==============================================
AGREEMENT AND PLAN OF MERGERS
BETWEEN
FRONTIER FINANCIAL CORPORATION
AND
FRONTIER BANK
AND
NORTHSTAR FINANCIAL CORPORATION
AND
NORTHSTAR BANK
==============================================
DATED AS OF SEPTEMBER 12, 2005
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S>
<C>
RECITALS
..............................................................................................1
DEFINITIONS
..............................................................................................2
ARTICLE I.
MERGERS.......................................................................................7
1.1
THE CORPORATE
MERGER..........................................................................7
1.2
THE BANK
MERGER...............................................................................8
1.3
DISSENTING
SHARES.............................................................................8
1.4
EFFECTIVE
DATE................................................................................9
ARTICLE II.
CONSIDERATION.................................................................................9
2.1
EXCHANGE
CONSIDERATION........................................................................9
2.2
FRACTIONAL
SHARES.............................................................................9
2.3
SHAREHOLDER RIGHTS; STOCK
TRANSFERS...........................................................9
2.4
EXCHANGE
PROCEDURES...........................................................................9
2.5
EXCHANGE RATIO/FRONTIER AVERAGE DAILY CLOSING PRICE
ADJUSTMENTS..............................10
2.6
OPTIONS......................................................................................10
ARTICLE III.
ACTIONS PENDING
CONSUMMATION.................................................................10
3.1
CAPITAL
STOCK................................................................................10
3.2
DIVIDENDS,
ETC...............................................................................11
3.3
INDEBTEDNESS; LIABILITIES;
ETC...............................................................11
3.4
OPERATING PROCEDURES; CAPITAL EXPENDITURES;
ETC..............................................11
3.5
LIENS AND
ENCUMBRANCES.......................................................................11
3.6
COMPENSATION; EMPLOYMENT AGREEMENTS;
ETC.....................................................11
3.7
BENEFIT
PLANS................................................................................11
3.8
CONTINUANCE OF
BUSINESS......................................................................11
3.9
AMENDMENTS...................................................................................11
3.10
CLAIMS.......................................................................................12
3.11
CONTRACTS....................................................................................12
3.12
LOANS........................................................................................12
3.13
TRANSACTION
EXPENSES.........................................................................12
ARTICLE IV.
REPRESENTATIONS AND
WARRANTIES...............................................................12
4.1
NORTHSTAR AND NORTHSTAR BANK REPRESENTATIONS AND
WARRANTIES..................................12
4.2
FRONTIER AND FRONTIER BANK REPRESENTATIONS AND
WARRANTIES....................................21
ARTICLE V.
COVENANTS....................................................................................25
5.1
BEST
EFFORTS.................................................................................25
5.2
THE
PROXY....................................................................................25
5.3
REGISTRATION STATEMENT COMPLIANCE WITH SECURITIES
LAWS.......................................25
</TABLE>
-i-
<PAGE>
<TABLE>
<S>
<C>
5.4
REGISTRATION STATEMENT
EFFECTIVENESS.........................................................25
5.5
PRESS
RELEASES...............................................................................25
5.6
ACCESS;
INFORMATION..........................................................................26
5.7
REGISTRATION STATEMENT PREPARATION; REGULATORY APPLICATIONS
PREPARATION......................26
5.8
AFFILIATE
AGREEMENTS.........................................................................26
5.9
CERTAIN POLICIES OF NORTHSTAR AND NORTHSTAR
BANK.............................................26
5.10
STATE TAKEOVER
LAW...........................................................................27
5.11 NO
RIGHTS
TRIGGERED..........................................................................27
5.12
SHARES
LISTED................................................................................27
5.13
REGULATORY
APPLICATIONS......................................................................27
5.14
REGULATORY
DIVESTITURES......................................................................27
5.15
CURRENT
INFORMATION..........................................................................27
5.16
INSURANCE....................................................................................28
5.17
POST-MERGER
ACTIONS..........................................................................28
5.18
CERTAIN
ACTIONS..............................................................................28
ARTICLE VI.
CONDITIONS TO CONSUMMATION OF THE
MERGERS....................................................29
6.1
CONDITIONS TO EACH PARTY'S
OBLIGATIONS.......................................................29
6.2
CONDITIONS TO OBLIGATIONS OF
FRONTIER........................................................30
6.3
CONDITIONS TO OBLIGATIONS OF NORTHSTAR AND NORTHSTAR
BANK....................................31
ARTICLE VII.
TERMINATION..................................................................................32
7.1
TERMINATION..................................................................................32
7.2
EFFECT OF
TERMINATION........................................................................35
ARTICLE VIII.
OTHER
MATTERS................................................................................36
8.1
SURVIVAL.....................................................................................36
7.3
AMENDMENT....................................................................................36
8.3
EXTENSION;
WAIVER............................................................................36
8.4
COUNTERPARTS.................................................................................36
8.5
GOVERNING
LAW................................................................................36
8.6
EXPENSES.....................................................................................36
8.7
CONFIDENTIALITY..............................................................................36
8.8
NOTICES......................................................................................36
8.9
ENTIRE AGREEMENT; NO THIRD PARTY
BENEFICIARIES...............................................37
8.10
BENEFIT
PLANS................................................................................37
8.11
HEADINGS.....................................................................................37
</TABLE>
-ii-
<PAGE>
AGREEMENT AND PLAN OF MERGERS
AGREEMENT AND PLAN OF
MERGERS, dated as of
the 12th day of September,
2005 (this "Agreement"), is between
FRONTIER FINANCIAL CORPORATION ("Frontier"),
FRONTIER BANK, NORTHSTAR FINANCIAL
CORPORATION ("NorthStar") and NORTHSTAR BANK.
RECITALS
(A) FRONTIER. Frontier
is a corporation duly organized and existing in
good standing under the laws of the State of
Washington,
with its principal
executive offices located in Everett,
Washington. Frontier
is a registered bank
holding company under the Bank Holding
Company Act of 1956,
as amended. As of
June 30, 2005, Frontier had capital of
$273,551,560, divided
into common stock
of $128,241,650, comprehensive income of $3,886,956, and retained earnings of
$141,422,954. As of the Execution Date, Frontier has 100,000,000 authorized
shares of common stock, no par value per
share ("Frontier
Common Stock"), of
which 24,409,918 shares of Frontier Common
Stock are issued and outstanding, and
has 10,000,000 authorized shares of preferred
stock, no par value per share, of
which no shares are issued and
outstanding.
