Exhibit 2.1
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF OCTOBER 10, 2006
AMONG
WASHINGTON FEDERAL, INC.,
WASHINGTON FEDERAL ACQUISITION, INC.
AND
FIRST FEDERAL BANC OF THE SOUTHWEST, INC.
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TABLE OF CONTENTS
Page
----
ARTICLE I CERTAIN
DEFINITIONS.............................................1
1.01
Certain
Definitions.............................................1
ARTICLE II THE
MERGER......................................................7
2.01
The
Merger......................................................7
2.02
Effective
Date and Effective Time; Closing......................8
ARTICLE III MERGER CONSIDERATION;
EXCHANGE PROCEDURES.......................8
3.01
Conversion
of Shares............................................8
3.02
Exchange
Procedures.............................................9
3.03
Dissenting
Shares..............................................11
3.04
FFSW
Options...................................................11
3.05
Bank
Merger....................................................11
ARTICLE IV ACTIONS PENDING
ACQUISITION....................................11
4.01
Forbearances of
FFSW...........................................11
4.02
No
Fundamental Washington Federal Changes......................15
ARTICLE V
REPRESENTATIONS AND
WARRANTIES.................................15
5.01
Disclosure
Schedules...........................................15
5.02
Standard.......................................................16
5.03
Representations and Warranties of
FFSW.........................16
5.04
Representations and Warranties of Washington
Federal...........33
5.05
Representations and Warranties of Merger
Sub...................35
ARTICLE VI
COVENANTS......................................................36
6.01
Reasonable
Best Efforts........................................36
6.02
Shareholder
Approval...........................................36
6.03
Proxy
Statement................................................37
6.04
Regulatory
Filings.............................................38
6.05
Press
Releases.................................................38
6.06
Access;
Information............................................38
6.07
Acquisition
Proposals..........................................40
6.08
Certain
Policies...............................................41
6.09
Indemnification................................................42
6.10
Benefit
Plans..................................................43
6.11
Notification of Certain
Matters................................44
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TABLE OF CONTENTS
(Continued)
6.12
Estoppel
Letters...............................................44
6.13
Assumption
of Indenture Obligations............................44
6.14
Antitakeover
Statutes..........................................45
6.15
Disposition of Certain
Assets..................................45
6.16
Regulatory
Remediation.........................................45
ARTICLE VII CONDITIONS TO
CONSUMMATION OF THE MERGER.......................45
7.01
Conditions
to Each Party's Obligation to Effect the Merger.....45
7.02
Conditions
to Obligation of FFSW...............................46
7.03
Conditions
to Obligation of Washington Federal.................47
ARTICLE VIII
TERMINATION....................................................48
8.01
Termination....................................................48
8.02
Effect of
Termination and Abandonment..........................49
ARTICLE IX
MISCELLANEOUS..................................................50
9.01
Survival.......................................................50
9.02
Waiver;
Amendment..............................................51
9.03
Counterparts...................................................51
9.04
Governing
Law..................................................51
9.05
Expenses.......................................................51
9.06
Notices........................................................51
9.07
Entire
Understanding; No Third Party Beneficiaries.............52
9.08
Severability...................................................52
9.09
Enforcement of the
Agreement...................................53
9.10
Interpretation.................................................53
9.11
Assignment.....................................................53
9.12
Alternative
Structure..........................................53
ANNEX A
Form of Shareholder Agreement
ANNEX B
Form of Agreement of Plan of Merger and Liquidation
ANNEX C
Form of Bank Merger Agreement
ANNEX D
Form of Tenant Estoppel Letter
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TABLE OF CONTENTS
(Continued)
ANNEX E
Form of Landlord Estoppel Letter
ANNEX F
Form of Non-Compete, Non-Solicitation Agreement
ANNEX G
Form of Non-Solicitation Agreement
ANNEX E
Form of Landlord Estoppel Letter
ANNEX F
Form of Non-Compete, Non-Solicitation Agreement
ANNEX G
Form of Non-Solicitation Agreement
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AGREEMENT AND PLAN OF
REORGANIZATION, dated
as of October 10, 2006, among
Washington Federal, Inc. ("Washington Federal"), Washington Federal
Acquisition,
Inc. ("Merger Sub") and First Federal Banc of the Southwest, Inc.
