to claims
arising from facts or events that occurred before the effective date of the
merger.
REGULATORY REQUIREMENTS
Closing of the merger is subject to approval by the appropriate banking
regulatory authorities, including the Board of Governors of the Federal Reserve
System and the Colorado State Banking Board.
ACCOUNTING TREATMENT OF THE MERGER
The acquisition of SJ Bancorp will be accounted for using the purchase
method of accounting by Glacier under accounting principles generally accepted
in the United States of America. Accordingly, using the purchase method of
accounting, the assets and liabilities of SJ Bancorp will be recorded by Glacier
at their respective fair values at the time of the merger. The excess of
Glacier's purchase price over the net fair value of assets acquired including
identifiable intangible assets and liabilities assumed will be recorded as
goodwill. Goodwill will be periodically assessed for impairment but no less
frequently than on an annual basis. Prior period financial statements are not
restated and results of operation of SJ Bancorp will be included in Glacier's
consolidated statement of operations after the date of the merger. The
identifiable intangible assets with finite lives, other than goodwill, will be
amortized against the combined company's earnings following completion of the
merger.
50
INFORMATION CONCERNING SJ BANCORP
GENERAL
SJ Bancorp is a Colorado corporation formed in June 2003 for the purpose of
acquiring the stock of SJ Bank and becoming the holding company for SJ Bank. SJ
Bancorp is registered with the Board of Governors of the Federal Reserve System
as a bank holding company. SJ Bancorp has no substantial operations separate or
apart from SJ Bank.
The principal offices of SJ Bancorp are located at 144 E. 8th Street,
Durango, Colorado 81301.
SJ Bank is a Colorado state-chartered bank, which commenced operations in
1998. As of June 30, 2008, SJ Bank had total assets of approximately $146
million, total net loans of approximately $130 million, total deposits of
approximately $131 million and approximately $15 million of shareholders'
equity.
MARKET AREA
SJ Bank currently operates three branches, primarily serving La Plata and
Archuleta Counties located in southwestern Colorado. SJ Bank has the fifth
largest market share in La Plata County and the third largest market share in
Archuleta County.
LENDING ACTIVITIES
SJ Bank's principal business is to accept deposits from the public and to
make loans and other investments. The primary source of income generated by SJ
Bank is the interest earned from both its loan and investment portfolios. To
develop business, the bank relies to a great extent on the personalized approach
of its officers and directors, who have extensive business and personal contacts
in the communities served by the bank. SJ Bank offers a variety of traditional
loan products to its customers, primarily individual consumers and small to
medium-sized businesses. For businesses, SJ Bank provides term loans, lines of
credit, loans for working capital, loans for business expansion and the purchase
of equipment and machinery, construction and land development loans for builders
and developers and commercial real estate loans. SJ Bank offers consumers
residential mortgage loans, home equity loans, automobile loans and various
other consumer installment loans.
At June 30, 2008, SJ Bank's consolidated total loan portfolio was $130
million, representing approximately 89% of its total assets. As of such date, SJ
Bank's loan portfolio consisted of 21% 1-4 family real estate secured loans, 30%
commercial real estate secured loans (excluding construction and land
development loans), 41% real estate construction and land development loans, 6%
commercial loans, 1% installment or consumer loans and less than 1% farm and
agriculture loans.
DEPOSIT AND BANKING SERVICES
Customers of SJ Bank are provided with a full complement of traditional
banking and deposit products. The bank is engaged in substantially all of the
business operations customarily conducted by independent financial institutions
in Colorado, including the acceptance of checking accounts, savings accounts,
money market accounts and a variety of certificates of deposit accounts.
SJ Bank does a substantial amount of business with individuals, as well as
with customers in small to medium-sized commercial, industrial and agriculture
businesses. The primary sources of core deposits are residents of SJ Bank s
primary market area and businesses and their employees located in that area. SJ
Bank also obtains deposits through personal solicitation by the bank's officers
and directors and through local advertising. For the convenience of its
customers, SJ Bank offers drive-through banking facilities, automated teller
machines, internet banking, direct deposit, night depositories, personalized
checks, merchant bank card processing and safe
51
deposit boxes. The bank's services also include cashier's checks, travelers'
checks, domestic wire transfers, account research, stop payments, and telephone
and internet based transfers between accounts.
SJ BANCORP AND SJ BANK SUMMARY FINANCIAL INFORMATION
The following selected financial information for the fiscal years ended
December 31, 2007, 2006 and 2005 are derived from audited financial statements
of SJ Bancorp on a consolidated basis:
SJ BANCORP
BALANCE SHEET
YEAR ENDED DECEMBER 31,
---------------------------------------
2007 2006 2005
----------- ----------- -----------
Cash and Due from Banks 4,372,464 7,309,000 5,395,796
Fed Funds 12,450,000 13,700,000 11,950,000
Securities 857,341 3,843,490 1,624,067
Gross Loans 114,986,059 104,239,715 85,854,444
Allowance for Loan Loss 711,427 656,404 575,230
NET LOANS 114,274,632 103,583,311 85,279,214
Premises & Fixed Assets 4,966,018 3,716,702 3,802,672
Other Assets 834,661 830,194 565,487
TOTAL ASSETS 137,755,116 132,982,697 108,617,080
Deposits 123,320,575 120,422,882 99,367.692
Fed Funds & Repos
Borrowings 2,578,000 2,578,000 1,330,000
Other Liabilities 432,223 297,603 321,081
TOTAL LIABILITIES 126,330,798 123,318,485 101,018,773
Equity 11,424,318 9,664,212 7,598,307
TOTAL LIABILITIES AND SHAREHOLDER EQUITY 137,755,116 132,982,697 108,617,080
SJ BANCORP
INCOME STATEMENT
YEAR ENDED DECEMBER 31,
---------------------------------------
2007 2006 2005
----------- ----------- -----------
Interest Income 10,072,342 8,807,657 6,450,443
Interest Expense 3,685,743 2,860,341 1,536,091
Net Interest Income 6,386,599 5,947,316 4,914,352
Loan Loss Provision 60,319 101,633 (80,548)
Non-interest Income 1,209,395 1,106,148 887,107
Non-interest Expense 4,733,125 4,345,919 3,864,521
Pre-Tax Income 2,802,550 2,605,912 2,017,486
Taxes 1,028,207 959,373 738,417
NET INCOME 1,774,343 1,646,539 1,279,069
The following selected financial information for the six-months ended June
30, 2008 and 2007 are
52
derived from unaudited internally prepared financial statements of SJ Bank:
SJ BANK
BALANCE SHEET
FOR THE PERIOD ENDING,
-------------------------
JUNE 30, JUNE 30,
2008 2007
----------- -----------
Cash and Cash Equivalents 3,736,132 4,749,567
Fed Funds 6,050,000 13,550,000
Securities 838,752 4,832,982
Gross Loans 130,277,082 107,452,040
Allowance for Loan Loss 796,392 660,136
NET LOANS 129,480,690 106,791,904
Premises & Fixed Assets 4,894,592 5,048,796
Other Assets 750,488 856,349
TOTAL ASSETS 145,750,654 135,829,598
Deposits 130,504,163 122,634,246
Fed Funds & Repos
Borrowings
Other Liabilities 547,791 277,580
TOTAL LIABILITIES 131,051,954 122,911,826
Equity 14,698,700 12,917,772
TOTAL LIABILITIES AND SHAREHOLDER EQUITY 145,750,654 135,829,598
SJ BANK
INCOME STATEMENT
SIX MONTHS ENDED,
-------------------------
JUNE 30, JUNE 30,
2008 2007
----------- -----------
Interest Income 4,776,301 4,965,639
Interest Expense 1,468,082 1,615,501
Net Interest Income 3,308,219 3,350,138
Loan Loss Provision 84,102 17,044
Non-interest Income 454,987 420,607
Non-interest Expense 2,150,338 2,380,659
Pre-Tax Income 1,528,766 1,373,042
Taxes 564,619 504,238
NET INCOME 964,147 868,804
53
COMPETITION
SJ Bank experiences competition in both lending and attracting funds from
other commercial banks, savings banks, savings and loan associations, credit
unions, finance companies, pension trusts, mutual funds, insurance companies,
mortgage bankers and brokers, brokerage and investment banking firms,
asset-based non-bank lenders, government agencies and certain other
non-financial institutions, including retail stores, which may offer more
favorable financing alternatives than SJ Bank.
SJ Bank also competes with companies located outside of its primary market
that provide financial services to persons within this market. Some of SJ Bank's
current and potential competitors have larger customer bases, greater brand
recognition, and significantly greater financial, marketing and other resources
than SJ Bank and some of them are not subject to the same degree of regulation
as SJ Bank.
EMPLOYEES
As of June 30, 2008, SJ Bank had 38 full-time and 3 part-time employees. SJ
Bancorp has no employees. SJ Bank believes that it has a good relationship with
its employees and the employees are not represented by a collective bargaining
agreement.
PROPERTIES
SJ Bank operates from three locations:
- SJ Bank's main office is located at 144 E. 8th Street, Durango,
Colorado 81301 and is housed in a one-story, approximately 6,500
square foot building. This banking center is equipped with four teller
stations and an automated teller machine.
- SJ Bank's North Main Durango branch is located at 1710 N. Main Ave.,
Durango, Colorado 81301 and is housed in a two-story building, of
which it leases approximately 3,700 square feet. This banking center
is equipped with six teller stations and an automated teller machine.
- SJ Bank's Pagosa Springs branch is located at 305 Hot Springs Blvd.,
Pagosa Springs, Colorado 81147 and is housed in a one-story,
approximately 4,200 square foot building. This banking center is
equipped with seven teller stations and an automated teller machine.
LEGAL PROCEEDINGS
From time to time, litigation arises in the normal conduct of SJ Bancorp's
business. SJ Bancorp, however, is not currently involved in any litigation that
management of SJ Bancorp believes, either individually or in the aggregate,
could reasonably be expected to have a material adverse effect on its business,
financial condition or results of operations.
SHARE OWNERSHIP OF PRINCIPAL SHAREHOLDERS, MANAGEMENT AND DIRECTORS OF SJ
BANCORP
The following table shows, as of __________, 2008, the beneficial ownership
of SJ Bancorp common stock by (i) each person known by SJ Bancorp to be the
beneficial owner more than 5% of SJ Bancorp's outstanding common stock, (ii)
each of SJ Bancorp's directors and executive officers; and (iii) all of SJ
Bancorp's directors and officers as a group. Except as otherwise noted in the
footnotes to the table, each individual has sole investment and voting power
with respect to the shares of common stock set forth.
54
SHARES PERCENTAGE
NAME BENEFICIALLY OWNED OF CLASS(1)
---------------------------------------- ------------------ -----------
DIRECTORS AND EXECUTIVE OFFICERS
Thomas P. Berry 3,829(2) 0.8%
Randy D. Burton 6,153 1.2%
Arthur C. Chase, Jr. 46,304(3) 9.3%
John R. Hatch 24,073 4.8%
Thomas F. Melchior 39,385(4) 7.9%
James E. Rockelmann 3,145(5) 0.6%
Douglas Simonson 3,000(6) 0.6%
John Stolfa 4,033(7) 0.8%
ALL DIRECTORS AND EXECUTIVE OFFICERS
AS A GROUP (8 PERSONS) 129,922 26.0%
FIVE PERCENT SHAREHOLDERS (NON-DIRECTOR)
Stephen Barney, Lynne Barney, 37,180(8) 7.4%
Barney Investments, LLC
Barney Investment Partnership, LLC
130 S. Canal Street, Suite 9-T
Chicago, IL 60606
Founders Group, Inc. (9) 19,893 4.0%
7103 West 111th Street
Worth, IL 60482
Peotone Bancorp, Inc. (9) 25,065 5.0%
200 West Corning
Peotone, IL 60648
(1) Percentages are based on 492,902 shares of common stock outstanding, plus
the assumed exercise of outstanding options to acquire 7,000 shares of
common stock.
(2) Includes 3,829 shares of common stock owned jointly by Mr. Berry with Mary
Ann Berry, Mr. Berry's spouse.
(3) Includes 1,310 shares of common stock owned by Mr. Chase, 1,260 shares of
common stock owned by Donna Chase, Mr. Chase's spouse, 42,734 shares owned
by the Chase Family Trust dated February 13, 2006, of which Mr. Chase is
trustee, and options held by Mr. Chase to acquire 1,000 shares of common
stock.
(4) Includes 21,738 shares of common stock owned by Mr. Melchior, 5,613 shares
of common stock owned by Sandra Melchior, Mr. Melchior's spouse and 12,034
shares held jointly by Mr. Melchior and his spouse.
(5) Includes 3,042 shares of common stock owned by Mr. Rockelmann and Connie
Rockelmann, Mr. Rockelmann's spouse and 103 shares held by Connie
Rocklemann.
(6) Includes 3,000 shares of common stock owned by the DAS Family Trust, of
which Mr. Simonson is trustee.
(7) Includes 533 shares of common stock owned by Mr. Stolfa and options held by
Mr. Stolfa to acquire 3,500 shares of common stock.
(8) Includes 18,590 shares of common stock held of record and held jointly by
Stephen Barney, Lynne Barney and Barney Investment Partnership, LP and
18,590 shares of common stock held of record by the Barney Investments, LLC
which shareholders management of SJ Bancorp believe to be a "group" within
the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of
1934.
(9) Management of SJ Bancorp believes Founders Group, Inc. and Peotone Bancorp,
Inc. to be a "group" within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934.
55
DESCRIPTION OF GLACIER'S CAPITAL STOCK
Glacier's authorized capital stock consists of 117,187,500 shares of common
stock, $0.01 par value per share, and 1,000,000 shares of preferred stock, $0.01
par value per share. As of the date of this proxy statement/prospectus, Glacier
had no shares of preferred stock issued. The Glacier board of directors is
authorized, without further shareholder action, to issue preferred stock shares
with such designations, preferences and rights as the Glacier board of directors
may determine.
Glacier common stock is listed for trading on The NASDAQ Global Select
Market under the symbol "GBCI."
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 SJ Bancorp Common
Stock."
COMPARISON OF CERTAIN RIGHTS OF HOLDERS OF
GLACIER AND SJ BANCORP COMMON STOCK
Montana law and Glacier's articles of incorporation and bylaws govern the
rights of Glacier shareholders and will govern the rights of SJ Bancorp
shareholders, who will become shareholders of Glacier as a result of the merger.
The rights of SJ Bancorp shareholders are currently governed by Colorado law and
by SJ Bancorp's articles of incorporation and bylaws. The following is a brief
summary of certain differences between the rights of Glacier and SJ Bancorp
shareholders. This summary does not purport to be complete and is qualified by
the documents referenced. See also "Where You Can Find More Information About
Glacier."
GENERAL
Under its articles of incorporation, Glacier's authorized capital stock
consists of 117,187,500 shares of common stock, $0.01 par value per share, and
1,000,000 shares of preferred stock, $0.01 par value per share. No shares of
preferred stock are currently outstanding.
Under its articles of incorporation, SJ Bancorp's authorized capital
consists of 2,000,000 shares of common stock, $5.00 par value per share.
The following is a more detailed description of Glacier's and SJ Bancorp's
capital stock.
COMMON STOCK
As of June 30, 2008, there were 53,985,813 shares of Glacier common stock
issued and outstanding, in addition to options for the purchase of 3,040,993
shares of Glacier common stock under Glacier's employee and director stock
option plans.
As of June 30, 2008, there were 492,902 shares of SJ Bancorp common stock
issued and outstanding, in addition to options for the purchase of 7,000 shares
of SJ Bancorp common stock under SJ Bancorp's employee stock option plans.
56
PREFERRED STOCK
As of the date of this proxy statement/prospectus, Glacier had no shares of
preferred stock issued. The Glacier board of directors is authorized, without
further shareholder action, to issue preferred stock shares with such
designations, preferences and rights as the Glacier board of directors may
determine.
SJ Bancorp's authorized capital does not include preferred stock.
DIVIDEND RIGHTS
Dividends may be paid on Glacier common stock as and when declared by the
Glacier board of directors out of funds legally available for the payment of
dividends. The Glacier board of directors may issue preferred stock that is
entitled to such dividend rights as the board of directors may determine,
including priority over the common stock in the payment of dividends.
The ability of Glacier to pay dividends basically depends on the amount of
dividends paid to it by its subsidiaries. The payment of dividends is subject to
government regulation, in that regulatory authorities may prohibit banks and
bank holding companies from paying dividends in a manner that would constitute
an unsafe or unsound banking practice. In addition, a bank may not pay cash
dividends if doing so would reduce the amount of its capital below that
necessary to meet minimum applicable regulatory capital requirements. State laws
also limit a bank's ability to pay dividends. Accordingly, the dividend
restrictions imposed on the subsidiaries by statute or regulation effectively
may limit the amount of dividends Glacier can pay.
Dividends may be paid on SJ Bancorp common stock as and when declared by
the SJ Bancorp board of directors out funds legally available for the payment of
dividends.
VOTING RIGHTS
All voting rights are currently vested in the holders of Glacier common
stock and SJ Bancorp common stock, with each share being entitled to one vote.
The articles of incorporation of Glacier provide that shareholders do not
have cumulative voting rights in the election of directors. The articles of
incorporation of SJ Bancorp provide that shareholders do not have cumulative
voting rights in the election of directors or for any other purpose.
PREEMPTIVE RIGHTS
Glacier's shareholders do not have preemptive rights to subscribe to any
additional securities that may be issued.
SJ Bancorp's shareholders do not have preemptive rights to acquire
additional unissued or treasury shares of SJ Bancorp or securities convertible
into shares or carrying stock purchase warrants or privileges.
LIQUIDATION RIGHTS
If Glacier is liquidated, the holders of Glacier common stock are entitled
to share, on a pro rata basis, Glacier's remaining assets after provision for
liabilities. The Glacier board of directors is authorized to determine the
liquidation rights of any preferred stock that may be issued.
If SJ Bancorp is liquidated, the holders of SJ Bancorp common stock are
entitled to share, on a pro rata basis, SJ Bancorp's remaining assets after
provision for liabilities.
57
All outstanding shares of Glacier common stock are, and the shares to be
issued in the merger will be, fully paid and nonassessable. Shares of SJ
Bancorp's common stock are fully paid and nonassessable.
AMENDMENT OF ARTICLES AND BYLAWS
The Montana Business Corporation Act ("MBCA") authorizes a corporation's
board of directors to make various changes of an administrative nature to its
articles of incorporation. Other amendments to a corporation's articles of
incorporation must be recommended to the shareholders by the board of directors,
unless the board determines that because of a conflict of interest or other
special circumstances it should make no recommendation, and must be approved by
a majority of all votes entitled to be cast by each voting group that has a
right to vote on the amendment. The Glacier board of directors may, by a
majority vote, amend Glacier's bylaws.
The articles of incorporation of SJ Bancorp provide that amendment to such
articles of incorporation must be approved by the vote of two-thirds of the
shares of each class entitled vote on the action. The bylaws of SJ Bancorp
provide that except as otherwise provide by law, the articles of incorporation
or by specific provisions of the bylaws, such bylaws may be amended,
supplemented or repealed by the board of directors.
APPROVAL OF CERTAIN TRANSACTIONS
The MBCA does not contain any "anti-takeover" provisions imposing specific
requirements or restrictions on transactions between a corporation and
significant shareholders. Glacier's articles of incorporation contain a
provision requiring that specified transactions with an "interested shareholder"
be approved by 80% of the voting power of the then outstanding shares unless it
is (i) approved by Glacier's board of directors, or (ii) certain price and
procedural requirements are satisfied. An "interested shareholder" is broadly
defined to include the right, directly or indirectly, to acquire or to control
the voting or disposition of 10% or more of Glacier's voting stock.
SJ Bancorp's articles of incorporation do not contain any anti-takeover
provisions.
BOARD OF DIRECTORS - NUMBER OF DIRECTORS
Glacier's articles of incorporation provide that the number of directors
may not be less than seven or more than 17. Glacier's board currently consists
of 10 members, each of whom is currently serving an annual term.
SJ Bancorp's articles of incorporation provide that the number of directors
may not be less than three. The board of directors of SJ Bancorp currently
consists of seven members, each of whom is currently serving an annual term.