(B) FRONTIER
BANK. Frontier Bank is a banking corporation duly
organized and existing in good standing under the laws of the State of
Washington. As of the Execution Date,
Frontier Bank has 83,029 authorized shares
of common stock, $37.50 par value per share
("Frontier Bank Common
Stock") (no
other class of capital stock being authorized), of which 72,600 shares are
issued and outstanding and owned by
Frontier, the sole
shareholder of
Frontier
Bank.
(C) NORTHSTAR.
NorthStar is a corporation duly organized and existing
in good standing under the laws of the
State of Washington,
with its principal
executive offices located in Seattle,
Washington. NorthStar is a registered bank
holding company under the Bank Holding
Company Act of 1956,
as amended. As of
the Execution Date, NorthStar has 3,000,000
authorized shares of
common stock,
no par value per share ("NorthStar Common Stock"), of which 830,079 shares of
NorthStar Common Stock are issued and outstanding, no other class of capital
stock being authorized. As of July 31, 2005, NorthStar had capital of
$14,127,531, divided into surplus of $11,919,225, retained earnings of
$2,299,599, and accumulated other comprehensive loss of $91,293. As of the
Execution Date, NorthStar has 175,854 shares of
NorthStar Common Stock reserved
for issuance under Employee and Director Stock Option Plans ("NorthStar
Options") pursuant to which options covering
117,608 shares of NorthStar Common
Stock are outstanding.
(D) NORTHSTAR
BANK. NorthStar Bank is a banking corporation duly
organized and existing in good standing under the laws of the State of
Washington. As of the Execution Date,
NorthStar Bank has
3,000,000
authorized
shares of common stock, no par value per
share ("NorthStar
Bank Common
Stock")
(no other class of capital stock being
authorized),
of which 815,358
shares of
NorthStar Bank Common Stock are issued and
outstanding.
All of the issued
and
outstanding shares of NorthStar Bank Common Stock are owned by
NorthStar, the
sole shareholder of NorthStar Bank.
(E) VOTING AND RELATED AGREEMENTS. As a condition and an inducement
to
Frontier's and Frontier Bank's willingness
to enter into this Agreement, (i) the
directors and executive officers of NorthStar Bank and NorthStar have entered
into agreements in the forms attached to
this Agreement as EXHIBIT A pursuant to
which, among other things, such individuals have agreed to
vote their shares of
NorthStar Common Stock in favor of approval
of the actions
contemplated by this
Agreement at the Meeting (as defined below), (ii) the outside directors of
NorthStar Bank and NorthStar have entered
into agreements in the
forms attached
to this Agreement as EXHIBIT B,
pursuant to which,
among other
things, such
individuals have agreed to refrain from
competing with Frontier and Frontier
Bank, and (iii) and Ellen Sas and Duane
Oord have entered into agreements in the
forms attached to this Agreement as, respectively, EXHIBIT E and EXHIBIT F,
pursuant to which, among other things, such individuals have agreed to
refrain
from competing with Frontier and Frontier
Bank.
1
<PAGE>
(F) RIGHTS, ETC.
Except as Previously
Disclosed (as defined below) in
SCHEDULE 4.1(C), or paragraphs (C) and (D) of the
Recitals to this Agreement,
or as authorized by this Agreement, there are no shares of capital
stock of
NorthStar or NorthStar Bank authorized and reserved for issuance; neither
NorthStar nor NorthStar Bank has any Rights (as defined below) issued or
outstanding; and neither NorthStar nor NorthStar Bank has any commitment to
authorize, issue or sell any such shares or
any Rights. The term "Rights" means
securities or obligations convertible into or exchangeable for, or giving any
Person any right to subscribe for or acquire, or any options, calls or
commitments relating to, shares of capital
stock. There are no preemptive rights
with respect to NorthStar Common Stock.
(G) APPROVALS.
At meetings of the
respective
Boards of Directors
of
NorthStar, NorthStar Bank, Frontier and Frontier Bank, each such Board has
approved and authorized the execution of
this Agreement in counterparts.
In
consideration of their mutual promises and obligations,
the Parties
further agree as follows:
DEFINITIONS
(A) DEFINITIONS.
Capitalized
terms used in this
Agreement have the
following meanings:
"ACQUISITION
AGREEMENT" has the
meaning assigned to such term in
Section 7.1(G).
"ACQUISITION PROPOSAL" has the meaning assigned to such term in
Section
5.18(D)(1).
"ADJUSTMENT TRIGGERS"
has the meaning assigned to such term in Section
7.1(J)(i).
"AGREEMENT" means this Agreement and Plan of Mergers, together with
all
Exhibits and Schedules annexed to, and
incorporated by specific reference, as a
part of this Agreement.
"APPRAISAL LAWS" has the meaning assigned to such term in Section
1.3.
"ASSET CLASSIFICATION" has the meaning assigned to such term in
Section
4.1(T).
"BANK FINANCIAL
REPORTS" has the meaning assigned to such term in
Section 4.1(H).
"BANK MERGER" has the meaning assigned to such term in Section
1.2(A).
"BUSINESS DAY" means
any day other than a Saturday, Sunday, or legal
holiday in the State of Washington.
"CODE" has the meaning assigned to such term in Section
4.1(Q)(2).
"COMPENSATION AND
BENEFIT PLANS" has the meaning assigned to such term
in Section 4.1(Q)(1).
"CONTINUING
CORPORATION" has the
meaning assigned to such term in
Section 1.1(A).
"CORPORATE MERGER"
has the meaning assigned to such term in
Section
1.1(A).
2
<PAGE>
"DEPARTMENT" means the
Department
of Financial
Institutions
of the
State of Washington.
"DERIVATIVES CONTRACT"
means an
exchange-traded or
over-the-counter
swap, forward, future, option, cap, floor or collar
financial contract or any
other contract that (1) is not included on the balance sheet of the Holding
Company Financial Reports or the Frontier
Financial Reports, as the case may be,
and (2) is a derivative contract (including
various combinations thereof).
"DETERMINATION DATE"
has the meaning
assigned to such term in Section
7.1(J)(i).
"DETERMINATION PERIOD" has the meaning assigned to such term in
Section
7.1(J)(i).
"DISSENTING SHARES"
means the shares of NorthStar Common Stock held by
those shareholders of NorthStar who have timely and
properly exercised
their
dissenters' rights in accordance with the
Appraisal Laws.
"EFFECTIVE DATE" has the meaning assigned to such term in Section
1.4.
"ELIGIBLE NORTHSTAR
COMMON STOCK" means shares of NorthStar Common
Stock other than Dissenting Shares.