("FFSW").
RECITALS
A.
Washington
Federal. Washington Federal is a Washington corporation,
------------------
having its executive offices in Seattle, Washington.
B.
FFSW. FFSW
is a Delaware
corporation, having its executive offices
----
in Roswell, New
Mexico.
C.
Merger
Sub. Merger Sub is a Delaware corporation and a wholly owned
----------
indirect subsidiary of
Washington Federal.
D.
Board
Action. The respective Boards of Directors of Washington
------------
Federal, Merger Sub and FFSW have determined that it is in the best
interests of
their respective
companies and their
stockholders to consummate the Merger (as
defined herein) provided for herein.
E.
Shareholder Agreements. As a material inducement to Washington
----------------------
Federal to enter into this Agreement, and simultaneously with the execution of
this Agreement,
certain Shareholders (as defined herein) is entering
into an
agreement, in the
form of Annex A hereto (collectively, the "Shareholder
Agreements") pursuant
to which they have agreed, among other things, to vote
their shares of FFSW Common Stock (as defined herein) in favor of the
approval
and adoption of this Agreement.
NOW,
THEREFORE,
in consideration of the premises and of the mutual
covenants,
representations,
warranties and
agreements contained
herein the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01
Certain Definitions. The following terms are used in this
-------------------
Agreement with the meanings set forth below:
"Acquisition Proposal"
has the meaning set
forth in Section 6.07(a).
"Agreement" means this Agreement and Plan of Reorganization, as
amended
or modified from time to time in accordance with Section 9.02.
"Agreement and Plan of Merger and Liquidation" means the
Agreement and
Plan of Merger and Liquidation between FFSW and Washington Federal,
the form of
which is attached hereto to Annex B, as amended or modified from
time to time in
accordance with its provisions.
"Bank Merger" has the meaning set forth in Section 3.05.
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"Bank Merger Agreement" means the Agreement of Merger to be entered
into
by and between WFS and FFB, the form of which is attached hereto as
Annex C and
which form
shall
be subject
to such changes
as Washington Federal shall
reasonably specify.
"Bank Secrecy
Act" means
the Bank Secrecy Act of 1970, as
amended.
"Benefit Plans" has
the meaning set forth in Section 5.03(m)(i).
"Burdensome Condition" has the meaning set forth in Section
7.01(b).
"Business Day" means Monday through Friday of each week, except
a legal
holiday recognized as such by the U. S. Government or any day on
which banking
institutions in
the States of New Mexico or Washington
are authorized or
obligated to close.
"Certificate" means a
certificate that
immediately prior to the
Effective Time evidenced shares of FFSW Common Stock.
"Change in
Control Benefit" has the meaning set forth in Section
5.03(m)(viii).
"Change in Recommendation" has the meaning set forth in Section
6.02(a).
"Closing" has the meaning set forth in Section 2.02(b).
"Code" means the Internal Revenue Code of 1986, as amended.
"Community Reinvestment Act" means the Community Reinvestment Act
of
1977, as amended.
"Confidentiality Agreement" has the meaning set forth in
Section
6.06(d).
"Control Transaction" has the meaning set forth in Section
8.02(b)(ii).
"Derivatives Contract" has the meaning set forth in Section
5.03(q)(ii).
"DGCL" means the Delaware General Corporation Law.
"Disclosure Schedule" has the meaning set forth in Section
5.01.
"Dissenting Shares" has the meaning set forth in Section 3.03.
"DOL" has the meaning set forth in Section 5.03(m)(i).
"Effective Date" has the meaning set forth in Section 2.02(a).
"Effective Time" has the meaning set forth in Section 2.02(a).
"Employees" has the meaning set forth in Section 5.03(m)(i).
"Environmental Laws" has the meaning set forth in Section
5.03(o).
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"Equal Credit Opportunity Act" means the Equal Credit Opportunity
Act,
as amended.
"Equity Investment" means (i) an Equity Security; and (ii) an
ownership
interest in any company or other entity, any membership interest
that includes a
voting right in any company or other entity, any interest in real estate,
and
any investment
or transaction which in substance falls into any of these
categories even though
it may be structured as some other form of investment or
transaction.