INDEMNIFICATION AND LIMITATION OF LIABILITY
Under the MBCA, indemnification of directors and officers is authorized to
cover judgments, amounts paid in settlement, and expenses arising out of actions
where the director or officer acted in good faith and in or not opposed to the
best interests of the corporation, and in criminal cases, where the director or
officer had no reasonable cause to believe that his or her conduct was unlawful.
Unless limited by the corporation's articles of incorporation, Montana law
requires indemnification if the director or officer is wholly successful on the
merits of the action. Glacier's bylaws provide that Glacier shall indemnify its
directors and officers to the fullest extent not prohibited by law, including
indemnification for payments in settlement of actions brought against a director
or officer in the name if the corporation, commonly referred to as a derivative
action. Under the MBCA, any indemnification of a director in a derivative action
must be reported to shareholders in writing prior to the next annual meeting of
shareholders.
58
The CBCA as set forth in Title 7, Articles 101 to 117 of the Colorado
Revised Statutes, governs a Colorado corporation's obligations to indemnify its
officers and directors. The CBCA specifies the circumstances under which a
corporation may indemnify its directors, officers, employees and agents. As to
directors, the CBCA generally requires that a director provide a statement that
he or she has met a certain standard of conduct. The CBCA standard requires that
a director must have acted in good faith, and fort acts done in a director's
official capacity, must have reasonably believed that he or she acted in the
best interests of the corporation. In all other instances, the director must
have acted in good faith and must have reasonably believed that he or she acted
in a manner that was not opposed to the best interests of the corporation. In
criminal proceedings, the director must not have had a reason to believe that
his or her conduct was unlawful. In a proceeding brought by or in the right of
the corporation, or that alleges that a director improperly received a personal
benefit, the director cannot be indemnified if he or she is adjudged liable,
unless a court orders the corporation to pay reasonable expenses. On the other
hand, the corporation must pay reasonable expenses that a director or officer
incurred in a proceeding when such director or officer is wholly successful on
the merits or otherwise in defending any civil or criminal proceeding. The CBCA
permits the corporation to indemnify officers and employees to a greater extent
than it may indemnify directors if such indemnification would not violate public
policy. Additionally, a corporation may provide insurance to directors and
officers without restriction, even though the corporation does not have the
power to indemnify such persons.
The CBCA also provides that a corporation may in its articles of
incorporation eliminate or limit the personal liability of a director to the
corporation or to its shareholders for monetary damages for breach of fiduciary
duty as a director, except for monetary damages for any breach of the director's
duty of loyalty to the corporation or its shareholders, acts or omissions not in
good faith or that involve intentional misconduct or knowing violation of law,
certain acts regarding approval of unlawful distributions ort any transaction
from which the director directly or indirectly derived an improper personal
benefit.
The articles of SJ Bancorp provide for indemnification to the fullest
extent permitted by applicable law in effect from time to time, any person
against all liability and expense incurred by reason of the fact that he is or
was serving at the request of SJ Bancorp as a director or officer of SJ Bancorp
or, while serving as a director or officer, he is or was serving at the request
of SJ Bancorp as a director, officer, partner, trustee, employee, fiduciary or
agent of, or in any similar managerial or fiduciary position of, another
corporation or other individual or entity or of any employee benefit plan. The
articles of SJ Bancorp also provide that a director will be personally liable to
SJ Bancorp for monetary damages arising from any breach of the director's duty
of loyalty to the corporation or its shareholders, acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of the law,
or any transaction from which a director derived an improper personal benefit.
RESTRICTION ON TRANSFER OF SHARES
Neither Glacier's articles of incorporation nor bylaws provide any specific
limitations on the ability to transfer Glacier shares, nor require the company's
shares to bear a restrictive legend.
SJ Bancorp's articles of incorporation provide that SJ Bancorp will have
the right to impose restrictions on the transfer of its shares, provided that
such restrictions or notice thereof is set forth on stock certificates.
Transfers of SJ Bancorp's shares are subject to restrictions imposed by a
Shareholders' Buy-Sell Agreement originally adopted by SJ Bank and its
shareholders, which became effective as to SJ Bancorp shares upon the formation
of SJ Bancorp as the holding company for SJ Bank.
POTENTIAL "ANTI-TAKEOVER" PROVISIONS
Glacier's articles of incorporation include certain provisions that could
make more difficult the acquisition of Glacier by means of a tender offer, a
proxy contest, merger or otherwise. These provisions consist of a requirement
that any "Business Combination" (as defined in the articles of incorporation) be
approved by the affirmative vote of not less than 80% of the voting power of the
then outstanding shares unless it is either
59
approved by the board of directors or certain price and procedural requirements
are satisfied.
In addition, the authorization of preferred stock, which is intended
primarily as a financing tool and not as a defensive measure against takeovers,
may potentially be used by management to make more difficult uninvited attempts
to acquire control of Glacier (for example, by diluting the ownership interest
of a substantial shareholder, increasing the amount of consideration necessary
for shareholder to obtain control, or selling authorized but unissued shares to
friendly third parties).
The "supermajority" approval requirement for certain business transactions
and the availability of Glacier's preferred stock for issuance without
shareholder approval, may have the effect of lengthening the time required for a
person to acquire control of Glacier through a tender offer, proxy contest or
otherwise, and may deter any potentially unfriendly offers or other efforts to
obtain control of Glacier. This could deprive Glacier's shareholders of
opportunities to realize a premium for their Glacier common stock, even in
circumstances where such action was favored by a majority of Glacier's
shareholders.
SJ Bancorp's articles of incorporation do not contain "anti-takeover"
provisions.
CERTAIN LEGAL MATTERS
The validity of the Glacier common stock to be issued in the merger will be
passed upon for Glacier by its special counsel, Christensen, Moore, Cockrell,
Cummings & Axelberg, P.C., Kalispell, Montana. Graham & Dunn PC, Seattle,
Washington, Glacier's corporate counsel, has provided an opinion concerning
certain tax matters related to the merger.
EXPERTS
The consolidated financial statements of Glacier Bancorp, Inc. as of
December 31, 2007, 2006 and 2005 and the years then ended have been incorporated
by reference herein and in the registration statement in reliance upon the
report of BKD, LLP, independent registered public accounting firm, and upon the
authority of said firm as experts in accounting and auditing.
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 SJ Bancorp 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 SJ Bancorp for the SJ Bancorp 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
60
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, 2007;
- Quarterly Reports on Form 10-Q for the quarters ended March 31 and
June 30, 2008;
- Proxy Statement for Glacier's 2008 Annual Meeting of Shareholders; and
- Current Reports on Form 8-K filed January 1, 2008; February 2, 2008;
April 25, 2008; June 29, 2008; June 27, 2008; July 25, 2008; August 8,
2008, and August 29, 2008.
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 SJ Bancorp shareholders (other than
current reports furnished under Item 9 or Item 12 of Form 8-K).
YOU CAN OBTAIN THE DOCUMENTS THAT ARE INCORPORATED BY REFERENCE THROUGH
GLACIER OR THE SEC. YOU CAN OBTAIN THE DOCUMENTS FROM THE SEC, AS DESCRIBED
ABOVE. THESE DOCUMENTS ARE ALSO AVAILABLE FROM GLACIER WITHOUT CHARGE, EXCLUDING
EXHIBITS UNLESS GLACIER HAS SPECIFICALLY INCORPORATED SUCH EXHIBITS BY REFERENCE
IN THIS PROXY STATEMENT/PROSPECTUS. YOU MAY OBTAIN DOCUMENTS INCORPORATED BY
REFERENCE IN THIS PROXY STATEMENT/PROSPECTUS BY REQUESTING THEM FROM GLACIER AT
49 COMMONS LOOP, KALISPELL, MONTANA 59901, TELEPHONE NUMBER (406) 751-4703,
ATTN: LEEANN WARDINSKY, CORPORATE SECRETARY. IF YOU WOULD LIKE TO REQUEST
DOCUMENTS FROM GLACIER, PLEASE DO SO BY ________, 2008 TO RECEIVE THEM BEFORE
THE SJ BANCORP 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 SJ Bancorp 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 October __, 2008. 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 SJ
Bancorp shareholders nor the issuance of Glacier common stock in the merger will
create any implication to the contrary.
61
APPENDIX A
================================================================================
PLAN AND AGREEMENT OF MERGER
BETWEEN
GLACIER BANCORP, INC.
AND
BANK OF THE SAN JUANS BANCORPORATION
DATED AS OF AUGUST 19, 2008
================================================================================
PLAN AND AGREEMENT OF MERGER
BETWEEN
GLACIER BANCORP, INC.
AND
BANK OF THE SAN JUANS BANCORPORATION
This Plan and Agreement of Merger (the "Agreement"), dated as of August 19,
2008, is made by and between GLACIER BANCORP, INC. ("GBCI") and BANK OF THE SAN
JUANS BANCORPORATION ("SJ Bancorp").
PREAMBLE
The management and boards of directors of GBCI and SJ Bancorp believe that
the proposed Merger, to be accomplished in the manner set forth in this
Agreement, is in the best interests of the respective corporations and their
shareholders.
RECITALS
A. THE PARTIES AND CERTAIN SUBSIDIARIES.
(1) GBCI is a corporation duly organized and validly existing under
Montana law and is a registered bank holding company under the Bank
Holding Company Act of 1956, as amended ("BHC Act"). GBCI's principal
office is located in Kalispell, Montana.
(2) SJ Bancorp is a corporation duly organized and validly existing under
Colorado law and is a registered bank holding company under the BHC
Act. SJ Bancorp's principal office is located in Durango, Colorado.
(3) SJ Bancorp owns all of the outstanding capital stock of Bank of the
San Juans, a Colorado state-chartered bank with its principal office
in Durango, Colorado ("SJ Bank").
B. THE TRANSACTION. On the Effective Date, SJ Bancorp will merge with and into
GBCI, and SJ Bank will become a wholly owned subsidiary of GBCI.
C. BOARD APPROVALS. The respective boards of directors of GBCI and SJ Bancorp
have approved this Agreement and authorized its execution and delivery.
D. OTHER APPROVALS. The Merger is subject to:
(1) Satisfaction of the conditions described in this Agreement;
(2) Approval by SJ Bancorp's shareholders; and
(3) Approval or acquiescence, as appropriate, by the Board of Governors of
the Federal Reserve System ("Federal Reserve"), the Banking Board of
the Colorado Division of Banking (the "Colorado Banking Board") and
any other agencies having jurisdiction over the Merger.
A-1
E. EMPLOYMENT AGREEMENTS. SJ Bank has entered into employment agreements with
Arthur C. Chase Jr., its President and Chief Executive Officer, and John
Stolfa, its Chief Operating Officer and Chief Financial Officer, which
agreements will take effect as of the Effective Date.
F. SHAREHOLDER, DIRECTOR AND EXECUTIVE OFFICER AGREEMENTS. In connection with
the parties' execution of this Agreement, each director of SJ Bancorp and
SJ Bank has entered into agreements, the forms of which have been approved
by GBCI, pursuant to which, among other things, each agrees to vote his
shares of SJ Bancorp capital stock in favor of the actions contemplated by
this Agreement and to refrain from competing with GBCI and/or SJ Bank and
their respective successors for a period of time.
G. FAIRNESS OPINION. SJ Bancorp has received from Sandler O'Neill & Partners,
L.P. ("SANDLER O'NEILL") an opinion to the effect that the Merger
Consideration is fair from a financial point of view to SJ Bancorp's
shareholders.
H. INTENTION OF THE PARTIES -- TAX TREATMENT. The parties intend for the
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 as required under 1.368-3(a) of the United States
Treasury Regulations.
AGREEMENT
In consideration of the mutual agreements set forth in this Agreement, GBCI
and SJ Bancorp 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 SJ Bancorp or any successor, (ii) a purchase,
lease or other acquisition in one or a series of related transactions of assets
of SJ Bancorp or any of its Subsidiaries representing 25% or more of the
consolidated assets of SJ Bancorp and its Subsidiaries, or (iii) a purchase or
other acquisition (including by way of merger, consolidation, share exchange or
any similar transaction) in one or a series of related transactions of
beneficial ownership of securities representing 50% or more of the voting power
of SJ Bancorp or its Subsidiaries, in each case with or by a person or entity
other than GBCI or one of its Subsidiaries.
"Acquisition Proposal" has the meaning assigned to such term in Section
4.1.10.
"Agreement" means this Plan and Agreement of Merger.
"ALLL" means allowance for possible loan and lease losses.
"ALLL Adjustment" has the meaning assigned to such term in Section 4.12.1.
"Asset Classification" has the meaning assigned to such term in Section
3.1.16.
"BHC Act" has the meaning assigned to such term in Recital A.
"Break-Up Fee" has the meaning assigned to such term in Section 7.5.
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"Business Day" means any day other than a Saturday, Sunday, legal holiday
or a day on which banking institutions located in the State of Montana and the
State of Colorado are required by law to remain closed.
"CBCA" means the Colorado Business Corporation Act, as amended.
"Certificate" has the meaning assigned to such term in Section 1.7.1.
"Closing" means the closing of the Merger contemplated by this Agreement,
as more fully specified in Section 2.2.
"Closing Capital Differential" has the meaning assigned to such term in
Section 1.2.2(i).
"Colorado Banking Board" means the Banking Board of the Colorado Division
of Banking.
"Commissioner" means the Commissioner of the Division of Banking and
Financial Institutions for the State of Montana.
"Compensation Plans" has the meaning assigned to such term in Section
3.1.20.
"Daily Sales Price" has the meaning assigned to such term in Section
1.4(i).
"Determination Date" has the meaning assigned to such term in Section
1.4(ii).
"Effective Date" means the date on which the Merger takes place, as more
fully specified in Section 2.1.
"Employees" has the meaning assigned to such term in Section 3.1.20.
"Environmental Laws" has the meaning assigned to such term in Section
3.1.7.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means, with respect to SJ Bancorp, any other entity that
is considered one employer with SJ Bancorp under Section 4001 of ERISA or
Section 414 of the IRC.
"Exchange Act" has the meaning assigned to such term in Section 3.1.5.
"Exchange Agent" means American Stock Transfer and Trust Co.
"Exchange Fund" has the meaning assigned to such term in Section 1.6.
"Execution Date" means the date of this Agreement.
"Executive Officers," with respect to GBCI, means Michael J. Blodnick and
Ronald Copher.
"Executive Officers," with respect to SJ Bancorp and SJ Bank, means Arthur
C. Chase Jr., John Stolfa and Thomas F. Melchior.
"FDIC" means the Federal Deposit Insurance Corporation.
"Federal Reserve" means the Board of Governors of the Federal Reserve
System.
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"GAAP" means United States generally accepted accounting principles.
"GBCI" is Glacier Bancorp, Inc., a Montana corporation that has its
principal place of business in Kalispell, Montana, and that is a bank holding
company registered pursuant to the BHC Act.
"GBCI Average Closing Price" has the meaning assigned to such term in
Section 1.4(iii).
"GBCI Common Stock" means the shares of GBCI common stock, $0.01 par value
per share, issued and outstanding from time to time.
"GBCI Contract" has the meaning assigned to such term in Section 3.2.2.
"GBCI Financial Statements" means GBCI's (i) audited consolidated balance
sheets as of December 31, 2007, 2006 and 2005 and the related audited
consolidated statements of income, cash flows and changes in shareholders'
equity for each of the years ended December 31, 2007, 2006 and 2005; (ii)
unaudited consolidated balance sheet as of the end of each fiscal quarter
following December 31, 2007 but preceding the Execution Date, and the related
unaudited consolidated statements of income, cash flows and changes in
shareholders' equity for each such quarter; and (iii) unaudited consolidated
balance sheets and related consolidated statements of income and shareholders'
equity for each of the fiscal quarters ending after the Execution Date and
before Closing or the Termination Date, as the case may be.
"GBCI Shares" means the shares of GBCI Common Stock to be issued to the
holders of SJ Bancorp Common Stock as Merger Consideration in accordance with
Section 1.2.2.
"Hazardous Substances" has the meaning assigned to such term in Section
3.1.7.
"Independent Accountants" has the meaning assigned to such term in Section
4.12.1.
"IRC" means the Internal Revenue Code of 1986, as amended.
"Knowledge" has the following meanings: (i) SJ Bancorp will be deemed to
have "Knowledge" of a particular fact or matter if any Executive Officer of SJ
Bancorp or SJ Bank has actual knowledge of such fact or matter or if any such
person could reasonably be expected to discover or otherwise become aware of
such fact or matter in the course of making a reasonable inquiry into such areas
of SJ Bancorp's and SJ Bank's business that are under such individual's general
area of responsibility; and (ii) GBCI will be deemed to have "Knowledge" of a
particular fact or matter if any Executive Officer of GBCI has actual knowledge
of such fact or matter or if any such person could reasonably be expected to
discover or otherwise become aware of such fact or matter in the course of
making a reasonable inquiry into such areas of GBCI's business that are under
such individual's general area of responsibility.
"Leased Real Property" means the real properties subject to Leases as
identified in Schedule 3.1.6.
"Leases" means the terms and conditions governing the leasehold interests
in the Leased Real Property as identified in Schedule 3.1.6 to this Agreement.
"Liens" means, collectively, liens, pledges, security interests, claims,
proxies, preemptive or subscriptive rights or other encumbrances or restrictions
of any kind.
"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
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taken as a whole; (ii) significantly and adversely affects the ability of the
Person to consummate the Merger on or by the Termination Date or to perform its
material obligations under this Agreement; or (iii) enables any Person to
prevent the consummation of the Merger on or by the Termination Date; provided,
however, that Material Adverse Effect shall not be deemed to include the impact
of any (a) changes in banking and similar laws of general applicability or
interpretations thereof by governmental authorities or other changes affecting
depository institutions generally that do not have a materially more adverse
effect on such party than that experienced by similarly situated financial
services companies, including changes in general economic conditions and changes
in prevailing interest and deposit rates that do not have a materially more
adverse effect on such party than that experienced by similarly situated
financial services companies, (b) acts of terrorism or war; (c) any
modifications or changes to valuation policies and practices in connection with
the Merger or restructuring charges taken in connection with the Merger, in each
case in accordance with GAAP; (d) changes resulting from SJ Bancorp Transaction
Fees; (e) any modifications or changes made by SJ Bancorp to its or its
Subsidiaries' general business practices or policies as may be required by GBCI
so as to be consistent with the practices or policies of GBCI; or (f) actions or
omissions of a party taken with the prior consent of the other, in contemplation
of the transactions contemplated hereby, as required or permitted hereunder, as
required under any regulatory approval received in connection with the Merger or
which have been waived in writing by the other party.
"MBCA" means the Montana Business Corporations Act, as amended.
"Merger" means the merger of SJ Bancorp with and into GBCI.
"Merger Consideration" means the aggregate consideration contemplated by
Section 1.2.2.
"Pension Plan" has the meaning assigned to such term in Section 3.1.20.
"Per Share Cash Consideration" has the meaning assigned to such term in
Section 1.2.2(ii).
"Per Share Stock Consideration" has the meaning assigned to such term in
Section 1.2.2(iii).
"Person" includes an individual, corporation, partnership, association,
limited liability company, trust or unincorporated organization.
"Plan" has the meaning assigned to such term in Section 3.1.20.
"Properties," with respect to any party to this Agreement, means properties
or other assets owned or leased by such party or any of its Subsidiaries
including, with respect to SJ Bancorp, Real Property.
"Proposed Dissenting Shares" means those shares of SJ Bancorp Common Stock
as to which shareholders have properly given notice of their intent to assert
appraisal rights pursuant to Section 7-113-202 of the CBCA.
"Prospectus/Proxy Statement" means the Prospectus/Proxy Statement referred
to in Section 4.2.1, to be provided to all shareholders of SJ Bancorp in
connection with their consideration and approval of the Merger.
"Real Property" means any real property that SJ Bancorp or SJ Bank owns in
fee title, other than "other real estate owned."
"Registration Statement" has the meaning assigned to such term in Section
4.2.1.
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"Reports" has the meaning assigned to such term in Section 3.1.5.
"Sandler O'Neill" means Sandler O'Neill & Partners, L.P.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" has the meaning assigned to such term in Section 3.1.5.
"Securities Laws" has the meaning assigned to such term in Section 3.1.5.
"SJ Bancorp" is Bank of the San Juans Bancorporation, a Colorado
corporation that has its principal place of business in Durango, Colorado, and
that is a bank holding company registered pursuant to the BHC Act.