"ENVIRONMENTAL LAW"
means (1) any federal,
state, and/or local law,
statute, ordinance, rule, regulation, code, license, permit, order,
judgment,
decree, injunction or agreement with any
governmental entity,
relating to (a)
the protection, preservation or restoration of the
environment (including
air,
surface water, groundwater, drinking water supply,
surface land,
subsurface
land, plant and animal life or any other
natural resource) or to human health or
safety, or (b) the exposure to, or the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling,
production, release
or disposal of Hazardous Material, in each
case as amended and as now in effect,
including the Federal Comprehensive
Environmental
Response,
Compensation, and
Liability Act of 1980, the Superfund Amendments and Reauthorization Act, the
Federal Water Pollution Control Act of 1972, the Federal Clean Air Act, the
Federal Clean Water Act, the Federal
Resource Conservation and Recovery Act
of
1976 (including the Hazardous and Solid
Waste Amendments
thereto), the
Federal
Solid Waste Disposal and the Federal Toxic Substances Control Act, and the
Federal Insecticide, Fungicide and Rodenticide
Act, the Federal
Occupational
Safety and Health Act of 1970,
and (2) any
common law or
equitable doctrine
(including injunctive relief and tort doctrines such as
negligence,
nuisance,
trespass and strict liability) that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Material.
"ERISA" has the meaning assigned to such term in Section
4.1(Q)(2).
"ERISA AFFILIATE"
has the meaning assigned to such term in Section
4.1(Q)(3).
"ERISA PLANS"
has the meaning assigned to such term in Section
4.1(Q)(2).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended,
together with the rules and regulations
promulgated under such statute.
"EXCHANGE AGENT" has the meaning assigned to such term in Section
2.4.
"EXCHANGE RATIO" means
1.754 shares of Frontier Common Stock exchanged
for each share of NorthStar Common Stock
outstanding; PROVIDED, HOWEVER, that if
the Adjustment Triggers in Section 7.1(J) occur, the Exchange Ratio may, in
Frontier's sole discretion, be increased as set forth in
Section
7.1(J)(ii);
and PROVIDED, FURTHER, that the Exchange Ratio
will be adjusted proportionately
for any stock split or other change in the number of outstanding shares of
Frontier Common Stock pursuant to Section
2.5.
3
<PAGE>
"EXECUTION DATE"
means the last date on which this Agreement is
executed by each of the Parties hereto.
"FAILURE TO RECOMMEND SHAREHOLDER APPROVAL" has the meaning
assigned to
such term in Section 7.2(B).
"FDIC" means the Federal Deposit Insurance Corporation.
"FINANCIAL REPORTS"
has the meaning
assigned to such term
in Section
4.1(H).
"FEDERAL RESERVE
BOARD" means the Board of Governors of the Federal
Reserve System.
"FINAL AVERAGE PRICE" has the meaning assigned to such term in
Section
7.1(J)(i).
"FINAL INDEX
PRICE" has the meaning
assigned to such term
in Section
7.1(J)(i).
"FINAL PRICE"
has the meaning assigned to such term in Section
7.1(J)(i).
"FRONTIER" has the meaning assigned to such term in the first
paragraph
of this Agreement.
"FRONTIER AVERAGE
CLOSING PRICE" means the average
closing price of
Frontier Common Stock (rounded to four decimals) as
reported on the website of
www.nasdaq.com for the twenty trading day
period through and including the third
trading day immediately preceding the
Effective Date.
"FRONTIER BANK COMMON
STOCK" has the meaning
assigned to such term in
paragraph (B) of the Recitals.
"FRONTIER COMMON
STOCK" has the meaning assigned to such term in
paragraph (A) of the Recitals.
"FRONTIER FINANCIAL
REPORTS" has the
meaning assigned to such term in
Section 4.2(H).
"FRONTIER OPTION"
has the meaning assigned to such term in Section
2.6.
"FRONTIER TRANSACTION"
means: (1) a merger,
consolidation or
similar
transaction involving Frontier,
where Frontier is not
the corporation surviving
such transaction or where a change of
control of Frontier is otherwise effected,
(2) the disposition, by sale, lease, exchange or otherwise, of assets or
deposits of Frontier or any of its
significant
subsidiaries
representing
in
either case 25% or more of the consolidated assets or deposits of Frontier
and
its subsidiaries, or (3) the issuance, sale or other disposition
(including by
way of merger, consolidation, share exchange or any similar
transaction)
of
securities representing 25% or more of the voting
power of Frontier or
any of
its significant subsidiaries other than the issuance of
Frontier Common Stock
upon the exercise of outstanding options or the conversion of outstanding
convertible securities of Frontier.
"GAAP" means generally
accepted accounting principles consistently
applied.
4
<PAGE>
"HAZARDOUS MATERIAL"
means any substance
presently listed,
defined,
designated or classified as hazardous,
toxic, radioactive or dangerous under any
Environmental Law, whether by type or quantity, including any oil or other
petroleum product, toxic waste, pollutant, contaminant, hazardous substance,
toxic substance, hazardous waste or petroleum or any
derivative or by-product
thereof, radon, radioactive material, asbestos, asbestos containing material,
urea formaldehyde foam insulation, lead and
polychlorinated biphenyl.
"HOLDING COMPANY
FINANCIAL REPORTS" has the meaning assigned
to such
term in Section 4.1(H).
"INDEX GROUP"
has the meaning assigned to such term in Section
7.1(J)(i).
"INITIAL INDEX PRICE" has the meaning assigned to such term in
Section
7.1(J)(i).
"LOAN/FIDUCIARY
PROPERTY" means any
property owned or
controlled by
NorthStar or any of its Subsidiaries or in which NorthStar or any of its
Subsidiaries holds a security or other
interest, and, where required by the
context, includes any such property where
NorthStar or any of its Subsidiaries
constitutes the owner or operator of such
property, but only with respect to
such property.
"MATERIAL ADVERSE
EFFECT" means, with respect to any Party to this
Agreement, an event, occurrence or circumstance
that (a) has or is
reasonably
likely to have a material adverse effect on
the financial condition, results of
operations, business or prospects of such
Party and its Subsidiaries, taken as a
whole, or (b) would materially impair such Party's ability to perform its
obligations under this Agreement or the
consummation of any of the transactions
contemplated by this Agreement.
"MEETING" has the meaning assigned to such term in Section
5.2.
"MERGERS" means the
merger of NorthStar
with and into
Frontier, and
NorthStar Bank with and into Frontier
Bank.
"MULTIEMPLOYER PLANS"
has the meaning assigned to such term in Section
4.1(Q)(2).
"NASDAQ" means the National Association of Securities Dealers
Automated
Quotations system.
"NORTHSTAR BANK" has
the meaning
assigned to such term in the first
paragraph of this Agreement.
"NORTHSTAR BANK COMMON STOCK" has the meaning assigned to such term in
paragraph (D) of the Recitals.
"NORTHSTAR COMMON
STOCK" has the meaning assigned to such term in
paragraph (C) of the Recitals.
"NORTHSTAR OPTION" has
the meaning assigned
to such term in paragraph
(C) of the Recitals.
"PARTICIPATION
FACILITY" means any
facility in which NorthStar or any
of its Subsidiaries participates in the management and, where
required by the
context, includes the owner or operator of
such facility.
"PARTY" means a party to this Agreement.
5
<PAGE>
"PENSION PLAN"
has the meaning assigned to such term in Section
4.1(Q)(2).
"PERSON" means any
individual,
corporation (including
any non-profit
corporation), general or limited partnership,
limited liability
company, joint
venture, estate, trust, association, organization, labor union, governmental
body, or other entity.
"PREVIOUSLY DISCLOSED"
means information provided by a Party in a
Schedule that is delivered by that Party to the other Party
contemporaneously
with the execution of this Agreement.
"PROXY STATEMENT"
has the meaning assigned to such term in Section
5.2.
"REGISTRATION
STATEMENT" has the
meaning assigned to such term in
Section 5.2.
"REGULATORY
AUTHORITIES" means federal or state governmental agencies,
authorities or departments charged with the supervision or regulation of
depository institutions or engaged in the
insurance of deposits.
"REPRESENTATIVES" has
the meaning
assigned to such term in Section
5.18(A).
"RCW" means the Revised Code of Washington, as amended.
"RIGHTS" has the meaning assigned to such term in paragraph
(F) of the
Recitals to this Agreement.
"SANDLER O'NEILL"
has the meaning assigned to such term in Section
4.1(P).
"SECURITIES ACT" means the Securities Act of 1933, as amended,
together
with the rules and regulations promulgated
under such statute.
"SEC" means the
Securities and Exchange Commission.
"SUBSIDIARY" means,
with respect to any entity, each partnership,
limited liability company, or corporation the majority of the outstanding
partnership interests, membership interests, capital stock or voting power
of
which is (or upon the exercise of all
outstanding
warrants, options and other
rights would be) owned, directly or
indirectly, at the
time in question by such
entity.
"SUPERIOR PROPOSAL"
has the meaning
assigned to such term
in Section
5.18(D)(2).
"TAX RETURNS"
has the meaning assigned to such term in Section
4.1(AA).
"TAXES" means federal,
state, local or foreign income, gross receipts,
windfall profits, severance, property, production, sales, use,
license, excise,
franchise, employment, withholding or similar taxes imposed on the income,
properties or operations of the respective
Party or its
Subsidiaries,
together
with any interest, additions, or penalties
with respect thereto and any interest
in respect of such additions or
penalties.
"TERMINATION FEE
AMOUNT" has the meaning assigned to such term in
Section 7.2(B).
"THIRD PARTY" means a person within the meaning of Sections 3(a)(9)
and
13(d)(3) of the Exchange Act, excluding: (1) NorthStar or any Subsidiary of
NorthStar, and (2) Frontier or any
Subsidiary of Frontier.
6
<PAGE>
(B) GENERAL
INTERPRETATION. Except
as otherwise expressly provided in
this Agreement or unless the context clearly requires otherwise, the terms
defined in this Agreement include the
plural as well as the singular; the words
"hereof," "herein," "hereunder," "in this Agreement"
and other words of similar
import refer to this Agreement as a whole and not to
any particular
Article,
Section or other subdivision; and references in this Agreement to Articles,
Sections, Schedules, and Exhibits refer to Articles and Sections of and
Schedules and Exhibits to this Agreement.
Unless otherwise stated, references to
Subsections refer to the Subsections of the Section in which the reference
appears. The table of contents and headings
contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include,"
"includes" or
"including" are used in this Agreement, they shall be deemed to be
followed by
the words "without limitation." The words
"stockholder" or "stockholders" shall
be deemed to include the words "shareholder" or "shareholders"
and vice versa,
and the word "stock" shall be deemed to
include the word "share" or "shares" and
vice versa. All pronouns used in this
Agreement include the masculine, feminine
and neuter gender, as the context requires. All accounting terms used in
this
Agreement that are not expressly
defined in this
Agreement have the respective
meanings given to them in accordance
with GAAP. All Parties
will be considered
drafters of this Agreement and accordingly any ambiguity shall
not be construed
against any particular Party.
ARTICLE I. MERGERS
1.1.THE CORPORATE MERGER. Subject to the provisions of this
Agreement, on
the Effective Date:
(A) CONTINUING
CORPORATION.
NorthStar shall be merged with and into
Frontier pursuant to the terms and
conditions set forth herein (the "Corporate
Merger"). Upon consummation of the Corporate
Merger, the separate
existence of
NorthStar shall cease and Frontier shall
continue as the continuing corporation
(the "Continuing Corporation").
(B) ARTICLES,
BYLAWS,
OFFICERS AND DIRECTORS. The Articles of
Incorporation and Bylaws of Frontier, in effect immediately prior to the
Effective Date, shall become the Articles of
Incorporation
and Bylaws of the
Continuing Corporation. The directors and officers of Frontier in office
immediately prior to the Corporate Merger becoming effective shall be the
directors and officers of the Continuing Corporation, together with such
additional directors and officers as may
thereafter be elected,
who shall hold
office until such time as their successors
are elected and qualified.
(C) RIGHTS,
ETC. The Continuing Corporation shall thereupon and
thereafter possess all of the rights,
privileges, immunities and franchises of a
public as well as of a private nature of
each of the institutions so merged; and
all property, real, personal and mixed, and all debts
due on whatever account,
and all and every other interest, of or belonging to or due to each of the
institutions so merged, shall be deemed to be vested in the Continuing
Corporation without further act or deed;
and the title to any real estate or any
interest therein, vested in each of such
institutions, shall not revert or be in
any way impaired by reason of the Corporate
Merger.
(D) EFFECTS
OF THE CORPORATE MERGER. The separate existence of
NorthStar shall cease, and NorthStar shall be merged with and into
Frontier
which, as the Continuing Corporation, shall
thereupon and thereafter possess all
of the assets, rights, privileges,
appointments,
powers, licenses,
permits and
franchises of the two merged corporations, whether of a public or a private
nature, and shall be subject to all of the liabilities, restrictions,
disabilities and duties of both Frontier
and NorthStar.