"SJ Bancorp Capital" means SJ Bancorp's capital stock, surplus and retained
earnings determined in accordance with GAAP, applied on a consistent basis for
financial institutions, after giving effect to (a) the payment of all SJ Bancorp
Transaction Fees, (b) the payment due under the Incentive Bonus Agreement, dated
August 21, 2007, between SJ Bancorp, SJ Bank and John Stolfa, (c) the impact of
the ALLL Adjustment (other than for amounts in excess of $2,050,000) as
described in Section 4.12.1, and (d) adjustments, calculated in accordance with
GAAP, for accumulated other comprehensive income or loss as reported on the SJ
Bancorp balance sheet.
"SJ Bancorp Closing Capital" has the meaning assigned to such term in
Section 4.12.24.12.1.
"SJ Bancorp Common Stock" means the shares of SJ Bancorp common stock, par
value $5.00 per share, issued and outstanding from time to time.
"SJ Bancorp Contract" has the meaning assigned to such term in Section
3.1.2.
"SJ Bancorp Financial Statements" means SJ Bancorp's (i) audited
consolidated balance sheets as of December 31, 2007, 2006 and 2005 and the
related audited consolidated statements of income, cash flows and changes in
shareholders' equity for each of the years ended December 31, 2007, 2006 and
2005; (ii) unaudited consolidated balance sheet as of the end of each fiscal
quarter following December 31, 2007 but preceding the Execution Date, and the
related unaudited consolidated statements of income, cash flows and changes in
shareholders' equity for each such quarter; and (iii) the Subsequent SJ Bancorp
Financial Statements.
"SJ Bancorp Meeting" has the meaning assigned in Section 4.2.2.
"SJ Bancorp Transaction Fees" means all costs and expenses incurred by SJ
Bancorp or owed or paid by SJ Bancorp to investment advisors, independent
accountants, legal counsel, printers and other professional advisors in
connection with the preparation, negotiation and execution of this Agreement and
related documents and the consummation of the Merger.
"SJ Bank" means Bank of the San Juans, a Colorado state-chartered bank with
its principal office in Durango, Colorado.
"SJ Option Plan" means the Bank of the San Juans 1998 Incentive Stock
Option Plan.
"SJ Options" means stock options issued and outstanding on the date of this
Agreement pursuant to the SJ Option Plan.
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"Subject Property" has the meaning assigned to such term in Section 3.1.7.
"Subsequent SJ Bancorp Financial Statements" means the unaudited
consolidated balance sheets and related consolidated statements of income and
shareholders' equity for each month after the Execution Date and before Closing
or the Termination Date, as the case may be, prepared in accordance with Section
4.1.8.
"Subsidiary" with respect to any party to this Agreement means any Person
in which such party owns the majority of outstanding capital stock or voting
power.
"Superior Proposal" means, with respect to SJ Bancorp and/or SJ Bank, any
Acquisition Proposal made by a Person other than GBCI or its Subsidiary(A) that
is for (i) a merger, reorganization, consolidation, share exchange, business
combination, recapitalization or similar transaction involving SJ Bancorp or SJ
Bank, (ii) a sale, lease, exchange, transfer, or other disposition of at least
25% of the assets of SJ Bancorp or SJ Bank, taken as a whole, in a single
transaction or a series of related transactions, or (iii) the acquisition,
directly or indirectly, by a person of beneficial ownership of 50% or more of
the SJ Bancorp Common Stock or SJ Bank's outstanding shares whether by merger,
consolidation, share exchange, business combination, tender, or exchange offer
or otherwise, and (B) that is otherwise on terms which the Board of Directors of
SJ Bancorp in good faith concludes (after consultation with its financial
advisors and outside counsel), taking into account, among other things, all
legal, financial, regulatory, and other aspects of the proposal and the Person
making the proposal, (x) would, if consummated, result in a transaction that is
more favorable to its stockholders (in their capacities as stockholders), from a
financial point of view, than the transactions contemplated by this Agreement,
and (y) is reasonably probable of being completed.
"Termination Date" means February 28, 2009.
"Termination Fee" has the meaning assigned to such term in Section 7.3.
"Title Companies" has the meaning assigned to such term in Section 4.1.11.
"Trading Day" has the meaning assigned to such term in Section 1.4(iv).
SECTION 1.
TERMS OF TRANSACTION
1.1 EFFECT OF MERGER. Upon Closing of the Merger, pursuant to the provisions of
the MBCA and the CBCA, all shares of SJ Bancorp Common Stock issued and
outstanding immediately prior to Closing, except for Proposed Dissenting
Shares, will, by virtue of the Merger and without any action on the part of
any holder of shares of SJ Bancorp Common Stock, be converted into the
right to receive the merger consideration as described in Sections 1.2 and
1.3.
1.2 MERGER CONSIDERATION. Subject to the provisions of this Agreement, on the
Effective Date:
1.2.1 OUTSTANDING GBCI COMMON STOCK. The shares of GBCI Common Stock
issued and outstanding immediately prior to the Effective Date will,
on and after the Effective Date, remain as issued and outstanding
shares of GBCI.
1.2.2 OUTSTANDING SJ BANCORP COMMON STOCK. Each share of SJ Bancorp Common
Stock issued and outstanding immediately prior to the Execution
Date, except for Proposed Dissenting Shares, will automatically and
without any action on the part of the holder of
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such share, be converted into and represent the right to receive from
GBCI (i) the Per Share Cash Consideration, and (ii) the Per Share
Stock Consideration (the "Merger Consideration"). For purposes of this
Agreement, the following terms have the following meanings:
(i) "Closing Capital Differential" means, to the extent the SJ
Bancorp Closing Capital is less than $11,350,000, the
difference between such SJ Bancorp Closing Capital and
$11,350,000.
(ii) "Per Share Cash Consideration" means $9,000,000, less the
amount of any Closing Capital Differential, divided by the
number of shares of SJ Bancorp Common Stock outstanding on the
Effective Date.
(iii) "Per Share Stock Consideration" means the number of shares of
GBCI Common Stock determined by dividing 640,000 by the number
of shares of SJ Bancorp Common Stock outstanding on the
Effective Date.
1.3 SJ OPTIONS. If any holder of an SJ Option exercises such SJ Option after
the Execution Date and before the Effective Date, the shares of SJ Bancorp
Common Stock issued upon such exercise will be converted into the right to
receive the Merger Consideration pursuant to Section 1.2.2. All unexercised
SJ Options will be canceled on the Effective Date in accordance with the SJ
Option Plan.
1.4 NO FRACTIONAL SHARES. No fractional shares of GBCI Common Stock will be
issued. In lieu of fractional shares, if any, each holder of SJ Bancorp
Common Stock who is otherwise entitled to receive a fractional share of
GBCI Common Stock will receive an amount of cash equal to the product of
such fractional share times the GBCI Average Closing Price. Such fractional
share interests will not include the right to vote or receive dividends or
any interest on dividends. For purposes of this Agreement, the following
terms have the following meanings:
(i) "Daily Sales Price" for any Trading Day means the daily closing
price per share of Glacier Common Stock on the NASDAQ Global
Market, as reported on the website www.nasdaq.com.
(ii) "Determination Date" means the fifth (5th) Business Day
immediately preceding the Effective Date.
(iii) "GBCI Average Closing Price" means the average Daily Sales
Price of GBCI Common Stock for the five (5) Trading Days
immediately preceding the Determination Date.
(iv) "Trading Day" means a day on which GBCI Common Stock is traded
on the NASDAQ Global Market.
1.5 PAYMENT TO DISSENTING SHAREHOLDERS. Proposed Dissenting Shares will have
the rights provided by Article 113 of the CBCA.
1.6 DEPOSIT OF CASH AND SHARES. On or before the Effective Date, GBCI will
deposit, or will cause to be deposited, with the Exchange Agent, for the
benefit of the holders of certificates representing SJ Bancorp Common
Stock, for exchange in accordance with this Section 1.6, (i) certificates
representing the GBCI Shares; (ii) the aggregate cash consideration for
payment of
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the Per Share Cash Consideration; and (iii) the cash in lieu of fractional
shares to be paid in accordance with Section 1.4. Such cash and
certificates for GBCI Shares, together with any dividends or distributions
with respect thereto, are referred to in this Agreement as the "Exchange
Fund."
1.7 CERTIFICATES.
1.7.1 LETTER OF TRANSMITTAL. On the business day after the Closing, GBCI
will cause the Exchange Agent to mail to each holder of record of a
certificate evidencing SJ Bancorp 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 1.7.2.
1.7.2 SURRENDER OF CERTIFICATES. Subject to Section 1.5, each Certificate
will, from and after the Effective Date, be deemed for all corporate
purposes to represent and evidence only the right to receive the
Merger Consideration (and cash for fractional shares). Following the
Effective Date, holders of Certificates will exchange their
Certificates in accordance with instructions provided by the
Exchange Agent pursuant to Section 1.7.1 and together with a
properly completed and executed form of transmittal letter in order
to effect their exchange for, as applicable, (i) certificates
representing GBCI Common Stock; (ii) a check or, at the election of
the SJ Bancorp shareholder, a wire transfer (but only if the amount
of cash included in that shareholder's Merger Consideration exceeds
$100,000), representing the cash consideration to be received
pursuant to Section 1.2.2; and/or (iii) a check representing the
amount of cash in lieu of fractional shares, if any. Until a
Certificate is so surrendered, the holder will not be entitled to
receive his, her or its portion of the Merger Consideration.
1.7.3 ISSUANCE OF CERTIFICATES IN OTHER NAMES. Any person requesting that
any certificate evidencing GBCI Shares be issued in a name other
than the name in which the surrendered Certificate is registered
must: (1) establish to the Exchange Agent's satisfaction the right
to receive the certificate evidencing GBCI Shares and (2) either pay
to the Exchange Agent any applicable transfer or other taxes or
establish to the Exchange Agent's satisfaction that all applicable
taxes have been paid or are not required.
1.7.4 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
SJ Bancorp Common Stock and that the certificate representing this
ownership is lost, stolen, or destroyed, (2) any appropriate
affidavit or security the Exchange Agent may require, and (3) any
reasonable assurances that the Exchange Agent or GBCI may require.
1.7.5 RIGHTS TO DIVIDENDS AND DISTRIBUTIONS. After the Effective Date, no
holder of any Certificate will be entitled to receive any dividends
or other distributions otherwise payable to holders of record of
GBCI Common Stock on any date after the Effective Date, unless the
holder (1) is entitled by this Agreement to receive a certificate
representing GBCI Common Stock and (2) has surrendered in accordance
with this Agreement his, her or its Certificates (or has met the
requirements of Section 1.7.4) in exchange for certificates
representing GBCI Shares. Surrender of Certificates will not deprive
the holder of any dividends or distributions that the holder is
entitled to receive as
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a record holder of SJ Bancorp Common Stock on a date before the
Effective Date. When the holder surrenders his, her or its
Certificates in exchange for GBCI Shares, the holder will receive
the amount, without interest, of any cash dividends and any other
distributions distributed after the Effective Date on the whole
number of GBCI Shares into which the holder's SJ Bancorp Common
Stock was converted at the Effective Date.
1.7.6 CHECKS IN OTHER NAMES. Any person requesting that a check for cash
to be received in the Merger or cash in lieu of fractional shares be
issued in a name other than the name in which the Certificate
surrendered in exchange for the cash is registered, must establish
to the Exchange Agent's satisfaction the right to receive this cash.
1.7.7 UNDELIVERED CERTIFICATES. Any portion of the Exchange Fund that
remains unclaimed by shareholders of SJ Bancorp on a date that is
six months after the Effective Date may be paid to GBCI, at GBCI's
election. To the extent so paid, holders of SJ Bancorp Common Stock
who have not, prior to such time, complied with the provisions of
this Section 1.7 will, from such time forward, look only to GBCI for
payment of the Merger Consideration, the cash in lieu of fractional
shares, and/or unpaid dividends and distributions on the GBCI Shares
deliverable with respect to each share of SJ Bancorp Common Stock
held by such holder as determined pursuant to this Agreement, in
each case, without any interest. Neither GBCI nor SJ Bancorp will be
liable to any holder of SJ Bancorp 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 EFFECTIVE DATE. The Merger shall be consummated by the filing with and
acceptance by the Montana Secretary of State of Articles of Merger, in the
form required by and executed in accordance with the relevant provisions of
the MBCA, and by the issuance of a Certificate of Merger by the Secretary
of State of Montana. Unless GBCI and SJ Bancorp agree upon a different
date, the Effective Date will occur on the date of Closing. If the
Effective Date does not occur on or prior to the Termination Date and the
parties do not mutually agree in writing to extend the Termination Date,
either party may terminate this Agreement in accordance with Section 7.1.
2.2 EVENTS OF CLOSING. Closing shall occur within five (5) business days after
fulfillment or waiver of each condition precedent set forth in, and the
granting of each approval (and expiration of any waiting period) covered by
Section 5, or such other date as may be agreed upon by the parties. At the
Closing, all properly executed documents required by this Agreement will be
delivered to the proper party, in form consistent with this Agreement. If
any party fails to deliver a required document at the Closing or otherwise
defaults under this Agreement on or prior to the Effective Date, then the
Merger will not occur unless the adversely affected party waives the
default.
2.3 MANNER AND TIME OF CLOSING. The Closing will take place remotely via the
electronic exchange of documents and signatures, at 9:00 a.m. Mountain
Time, or such other time as the parties agree.
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SECTION 3.
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF SJ BANCORP. SJ Bancorp represents and
warrants to GBCI that, except as disclosed in a Schedule to this Agreement:
3.1.1 ORGANIZATION AND GOOD STANDING. SJ Bancorp is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Colorado, 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 3.1.1.
3.1.2 CORPORATE AUTHORITY. The execution, delivery and performance by SJ
Bancorp of this Agreement does not and will not, and the
consummation by SJ Bancorp of the Merger will not, constitute or
result in: (1) a breach or violation of, or a default under, its
articles of incorporation or bylaws; (2) a breach or violation of,
or a default under, or the acceleration of or the creation of a
Lien (with or without the giving of notice, the lapse of time or
both) under, any provision of any agreement, lease, contract, note,
mortgage, indenture, arrangement or other obligation by which it or
any of its Subsidiaries is bound or to which it or any of its
Subsidiaries is a party (collectively, the "SJ Bancorp Contracts");
or (3) a material violation of any law, rule, ordinance or
regulation or judgment, decree, order, award, or governmental or
non-governmental permit or license to which it is subject; or (4)
any change in the rights or obligations of any party under any of
the SJ Bancorp Contracts. Schedule 3.1.2 contains a list of all
consents SJ Bancorp or SJ Bank must obtain from third parties under
any SJ Bancorp Contracts before consummation of the Merger, the
failure of which to obtain would have a Material Adverse Effect.
3.1.3 CAPITAL STOCK.
(i) The authorized capital stock of SJ Bancorp consists of
2,000,000 shares of SJ Bancorp Common Stock, par value $5.00
per share. A total of 492,902 shares of SJ Bancorp 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. As of the date of this Agreement, SJ
Options with respect to 7,000 shares of SJ Bancorp Common
Stock have been granted and are outstanding.
(ii) The authorized capital stock of SJ Bank consists of 1,000,000
shares of common stock, par value $5.00 per share. A total of
455,605 shares of SJ Bank Common Stock are issued and
outstanding as of the date of this Agreement, all of which
are owned by SJ Bancorp free and clear of all liens, claims,
encumbrances and restrictions on transfer, other than the
restrictions imposed by applicable federal and state
securities laws, and all of which are validly issued, fully
paid and nonassessable, except to the extent of any
assessment required under the Colorado Banking Code.
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(iii) No shares of SJ Bancorp Common Stock are reserved for
issuance, other than those reserved for issuance under the SJ
Option Plan. Except as set forth in Schedule 3.1.3 or in the
SJ Option Plan, there are no preemptive rights or any
outstanding subscriptions, warrants, options, conversion
privileges, rights or commitments of SJ Bancorp or its
Subsidiaries of any character, kind or nature (including
those relating to the issuance, sale, purchase, redemption,
conversion, exchange, registration, voting or transfer of
such stock or securities), and neither SJ Bancorp nor SJ Bank
has issued or is obligated to issue any additional shares of
common stock or any other security to any other person,
except as so disclosed.
3.1.4 SUBSIDIARIES. Except as disclosed in Schedule 3.1.4, SJ Bancorp has
no Subsidiaries other than SJ Bank.
3.1.5 REPORTS AND FINANCIAL STATEMENTS.
(i) Filing of Reports. Since January 1, 2003, each of SJ Bancorp
and SJ Bank has filed all reports and statements, together
with any required amendments to these reports and statements,
that they were required to file with (1) the Federal Reserve,
(2) the FDIC, (3) the Colorado Banking Board and (4) any
other applicable federal or state banking, insurance,
securities, or other regulatory authorities. Each of these
reports and statements, including the related financial
statements and exhibits, complied as to form in all material
respects with all applicable statutes, rules and regulations
as of their respective dates.
(ii) Delivery to Other Party of Reports. SJ Bancorp has delivered
or otherwise made available to GBCI a copy of each and any
registration statement, offering circular, report, definitive
proxy statement or information statement (collectively, its
"Reports") under the Securities Act of 1933, as amended
("Securities Act"), the Securities Exchange Act of 1934, as
amended ("Exchange Act"), and state securities and "Blue Sky"
laws (collectively, the "Securities Laws") filed, used or
circulated by it or SJ Bank with respect to periods since
January 1, 2003, through the Execution Date.
(iii) Compliance with Securities Laws. As of their respective
dates (and without giving effect to any amendments or
modifications filed after the Execution Date), each of the
Reports, including the related financial statements, exhibits
and schedules, filed, used or circulated before the Execution
Date complied (and each of the Reports filed after the
Execution Date, will comply) in all material respects with
applicable Securities Laws, and did not (or in the case of
reports, statements, or circulars filed after the Execution
Date, will not) contain any untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in
light of the circumstances under which they were made, not
misleading.
(iv) Financial Statements. Each of SJ Bancorp's balance sheets
included in the SJ Bancorp Financial Statements fairly
presents (or, in the case of SJ Bancorp Financial Statements
for periods ending on a date following the Execution Date,
will fairly present) the financial position of SJ Bancorp and
SJ Bank as of the date of the balance sheet. Except as
disclosed in Schedule 3.1.5, each of the statements of
income, cash flows and shareholders' equity included in the
SJ
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Bancorp Financial Statements fairly presents the results of
operations, shareholders' equity and cash flows, as the case
may be, of SJ Bancorp and SJ Bank for the periods set forth
in these statements (subject, in the case of unaudited
statements, to normal year-end audit adjustments), in each
case in accordance with GAAP, except as may be noted in these
statements.
3.1.6 PROPERTIES.
(i) SJ Bancorp and its Subsidiaries are not a party to any real
property lease, whether as landlord, tenant, guarantor or
otherwise, except as disclosed in Schedule 3.1.6. Except as
disclosed or reserved against in the SJ Bancorp Financial
Statements or in Schedule 3.1.6, SJ Bancorp 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 and other security provided in
the ordinary course of business including, without
limitation, security for Federal Home Loan Bank borrowings,
federal funds and repurchase agreements) to all of the
properties and assets, tangible or intangible, reflected in
the SJ Bancorp Financial Statements as being owned or leased
by any of them as of the Execution Date. To the Knowledge of
SJ Bancorp, except as disclosed in Schedule 3.1.6, all
buildings and structures on the Real Property and the
equipment located thereon are in all material respects in
good operating condition and repair (ordinary wear and tear
excepted) and conform in all material respects to all
applicable laws, ordinances and regulations.
(ii) To the Knowledge of SJ Bancorp, all buildings and all
fixtures, equipment and other property and assets that are
material to SJ Bancorp's business on a consolidated basis are
owned by it or one of its Subsidiaries or are held under
leases or subleases by it or one of its Subsidiaries,
enforceable in accordance with their respective terms (except
as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors'
rights generally or by general equitable principles).
(iii) Schedule 3.1.1 lists all of its existing branches and
offices and all new branches or offices that SJ Bank has
applied to establish or purchase, along with the estimated
cost to establish or purchase those new branches.
(iv) SJ Bancorp has provided to GBCI copies of existing title
policies, if any, held in its files relating to the Real
Property, and, to the Knowledge of SJ Bancorp, 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
facility; and (iii) all other real property that, for
purposes of any
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Environmental Law, it otherwise could be deemed to be an
owner or operator of or as otherwise having cont rol
over.
(2) "Environmental Laws" means any federal, state or local
law, regulation, order, decree, judgment, judicial
opinion, or any agreement between SJ Bancorp or any of
its Subsidiaries and any Governmental Entity presently
in effect relating to: (i) the manufacture, generation,
transport, use, treatment, storage, recycling, disposal,
release, threatened release or presence of Hazardous
Substances, or (ii) the protection of human health or
the environment.
(3) "Hazardous Substances" means any substance, material or
waste that is (a) defined as a "hazardous substance" in
42 USC Section 9601(14), (b) defined as a "pollutant or
contaminant" in 33 USC Section 1362(6), (c) defined as a
"hazardous waste" in 42 USC Section 6903(5), or (d)
petroleum or a petroleum product or any other substance
defined as "hazardous," "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 SJ Bancorp
and/or its Subsidiaries for general office purposes will
not be deemed to be Hazardous Substances for the
purposes of this Agreement.
(ii) To the Knowledge of SJ Bancorp, except as disclosed in
Schedule 3.1.7, SJ Bancorp, its Subsidiaries and the Subject
Property are, and have been, in material compliance with all
applicable Environmental Laws, and no circumstances exist
that would result in a material violation of such
Environmental Laws.
(iii) Except as disclosed in Schedule 3.1.7, none of the following
exists, and to SJ Bancorp's Knowledge, no reasonable basis
for any of the following exists: pending or threatened
claims, actions, investigations, notices of non-compliance,
information requests or notices of potential responsibility
or proceedings involving SJ Bancorp, any of its Subsidiaries
or any Subject Property, the occurrence or existence of which
would result in a Material Adverse Effect, relating to:
(1) an asserted liability of SJ Bancorp or any of its
Subsidiaries or any prior owner, occupier or user of
Subject Property under any applicable Environmental Law
or the terms and conditions of any permit, license,
authority, settlement, agreement, decree or other
obligation arising under any applicable Environmental
Law;
(2) the handling, storage, use, transportation, removal or
disposal of Hazardous Substances;
(3) the actual or threatened discharge, release or emission
of Hazardous Substances from, on or under or within
Subject Property into the air, water, surface water,
ground water, land surface or subsurface strata; or
(4) personal injuries or damage to the Subject Property
related to or arising out of the release of Hazardous
Substances.
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(iv) Except as disclosed in Schedule 3.1.7, 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 (except where the failure to be in full compliance would
not have a Material Adverse Effect). With respect to any
Subject Property, except as permitted by applicable
Environmental Laws, neither SJ Bancorp nor any of its
Subsidiaries owns, possesses or controls any PCBs,
PCB-contaminated fluids, wastes or equipment, or any material
amount of asbestos or asbestos-containing material, the
existence of which would have a Material Adverse Effect. No
Hazardous Substances have been used, handled, stored,
discharged, released or emitted, or are threatened to be
discharged, released or emitted, at or on any Subject
Property, except in compliance with applicable Environmental
Laws (except where failure to be in compliance would not have
a Material Adverse Effect).
(v) To the Knowledge of SJ Bancorp, except as disclosed in
Schedule 3.1.7, no part of the Subject Property has been or
is scheduled for investigation or monitoring under any
applicable Environmental Law.
(vi) Except as disclosed in Schedule 3.1.7, no condition from, on
or under the Subject Property exists with respect to the
Subject Property which would have a Material Adverse Effect
that would require remediation under applicable Environmental
Laws.
3.1.8 TAXES. All tax returns and reports required by law to be filed by
SJ Bancorp and its Subsidiaries have been duly filed, and all
taxes, assessments, fees and other government charges upon SJ
Bancorp or any of its Subsidiaries or upon any of their respective
properties, assets, income or franchises that are due and payable
have been paid, of which the failure to file or pay would have a
Material Adverse Effect. The federal income portion of such taxes
have been paid in full as indicated in the tax returns of SJ
Bancorp and its Subsidiaries for the past five years or adequate
provision has been made for any such taxes on its balance sheet in
accordance with GAAP, of which the failure to pay or provide for on
the balance sheet would have a Material Adverse Effect. No material
objections to returns or claims for additional taxes are being
asserted with respect to federal or state tax returns of SJ Bancorp
and its Subsidiaries for any prior years, except for such audits,
objections or claims which are being contested in good faith, by
appropriate proceedings and with establishment of appropriate
reserves, and which have been disclosed in writing to the other
parties to this Agreement. Except as specified in the foregoing
sentence, in the past five years, there has been no past audit,
objection to returns, or claim for additional taxes.
3.1.9 ABSENCE OF REGULATORY ACTION. Neither SJ Bancorp nor any of its
Subsidiaries is in violation of any statute, rule or governmental
regulation applicable to them (including, without limitation, the
Community Reinvestment Act, Bank Secrecy Act, Truth in Lending Act,
Equal Credit Opportunity Act, and statutes, rules and regulations
governing the reporting of taxpayer identification numbers of its
customers), which violation is reasonably likely to have a Material
Adverse Effect on SJ Bancorp or any of its Subsidiaries. Neither SJ
Bancorp 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
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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 SJ Bancorp Financial Statements is, and
that which will be stated in the Subsequent SJ Bancorp Financial
Statements prior to Closing, in both cases as adjusted for any
increases in ALLL or charge-offs reasonably required by GAAP or
applicable regulations, will be, adequate to absorb its anticipated
loan losses.
3.1.11 MATERIAL AGREEMENTS.
(i) Except for arrangements made after the date and in accordance
with the terms of this Agreement, SJ Bancorp and its
Subsidiaries are not bound by any material contract (as
defined in Item 601(b)(10) of Regulation S-K under the
Securities Act) that: (1) is to be performed after the date
of this Agreement and (2) has not been set forth in Schedule
3.1.11.
(ii) Neither SJ Bancorp nor any of its Subsidiaries is in default
under any contract, agreement, commitment, arrangement,
lease, insurance policy or other instrument, which default
would result in a Material Adverse Effect.
3.1.12 COMPLIANCE WITH LAWS. SJ Bancorp 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 SJ
Bancorp or its Subsidiaries to carry on their respective businesses
as they are presently conducted and the absence of which,
individually or in the aggregate, can reasonably be expected to
have a Material Adverse Effect on them. All such material permits,
licenses, certificates of authority, orders and approvals are in
full force and effect, and, to the Knowledge of SJ Bancorp, no
suspension or cancellation of any of them is threatened.
3.1.13 KNOWLEDGE AS TO CONDITIONS. SJ Bancorp knows of no reason why the
approvals, consents and waivers of governmental authorities
referred to in Section 5.1 cannot be obtained.
3.1.14 NO MATERIAL ADVERSE EFFECT. Since December 31, 2007, (i) SJ Bancorp
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 SJ Bancorp or any of
its Subsidiaries.
3.1.15 COMPLETENESS OF REPRESENTATIONS. No representation or warranty made
by or with respect to SJ Bancorp 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.
A-16
3.1.16 ASSET CLASSIFICATION.
(i) Schedule 3.1.16 sets forth a list, accurate and complete, as
of June 30, 2008 except as otherwise expressly noted, and
separated by category of classification or criticism ("Asset
Classification"), of the aggregate amounts of loans,
extensions of credit and other assets of SJ Bancorp and its
Subsidiaries that have been criticized or classified by any
internal audit conducted by SJ Bancorp, taking into account
any assets that have been criticized or classified by any
governmental or regulatory authority.
(ii) Except as shown in Schedule 3.1.16, no amounts of its loans,
extensions of credit or other assets that have been classified
or criticized by any representative of any governmental entity
as "Other Assets Especially Mentioned," "Substandard,"
"Doubtful," "Loss" or words of similar effect 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 SJ Bancorp or its
Subsidiaries before the date of this Agreement.
3.1.17 LITIGATION. Except as disclosed in Schedule 3.1.17, 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 SJ Bancorp or any of its Subsidiaries, which is reasonably
likely, individually or in the aggregate, to have a Material
Adverse Effect on them or to materially hinder or delay
consummation of the Merger, and, to the Knowledge of SJ Bancorp, no
such litigation, proceeding, controversy, claim or action has been
threatened or is contemplated.
3.1.18 INSURANCE. SJ Bancorp and each of its Subsidiaries have taken all
requisite action (including the making of claims and the giving of
notices) under their respective directors' and officers' liability
insurance policy or policies in order to preserve all rights under
such policies with respect to all matters known to them (other than
matters arising in connection with, and the transactions
contemplated by, this Agreement). Schedule 3.1.18 lists all
directors' and officers' liability insurance policies and other
material insurance policies maintained by SJ Bancorp or its
Subsidiaries.
3.1.19 LABOR MATTERS. Neither SJ Bancorp 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 SJ Bancorp 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 SJ Bancorp or its Subsidiaries is
pending or, to SJ Bancorp's Knowledge, threatened. SJ Bancorp has
no Knowledge of any activity involving its or SJ Bank's 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 SJ
Bancorp or its Subsidiaries, as the case may be. SJ Bancorp
and its Subsidiaries are not now nor have ever been a
contributing employer to or
A-17
sponsor of a multiemployer plan or a single employer plan
subject to Title IV of ERISA.
(ii) Schedule 3.1.20 sets forth a list, as of the Execut ion
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 SJ Bancorp and its Subsidiaries (its
"Compensation Plans"). True and complete copies of the
Compensation Plans (and, as applicable, copies of summary
plan descriptions, governmental filings (on Form 5500 series
or otherwise), actuarial reports and reports under Financial
Accounting Standards Board Statement No. 106 relating to
such Compensation Plans) covering its current employees or
those of its Subsidiaries (collectively, "Employees"),
including Plans and related amendments, have been made
available to GBCI.
(iii) All of its Plans covering Employees (other than
"multi-employer plans" within the meaning of ERISA Sections
3(37) or 4001(a)(3)), to the extent subject to ERISA, are in
substantial compliance with ERISA. Each of its Plans that is
an "employee pension benefit plan" within the meaning of
ERISA Section 3(2) ("Pension Plan") and that is intended to
be qualified under IRC Section 401(a), has either received a
favorable determination letter from the Internal Revenue
Service or consists of a master, prototype, or volume
submitter plan which has received an opinion or advisory
letter from the Internal Revenue Service upon which SJ
Bancorp may rely, and SJ Bancorp 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 SJ Bancorp's Knowledge,
threatened. Neither SJ Bancorp 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 SJ Bancorp 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 SJ Bancorp 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 SJ Bancorp 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 SJ Bancorp Financial Statements
or in Schedule 3.1.20, neither SJ Bancorp 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 SJ Bancorp or its Subsidiaries
to amend or terminate any Plan without incurring liability
under the Plan other than normal liabilities for benefits.
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(vii) Except as disclosed in the SJ Bancorp Financial Statements
or otherwise disclosed in this Agreement or in Schedule
3.1.20, the Merger will not result in (a) vesting,
acceleration, or increase of any amounts payable under any
Compensation Plan, (b) any material increase in benefits
under any Compensation Plan or (c) payment of any severance
or similar compensation under any Compensation Plan.
(viii) Except as disclosed in Schedule 3.1.20, neither SJ Bancorp
nor any of its Subsidiaries maintains an executive
supplemental retirement plan or similar arrangement.
3.1.21 BROKER'S OR FINDER'S FEES. Except for the fees of Sandler O'Neill
deemed by SJ Bancorp to be required to obtain a fairness opinion
and related advice from Sandler O'Neill to effect the Merger
pursuant to a letter agreement that has been disclosed to GBCI, no
agent, broker, person or firm acting on behalf of SJ Bancorp or SJ
Bank, or under their authority, is or will be entitled to any
commission, broker's, finder's or financial advisory fee in
connection with the Merger.
3.2 REPRESENTATIONS AND WARRANTIES OF GBCI. Except as disclosed in a schedule
to this Agreement, GBCI represents and warrants to SJ Bancorp:
3.2.1 ORGANIZATION AND GOOD STANDING. GBCI is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Montana, is a registered bank holding company pursuant
to the BHC Act, and has all requisite power and authority to own
and operate its properties and to carry on its businesses as now
conducted. Each of its Subsidiaries is either a commercial bank, a
statutory trust or a corporation duly organized, validly existing
and in good standing under the laws of its state of incorporation
and has all requisite power and authority to own and operate its
Properties and to carry on its businesses as now conducted.
3.2.2 CORPORATE AUTHORITY. The execution, delivery and performance by
GBCI of this Agreement does not and will not, and the consummation
by GBCI of the Merger will not, constitute or result in: (1) a
breach or violation of, or a default under, either of their
articles of incorporation or bylaws; (2) a breach or violation of,
or a default under, or the acceleration of or the creation of a
Lien (with or without the giving of notice, the lapse of time or
both) under any provision of any agreement, lease, contract, note,
mortgage, indenture, arrangement or other obligation by which
either of them is bound or to which either of them is a party
(collectively, the "GBCI Contracts"); or (3) a material violation
of any law, rule, ordinance or regulation or judgment, decree,
order, award, or governmental or non-governmental permit or license
to which either of them is subject; or (4) any change in the rights
or obligations of any party under any of the GBCI Contracts.
3.2.3 CAPITAL STOCK.
(i) The authorized capital stock of GBCI consists of 117,187,500
shares of GBCI Common Stock, par value $0.01 per share. A
total of 53,985,813 shares of GBCI Common Stock were issued
and outstanding as of June 30, 2008, all of which were validly
issued and are fully paid and nonassessable. As of June 30,
2008, options to acquire 3,040,993 shares of GBCI Common Stock
have been granted and are outstanding.
A-19
(ii) No unissued shares of common stock or any other securities of
GBCI are subject to any warrants, options, conversion
privileges, rights or commitments of any character, kind or
nature, except as set forth in GBCI's Reports, and GBCI has
not issued and is not obligated to issue any additional
shares of common stock or any other security to any other
person, except as so disclosed.
3.2.4 REPORTS AND FINANCIAL STATEMENTS.
(i) Filing of Reports. Since January 1, 2003, GBCI and each of
its Subsidiaries has filed all reports and statements,
together with any required amendments to these reports and
statements, that they were and will be required to file with
(1) the SEC, (2) the Federal Reserve, (3) the FDIC, and (4)
any other applicable federal or state banking, insurance,
securities, or other regulatory authorities. Each of these
reports and statements, including the related financial
statements and exhibits, complied as to form in all material
respects with all applicable statutes, rules and regulations
as of their respective dates.
(ii) Compliance with Securities Laws. As of their respective dates
(and without giving effect to any amendments or modifications
filed after the Execution Date), each of the Reports,
including the related financial statements, exhibits and
schedules, filed, used or circulated before the Execution
Date complied (and each of the Reports filed after the
Execution Date, will comply) in all material respects with
applicable Securities Laws, and did not (or, in the case of
reports, statements, or circulars filed after the Execution
Date, will not) contain any untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in
light of the circumstances under which they were made, not
misleading.
(iii) Financial Statements. Each of GBCI's balance sheets included
in the GBCI Financial Statements fairly presents (or, in the
case of GBCI Financial Statements for periods ending on a
date following the Execution Date, will fairly present) the
financial position of GBCI and its Subsidiaries as of the
date of the balance sheet. Each of the statements of income,
cash flows and shareholders' equity included in the GBCI
Financial Statements fairly presents (or, in the case of GBCI
Financial Statements to be prepared and filed with the SEC
pursuant to GBCI's reporting obligations under the Exchange
Act for periods ending on a date following the Execution
Date, will fairly present) the results of operations,
shareholders' equity and cash flows, as the case may be, of
GBCI and its Subsidiaries for the periods set forth in these
statements, in each case in accordance with GAAP, except as
may be noted in these statements.
3.2.5 FINANCING AND SHARES AVAILABLE. GBCI has, and at the Effective Date
will have, (i) sufficient cash and cash equivalents on hand to pay
the cash component of the Merger Consideration, cash in lieu of
fractional shares, and any amounts payable to holders of Proposed
Dissenting Shares; and (ii) a sufficient number of shares of common
stock authorized and available to issue the GBCI Shares.
3.2.6 ABSENCE OF REGULATORY ACTION. Neither GBCI nor any of its
Subsidiaries is, to the Knowledge of GBCI, in material violation of
any statute, rule or governmental regulation applicable to them
(including, without limitation, the Community Reinvestment Act,
Bank Secrecy Act, Truth in Lending Act, Equal Credit Opportunity
Act, and statutes,
A-20
rules and regulations governing the reporting of taxpayer
identification numbers of its customers). Neither GBCI nor any of
its Subsidiaries is a party to any cease and desist order, written
agreement or memorandum of understanding with, or a party to any
commitment letter or similar undertaking to, or is subject to any
order or directive by, or is a recipient of any extraordinary
supervisory letter from, or has adopted any board resolutions at
the request of, federal or state regulatory authorities, nor has it
been advised by such authorities that they are contemplating
issuing or requesting any such order, agreement, memorandum or
similar document or undertaking.
3.2.7 KNOWLEDGE AS TO CONDITIONS. GBCI knows of no reason why the
approvals, consents and waivers of governmental authorities
referred to in Section 5.1 cannot be obtained.
3.2.8 LITIGATION. Except as disclosed in GBCI's Reports, no material
litigation, proceeding or controversy before any court or
governmental agency is pending, and there is no pending claim,
action or proceeding against GBCI or any of its Subsidiaries, which
is reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect on them or to materially hinder or delay
consummation of the Merger.
3.2.9 TAXES. All tax returns and reports required by law to be filed by
GBCI and its Subsidiaries have been duly filed, and all taxes,
assessments, fees and other government charges upon GBCI or any of
its Subsidiaries or upon any of their respective properties,
assets, income or franchises that are due and payable have been
paid. The federal income portion of such taxes have been paid in
full as indicated in the tax returns of GBCI and its Subsidiaries
for the past five years or adequate provision has been made for any
such taxes on its balance sheet in accordance with GAAP. No
material objections to returns or claims for additional taxes are
being asserted with respect to federal or state tax returns of GBCI
and its Subsidiaries for any prior years, except for such audits,
objections or claims which are being contested in good faith, by
appropriate proceedings and with establishment of appropriate
reserves, and which have been disclosed in writing to the other
parties to this Agreement. Except as specified in the foregoing
sentence, in the past five years, there has been no past audit,
objection to returns, or claim for additional taxes.
3.2.10 NO MATERIAL ADVERSE EFFECT. Since December 31, 2007, (i) GBCI and
its Subsidiaries have conducted their respective businesses only in
the ordinary and usual course of business, and (ii) there has not
been any change in the financial condition (which includes, without
limitation, the condition of assets, franchises, results of
operations and prospects) that has had or may reasonably be
expected to have a Material Adverse Effect on GBCI or any of its
Subsidiaries.
3.2.11 COMPLETENESS OF REPRESENTATIONS. No representation or warranty made
by or with respect to GBCI or its Subsidiaries in this Agreement
(or in the Schedules to this Agreement) contains any untrue
statement of a material fact or omits to state a material fact
necessary to make the statements contained in this Agreement (or in
such Schedules) or in such representation or warranty not
misleading.
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SECTION 4.
CONDUCT AND TRANSACTIONS PRIOR TO CLOSING
4.1 CONDUCT OF SJ BANCORP'S AND SJ BANK'S BUSINESSES PRIOR TO CLOSING. SJ
Bancorp covenants that, from the date of this Agreement and prior to
Closing:
4.1.1 AVAILABILITY OF BOOKS, RECORDS AND PROPERTIES.
(i) With prior notice to SJ Bancorp, subject to applicable law,
the books, records, properties, contracts and documents of
SJ Bancorp and SJ Bank will be available at all reasonable
times to GBCI and its counsel, accountants and other
representatives. Such items will be open for inspection,
audit and direct verification of loan or deposit balances,
collateral receipts and such other transactions or
documentation as GBCI deems reasonably relevant to the
Transaction. SJ Bancorp will (and will cause SJ Bank to)
cooperate fully in such inspection and audit, and make
available all information reasonably requested by or on
behalf of GBCI.