7
<PAGE>
(E) TRANSFER
OF ASSETS. All rights, assets, licenses, permits,
franchises and interests of Frontier and NorthStar in and to every type of
property, whether real, personal, or mixed, whether tangible or intangible,
shall be deemed to be vested in Frontier as
the Continuing Corporation by virtue
of the Corporate Merger becoming effective and without any deed or other
instrument or act of transfer whatsoever.
(F) ASSUMPTION OF LIABILITIES. The Continuing Corporation shall
become
and be liable for all debts, liabilities,
obligations and contracts of Frontier
as well as those of NorthStar, whether the
same shall be matured or un-matured;
whether accrued, absolute, contingent or
otherwise; and whether or not reflected
or reserved against in the balance sheets,
other financial statements, books of
account or records of Frontier or
NorthStar.
1.2. THE BANK MERGER.
As soon as practicable following the Effective Date:
(A) CONTINUING BANK.
NorthStar Bank shall be merged into Frontier Bank
(the "Bank Merger"). Upon consummation of the Bank Merger, the separate
existence of NorthStar Bank shall cease and Frontier
Bank shall survive as
the
Continuing Bank.
(B) ARTICLES, BYLAWS,
DIRECTORS, OFFICERS.
The Articles and Bylaws of
the Continuing Bank shall be those of Frontier
Bank, as in effect
immediately
prior to the Bank Merger becoming effective. The directors and officers of
Frontier Bank in office immediately prior to the Bank
Merger becoming effective
shall be the directors and officers of the
Continuing Bank,
together with such
additional directors and officers as may
thereafter be elected,
who shall hold
office until such time as their
successors
are elected and qualified.
(C) EFFECTS OF THE BANK MERGER. The separate existence of NorthStar
Bank shall cease, and NorthStar Bank shall
be merged with and into Frontier Bank
which, as the Continuing Bank, shall
thereupon and thereafter possess all of the
assets, rights, privileges, appointments, powers, licenses, permits and
franchises of the two merged banks, whether
of a public or a private nature, and
shall be subject to all of the liabilities, restrictions, disabilities and
duties of both Frontier Bank and NorthStar
Bank.
(D) RIGHTS, ETC. The
Continuing
Bank shall
thereupon and
thereafter
possess all of the rights, privileges,
immunities and franchises, of a public as
well as of a private nature, of each of the institutions so merged; and all
property, real, personal and mixed, and all
debts due on whatever account, and
all and every other interest, of or belonging to or due to each of the
institutions so merged, shall be deemed to be vested in
the Continuing
Bank
without further act or deed; and the title to any real estate
or any interest
therein, vested in each of such
institutions, shall
not revert or be in any way
impaired by reason of the Bank Merger.
(E) TRANSFER OF ASSETS. All rights, assets, licenses, permits,
franchises and interests of Frontier Bank
and NorthStar Bank in and to every
type of property, whether real, personal,
or mixed, whether tangible or
intangible, shall be deemed to be vested in
Frontier Bank as the Continuing Bank
by virtue of the Bank Merger becoming
effective and without any deed or other
instrument or act of transfer
whatsoever.
1.3. DISSENTING SHARES. Notwithstanding anything to the contrary in
this
Agreement, each Dissenting Share whose
holder, as of the
Effective Date of the
Corporate Merger, has not effectively withdrawn or lost his dissenters'
rights
under RCW 23B.13 (the "Appraisal Laws")
shall not be converted into or represent
a right to receive Frontier Common Stock, but the holder of such
Dissenting
Share shall be entitled only to such rights as are granted by the Appraisal
Laws, unless and until such holder shall have failed to perfect or
shall have
effectively withdrawn or lost the right to
payment under the Appraisal Laws, in
which case each such share shall be deemed to have been converted at the
Effective Date into the right to receive
Frontier Common Stock without any
interest thereon. Each holder of Dissenting Shares who becomes entitled to
payment for his NorthStar Common Stock pursuant to the provisions of the
Appraisal Laws shall receive payment for such Dissenting Shares from Frontier
(but only after the amount thereof shall have been agreed upon or finally
determined pursuant to the Appraisal
Laws).
8
<PAGE>
1.4. EFFECTIVE DATE. Subject to the
terms and conditions of this Agreement,
the closing of the Mergers will take place at 10:00 a.m. on
the first day which
is at least one Business Day after the satisfaction or waiver (subject to
applicable law) of the latest to occur of the
conditions set forth
in ARTICLE
VI. (other than those conditions which relate to actions to be taken at
the
closing) (the "Effective Date"), at the offices of Keller
Rohrback L.L.P.,
unless another time, date or place is agreed
to in writing by the parties
hereto. If the Corporate Merger is not consummated in accordance with this
Agreement on or prior to March 31, 2006,
NorthStar or Frontier may terminate
this Agreement in accordance with ARTICLE VII. On the Effective Date,
Certificates of Merger will be issued by the
Secretary of State,
Corporations
Division, and the Department of Financial Institutions of the State of
Washington in accordance with applicable
law.
ARTICLE II. CONSIDERATION
2.1. EXCHANGE
CONSIDERATION. Subject to the provisions of this Agreement, on
the Effective Date:
(A) OUTSTANDING
FRONTIER COMMON STOCK.
The shares of Frontier
Common
Stock issued and outstanding immediately prior to the Effective Date shall,
on
and after the Effective Date, remain as issued and outstanding shares of
Frontier Common Stock.
(B) OUTSTANDING NORTHSTAR COMMON STOCK. Each share of Eligible
NorthStar Common Stock issued and
outstanding immediately prior to the Effective
Date shall, by virtue of the Merger,
automatically and without any action on the
part of the holder of such share, be converted into the right to receive the
number of shares of Frontier Common Stock determined pursuant to the Exchange
Ratio.
2.2. FRACTIONAL SHARES. Notwithstanding any other provision of this
Agreement, no fractional shares of Frontier Common Stock
and no
certificates,
scrip or other evidence of ownership of
fractional shares will
be issued in the
Merger. Frontier shall pay to each holder of
NorthStar Common Stock
who would
otherwise be entitled to a fractional share an amount in cash
determined
by
multiplying such fraction by the Frontier
Average Closing Price.
2.3. SHAREHOLDER
RIGHTS; STOCK TRANSFERS. On the Effective Date, holders
of
NorthStar Common Stock shall cease to be, and shall have no rights as,
shareholders of NorthStar, other than to receive the
consideration
provided
under this ARTICLE II. After the Effective
Date, there shall be no transfers on
the stock transfer books of NorthStar or the Continuing Corporation of the
shares of NorthStar Common Stock that were issued and
outstanding
immediately
prior to the Effective Date.