(ii) Upon request by GBCI, SJ Bancorp and SJ Bank will request
that any third parties involved in the preparation or review
of the SJ Bancorp Financial Statements or SJ Bancorp
Subsequent Financial Statements disclose to GBCI the work
papers or any similar materials related to such financial
statements.
4.1.2 ORDINARY AND USUAL COURSE. Without prior written consent of GBCI,
subject to applicable law and except as required by the Colorado
Banking Board, the FDIC, or the Federal Reserve (so long as GBCI
receives prior written notice of such required action), SJ Bancorp
and SJ Bank will conduct their respective business only in the
ordinary and usual course and will not do any of the following:
(i) effect any stock split or other recapitalization with
respect to SJ Bancorp Common Stock or the shares of SJ Bank;
issue (except for issuances upon exercise of SJ Options),
redeem, pledge or encumber in any way any shares of such
capital stock; or grant any option for shares of such
capital stock;
(ii) other than in the ordinary course of business, consistent
with past practice, or as necessary to pay SJ Bancorp
Transaction Fees consistent with this Agreement or as
authorized by Section 4.12, declare or pay any dividend, or
make any other distribution, either directly or indirectly,
with respect to SJ Bancorp Common Stock;
(iii) acquire, sell, transfer, assign, encumber or otherwise
dispose of any material assets or make any material
commitment other than in the ordinary and usual course of
business;
(iv) solicit or accept deposit accounts of a different type from
accounts previously accepted by SJ Bank or at rates
materially in excess of prevailing interest rates, or incur
any indebtedness for borrowed money (excluding Fed Funds and
Federal Home Loan Bank borrowings);
(v) offer or make loans or other extensions of credit of a
different type, or apply different underwriting standards,
from those previously offered or applied by SJ
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Bank, or offer or make a new loan or extension of credit in
an amount greater than $1 million without prior consultation
with GBCI; which consultation will not be unreasonably
withheld or delayed and will be deemed provided if GBCI has
not responded to SJ Bancorp's request for consultation
within three (3) Business Days after GBCI's receipt of a
loan package concerning the loan at issue;
(vi) except for the transfer of the Leased Real Property,
cancellation of Leases, foreclosures and satisfaction of
obligations as contemplated by Section 4.1.11, acquire an
ownership interest or a leasehold interest in any real
property, except those disclosed in Schedule 3.1.6, without
making an appropriate environmental evaluation in advance of
obtaining such interest and without providing to GBCI such
evaluation and at least 30 days' advance notice;
(vii) enter into, renew, or terminate any contracts calling for a
payment by any of them of more than $25,000 (including real
property leases and data or item processing agreements) with
or for a term of one-year or more, except for its contracts
of deposit and agreements to lend money not otherwise
restricted under this Agreement and (1) entered into in the
ordinary course of business, consistent with past practices,
and (2) providing for not less (in the case of loans) or
materially more (in the case of deposits) than prevailing
market rates of interest;
(viii) enter into or amend any contract (other than contracts for
deposits or agreements to lend money not otherwise
restricted by this Agreement) calling for a payment by any
of them of more than $25,000, unless the contract may be
terminated without cause or penalty upon 30 days notice or
less;
(ix) enter into any personal services contract with any person or
firm outside the ordinary course of business, except
contracts, agreements, or arrangements for legal,
accounting, consulting, investment advisory, or tax services
entered into to directly facilitate the Merger;
(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 $25,000 or (B) transfer any investment
securities between portfolios of securities available for
sale and portfolios of securities to be held to maturity;
(xi) amend its Articles of Incorporation, Bylaws, or other
formation agreements, or convert its charter or form of
entity;
(xii) implement or adopt any material changes in its operations,
policies, or procedures, including loan loss reserve
policies, unless the changes are requested by GBCI or are
necessary or advisable, on the advice of legal counsel, to
comply with applicable laws, regulations, or regulatory
policies;
(xiii) implement or adopt any change in its accounting principles,
practices or methods, other than as may be required (1) by
GAAP, (2) for tax purposes, or (3) to take advantage of any
beneficial tax or accounting methods;
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(xiv) other than in accordance with binding commitments existing
on the Execution Date and that have been disclosed to GBCI,
make any capital expenditures in excess of $25,000 per
project or related series of projects or $50,000 in the
aggregate;
(xv) enter into any other material transaction or make any
material expenditure other than in the ordinary and usual
course of its business except for expenses reasonably
related to completion of the Merger; or
(xvi) take any action which would materially and adversely affect
or delay their ability or the ability of GBCI to obtain any
necessary approvals, consents or waivers of any governmental
authority required for the Merger or to perform in all
material respects their respective covenants and agreements
under this Agreement.
4.1.3 CONTINUING REPRESENTATION AND WARRANTY. Neither SJ Bancorp nor any
of its Subsidiaries will do or cause to be done anything that would
cause any representation or warranty in Section 3.1 to be untrue or
inaccurate if made at Closing, except as otherwise contemplated or
required by this Agreement or consented to in writing by GBCI.
4.1.4 MAINTENANCE OF PROPERTIES. SJ Bancorp and SJ Bank will in all
material respects maintain their respective properties and
equipment (and related insurance or its equivalent) in accordance
with good business practice.
4.1.5 PRESERVATION OF BUSINESS ORGANIZATION. Each of SJ Bancorp and SJ
Bank will use its commercially-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 Merger as will be developed in
cooperation with GBCI.
(iii) Preserve the goodwill of suppliers, customers and others
with whom SJ Bancorp and SJ Bank have business relations.
4.1.6 SENIOR MANAGEMENT. Except as otherwise provided in this Agreement
and excluding resignations, without prior consultation with GBCI,
SJ Bancorp will not, and will cause SJ Bank not to, make any change
with respect to present management personnel having the rank of
vice-president or higher.
4.1.7 COMPENSATION. SJ Bancorp will not, and will cause SJ Bank not to,
permit any increase in the current or deferred compensation payable
or to become payable by SJ Bancorp or SJ Bank to any of its
directors, officers, employees, agents or consultants other than
normal increments in compensation in accordance with SJ Bancorp's
and SJ Bank's established policies with respect to the timing and
amounts of such increments. Without the prior written approval of
GBCI, SJ Bancorp will not, and will cause SJ Bank not to, commit
to, execute or deliver any employment agreement with any party not
terminable without expense with two weeks notice.
4.1.8 UPDATE OF FINANCIAL STATEMENTS. SJ Bancorp will deliver unaudited
balance sheets and related statements of income and shareholders'
equity for (i) SJ Bank for each month
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ending after the Execution Date and before Closing or the
Termination Date, as the case may be, within 15 days after each
such month-end and (ii) SJ Bancorp on a parent-only basis for each
quarter ending after the Execution Date and before Closing or the
Termination Date. The Subsequent SJ Bancorp Financial Statements:
(i) will be prepared from the books and records of SJ Bancorp
and its Subsidiaries;
(ii) will present fairly the financial position and operating
results of SJ Bancorp and its Subsidiaries at the times
indicated and for the periods covered;
(iii) will be prepared in accordance with GAAP (except for the
absence of notes and exceptions from GAAP identified in
Section 3.1.5) and with the regulations promulgated by
applicable regulatory authorities, to the extent then
applicable; and
(iv) will reflect all liabilities, contingent or otherwise, of SJ
Bancorp 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 SJ Bancorp Financial
Statements will be disclosed in writing to GBCI.
4.1.9 UPDATE SCHEDULES. From the date of this Agreement until Closing, SJ
Bancorp will promptly revise and supplement the Schedules to this
Agreement prepared by or on behalf of SJ Bancorp 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 SJ Bancorp's
representations or warranties contained in this Agreement.
4.1.10 ACQUISITION PROPOSAL. SJ Bancorp agrees that neither it nor any of
its Subsidiaries will, and SJ Bancorp will direct and use its best
efforts to cause its and its Subsidiaries' directors, officers,
employees, agents and representatives (including, without
limitation, any investment banker, attorney or accountant retained
by it or any of its Subsidiaries) not to, initiate, solicit,
encourage or take any other action to facilitate any inquiries or
the making of any proposal or offer (including, without limitation,
any proposal or offer to shareholders of SJ Bancorp) with respect
to an Acquisition Event (any such proposal or offer being
hereinafter referred to as an "Acquisition Proposal") or, except to
the extent legally required for the discharge by the board of
directors of its fiduciary duties as advised in writing by such
board's counsel, engage in any negotiations concerning, or provide
any confidential information or data to any Person relating to, an
Acquisition Proposal, or otherwise facilitate any effort or attempt
to make or implement an Acquisition Proposal. SJ Bancorp 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. SJ
Bancorp will take the necessary steps to inform the appropriate
individuals or entities referred to in the first sentence hereof of
the obligations undertaken in this Section 4.1.10. SJ Bancorp will
notify GBCI immediately if any such inquiries or proposals are
received by, any such information is requested from, or any such
negotiations are sought to be initiated or continued with SJ
Bancorp or its Subsidiaries.
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4.1.11 STATUS OF TITLE/LEASEHOLD INTERESTS. SJ Bancorp will use its
reasonable best efforts to provide GBCI, no later than 30 days
after the Execution Date, title reports for the Real Property
issued by title insurance companies reasonably satisfactory to the
parties (the "Title Companies"). These title reports must show the
current status of title to the Real Property. Within 15 days after
the date on which SJ Bancorp delivers all of the title reports to
GBCI for its review, GBCI will inform SJ Bancorp in writing
whether, and in what manner, it objects to any of the exceptions to
title shown on any of the title reports. SJ Bancorp will, within 10
days of the date on which it receives the written notice of
objection from GBCI, inform GBCI if there are any objections that
it is unable to remove at or prior to Closing. SJ Bancorp will not,
however, be obligated to remove exceptions that are non-monetary
exceptions that do not prohibit or materially interfere with the
use of the properties as bank branch locations. At Closing, if
requested by GBCI, SJ Bancorp will cause the Title Companies to
provide GBCI with standard coverage title insurance policies issued
with respect to each of the Properties, in an amount commensurate
with the value of each such Property as agreed upon by GBCI and SJ
Bancorp, dated as of the Effective Date, insuring fee title in GBCI
or such subsidiary of GBCI, as so designated by GBCI, and that each
such Real Property is 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 GBCI.
4.1.12 DIRECTORS' AND OFFICERS' LIABILITY. Before the Effective Date, SJ
Bancorp will notify its directors' and officers' liability insurers
of the Merger and of all pending or, to SJ Bancorp's Knowledge,
threatened claims, actions, suits, proceedings or investigations
asserted or claimed against any Person entitled to indemnification
pursuant to Section 6.4 and known to SJ Bancorp, or circumstances
reasonably deemed by GBCI to be likely to give rise thereto, in
accordance with terms and conditions of the applicable policies.
4.1.13 REVIEW OF LOANS. SJ Bancorp and SJ Bank will permit GBCI to conduct
an examination of SJ Bank's loans to determine credit quality and
the adequacy of its ALLL. GBCI will have continued access to SJ
Bank's loans through Closing to update its examination. At GBCI's
reasonable request, SJ Bank will provide GBCI with current reports
updating the information set forth in Schedule 3.1.16.
4.1.14 CONDUCT OF GBCI'S BUSINESS BEFORE CLOSING. GBCI will:
(i) provide SJ Bancorp with prompt written notice of any events,
individually or in the aggregate, that could have a Material
Adverse Effect with respect to GBCI;
(ii) conduct, and cause its Subsidiaries to conduct, their
respective businesses in compliance with all material
obligations and duties imposed on them by applicable federal
and state laws; and
(iii) maintain all books and records of it and its Subsidiaries,
including all financial statements, in accordance with such
accounting principles and practices consistent with those
used for the GBCI Financial Statements, except for changes
in such principles and practices required under GAAP.
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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 GBCI with the SEC under the Securities Act
for registration of the GBCI Shares to be issued in the
Merger, and the parties will prepare a related
prospectus/proxy statement ("Prospectus/Proxy Statement") to
be mailed, together with any amendments and supplements
thereto, to SJ Bancorp'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 SJ
Bancorp Meeting), all information set forth in the
Registration Statement that is or to be furnished by or on
behalf of GBCI relating to GBCI and by or on behalf of SJ
Bancorp relating to SJ Bancorp, (1) will comply in all
material respects with the provisions of the Securities Act
and any other applicable statutory or regulatory
requirements, and (2) will not contain any untrue statement
of a material fact or omit to state a material fact that is
required to be stated or necessary to make the statements in
the Registration Statement not misleading; provided,
however, that in no event will any party be liable for any
untrue statement of a material fact or omission to state a
material fact in the Registration Statement where such
statement or omission, as the case may be, was made in
reliance upon, and in conformity with, written information
concerning another party furnished by or on behalf of such
other party specifically for use in the Registration
Statement.
(iv) GBCI will pay all fees and costs associated with the
preparation by GBCI's counsel (and other professional
advisors) and the filing of the Registration Statement. SJ
Bancorp will pay all costs associated with its review and
preparation of the Registration Statement and the
Prospectus/Proxy Statement. SJ Bancorp will pay the costs
associated with the printing and mailing of the
Prospectus/Proxy Statement to its shareholders and any other
direct costs incurred by it in connection with the
Prospectus/Proxy Statement.
4.2.2 SUBMISSION TO SHAREHOLDERS.
(i) GBCI and SJ Bancorp 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.
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(ii) SJ Bancorp 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 "SJ
Bancorp Meeting"). The SJ Bancorp Meeting will be held on
the earliest practical date after the date the
Prospectus/Proxy Statement may first be sent to SJ Bancorp's
shareholders without objection by applicable governmental
authorities. SJ Bancorp's board of directors and officers
will recommend approval of the Merger to SJ Bancorp's
shareholders.
4.3 SUBMISSION TO REGULATORY AUTHORITIES. Representatives of GBCI will prepare
and file with applicable regulatory agencies, applications for approvals,
waivers or other actions deemed necessary or desirable, in the opinion of
counsel, in order to consummate the Merger. GBCI will use its best efforts
to file such regulatory applications within 30 days following the date of
execution of this Agreement. GBCI will provide copies of such applications
for review by SJ Bancorp prior to their submission to the applicable
regulatory authorities. These applications are expected to include:
(i) An application to the Federal Reserve and related filings
regarding the Merger.
(ii) An application to the Colorado Banking Board and related
filings regarding the Merger.
(iii) Filings and coordination with the offices of the
Commissioner and Montana Secretary of State with respect to
the Merger.
4.4 PUBLIC ANNOUNCEMENTS. Subject to written advice of legal counsel with
respect to legal requirements relating to public disclosure of matters
related to the subject matter of this Agreement, the timing and content of
any announcements, press releases or other public statements concerning the
Merger will occur upon, and be determined by, the mutual consent of SJ
Bancorp and GBCI.
4.5 CONSENTS. Each party to this Agreement will use its best efforts to obtain
the timely consent or approval of any Person whose consent or approval is
required in order to permit GBCI or Holdings and SJ Bancorp to consummate
the Merger.
4.6 FURTHER ACTIONS. The parties to this Agreement will use their best efforts
in good faith to make all such arrangements, do or cause to be done all
such acts and things, and execute and deliver all such certificates and
other instruments and documents as may be reasonably necessary or
appropriate in order to consummate the Merger promptly.
4.7 NOTICE. The parties will provide each other with prompt written notice of:
(i) Any events that, individually or in the aggregate, can
reasonably be expected to have a Material Adverse Effect
with respect to them.
(ii) The commencement of any proceeding against any one or more
of them by or before any court or governmental agency that,
individually or in the aggregate, can reasonably be expected
to have a Material Adverse Effect with respect to any one or
more of them.
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(iii) In the case of SJ Bancorp and its Subsidiaries, the
acquisition of an ownership or leasehold interest in any
real property (except as disclosed in Schedule 3.1.6), as
specified in Section 4.1.2.
4.8 CONFIDENTIALITY. Subject to the requirements of law, each party will keep
confidential, and will exercise its best efforts to cause its
representatives to keep confidential, all information and documents
obtained pursuant to this Agreement unless such information (i) is required
by law to be disclosed, (ii) becomes available to such party from other
sources not bound by a confidentiality obligation, (iii) is disclosed with
prior written approval of the party to which such information pertains or
is disclosed in a legal action between the parties relating to the Merger,
or (iv) is or becomes public without fault of the subject party. If this
Agreement is terminated or the Merger otherwise fails to be consummated,
each party to this Agreement will promptly (i) return to the other all
confidential documents obtained from them and (ii) not use or disclose any
nonpublic information obtained under this Agreement or in connection with
the Merger.
4.9 AVAILABILITY OF GBCI'S BOOKS, RECORDS AND PROPERTIES.
(a) GBCI will make its books, records, properties, contracts and documents
available during business hours with reasonable advance notice to SJ
Bancorp and its counsel, accountants and other representatives. These
items will be open for inspection, audit and direct verification of
loan or deposit balances and collateral receipts. GBCI will cooperate
fully in any such inspection, audit, or direct verification
procedures, and will make available all information reasonably
required by or on behalf of GBCI.
(b) At SJ Bancorp's request, GBCI will request any third parties involved
in the preparation or review of (1) GBCI Financial Statements or (2)
any audits of GBCI's operations, loan portfolios or other assets, to
disclose to SJ Bancorp the work papers or any similar materials
related to these items.
4.10 BLUE SKY FILINGS. GBCI will use its best efforts to obtain, prior to the
effective date of the Registration Statement, any necessary state
securities laws or "Blue Sky" permits and approvals.
4.11 TAX TREATMENT. Neither GBCI and its Subsidiaries nor SJ Bancorp 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.
4.12 SJ BANCORP CLOSING CAPITAL AND DIVIDEND.
4.12.1 ALLL Adjustment. Immediately prior to Closing, SJ Bank will add to
its ALLL to cause the balance thereof to be $2,050,000 or such
greater amount required by GBCI (the "ALLL Adjustment"); provided,
however, that any amount in excess of $2,050,000 shall not be taken
into account in calculating and shall be excluded for purposes of
determining the SJ Bancorp Capital and the SJ Bancorp Closing
Capital.
4.12.2 Determination of SJ Bancorp Closing Capital. No later than the
seventh (7th) Business Day before Closing, SJ Bancorp shall
calculate in good faith the estimated SJ Bancorp Capital as of the
Closing and shall provide GBCI with a copy of the proposed
Subsequent SJ Bancorp Financial Statements for the month preceding
the date of calculation (if not already provided in accordance with
Section 4.1.8), together with internally prepared financial
statements through the date of calculation, estimated retained
earnings through the date of Closing, the impact of any pending
adjustments required in the calculation of
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the SJ Bancorp Capital, and any other documentation requested by
GBCI for purposes of confirming the amount of such SJ Bancorp
Capital. GBCI shall review such materials and, within two (2)
Business Days following receipt thereof, notify SJ Bancorp as to
whether GBCI accepts or disputes the amount of the SJ Bancorp
Capital. If GBCI disputes such calculation, it shall describe in
its notice the specific changes or adjustments that must be made.
If GBCI and SJ Bancorp are unable to resolve such dispute through
good faith negotiations within three (3) Business Days after
delivery of GBCI's notice of objection, then the parties shall
mutually engage and submit such dispute to, and the same shall be
finally resolved by, an accounting firm that is mutually and
reasonably acceptable to the parties (the "Independent
Accountants"). The Independent Accountants shall determine and
report in writing to GBCI and SJ Bancorp the resolution of such
disputed matters and the effect of such determinations on the
calculation of the SJ Bancorp Capital as of Closing, and such
determinations shall be final, binding and conclusive unless GBCI
and SJ Bancorp mutually agree upon an different amount. The SJ
Bancorp Capital as of Closing, as determined and agreed upon in
writing by GBCI and SJ Bancorp in accordance with this Section
4.12.2, is the "SJ Bancorp Closing Capital." The fees and
disbursements of the Independent Accountants shall be shared
equally by GBCI, on the one hand, and SJ Bancorp, on the other
hand, and with respect to SJ Bancorp's portion, shall be deducted
from the SJ Bancorp Closing Capital.
4.12.3 Payment of Dividend. To the extent the SJ Bancorp Closing Capital
exceeds $11,350,000, SJ Bancorp may, effective immediately prior to
the Effective Time, declare and pay a dividend to its shareholders
in the amount of such excess.
4.13 BEST EFFORTS. Subject to the terms and conditions of this Agreement, each
party will use its reasonable best efforts in good faith to take, or cause
to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or desirable, or advisable under applicable laws, so as
to permit consummation of the Merger by December 31, 2008, and in any case
as early as possible, and to otherwise enable consummation of the
transactions contemplated by this Agreement, subject to any delays
resulting from SEC review or bank regulatory processing.
SECTION 5.
APPROVALS AND CONDITIONS
5.1 REQUIRED APPROVALS. The obligations of the parties to this Agreement are
subject to the approval of this Agreement and the Merger by all appropriate
regulatory agencies having jurisdiction with respect thereto; provided,
however, that no such consent or approval will have imposed any condition
or requirement not normally imposed in such transactions that, in the
opinion of GBCI, would deprive GBCI of the material economic or business
benefits of the Merger.
5.2 CONDITIONS TO OBLIGATIONS OF GBCI. All obligations of GBCI pursuant to this
Agreement are subject to satisfaction of the following conditions at or
before Closing:
5.2.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of SJ Bancorp contained in this Agreement or in any certificate or
other instrument delivered in connection with this Agreement that
are not qualified as to materiality will be true and correct in all
material respects at Closing, and the representations and
warranties of SJ Bancorp contained in this Agreement or in any
certificate or other instrument delivered in connection with this
Agreement that are qualified as to materiality will be true and
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correct at Closing, all with the same force and effect as though
such representations and warranties had been made on and as of
Closing (except to the extent that such representations and
warranties are by their express provisions made as of a specified
date, in which case such representations and warranties will be
true and correct in all material respects or true and correct, as
the case may be, as of such date). SJ Bancorp will have delivered
to GBCI a certificate to that effect, executed by a duly authorized
officer of SJ Bancorp and dated as of Closing.
5.2.2 COMPLIANCE. SJ Bancorp will have performed and complied, and will
have caused SJ Bank to perform and comply, in all material respects
with all terms, covenants and conditions of this Agreement on or
before Closing. SJ Bancorp will have delivered to GBCI a
certificate to that effect, executed by a duly authorized officer
of SJ Bancorp and dated as of Closing.
5.2.3 EFFECTIVENESS OF EMPLOYMENT AGREEMENT. The respective employment
agreements referenced in Recital E to which Arthur C. Chase Jr. and
John Stolfa are parties shall be in effect as of the Effective
Date.
5.2.4 CLOSING CAPITAL AND FINANCIAL STATEMENTS. SJ Bancorp will have
delivered to GBCI the financial information set forth in Section
4.12.2, and the parties will have agreed upon the amount of SJ
Bancorp Closing Capital pursuant to the terms of Section 4.12.2.
5.2.5 NO MATERIAL ADVERSE EFFECT. Since December 31, 2007, and since the
date of this Agreement, there will have been no material damage,
destruction or loss (whether or not covered by insurance) and no
other event, individually or in the aggregate, constituting a
Material Adverse Effect with respect to SJ Bancorp or SJ Bank.
5.2.6 FINANCIAL CONDITION. The following will be true and the certificate
of SJ Bancorp referred to in Section 5.2.2 will so state:
(i) In the opinion of the Executive Officers of SJ Bancorp and
SJ Bank, SJ Bank's ALLL, as adjusted for the ALLL
Adjustment, is adequate to absorb SJ Bank's anticipated loan
losses.
(ii) The SJ Bancorp Closing Capital will not be less than $11.2
million.
(iii) The aggregate deposits of SJ Bank, excluding (a)
certificates of deposit (or equivalents) of $100,000 or more
and (b) brokered deposits, will not be less than $90 million
at Closing.
5.2.7 NO GOVERNMENTAL PROCEEDINGS. No action or proceeding will have been
commenced or threatened by any governmental agency to restrain or
prohibit or invalidate the Merger.
5.2.8 OPINION OF COUNSEL. Counsel to SJ Bancorp will have delivered to
GBCI a legal opinion in form and substance reasonably acceptable to
SJ Bancorp and GBCI.
5.2.9 REAL PROPERTY MATTERS. GBCI will have received the irrevocable
commitments by the Title Companies to issue the policies required
under Section 4.1.11.
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5.2.10 CORPORATE AND SHAREHOLDER ACTION. Each of the following will have
approved the Merger:
(i) The Boards of Directors of SJ Bancorp; and
(ii) The shareholders of SJ Bancorp.
5.2.11 RESIGNATION OF DIRECTORS. The directors of SJ Bancorp will have
tendered their written resignations from the Board of Directors, to
be effective upon consummation of the Merger.
5.2.12 TAX OPINION. GBCI will have, at GBCI's expense, obtained from
Graham & Dunn PC and delivered to SJ Bancorp, an opinion addressed
to SJ Bancorp and GBCI (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 SJ Bancorp Common Stock who receives both GBCI
common stock and cash consideration in exchange for his, her
or its shares of SJ Bancorp Common Stock will recognize
gain, but not loss, in an amount equal to the lesser of (i)
the excess of the sum of the fair market value of GBCI
common stock and cash (excluding any cash received in lieu
of fractional shares) received by the holder in the exchange
over the holder's tax basis in the SJ Bancorp Common Stock
surrendered in the exchange, and (ii) the amount of cash
(excluding any cash received in lieu of fractional shares)
received by the holder in the exchange. Any gain recognized
by a holder who owns his, her or its shares of SJ Bancorp
Common Stock as a capital asset will be treated as capital
gain if the exchange is, with respect to the holder, either
"substantially disproportionate" or "not essentially
equivalent to a dividend," each within the meaning of IRC
Section 302(b). The gain will be long-term capital gain if
the shares of SJ Bancorp Common Stock were held for more
than one year.
The exchange will be "substantially disproportionate" with
respect to a holder of SJ Bancorp Common Stock if,
immediately after the Merger, the holder owns, actually and
constructively, less than 50% of the total combined voting
power of all classes of GBCI stock entitled to vote and less
than 80% of the percentage of GBCI common stock actually and
constructively owned by the holder immediately before the
Merger. For purposes of the foregoing determination, the
holder is treated as if (i) all its shares of SJ Bancorp
Common Stock were first exchanged in the Merger for shares
of GBCI common stock, and (ii) a portion of those shares of
GBCI common stock were then redeemed for the cash actually
received in the Merger ("hypothetical exchange and
redemption").
Whether the exchange will be "not essentially equivalent to
a dividend" with respect to a holder of SJ Bancorp Common
Stock will depend upon the holder's particular facts and
circumstances. At minimum, however, there must be a
"meaningful reduction" in the holder's actual and
constructive percentage ownership of GBCI Shares as a result
of the hypothetical exchange and redemption. 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
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publicly held corporation, and who exercises no control over
the affairs of the corporation, will be treated as a
meaningful reduction.
(iii) The aggregate tax basis of GBCI common stock received by a
holder of SJ Bancorp Common Stock in the Merger (before
reduction by the basis in any fractional share that the
holder is deemed to receive and exchange for cash) will be
equal to the aggregate tax basis of the holder in the shares
of SJ Bancorp Common Stock surrendered in the Merger,
increased by the amount of any taxable gain recognized by
the holder (other than gain recognized as a result of cash
received in lieu of a fractional share), and decreased by
the amount of any cash received in the Merger (other than
cash received in lieu of a fractional share).
(iv) The holding period of GBCI common stock received by a holder
of SJ Bancorp Common Stock in the Merger will include the
period during which the shares of SJ Bancorp Common Stock
surrendered in the exchange were held as a capital asset as
of the date of the Merger.
(v) If a holder of SJ Bancorp Common Stock receives cash in lieu
of a fractional share interest in such common stock in the
Merger, the holder will be treated as having received a
fractional share of GBCI common stock and having immediately
exchanged that fractional share for cash in a taxable
redemption by GBCI.
5.2.13 FAIRNESS OPINION. SJ Bancorp will have received from Sandler
O'Neill an updated fairness opinion, dated on or about the date on
which the Prospectus/Proxy Statement is distributed to SJ Bancorp's
shareholders, to the effect that the Merger Consideration to be
received by SJ Bancorp shareholders is fair to such shareholders
from a financial point of view.
5.2.14 REGISTRATION STATEMENT. The Registration Statement, as it may have
been amended, required in connection with the GBCI Shares, and as
described in Section 4.2, will have become effective, and no stop
order suspending the effectiveness of such Registration Statement
will have been issued or remains in effect, and no proceedings for
that purpose will have been initiated or threatened by the SEC, the
basis for which still exists.
5.2.15 NO CHANGE IN LOAN REVIEW. SJ Bancorp will have provided to GBCI the
reports reasonably requested by GBCI under Section 4.1.13, and
neither these reports nor any examinations conducted by GBCI under
Section 4.1.13 will have revealed a change in either: (i) the
information set forth in Schedule 3.1.16 or (ii) information
revealed during GBCI's previous examinations of SJ Bank's loans, in
either case which change constitutes a Material Adverse Effect.
5.3 CONDITIONS TO OBLIGATIONS OF SJ BANCORP. All obligations of SJ Bancorp
pursuant to this Agreement are subject to satisfaction of the following
conditions at or before Closing:
5.3.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of GBCI contained in this Agreement or in any certificate or other
instrument delivered in
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connection with this Agreement that are not qualified as to
materiality will be true and correct in all material respects at
Closing, and the representations and warranties of GBCI contained
in this Agreement or in any certificate or other instrument
delivered in connection with this Agreement that are qualified as
to materiality will be true and correct at Closing, all with the
same force and effect as though such representations and warranties
had been made on and as of Closing (except to the extent that such
representations and warranties are by their express provisions made
as of a specified date, in which case such representations and
warranties will be true and correct in all material respects or
true and correct, as the case may be, as of such date). GBCI will
have delivered to SJ Bancorp a certificate to that effect, executed
by a duly authorized officer of GBCI and dated as of Closing.
5.3.2 COMPLIANCE. GBCI will have performed and complied with all terms,
covenants and conditions of this Agreement on or before Closing.
GBCI will have delivered to SJ Bancorp a certificate to that
effect, executed by a duly authorized officer of GBCI and dated as
of Closing.
5.3.3 NO GOVERNMENTAL PROCEEDINGS. No action or proceeding will have been
commenced or threatened by any governmental agency to restrain or
prohibit or invalidate the Merger.
5.3.4 NO MATERIAL ADVERSE EFFECT. Since December 31, 2007, there will
have been no material damage, destruction or loss (whether or not
covered by insurance) and no other event, individually or in the
aggregate, constituting a Material Adverse Effect with respect to
GBCI.
5.3.5 TAX OPINION. The tax opinion specified in Section 5.2.12 will have
been delivered to SJ Bancorp in form and substance reasonably
acceptable to SJ Bancorp and its advisors.
5.3.6 CORPORATE ACTION. The Board of Directors of GBCI will have approved
the Merger:
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. GBCI will have received the state securities laws
or "Blue Sky" permits and approvals specified in Section 4.10.
5.3.9 PAYMENTS TO THE EXCHANGE AGENT. GBCI will have deposited the Merger
Consideration with the Exchange Agent.
5.3.10 APPROVAL OF SJ BANCORP SHAREHOLDERS. The shareholders of SJ Bancorp
will have approved the Merger by at least a two-thirds majority of
all outstanding shares of SJ Bancorp as required by the Articles of
Incorporation of SJ Bancorp.
5.3.11 FAIRNESS OPINION. SJ Bancorp will have received from Sandler
O'Neill an updated fairness opinion, dated on or about the date on
which the Prospectus/Proxy Statement is distributed to SJ Bancorp's
shareholders, to the effect that the Merger Consideration to be
received by SJ Bancorp shareholders is fair to such shareholders
from a financial point of view.
5.3.12 CLOSING CAPITAL AND FINANCIAL CONDITION. The parties will have
agreed upon the amount of SJ Bancorp Closing Capital pursuant to
the terms of Section 4.12.1, and the SJ Bancorp Closing Capital
will not be less than $11.2 million.
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SECTION 6.
DIRECTORS, OFFICERS AND EMPLOYEES
6.1 DIRECTOR AND SHAREHOLDER AGREEMENTS. As a condition to the execution of
this Agreement, the directors described in Recital F 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 unless otherwise
noted in the applicable agreement.
6.2 OFFICER'S EMPLOYMENT CONTRACT. As a condition to the execution of this
Agreement, the employment agreements described in Recital E have been
executed on or before the Execution Date. Such agreements will take effect
at the Effective Date unless otherwise noted in the applicable agreement.
6.3 EMPLOYEE BENEFIT ISSUES.
6.3.1 COMPARABILITY OF BENEFITS. GBCI intends that its current personnel
policies will apply to any current employees of SJ Bancorp and SJ
Bank who are retained after Closing. Such retained employees will
be eligible to participate in all of the benefit plans of GBCI that
are generally available to similarly situated employees of GBCI in
accordance with and subject to the terms of such plans.
6.3.2 TREATMENT OF PAST SERVICE. For purposes of such participation,
current employees' prior service with SJ Bancorp and/or SJ Bank
will constitute prior service with GBCI for purposes of determining
eligibility and vesting (including but not limited to vacation time
and participation and benefits under the GBCI Severance Plan for
Employees in effect at the time of any termination).
6.3.3 NO CONTRACT CREATED. Nothing in this Agreement will give any
employee a right to continuing employment.
6.4 INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS. For a period of four
(4) years from and after the Effective Date, GBCI will indemnify and defend
each present and former director and officer of SJ Bancorp and SJ Bank from
and against any and all claims, losses, liabilities, judgments, fines,
damages, costs, and expenses (including reasonable attorneys' fees)
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative, or investigative,
arising out of actions or omissions accruing at or prior to the Effective
Date, including, without limitation, the Merger contemplated by this
Agreement, to the fullest extent that SJ Bancorp and/or SJ Bank is
currently permitted to indemnify (and advance expenses to) its directors
and officers under applicable law, including federal banking law, and under
their respective articles of incorporation or bylaws in effect at the date
of this Agreement. Any determination required to be made with respect to
whether an officer's or director's conduct complies with the standard set
forth under SJ Bancorp's or SJ Bank's articles of incorporation or bylaws
will be made by independent counsel (which will not be counsel that
provides any services to GBCI or any of its Subsidiaries) selected by GBCI
and reasonably acceptable to such officer or director. For a period of four
(4) years after the Effective Date, GBCI will use reasonable efforts to
cause to be maintained in effect (with reputable and financially sound
insurers) director and officer liability insurance substantially similar to
that maintained by GBCI with respect to claims arising from facts or events
that occurred before the Effective Date.
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SECTION 7.
TERMINATION OF AGREEMENT AND ABANDONMENT OF TRANSACTION
7.1 TERMINATION BY REASON OF LAPSE OF TIME. If Closing does not occur on or
before the Termination Date, either GBCI or SJ Bancorp may terminate this
Agreement and the Merger if both of the following conditions are satisfied:
(a) the terminating party's board of directors decides to terminate by a
majority vote of all of its members; and
(b) the terminating party delivers to the other party written notice that
its board of directors has voted in favor of termination.
7.2 OTHER GROUNDS FOR TERMINATION. This Agreement and the Merger may be
terminated at any time before Closing (whether before or after applicable
approval of this Agreement by SJ Bancorp's shareholders, unless otherwise
provided) as follows:
7.2.1 MUTUAL CONSENT. By mutual consent of SJ Bancorp and GBCI, if the
board of directors of each party agrees to terminate by a majority
vote of all 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 Merger); 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 such denial,
and such other party may not terminate this Agreement pursuant to
this Section 7.2.2 during such period of time; provided further,
however, either party shall be entitled to terminate this Agreement
pursuant to Section 7.1 during such period of time.
7.2.3 BREACH OF REPRESENTATION. By either party (provided that the
terminating party is not then in material breach of any of its
representations, warranties, agreements or covenants in this
Agreement if they are not qualified as to materiality and is not
then in breach of any of its representations, warranties,
agreements or covenants in this Agreement if they are qualified as
to materiality) if there has been a material breach of any of the
representations or warranties set forth in this Agreement that are
not qualified as to materiality or a breach of any of the
representations or warranties set forth in this Agreement that are
qualified as to materiality on the part of the other party, which
breach is not cured within thirty days following written notice to
the party committing such breach, or which breach, by its nature,
cannot be cured prior to the end of such thirty day period;
provided, however, that neither party will have the right to
terminate this Agreement pursuant to this Section 7.2.3 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 SJ Bancorp) or Section 5.3.1 (in the
case of a breach of a representation or warranty by GBCI). In the
event of termination pursuant to this Section 7.2.3, 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, agreements or covenants in this Agreement if they are
not qualified as to materiality and is not then in breach of any of
its
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representations, warranties, agreements or covenants in this
Agreement if they are qualified as to materiality) if there has
been a material breach of any of the covenants or agreements set
forth in this Agreement that are not qualified as to materiality or
a breach of any of the covenants or agreements set forth in this
Agreement that are qualified as to materiality on the part of the
other party, which breach is not cured within thirty days following
written notice to the party committing such breach, or which
breach, by its nature, cannot be cured prior to the end of such
thirty day period. In the event of termination pursuant to this
Section 7.2.4, the terminating party will be entitled to receive
from the other party the Termination Fee; provided, however, that
GBCI will not be entitled to collect the Termination Fee in the
event of a breach of Section 4.1.11 caused by SJ Bancorp'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 GBCI
(provided that GBCI is not then in material breach of any of its
representations, warranties, covenants or other agreements in this
Agreement), if (a) SJ Bancorp's Board of Directors (i) fails to
recommend to its shareholders the approval of the Merger or (ii)
modifies, withdraws or changes in a manner adverse to GBCI its
recommendation to shareholders to approve the Merger; or (b)
regardless of whether SJ Bancorp's Board of Directors recommends to
its shareholders the approval of the Merger, SJ Bancorp's
shareholders elect not to approve the Merger.
7.2.6 IMPRACTICABILITY. By either GBCI or SJ Bancorp, 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 Merger has become inadvisable
or impracticable by reason of actions taken by the federal
government or the governments of the States of Montana or Colorado
to restrain or invalidate the Merger or this Agreement.
7.2.7 DISSENTING SHARES. By GBCI, if holders of 10% or more of the
outstanding shares of SJ Bancorp Common Stock are Proposed
Dissenting Shares.
7.2.8 SUPERIOR PROPOSAL - TERMINATION BY SJ BANCORP. By the board of
directors of SJ Bancorp upon written notice to GBCI if such board
of directors has in good faith determined that a Takeover Proposal
constitutes a Superior Proposal; provided, however, that SJ Bancorp
may not terminate this Agreement pursuant to this Section 7.2.8
unless (i) it has not breached Section 4.1.10, (ii) subsequent to
delivering such notice of termination, it intends to enter into a
letter of intent, acquisition agreement or similar agreement
relating to such Superior Proposal, (iii) it has provided GBCI at
least five (5) days' prior written notice advising GBCI that the
board of directors of SJ Bancorp is prepared to accept a Superior
Proposal and has given GBCI, if it so elects, an opportunity to
amend the terms of this Agreement (and negotiated with GBCI in good
faith with respect to such terms) in such a manner as would enable
SJ Bancorp's board of directors to proceed with the Merger, and
(iv) simultaneously upon entering into such letter of intent,
acquisition agreement or similar agreement relating to such
Superior Proposal referred to in clause (ii), it delivers to GBCI
the Break-Up Fee.
7.2.9 SUPERIOR PROPOSAL - TERMINATION BY GBCI. By GBCI upon written
notice to SJ Bancorp if (i) an Acquisition Event will have occurred
or (ii) a third party will have made a proposal to SJ Bancorp or
its shareholders to engage in or entered into an agreement
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with respect to an Acquisition Event, and this Agreement and the
Merger are not approved at the SJ Bancorp Meeting.
7.3 TERMINATION FEE PAYABLE BY SJ BANCORP. Due to expenses, direct and
indirect, incurred by GBCI in negotiating and executing this Agreement and
in taking steps to effect the Merger, SJ Bancorp will pay to GBCI $200,000
(the "Termination Fee") if GBCI 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 GBCI's demand and must be paid by SJ Bancorp within three
Business Days following the date of GBCI's demand.