2.4. EXCHANGE PROCEDURES. As promptly as practicable
after the
Effective
Date, Frontier shall send or cause to be sent to
each former
shareholder
of
NorthStar of record immediately prior to the Effective Date transmittal
materials for use in exchanging such
shareholder's
certificates
for NorthStar
Common Stock for the consideration set forth in this ARTICLE II. The
certificates representing the shares of
Frontier Common Stock into which shares
of such shareholder's NorthStar Common Stock are converted on the Effective
Date, any fractional share checks that such
shareholder
shall be entitled
to
receive, and any dividends paid on such shares of Frontier
Common Stock for
which the record date for determination of shareholders entitled to such
dividends is on or after the Effective Date, will be delivered to such
shareholder only upon delivery to Frontier's exchange agent (the "Exchange
Agent") of the certificates representing all of such shares of
NorthStar Common
Stock (or indemnity satisfactory to Frontier and the Exchange
Agent, in their
judgment, if any of such certificates are lost, stolen or destroyed). No
interest will be paid on any such
fractional share
checks or dividends to which
the holder of such shares shall be entitled to receive upon such delivery.
Certificates surrendered for exchange by any
person constituting an "affiliate"
of NorthStar for purposes of Rule 145 of the Securities Act shall not be
exchanged for certificates representing
Frontier Common Stock until Frontier has
received a written agreement from such
person as specified in Section 5.8.
9
<PAGE>
2.5. EXCHANGE
RATIO/FRONTIER AVERAGE CLOSING PRICE ADJUSTMENTS. In the event
Frontier changes the number of shares of Frontier Common Stock issued and
outstanding prior to the Effective Date as a result of a stock
split, stock
dividend, recapitalization
or similar transaction with respect to the
outstanding Frontier Common Stock and the
record date therefor shall be prior to
the Effective Date, the Exchange Ratio
shall be adjusted proportionately.
2.6. OPTIONS. On the
Effective Date, by virtue of the Corporate Merger, each
outstanding and unexercised NorthStar Option to purchase shares of
NorthStar
Common Stock shall, without any action on the part of
the holder, be
converted
into and become an option to purchase
Frontier Common Stock ("Frontier Option")
on the same terms and conditions as are in effect with respect to NorthStar
Options immediately prior to the Effective Date, except that (A) each such
Frontier Option may be exercised solely for
shares of Frontier Common Stock, (B)
the number of shares of Frontier
Common Stock subject
to such Frontier
Option
shall be equal to the number of shares of
NorthStar Common Stock subject to such
NorthStar Options immediately prior to the Effective
Date multiplied by the
Exchange Ratio, the product being rounded, if necessary, up or down to the
nearest whole share, and (C) the per share exercise price under each such
Frontier Option shall be adjusted by
dividing the per share
exercise price of
NorthStar Options by the Exchange Ratio, and
rounding up or down to the nearest
cent. The number of shares of NorthStar
Common Stock that are issuable upon
exercise of NorthStar Options as of the
Execution Date are Previously Disclosed
in SCHEDULE 2.6. Within fifteen (15) days following the Effective Date,
Frontier will prepare and file with the SEC
a Registration Statement on Form S-8
covering shares of Frontier Common Stock to
be issued upon the exercise of stock
options assumed by Frontier pursuant to
this Section 2.6.
ARTICLE III. ACTIONS PENDING CONSUMMATION
Unless otherwise
agreed to in writing
by Frontier or
Frontier Bank,
NorthStar and NorthStar Bank shall each conduct its and each of its
Subsidiaries' business in the ordinary and usual
course consistent with past
practice and shall use its best efforts to
maintain and preserve its and each of
its Subsidiaries' business organization, employees and advantageous
business
relationships and retain the services of its and each of its
Subsidiaries'
officers and key employees identified by Frontier Bank,
and neither
NorthStar
nor NorthStar Bank, without the prior written
consent of Frontier,
will (or
cause or allow any of it Subsidiaries
to):
3.1.CAPITAL STOCK.
Except for the exercise of outstanding NorthStar Options,
or as Previously Disclosed in SCHEDULE
4.1(C), issue, sell or otherwise
permit
to become outstanding any additional shares of capital stock of NorthStar,
NorthStar Bank or any of their
Subsidiaries, or any Rights with respect thereto,
or enter into any agreement with respect to the foregoing, or permit any
additional shares of NorthStar Common Stock to become subject to grants of
NorthStar Options, stock appreciation rights or similar stock-based employee
compensation rights.
10
<PAGE>
3.2. DIVIDENDS, ETC. Make, declare or pay any dividend (other than as
necessary to pay NorthStar's general operating expenses, including the
transaction fee expenses referred to in Section
3.13 as well as
distributions
on NorthStar's Subsidiaries' trust preferred stock) on or in respect of, or
declare or make any distribution on, or
directly or indirectly combine, redeem,
reclassify, purchase or otherwise acquire,
any shares of its
capital stock or,
other than as permitted in or contemplated by this Agreement, authorize the
creation or issuance of, or issue, any
additional shares of its capital stock or
any Rights with respect thereto.
3.3. INDEBTEDNESS; LIABILITIES; ETC. Other than in the ordinary
course of
business consistent with past practice, incur any indebtedness for borrowed
money, assume, guarantee, endorse or otherwise as an accommodation become
responsible or liable for the obligations
of any other
individual,
corporation
or other entity.
3.4. OPERATING PROCEDURES; CAPITAL EXPENDITURES; ETC. Except as may be
directed by any regulatory agency, (A)
change its lending, investment, liability
management or other material banking policies in any material
respect, except
such changes as are in accordance
and in an effort to
comply with Section
5.9,
or (B) commit to incur any further capital
expenditures beyond
those Previously
Disclosed in SCHEDULE 3.4 other than in the ordinary
course of business and not
exceeding $50,000 individually.
3.5. LIENS AND
ENCUMBRANCES. Impose, or suffer the imposition, on any shares
of stock of any of its Subsidiaries,
any lien, charge or
encumbrance, or permit
any such lien, charge or encumbrance to
exist.
3.6. COMPENSATION; EMPLOYMENT AGREEMENTS; ETC. Except as Previously
Disclosed in SCHEDULE 3.6, enter into or amend any
employment,
severance or
similar agreement or arrangement with any of its directors, officers or
employees, or grant any salary or wage increase, amend the terms of any
NorthStar Option or increase any employee
benefit (including
incentive or bonus
payments), except normal individual increases in regular compensation to
employees in the ordinary course of
business consistent with past practice.
3.7. BENEFIT PLANS.
Except as Previously
Disclosed in SCHEDULE
3.7, enter
into or modify (except as may be required by applicable law) any pension,
retirement, stock option, stock purchase, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other employee
benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement
related thereto, in respect of any of its directors, officers or other
employees, including taking any action that
accelerates the vesting or exercise
of any benefits payable thereunder.
3.8. CONTINUANCE OF BUSINESS.
Dispose of or
discontinue any portion of its
assets, business or properties, that is material to NorthStar and its
Subsidiaries taken as a whole, or merge or
consolidate with, or
acquire all or
any portion of, the business or property of
any other entity that is material to
NorthStar and its Subsidiaries taken as a whole (except foreclosures or
acquisitions by NorthStar Bank in its fiduciary
capacity, in each case in the
ordinary course of business consistent with
past practice).
3.9. AMENDMENTS. Amend
its Articles of Incorporation or Bylaws.
11
<PAGE>
3.10. CLAIMS. Settle
any claim, litigation,
action or proceeding
involving
any liability for material money damages or
restrictions upon the
operations of
NorthStar or any of its Subsidiaries.
3.11. CONTRACTS. Except as previously disclosed on SCHEDULE 3.11, enter
into, renew, terminate or make any change
in any material contract, agreement or
lease (excluding agreements and loans permitted
under Section 3.12),
except in
the ordinary course of business consistent with past practice with respect
to
contracts, agreements and leases that are
terminable by it without penalty on no
more than 60 days prior written notice.
3.12. LOANS. Extend credit or account for loans and
leases other than
in
accordance with existing lending policies
and accounting practices, or make any
new loan, a loan extension or renewal in a principal amount which exceeds
$500,000, other than in accordance with the
loan reporting process agreed to by
the Parties.
3.13. TRANSACTION EXPENSES. Incur expenses in connection with the
transactions contemplated by this Agreement that exceed $2.2-million in the
aggregate. This figure includes severance benefits but does not include the
investment banking fee payable to Sandler O'Neill at closing (estimated at
$550,000) and costs or expenses that may be incurred in
conjunction
with the
closing of the Mergers, such as conforming to accounting adjustments in
coordination with closing or the Mergers or
conversion and
integration
costs
incurred with respect to any data systems
conversion.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
4.1. NORTHSTAR AND
NORTHSTAR BANK REPRESENTATIONS AND WARRANTIES. NorthStar
and NorthStar Bank each hereby represent and warrant to Frontier
and Frontier
Bank as follows:
(A) RECITALS.
The facts set forth in
the Recitals of this
Agreement
with respect to NorthStar and its
Subsidiaries are true and correct.
(B) ORGANIZATION,
STANDING AND
AUTHORITY.
Each of NorthStar and
its
Subsidiaries is duly qualified to do business
and is in good standing under the
laws of its state of incorporation or organization and in such foreign
jurisdictions where the failure to be duly
qualified,
individually
or in the
aggregate, is reasonably likely to have a
Material Adverse Effect on it. Each of
NorthStar and its Subsidiaries has in effect all federal state, local and
foreign governmental authorizations necessary for it to own or lease its
properties and assets and to carry on its
business as it is now
conducted, the
absence of which, individually or in the
aggregate, is reasonably likely to have
a Material Adverse Effect on it. NorthStar Bank is an "insured depository
institution" as defined in the Federal Deposit
Insurance Act, as
amended, and
applicable regulations under such statute,
and its deposits are
insured by the
Bank Insurance Fund of the FDIC.
(C) SHARES. The
outstanding shares of
NorthStar and its Subsidiaries'
capital stock are validly issued and
outstanding, fully paid and non-assessable,
and subject to no preemptive rights.
Except as Previously
Disclosed in SCHEDULE
4.1(C) and paragraphs (C) or (D) of the Recitals, there are no shares of
capital stock or other equity securities of NorthStar or its Subsidiaries
outstanding and no outstanding Rights with
respect thereto.
(D) NORTHSTAR
SUBSIDIARIES.
NorthStar has Previously Disclosed in
SCHEDULE 4.1(D) a list of all of its
Subsidiaries.
Each of its
Subsidiaries
that is a bank is an "insured depository
institution" as
defined in the Federal
Deposit Insurance Act, as amended, and applicable regulations under such
statute. No equity securities of any of its Subsidiaries are or may become
required to be issued (other than to NorthStar or one of
its Subsidiaries)
by
reason of any Rights with respect thereto.
There are no contracts, commitments,
understandings or arrangements by which any of its Subsidiaries is or may be
bound to sell or otherwise issue any shares
of such Subsidiary's
capital stock,
and except as Previously Disclosed in
SCHEDULE 4.1(D),
there are no
contracts,
commitments, understandings or arrangements
relating to the rights of NorthStar
or its Subsidiaries, as applicable, to vote
or to dispose of such shares. Except
as Previously Disclosed in SCHEDULE 4.1(D), all of the shares of
capital stock
of each of its Subsidiaries held by NorthStar or one of its
Subsidiaries
are
fully paid and non-assessable and are owned by NorthStar or one of its
Subsidiaries free and clear of any charge,
mortgage, pledge,
security interest,
restriction, claim, lien or encumbrance. Each of its Subsidiaries is in good
standing under the laws of the jurisdiction in which it is incorporated or
organized, and is duly qualified to do business and in good standing in the
jurisdictions where the failure to be duly qualified is reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on it.
Except as Previously Disclosed in SCHEDULE 4.1(D), NorthStar does not own
beneficially, directly or indirectly, any shares of any equity
securities or
similar interests of any corporation, bank,
partnership, joint venture, business
trust, association or other organization. In the case of representations by
NorthStar, the deposits of its Subsidiaries that are banks are insured by
the
Bank Insurance Fund of the FDIC.
12
<PAGE>
(E) CORPORATE POWER.
Each of NorthStar and
its Subsidiaries
has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its material
properties and assets.
(F) CORPORATE
AUTHORITY. Subject to
any necessary receipt of approval
by its shareholders referred to in Section 6.1, this Agreement has been
authorized by all necessary corporate action of NorthStar and each of its
Subsidiaries that is a Party, and each such agreement is a valid and binding
agreement of NorthStar and such
Subsidiaries,
enforceable against NorthStar and
such Subsidiaries in accordance with its terms, subject to bankruptcy,
insolvency and other laws of general
applicability
relating to or affecting
creditors' rights and to general equity
principles.
(G) NO DEFAULTS.