7.4 TERMINATION FEE PAYABLE BY GBCI. Due to expenses, direct and indirect,
incurred by SJ Bancorp in negotiating and executing this Agreement and in
taking steps to effect the Merger, GBCI will pay to SJ Bancorp the
Termination Fee if SJ Bancorp 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 SJ Bancorp's demand and must be paid by GBCI within three
Business Days following the date of SJ Bancorp's demand.
7.5 BREAK-UP FEE. If this Agreement is terminated pursuant to Section 7.2.5(a)
(Failure to Recommend), Section 7.2.8 (Superior Proposal - Termination by
SJ Bancorp), or Section 7.2.9(i) (Superior Proposal - Termination by GBCI -
Immediate Acquisition Event), then SJ Bancorp will immediately pay to GBCI
$1,000,000 (the "Break-Up Fee"). If this Agreement is terminated pursuant
to Section 7.2.9(ii) (Superior Proposal - Termination by GBCI -Subsequent
Acquisition Event) and prior to or within six months after such
termination, SJ Bancorp or SJ Bank enters into an agreement, or publicly
announces an intention, to engage in an Acquisition Event, or within twelve
months after such termination an Acquisition Event will have occurred, then
SJ Bancorp will promptly pay to GBCI the Break-Up Fee.
7.6 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, GBCI and SJ Bancorp will each pay its 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:
GBCI: Glacier Bancorp, Inc.
49 Commons Loop
Kalispell, Montana 59901
Attn: Michael J. Blodnick
President and CEO
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with a copy to: Graham & Dunn PC
Pier 70
2801 Alaskan Way Suite 300
Seattle, Washington 98121-1128
Attn: Stephen M. Klein, Esq.
Kumi Y. Baruffi, Esq.
SJ Bancorp: Bank of the San Juans Bancorporation
144 E. 8th Street
Durango, Colorado 81301
Attn: Arthur C. Chase Jr.
President and CEO; and
Thomas Melchior
Chairman
with a copy to: Rothgerber Johnson & Lyons L.L.P.
1200 Seventeenth Street, Suite 3000
Denver, Colorado 80202
Attn: Kevin M. Kelly, Esq.
Tennyson W. Grebenar, Esq.
or to such other address or person as any party may designate by written
notice to the other given under this Section.
8.2 WAIVERS AND EXTENSIONS. Subject to Section 9, GBCI or SJ Bancorp may grant
waivers or extensions to the other party, but only through a written
instrument executed by the President and/or CEO of the party granting the
waiver or extension. Waivers or extensions that do not comply with the
preceding sentence are not effective. In accordance with this Section 8.2,
a party may extend the 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
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document. References in this Agreement to Recitals, Sections, Subsections
or Schedules are references to the Recitals, Sections, Subsections and
Schedules of and to this Agreement unless expressly stated otherwise.
8.4 SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS. Except as set forth
below, the representations, warranties, agreements and covenants set forth
in this Agreement will not survive Closing or termination of this
Agreement, except that (1) Section 4.8 (Confidentiality), Sections 7.3 and
7.4 (Termination-Related Fees), Section 7.7 (Break-Up Fee), Section 7.6
(Cost Allocation Upon Termination), and Sections 8.3 through 8.8 will
survive termination; and (2) the covenants and other agreements in this
Agreement that impose duties or obligations on the parties following
Closing, including Section 6.3 (Employee Benefit Issues) and Section 6.4
(Indemnification), will survive Closing. Except as specifically set forth
in the preceding sentences, none of the representations, warranties,
agreements or covenants contained in this Agreement shall survive Closing,
and neither GBCI nor SJ Bancorp shall have any rights or remedies after
Closing with respect to any breach of any such representations, warranties,
agreements or covenants.
8.5 ATTORNEYS' FEES AND COSTS. In the event of any dispute or litigation with
respect to the terms and conditions or enforcement of rights or obligations
arising by reason of this Agreement or the Merger, the substantially
prevailing party in any such litigation will be entitled to reimbursement
from the other party of its costs and expenses, including reasonable
attorneys' fees.
8.6 ARBITRATION. At either party's request, the parties must submit any
dispute, controversy or claim arising out of or in connection with, or
relating to, this Agreement or any breach or alleged breach of this
Agreement, to arbitration under the American Arbitration Association's
rules then in effect (or under any other form of arbitration mutually
acceptable to the parties). A single arbitrator agreed on by the parties
will conduct the arbitration. If the parties cannot agree on a single
arbitrator, each party must select one arbitrator and those two arbitrators
will select a third arbitrator. This third arbitrator will hear the
dispute. The arbitrator's decision is final (except as otherwise
specifically provided by law) and binds the parties, and either party may
request any court having jurisdiction to enter a judgment and to enforce
the arbitrator's decision. The 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 the City and County
of Denver, Colorado.
8.7 GOVERNING LAW AND VENUE. This Agreement will be governed by and construed
in accordance with the laws of the State of Delaware, except to the extent
that federal law may govern certain matters. The parties must bring any
legal proceeding arising out of this Agreement in federal court in the City
and County of Denver, Colorado. Each party consents to and submits to the
jurisdiction of any such federal court.
8.8 SEVERABILITY. If a court determines that any term of this Agreement is
invalid or unenforceable under applicable law, the remainder of this
Agreement will not be affected thereby, and each remaining term will
continue to be valid and enforceable to the fullest extent permitted by
law.
8.9 NO ASSIGNMENT. Neither this Agreement nor any of the rights, interests or
obligations under this Agreement may be assigned by any of the parties
(whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns. Except as
otherwise expressly provided, this Agreement
A-40
(including the documents and instruments referred to in this Agreement) is
not intended to confer upon any person other than the parties any rights or
remedies under this Agreement.
SECTION 9.
AMENDMENTS
Subject to applicable law, this Agreement and the form of any attached
Exhibit or Schedule may be amended upon authorization of the boards of directors
of the parties, whether before or after the SJ Bancorp Meeting; provided,
however, that after approval by SJ Bancorp's shareholders, no amendment will be
made changing the form or reducing the amount of consideration to be received by
the shareholders of SJ Bancorp 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]
A-41
This Plan and Agreement of Merger is dated as of the 19th day of August, 2008.
GLACIER BANCORP, INC.
By: /s/ Michael J. Blodnick
------------------------------------
Michael J. Blodnick, President
and CEO
BANK OF THE SAN JUANS BANCORPORATION
By: /s/ Arthur C. Chase Jr.
------------------------------------
Arthur C. Chase Jr., President
and CEO
A-42
STATE OF COLORADO )
) ss.
COUNTY OF LA PLATA )
On this 19th day of August, 2008, 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/ John N. Stolfa
----------------------------------------
NOTARY PUBLIC in and for the State of
Colorado, residing at 144 E. 8th St.,
Durango, CO 81301
My Commission expires: 6-14-2009
STATE OF COLORADO )
) ss.
COUNTY OF LA PLATA )
On this 19th day of August, 2008, before me personally appeared Arthur C.
Chase Jr., to me known to be the President and CEO of BANK OF THE SAN JUANS
BANCORPORATION, 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/ John N. Stolfa
----------------------------------------
NOTARY PUBLIC in and for the State of
Colorado, residing at 144 E. 8th St.,
Durango, CO 81301
My Commission expires: 6-14-2009
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TABLE OF CONTENTS
PAGE
----
DEFINITIONS................................................................. 2
SECTION 1. TERMS OF TRANSACTION............................................. 7
1.1 Effect of Merger.................................................... 7
1.2 Merger Consideration................................................ 7
1.3 SJ Options.......................................................... 8
1.4 No Fractional Shares................................................ 8
1.5 Payment to Dissenting Shareholders.................................. 8
1.6 Deposit of Cash and Shares.......................................... 8
1.7 Certificates........................................................ 9
SECTION 2. CLOSING OF TRANSACTION........................................... 10
2.1 Effective Date...................................................... 10
2.2 Events of Closing................................................... 10
2.3 Manner and Time of Closing.......................................... 10
SECTION 3. REPRESENTATIONS AND WARRANTIES................................... 11
3.1 Representations and Warranties of SJ Bancorp........................ 11
3.2 Representations and Warranties of GBCI.............................. 19
SECTION 4. CONDUCT AND TRANSACTIONS PRIOR TO CLOSING........................ 22
4.1 Conduct of SJ Bancorp's and SJ Bank's Businesses Prior to Closing... 22
4.2 Registration Statement.............................................. 27
4.3 Submission to Regulatory Authorities................................ 28
4.4 Public Announcements................................................ 28
4.5 Consents............................................................ 28
4.6 Further Actions..................................................... 28
4.7 Notice.............................................................. 28
4.8 Confidentiality..................................................... 29
4.9 Availability of GBCI's Books, Records and Properties................ 29
4.10 Blue Sky Filings.................................................... 29
4.11 Tax Treatment....................................................... 29
4.12 SJ Bancorp Closing Capital and Dividend............................. 29
4.13 Best Efforts........................................................ 30
SECTION 5. APPROVALS AND CONDITIONS......................................... 30
5.1 Required Approvals.................................................. 30
5.2 Conditions to Obligations of GBCI................................... 30
5.3 Conditions to Obligations of SJ Bancorp............................. 33
SECTION 6. DIRECTORS, OFFICERS AND EMPLOYEES................................ 35
6.1 Director and Shareholder Agreements................................. 35
6.2 Officer's Employment Contract....................................... 35
6.3 Employee Benefit Issues............................................. 35
6.4 Indemnification of Directors and Executive Officers................. 35
i
SECTION 7. TERMINATION OF AGREEMENT AND ABANDONMENT OF TRANSACTION.......... 36
7.1 Termination by Reason of Lapse of Time.............................. 36
7.2 Other Grounds for Termination....................................... 36
7.3 Termination Fee Payable By SJ Bancorp............................... 38
7.4 Termination Fee Payable By GBCI..................................... 38
7.5 Break-Up Fee........................................................ 38
7.6 Cost Allocation Upon Termination.................................... 38
SECTION 8. MISCELLANEOUS.................................................... 38
8.1 Notices............................................................. 38
8.2 Waivers and Extensions.............................................. 39
8.3 Construction and Execution in Counterparts.......................... 39
8.4 Survival of Representations, Warranties, and Covenants.............. 40
8.5 Attorneys' Fees and Costs........................................... 40
8.6 Arbitration......................................................... 40
8.7 Governing Law and Venue............................................. 40
8.8 Severability........................................................ 40
8.9 No Assignment....................................................... 40
SECTION 9. AMENDMENTS....................................................... 41
ii
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES:
Schedule 3.1.1 Offices of SJ Bancorp/SJ Bank
Schedule 3.1.2 Third Party Consents Required by SJ Bancorp/SJ Bank
Schedule 3.1.3 Capital Stock - SJ Bancorp/SJ Bank
Schedule 3.1.4 SJ Bancorp Subsidiaries
Schedule 3.1.5 SJ Bancorp Financial Statements
Schedule 3.1.6 SJ Bancorp Properties
Schedule 3.1.7 SJ Bancorp Environmental Matters
Schedule 3.1.11 SJ Bancorp Material Contracts
Schedule 3.1.16 Asset Classifications
Schedule 3.1.17 SJ Bancorp Litigation
Schedule 3.1.18 SJ Bancorp Insurance Policies
Schedule 3.1.20 SJ Bancorp Benefit Plans
iii
APPENDIX B
COLORADO BUSINESS CORPORATIONS
ARTICLE 113. DISSENTERS' RIGHTS
PART 1. RIGHT OF DISSENT--PAYMENT FOR SHARES
Section 7-113-101. DEFINITIONS
For purposes of this article:
(1) "Beneficial shareholder" means the beneficial owner of shares held in a
voting trust or by a nominee as the record shareholder.
(2) "Corporation" means the issuer of the shares held by a dissenter before the
corporate action, or the surviving or acquiring domestic or foreign corporation,
by merger or share exchange of that issuer.
(3) "Dissenter" means a shareholder who is entitled to dissent from corporate
action under section 7-113-102 and who exercises that right at the time and in
the manner required by part 2 of this article.
(4) "Fair value", with respect to a dissenter's shares, means the value of the
shares immediately before the effective date of the corporate action to which
the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action except to the extent that 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 none, at the legal rate as specified in
section 5-12-101, C.R.S.
(6) "Record shareholder" means the person in whose name shares are registered in
the records of a corporation or the beneficial owner of shares that are
registered in the name of a nominee to the extent such owner is recognized by
the corporation as the shareholder as provided in section 7-107-204.
(7) "Shareholder" means either a record shareholder or a beneficial shareholder.
Section 7-113-102. RIGHT TO DISSENT
(1) A shareholder, whether or not entitled to vote, is entitled to dissent and
obtain payment of the fair value of the shareholder's shares in the event of any
of the following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a party if:
(I) Approval by the shareholders of that corporation is required for the merger
by section 7-111-103 or 7-111-104 or by the articles of incorporation; or
(II) The corporation is a subsidiary that is merged with its parent corporation
under section 7-111-104;
(b) Consummation of a plan of share exchange to which the corporation is a party
as the corporation whose shares will be acquired;
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(c) Consummation of a sale, lease, exchange, or other disposition of all, or
substantially all, of the property of the corporation for which a shareholder
vote is required under section 7-112-102(1); and
(d) Consummation of a sale, lease, exchange, or other disposition of all, or
substantially all, of the property of an entity controlled by the corporation if
the shareholders of the corporation were entitled to vote upon the consent of
the corporation to the disposition pursuant to section 7-112-102(2).
(e) Consummation of a conversion in which the corporation is the converting
entity as provided in section 7-90-206(2).
(1.3) A shareholder is not entitled to dissent and obtain payment, under
subsection (1) of this section, of the fair value of the shares of any class or
series of shares which either were listed on a national securities exchange
registered under the federal "Securities Exchange Act of 1934", as amended,
[FN1] or on the national market system of the national association of securities
dealers automated quotation system, or were held of record by more than two
thousand shareholders, at the time of:
(a) The record date fixed under section 7-107-107 to determine the shareholders
entitled to receive notice of the shareholders' meeting at which the corporate
action is submitted to a vote;
(b) The record date fixed under section 7-107-104 to determine shareholders
entitled to sign writings consenting to the corporate action; or
(c) The effective date of the corporate action if the corporate action is
authorized other than by a vote of shareholders.
(1.8) The limitation set forth in subsection (1.3) of this section shall not
apply if the shareholder will receive for the shareholder's shares, pursuant to
the corporate action, anything except:
(a) Shares of the corporation surviving the consummation of the plan of merger
or share exchange;
(b) Shares of any other corporation which at the effective date of the plan of
merger or share exchange either will be listed on a national securities exchange
registered under the federal "Securities Exchange Act of 1934", as amended, or
on the national market system of the national association of securities dealers
automated quotation system, or will be held of record by more than two thousand
shareholders;
(c) Cash in lieu of fractional shares; or
(d) Any combination of the foregoing described shares or cash in lieu of
fractional shares.
(2) Deleted by Laws 1996, H.B.96-1285, Section 30, eff. June 1, 1996.
(2.5) A shareholder, whether or not entitled to vote, is entitled to dissent and
obtain payment of the fair value of the shareholder's shares in the event of a
reverse split that reduces the number of shares owned by the shareholder to a
fraction of a share or to scrip if the fractional share or scrip so created is
to be acquired for cash or the scrip is to be voided under section 7-106-104.
(3) A shareholder is entitled to dissent and obtain payment of the fair value of
the shareholder's shares in the event of any corporate action to the extent
provided by the bylaws or a resolution of the board of directors.
B-2
(4) A shareholder entitled to dissent and obtain payment for the shareholder's
shares under this article may not challenge the corporate action creating such
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
[FN1] 15 U.S.C.A. Section 78a et seq.
Section 7-113-103. DISSENT BY NOMINEES AND BENEFICIAL OWNERS
(1) A record shareholder may assert dissenters' rights as to fewer than all the
shares registered in the record shareholder's name only if the record
shareholder dissents with respect to all shares beneficially owned by any one
person and causes the corporation to receive written notice which states such
dissent and the name, address, and federal taxpayer identification number, if
any, of each person on whose behalf the record shareholder asserts dissenters'
rights. The rights of a record shareholder under this subsection (1) are
determined as if the shares as to which the record shareholder dissents and the
other shares of the record shareholder were registered in the names of different
shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to the shares held
on the beneficial shareholder's behalf only if:
(a) The beneficial shareholder causes the corporation to receive the record
shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and
(b) The beneficial shareholder dissents with respect to all shares beneficially
owned by the beneficial shareholder.
(3) The corporation may require that, when a record shareholder dissents with
respect to the shares held by any one or more beneficial shareholders, each such
beneficial shareholder must certify to the corporation that the beneficial
shareholder and the record shareholder or record shareholders of all shares
owned beneficially by the beneficial shareholder have asserted, or will timely
assert, dissenters' rights as to all such shares as to which there is no
limitation on the ability to exercise dissenters' rights. Any such requirement
shall be stated in the dissenters' notice given pursuant to section 7-113-203.
PART 2. PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
Section 7-113-201. NOTICE OF DISSENTERS' RIGHTS
(1) If a proposed corporate action creating dissenters' rights under section
7-113-102 is submitted to a vote at a shareholders' meeting, the notice of the
meeting shall be given to all shareholders, whether or not entitled to vote. The
notice shall state that shareholders are or may be entitled to assert
dissenters' rights under this article and shall be accompanied by a copy of this
article and the materials, if any, that, under articles 101 to 117 of this
title, are required to be given to shareholders entitled to vote on the proposed
action at the meeting. Failure to give notice as provided by this subsection (1)
shall not affect any action taken at the shareholders' meeting for which the
notice was to have been given, but any shareholder who was entitled to dissent
but who was not given such notice shall not be precluded from demanding payment
for the shareholder's shares under this article by reason of the shareholder's
failure to comply with the provisions of section 7-113-202(1).
(2) If a proposed corporate action creating dissenters' rights under section
7-113-102 is authorized without a meeting of shareholders pursuant to section
7-107-104, any written or oral solicitation of a shareholder to execute a
writing consenting to such action contemplated in section 7-107- 104 shall be
accompanied or preceded by a written notice stating that shareholders are or may
be entitled to assert dissenters' rights
B-3
under this article, by a copy of this article, and by the materials, if any,
that, under articles 101 to 117 of this title, would have been required to be
given to shareholders entitled to vote on the proposed action if the proposed
action were submitted to a vote at a shareholders' meeting. Failure to give
notice as provided by this subsection (2) shall not affect any action taken
pursuant to section 7-107-104 for which the notice was to have been given, but
any shareholder who was entitled to dissent but who was not given such notice
shall not be precluded from demanding payment for the shareholder's shares under
this article by reason of the shareholder's failure to comply with the
provisions of section 7-113-202(2).
Section 7-113-202. NOTICE OF INTENT TO DEMAND PAYMENT
(1) If a proposed corporate action creating dissenters' rights under section
7-113-102 is submitted to a vote at a shareholders' meeting and if notice of
dissenters' rights has been given to such shareholder in connection with the
action pursuant to section 7-113-201(1), a shareholder who wishes to assert
dissenters' rights shall:
(a) Cause the corporation to receive, before the vote is taken, written notice
of the shareholder's intention to demand payment for the shareholder's shares if
the proposed corporate action is effectuated; and
(b) Not vote the shares in favor of the proposed corporate action.
(2) If a proposed corporate action creating dissenters' rights under section
7-113-102 is authorized without a meeting of shareholders pursuant to section
7-107-104 and if notice of dissenters' rights has been given to such shareholder
in connection with the action pursuant to section 7-113-201(2), a shareholder
who wishes to assert dissenters' rights shall not execute a writing consenting
to the proposed corporate action.
(3) A shareholder who does not satisfy the requirements of subsection (1) or (2)
of this section is not entitled to demand payment for the shareholder's shares
under this article.
Section 7-113-203. DISSENTERS' NOTICE
(1) If a proposed corporate action creating dissenters' rights under section
7-113-102 is authorized, the corporation shall give a written dissenters' notice
to all shareholders who are entitled to demand payment for their shares under
this article.