Subject to the approval by its shareholders referred
to in Section 6.1, the required regulatory approvals referred to in Section
6.1, and the required filings under federal and state
securities
laws, and
except as Previously Disclosed in SCHEDULE
4.1(G), the execution,
delivery and
performance of this Agreement and the
consummation by
NorthStar and each of its
Subsidiaries that is a Party to the
transactions
contemplated by this Agreement
do not and will not (1) constitute a breach
or violation of, or a default under,
any law, rule or regulation or any
judgment, decree,
order, governmental permit
or license, or agreement, indenture or instrument of
NorthStar or of any of its
Subsidiaries or to which NorthStar or any of its
Subsidiaries or its or
their
properties is subject or bound, which
breach, violation or default is reasonably
likely, individually or in the aggregate,
to have a Material
Adverse Effect on
it, (2) constitute a breach or violation
of, or a default under, the Articles of
Incorporation, Charter or Bylaws of it or any of its Subsidiaries, or (3)
require any consent or approval under any
such law, rule, regulation, judgment,
decree, order, governmental permit or license or
the consent or approval of any
other party to any such agreement,
indenture or
instrument, other than any such
consent or approval that, if not obtained, would not be reasonably likely,
individually or in the aggregate,
to have a Material
Adverse Effect on
it.
(H) FINANCIAL
REPORTS. Except as Previously Disclosed in SCHEDULE
4.1(H), (1) as to NorthStar, its
consolidated balance sheet as of June 30, 2005
and the related statements of income,
changes in
shareholders' equity
and cash
flows for the fiscal year ended
December 31, 2004
(collectively,
the "Holding
Company Financial Reports"), and (2) as to
each of NorthStar's Subsidiaries that
is a bank, its call report for the fiscal
year ended December 31, 2004, and all
other financial reports filed or to be
filed subsequent to December 31, 2004, in
the form filed with the FDIC and the Department (in each case, the "Bank
Financial Reports" and together with the
Holding Company Financial Reports, the
"Financial Reports") did not and 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;
and each of the balance sheets in or
incorporated by reference into the Financial Reports (including the related
notes and schedules thereto) fairly presents and will fairly present the
financial position of the entity or
entities to which it relates as of its date,
and each of the statements of income and changes in
shareholders'
equity and
cash flows or equivalent statements in the
Bank Financial Reports (including any
related notes and schedules thereto) fairly
presents and will fairly present the
results of operations, changes in shareholders' equity and cash flows, as the
case may be, of the entity or entities to which it relates for the
periods set
forth therein, in each case in accordance
with GAAP during the periods involved,
except in each case as may be noted
therein, subject to normal and recurring
year-end audit adjustments in the case of
unaudited
statements.
13
<PAGE>
(I) ABSENCE OF UNDISCLOSED LIABILITIES. Except as Previously Disclosed
on SCHEDULE 4.1(I), neither NorthStar nor any of its Subsidiaries has any
obligation or liability (contingent or otherwise) that,
individually or in
the
aggregate, is reasonably likely to have a
Material Adverse Effect on it, except
(1) as reflected in its Holding Company
Financial Reports prior to the Execution
Date, and (2) for commitments and
obligations made, or liabilities incurred, in
the ordinary course of business consistent
with past practice since December 31,
2004. Except as Previously Disclosed on SCHEDULE 4.1(I), since December 31,
2004, neither NorthStar nor any of its
Subsidiaries
has incurred or paid
any
obligation or liability (including any obligation or liability incurred in
connection with any acquisitions in which any form of direct financial
assistance of the federal government or any agency thereof
has been provided to
any Subsidiary) that, individually or in the aggregate,
is reasonably likely to
have a Material Adverse Effect on it.
(J) NO EVENTS. Except
as Previously
Disclosed on SCHEDULE 4.1(J),
since December 31, 2004, no event has occurred that, individually or in the
aggregate, is reasonably likely to have a
Material Adverse Effect on it.
(K) PROPERTIES.
Except as reserved against in its Holding Company
Financial Reports, NorthStar and each of its Subsidiaries have good and
marketable title, free and clear of all
liens, encumbrances,
charges, defaults,
or equities of any character, to all of the properties and
assets, tangible and
intangible, reflected in its Holding
Company Financial Reports as being owned by
NorthStar or its Subsidiaries as of the dates thereof other than those that,
individually or in the aggregate,
are not reasonably
likely to have a
Material
Adverse Effect on it, except those sold or
otherwise disposed of in the ordinary
course of business. All buildings and all material fixtures, equipment, and
other property and assets that are held under
leases or subleases by NorthStar
or any of its Subsidiaries are held under
valid leases or subleases enforceable
in accordance with their respective terms, other than any such exceptions
to
validity or enforceability that, individually or in the aggregate, are not
reasonably likely to have a Material
Adverse Effect on it.
(L) LITIGATION;
REGULATORY ACTION.
Except as Previously
Disclosed in
SCHEDULE 4.1(L), no litigation, proceeding or controversy before
any court or
governmental agency is pending that, individually or in the aggregate, is
reasonably likely to have a Material
Adverse Effect on
NorthStar or any of its
Subsidiaries or that alleges claims under any fair lending law or other law
relating to discrimination, including the
Equal Credit Opportunity Act, the Fair
Housing Act, the Community Reinvestment Act and the Home Mortgage Disclosure
Act, and, to the best of its knowledge, no such litigation, proceeding or
controversy has been threatened;
and except as
Previously Disclosed in SCHEDULE
4.1(L), neither NorthStar nor any of its
Subsidiaries or any of
its or their
material properties or their officers, directors or controlling
persons is a
party to or is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or similar
submission to, any Regulatory Authority, and neither NorthStar nor any of its
Subsidiaries has been advised by any of such
Regulatory Authorities
that such
authority is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting)
any such order,
decree, agreement,
memorandum or understanding, commitment
letter or similar submission.
14
<PAGE>
(M) COMPLIANCE WITH
LAWS. Except as
Previously Disclosed
in SCHEDULE
4.1(M), each of NorthStar and its
Subsidiaries:
(1) Has all permits,
licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Regulatory
Authorities that are
required in order to permit
it to own its businesses presently conducted and that are material
to
the business
of it and its
Subsidiaries
taken as a whole;
all such
permits, licenses,
certificates of authority, orders and approvals are
in full force and effect and, to its best knowledge, no suspension or
cancellation of any of
them is threatened; and all such filings,
applications and registrations are current;
(2) Has received no
notification or
communication
from any
Regulatory Authority
or the staff thereof (a) asserting that Nort