(2) The dissenters' notice required by subsection (1) of this section shall be
given no later than ten days after the effective date of the corporate action
creating dissenters' rights under section 7-113-102 and shall:
(a) State that the corporate action was authorized and state the effective date
or proposed effective date of the corporate action;
(b) State an address at which the corporation will receive payment demands and
the address of a place where certificates for certificated shares must be
deposited;
(c) Inform holders of uncertificated shares to what extent transfer of the
shares will be restricted after the payment demand is received;
(d) Supply a form for demanding payment, which form shall request a dissenter to
state an address to which payment is to be made;
B-4
(e) Set the date by which the corporation must receive the payment demand and
certificates for certificated shares, which date shall not be less than thirty
days after the date the notice required by subsection (1) of this section is
given;
(f) State the requirement contemplated in section 7-113-103(3), if such
requirement is imposed; and
(g) Be accompanied by a copy of this article.
Section 7-113-204. PROCEDURE TO DEMAND PAYMENT
(1) A shareholder who is given a dissenters' notice pursuant to section 7-
113-203 and who wishes to assert dissenters' rights shall, in accordance with
the terms of the dissenters' notice:
(a) Cause the corporation to receive a payment demand, which may be the payment
demand form contemplated in section 7-113-203(2)(d), duly completed, or may be
stated in another writing; and
(b) Deposit the shareholder's certificates for certificated shares.
(2) A shareholder who demands payment in accordance with subsection (1) of this
section retains all rights of a shareholder, except the right to transfer the
shares, until the effective date of the proposed corporate action giving rise to
the shareholder's exercise of dissenters' rights and has only the right to
receive payment for the shares after the effective date of such corporate
action.
(3) Except as provided in section 7-113-207 or 7-113-209(1)(b), the demand for
payment and deposit of certificates are irrevocable.
(4) A shareholder who does not demand payment and deposit the shareholder's
share certificates as required by the date or dates set in the dissenters'
notice is not entitled to payment for the shares under this article.
Section 7-113-205. UNCERTIFICATED SHARES
(1) Upon receipt of a demand for payment under section 7-113-204 from a
shareholder holding uncertificated shares, and in lieu of the deposit of
certificates representing the shares, the corporation may restrict the transfer
thereof.
(2) In all other respects, the provisions of section 7-113-204 shall be
applicable to shareholders who own uncertificated shares.
Section 7-113-206. PAYMENT
(1) Except as provided in section 7-113-208, upon the effective date of the
corporate action creating dissenters' rights under section 7-113-102 or upon
receipt of a payment demand pursuant to section 7-113-204, whichever is later,
the corporation shall pay each dissenter who complied with section 7- 113-204,
at the address stated in the payment demand, or if no such address is stated in
the payment demand, at the address shown on the corporation's current record of
shareholders for the record shareholder holding the dissenter's shares, the
amount the corporation estimates to be the fair value of the dissenter's shares,
plus accrued interest.
B-5
(2) The payment made pursuant to subsection (1) of this section shall be
accompanied by:
(a) The corporation's balance sheet as of the end of its most recent fiscal year
or, if that is not available, the corporation's balance sheet as of the end of a
fiscal year ending not more than sixteen months before the date of payment, an
income statement for that year, and, if the corporation customarily provides
such statements to shareholders, a statement of changes in shareholders' equity
for that year and a statement of cash flow for that year, which balance sheet
and statements shall have been audited if the corporation customarily provides
audited financial statements to shareholders, as well as the latest available
financial statements, if any, for the interim or full-year period, which
financial statements need not be audited;
(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 section 7-
113-209; and
(e) A copy of this article.
Section 7-113-207. FAILURE TO TAKE ACTION
(1) If the effective date of the corporate action creating dissenters' rights
under section 7-113-102 does not occur within sixty days after the date set by
the corporation by which the corporation must receive the payment demand as
provided in section 7-113-203, the corporation shall return the deposited
certificates and release the transfer restrictions imposed on uncertificated
shares.
(2) If the effective date of the corporate action creating dissenters' rights
under section 7-113-102 occurs more than sixty days after the date set by the
corporation by which the corporation must receive the payment demand as provided
in section 7-113-203, then the corporation shall send a new dissenters' notice,
as provided in section 7-113-203, and the provisions of sections 7-113-204 to
7-113-209 shall again be applicable.
Section 7-113-208. SPECIAL PROVISIONS RELATING TO SHARES ACQUIRED AFTER
ANNOUNCEMENT OF PROPOSED CORPORATE ACTION
(1) The corporation may, in or with the dissenters' notice given pursuant to
section 7-113-203, state the date of the first announcement to news media or to
shareholders of the terms of the proposed corporate action creating dissenters'
rights under section 7-113-102 and state that the dissenter shall certify in
writing, in or with the dissenter's payment demand under section 7-113-204,
whether or not the dissenter (or the person on whose behalf dissenters' rights
are asserted) acquired beneficial ownership of the shares before that date. With
respect to any dissenter who does not so certify in writing, in or with the
payment demand, that the dissenter or the person on whose behalf the dissenter
asserts dissenters' rights acquired beneficial ownership of the shares before
such date, the corporation may, in lieu of making the payment provided in
section 7-113-206, offer to make such payment if the dissenter agrees to accept
it in full satisfaction of the demand.
(2) An offer to make payment under subsection (1) of this section shall include
or be accompanied by the information required by section 7-113-206(2).
B-6
Section 7-113-209. PROCEDURE IF DISSENTER IS DISSATISFIED WITH PAYMENT OR OFFER
(1) A dissenter may give notice to the corporation in writing of the dissenter's
estimate of the fair value of the dissenter's shares and of the amount of
interest due and may demand payment of such estimate, less any payment made
under section 7-113-206, or reject the corporation's offer under section
7-113-208 and demand payment of the fair value of the shares and interest due,
if:
(a) The dissenter believes that the amount paid under section 7-113-206 or
offered under section 7-113-208 is less than the fair value of the shares or
that the interest due was incorrectly calculated;
(b) The corporation fails to make payment under section 7-113-206 within sixty
days after the date set by the corporation by which the corporation must receive
the payment demand; or
(c) The corporation does not return the deposited certificates or release the
transfer restrictions imposed on uncertificated shares as required by section
7-113-207(1).
(2) A dissenter waives the right to demand payment under this section unless the
dissenter causes the corporation to receive the notice required by subsection
(1) of this section within thirty days after the corporation made or offered
payment for the dissenter's shares.
PART 3. JUDICIAL APPRAISAL OF SHARES
Section 7-113-301. COURT ACTION
(1) If a demand for payment under section 7-113-209 remains unresolved, the
corporation may, within sixty days after receiving the payment demand, commence
a proceeding and petition the court to determine the fair value of the shares
and accrued interest. If the corporation does not commence the proceeding within
the sixty-day period, it shall pay to each dissenter whose demand remains
unresolved the amount demanded.
(2) The corporation shall commence the proceeding described in subsection (1) of
this section in the district court for the county in this state in which the
street address of the corporation's principal office is located, or, if the
corporation has no principal office in this state, in the district court for the
county in which the street address of its registered agent is located, or, if
the corporation has no registered agent, in the district court for the city and
county of Denver. If the corporation is a foreign corporation without a
registered agent, it shall commence the proceeding in the county in which the
domestic corporation merged into, or whose shares were acquired by, the foreign
corporation would have commenced the action if that corporation were subject to
the first sentence of this subsection (2).
(3) The corporation shall make all dissenters, whether or not residents of this
state, whose demands remain unresolved parties to the proceeding commenced under
subsection (2) of this section as in an action against their shares, and all
parties shall be served with a copy of the petition. Service on each dissenter
shall be by registered or certified mail, to the address stated in such
dissenter's payment demand, or if no such address is stated in the payment
demand, at the address shown on the corporation's current record of shareholders
for the record shareholder holding the dissenter's shares, or as provided by
law.
(4) The jurisdiction of the court in which the proceeding is commenced under
subsection (2) of this section is plenary and exclusive. The court may appoint
one or more persons as appraisers to receive evidence and recommend a decision
on the question of fair value. The appraisers have the powers described in the
order appointing them, or in any amendment to such order. The parties to the
proceeding are entitled to the same discovery rights as parties in other civil
proceedings.
B-7
(5) Each dissenter made a party to the proceeding commenced under subsection (2)
of this section is entitled to judgment 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 for the fair value, plus interest, of the
dissenter's shares for which the corporation elected to withhold payment under
section 7-113-208.
Section 7-113-302. COURT COSTS AND COUNSEL FEES
(1) The court in an appraisal proceeding commenced under section 7- 113- 301
shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court shall
assess the costs against the corporation; except that the court may assess costs
against all or some of the dissenters, in amounts the court finds equitable, to
the extent the court finds the dissenters acted arbitrarily, vexatiously, or not
in good faith in demanding payment under section 7-113-209.
(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 dissenters if the court finds
the corporation did not substantially comply with part 2 of this article; or
(b) Against either the corporation or one or more dissenters, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by this article.
(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 to said counsel reasonable fees to be paid out of the amounts awarded to
the dissenters who were benefitted
B-8
APPENDIX C
August 19, 2008
Board of Directors
Bank of the San Juans Bancorporation
144 East Eight Street
Durango, CO 81301
Ladies and Gentlemen:
Bank of the San Juans Bancorporation ("SJ") and Glacier Bancorp, Inc.
("Glacier") have entered into a Plan and Agreement of Merger, dated as of August
19, 2008 (the "Agreement"), pursuant to which SJ will merge with and into
Glacier with Glacier as the surviving entity (the "Merger"). Pursuant to the
Agreement, each share of SJ common stock, par value $5.00 per share, issued and
outstanding immediately prior to the Merger (the "SJ Common Stock") will be
converted into the right to receive (i) the Per Share Cash Consideration and
(ii) the Per Share Stock Consideration. The Per Share Cash Consideration means
$9,000,000 less the amount of any Closing Capital Differential, dividend by the
number of shares of SJ Common Stock outstanding on the Effective Date. The
Closing Capital Differential means to the extent the SJ Closing Capital is less
than $11,350,000, the difference between such SJ Closing Capital and
$11,350,000. The Per Share Stock Consideration means the number of shares of
Glacier common stock determined by dividing 640,000 by the number of shares of
SJ Common Stock outstanding on the Effective Date. Capitalized terms used herein
without definition shall have the meanings given to such term in the Agreement.
You have requested our opinion as to the fairness, from a financial point of
view, of the Merger Consideration to be received in the Merger to the holders of
SJ Common Stock.
Sandler O'Neill & Partners, L.P., as part of its investment banking
business, is regularly engaged in the valuation of financial institutions and
their securities in connection with mergers and acquisitions and other corporate
transactions. In connection with this opinion, we have reviewed, among other
things: (i) the Agreement; (ii) certain publicly available financial statements
and other historical financial information of SJ that we deemed relevant; (iii)
certain publicly available financial statements and other historical financial
information of Glacier that we deemed relevant; (iv) internal financial
projections for SJ for the year ending December 31, 2008 and growth and
performance estimates for SJ for the years ending December 31, 2009, 2010, 2011
and 2012 as provided by and reviewed with management of SJ; (v) publicly
available consensus earnings estimates for Glacier for the years ending December
31, 2008 and 2009 and a long-term growth rate provided by senior of management
of Glacier for the years thereafter; (vi) the pro forma financial impact of the
Merger on Glacier, based on assumptions relating to transaction expenses,
purchase accounting adjustments and cost savings determined by the senior
managements of SJ and Glacier; (vii) the publicly reported historical price and
trading activity for Glacier's common stock, including a comparison of certain
financial and stock market information for Glacier with similar publicly
available information for certain other companies the securities of which are
publicly traded; (viii) the financial terms of certain recent business
combinations in the commercial banking industry, to the extent publicly
available; (ix) the current market environment generally and the banking
environment in particular; and (x) such other information, financial studies,
analyses and investigations and financial, economic and market criteria as we
considered relevant. We also discussed with certain members of senior management
of SJ the business, financial condition, results
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of operations and prospects of SJ, including certain operating, liquidity,
regulatory and other financial matters and held similar discussions with certain
members of senior management of Glacier regarding the business, financial
condition, results of operations and prospects of Glacier.
In performing our review, we have relied upon the accuracy and completeness
of all of the financial and other information that was available to us from
public sources, that was provided to us by SJ and Glacier or their respective
representatives or that was otherwise reviewed by us and have assumed such
accuracy and completeness for purposes of rendering this opinion. We have
further relied on the assurances of the respective managements of SJ and Glacier
that they are not aware of any facts or circumstances that would make any of
such information inaccurate or misleading. We have not been asked to and have
not undertaken an independent verification of any of such information and we do
not assume any responsibility or liability for the accuracy or completeness
thereof. We did not make an independent evaluation or appraisal of the specific
assets, the collateral securing assets or the liabilities (contingent or
otherwise) of SJ, Glacier or any of their respective subsidiaries, or the
collectibility of any such assets, nor have we been furnished with any such
evaluations or appraisals. We did not make an independent evaluation of the
adequacy of the allowance for loan losses of SJ and Glacier nor have we reviewed
any individual credit files relating to SJ and Glacier. We have assumed, with
your consent, that the respective allowances for loan losses for both SJ and
Glacier are adequate to cover such losses and will be adequate on an as adjusted
pro forma basis for the combined entity.
With respect to the internal projections and estimates for SJ and the
publicly available earnings and growth estimates for Glacier and the projections
of transaction costs, purchase accounting adjustments and expected cost savings
prepared by and/or reviewed with the managements of SJ and Glacier and used by
Sandler O'Neill in its analyses, SJ's and Glacier's management confirmed to us
that they reflected the best currently available estimates and judgments of
management of the future financial performance of SJ and Glacier and we assumed
that such performances would be achieved. We express no opinion as to such
financial projections and estimates or the assumptions on which they are based.
We have also assumed that there has been no material change in SJ's and
Glacier's assets, financial condition, results of operations, business or
prospects since the date of the most recent financial statements made available
to us. We have assumed in all respects material to our analysis that SJ and
Glacier will remain as going concerns for all periods relevant to our analyses,
that all of the representations and warranties contained in the Agreement are
true and correct, that each party to the Agreement will perform all of the
covenants required to be performed by such party under the Agreement, that the
conditions precedent in the Agreement are not waived. Finally, with your
consent, we have relied upon the advice SJ has received from its legal,
accounting and tax advisors as to all legal, accounting and tax matters relating
to the Merger and the other transactions contemplated by the Agreement.
Our opinion is necessarily based on financial, economic, market and other
conditions as in effect on, and the information made available to us as of, the
date hereof. Events occurring after the date hereof could materially affect this
opinion. We have not undertaken to update, revise, reaffirm or withdraw this
opinion or otherwise comment upon events occurring after the date hereof. We are
expressing no opinion herein as to what the value of SJ's and Glacier's common
stock will be when shares of Glacier's common stock will be issued to SJ's
shareholders pursuant to the Agreement or the prices at which SJ's and Glacier's
common stock may trade at any time.
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We have acted as SJ's financial advisor in connection with the Merger and
will receive a fee for our services, a substantial portion of which is
contingent upon consummation of the Merger. As you know, we have provided
investment banking services to SJ and have been compensated for those services.
We will also receive a fee for rendering this opinion. SJ has also agreed to
indemnify us against certain liabilities arising out of our engagement.
In the ordinary course of our business as a broker-dealer, we may purchase
securities from and sell securities to SJ and Glacier and their respective
affiliates. We may also actively trade the equity or debt securities of Glacier
or its affiliates for our own account and for the accounts of our customers and,
accordingly, may at any time hold a long or short position in such securities.
Our opinion is directed to the Board of Directors of SJ in connection with
its consideration of the Merger and does not constitute a recommendation to any
shareholder of SJ as to how such shareholder should vote at any meeting of
shareholders called to consider and vote upon the Merger. Our opinion is
directed only to the fairness, from a financial point of view, of the Merger
Consideration to be received in the Merger to holders of SJ Common Stock and
does not address the underlying business decision of SJ to engage in the Merger,
the relative merits of the Merger as compared to any other alternative business
strategies that might exist for SJ or the effect of any other transaction in
which SJ might engage. Our opinion is not to be quoted or referred to, in whole
or in part, in a registration statement, prospectus, proxy statement or in any
other document, nor shall this opinion be used for any other purposes, without
Sandler O'Neill's prior written consent. We do not express any opinion as to the
fairness of the amount or nature of the compensation to be received in the
Merger by SJ's officers, directors, or employees, or class of such persons,
relative to the compensation to be received in the Merger by any other
shareholders of the company. This opinion was approved by Sandler O'Neill's
fairness opinion committee.
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the Merger Consideration to be received in the Merger is fair to
the holders of SJ's Common Stock from a financial point of view.
Very truly yours,
/s/ Sandler O'Neill & Partners, L.P.
----------------------------------------
Sandler O'Neill & Partners, L.P.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 35-1-451 through 35-1-459 of the Montana Business Corporation Act
("MBCA") contain specific provisions relating to indemnification of directors
and officers of Montana corporations. In general, the statute provides that (i)
a corporation must indemnify a director or officer who is wholly successful in
his defense of a proceeding to which he is a party because of his status as
such, unless limited by the articles of incorporation, and (ii) a corporation
may indemnify a director or officer if he is not wholly successful in such
defense, if it is determined as provided in the statute that the director meets
a certain standard of conduct, provided that when a director is liable to the
corporation, the corporation may not indemnify him. The statute also permits a
director or officer of a corporation who is a party to a proceeding to apply to
the courts for indemnification or advance of expenses, unless the articles of
incorporation provide otherwise, and the court may order indemnification or
advancement of expenses under certain circumstances set forth in the statute.
The statute further provides that a corporation may in its articles of
incorporation or bylaws or by resolution provide indemnification in addition to
that provided by statute, subject to certain conditions set forth in the
statute.
The articles of incorporation of Glacier provide, among other things, that
the personal liability of the directors and officers of the corporation for
monetary damages shall be eliminated to the fullest extent permitted by the
MBCA. Glacier's bylaws provide that the corporation shall indemnify its
directors and officers to the fullest extent not prohibited by law, including
indemnification for payments in settlement of actions brought against a director
or officer in the name of the corporation.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The exhibits are listed on the accompanying "Exhibit Index".
(b) Financial Statement Schedules. None.
(c) The opinion of the financial advisor is set forth as APPENDIX C to this
proxy statement/prospectus
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which it offers or sells securities,
a post-effective amendment to this registration statement to;
(i) Include any prospectus required by Section 10(a)(3) of the
1933 Act;
(ii) Reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement; and
(iii) Include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the 1933
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of the
securities at that time shall be deemed to be the initial bona fide offering
thereof.
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(3) To file a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at the time shall be deemed to be the initial bona fide offering thereof..
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the Effective Date of the registration statement through the
date of responding to the request.
(e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
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SIGNATURES
Pursuant to the requirements of the 1933 Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Kalispell, State of
Montana, on September 12, 2008.
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 Ron J. Copher, 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/ Ron J. Copher
------------------------------------
Ron J. Copher, Senior Vice President
and Chief Financial Officer
(Principal Financial Officer)
By: /s/ Everit A. Sliter
------------------------------------
Everit A. Sliter,
Chairman of the Board and Director
By: /s/ James M. English
------------------------------------
James M. English, Director
By: /s/ Allen J. Fetscher
------------------------------------
Allen J. Fetscher, Director
By: /s/ Dallas I. Herron
------------------------------------
Dallas I. Herron, Director
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By:
------------------------------------
Jon W. Hippler, Director
By:
------------------------------------
Craig A. Langel, Director
By /s/ L. Peter Larson
------------------------------------
L. Peter Larson, Director
By: /s/ Douglas J. McBride
------------------------------------
Douglas J. McBride, Director
By: /s/ John W. Murdoch
------------------------------------
John W. Murdoch, Director
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ------------------------------------------------------------------
2 Plan and Agreement of Merger dated as of August 19, 2008, by and
between Glacier Bancorp, Inc. and Bank of the San Juans
Bancorporation (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 Form of Director Voting Agreement.
10.2 Form of Director Non-Competition Agreement.
10.3 Employment Agreement for Arthur C. Chase, Jr.
10.4 Employment Agreement for John Stolfa.
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 BKD, LLP, Glacier Bancorp's independent registered
public accounting firm.
23.4 Consent of Sander O'Neill & Partners, L.P., SJ Bancorp's financial
adviser.
24 Power of Attorney (contained on the signature page of the
registration statement).
99.1 Form of proxy to be mailed to shareholders of SJ Bancorp.
99.2 Opinion of Financial Advisor to SJ Bancorp (contained in Appendix
C to the proxy statement/prospectus which is included in the
registration statement).
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