"Equity
Security" means
any stock, certificate of interest or
participation in any
profit-sharing
agreement,
collateral-trust
certificate,
preorganization
certificate or
subscription,
transferable share,
investment
contract, or
voting-trust
certificate; any
security convertible
into such a
security; any security carrying any warrant or right to subscribe
to or purchase
any such security; and any certificate of interest or participation in,
temporary or interim certificate for, or receipt for any of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as
amended.
"ERISA Affiliate" has the meaning set forth in Section
5.03(m)(iii).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended,
and the rules and regulations thereunder.
"Exchange Agent" means an agent appointed by Washington Federal
and
reasonably acceptable to FFSW for the purpose of exchanging
Certificates.
"Exchange Fund" has the meaning set forth in Section 3.02(a).
"Fair Housing Act" means the Fair Housing Act, as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
"FHLB" means the Federal Home Loan Bank of Dallas.
"FFB" means First
Federal Bank, a federally chartered savings bank and
wholly owned
subsidiary of FFSW.
"FFB Board" means the Board of Directors of FFB.
"FFSW" has the meaning set forth in the preamble to this
Agreement.
"FFSW Articles"
means the Certificate
of Incorporation
of FFSW, as
amended.
"FFSW Board" means the Board of Directors of FFSW.
"FFSW Bylaws" means the Bylaws of FFSW, as amended.
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"FFSW Common Stock" means the common stock, $0.01 par value
per share,
of FFSW.
"FFSW Group" means any "affiliated group" (as defined in
Section
1504(a) of the Code
without regard to the limitations contained in Section
1504(b) of the Code) that includes FFSW and its Subsidiaries and
any predecessor
of and any successor to FFSW (or to another such predecessor or
successor).
"FFSW Loan Property" has the meaning set forth in Section
5.03(o).
"FFSW Meeting" has the meaning set forth in Section 6.02(a).
"FFSW Options"
means the options to
acquire FFSW Common
Stock issued
under the FFSW Stock Option Plans.
"FFSW Preferred Stock" means the preferred stock, $0.01 par
value per
share, of FFSW.
"FFSW Stock Option Plans" means the First Federal Bank 1995 Stock
Option Plan and the First Federal Banc of the Southwest,
Inc. 2002 Stock
Option
and Incentive Plan.
"GAAP" means generally accepted accounting principles and
practices as
in effect from time to time in the United States.
"Governmental Authority" means any federal, state, local or foreign
court, administrative
agency or commission or other governmental authority
or instrumentality or self-regulatory organization.
"Gross-Up Payment" has the meaning set forth in Section
5.03(m)(viii).
"Hazardous Substance" has the meaning set forth in Section
5.03(o).
"Indemnified Parties"
and "Indemnifying
Party" have the
meanings set
forth in Section 6.09(a).
"Insurance Policies" has the meaning set forth in Section
5.03(v).
"IRS" has the meaning set forth in Section 5.03(m)(i).
"Liens" means any charge, mortgage, pledge, security interest,
restriction, claim, lien or encumbrance.
"Liquidation" has the meaning set forth in Section 2.01(a).
"Loans" has the meaning set forth in Section 4.01(s).
"Material
Adverse Effect"
means (i) with respect to FFSW, any
effect that is
material and adverse to the financial condition,
results of
operations or business of FFSW and its Subsidiaries taken as a whole; provided,
4
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however, that Material Adverse Effect shall not be deemed to
include the impact
of (a) changes in banking, savings institution and similar laws of general
applicability or
interpretations
thereof by Governmental Authorities, (b)
changes in GAAP or
regulatory accounting
requirements
applicable
to banks,
federal savings institutions and their holding companies generally, (c)
changes
in general economic conditions affecting banks and their holding companies
generally, or (d) the effects of any action or omission
taken with the prior
written consent
of Washington Federal or as otherwise required by this
Agreement, provided that the effect of such changes described
in clauses (a),
(b) and (c) shall not be excluded as a Material Adverse Effect to
the extent of
a materially
disproportionate
impact (if any) they have on FFSW and its
Subsidiaries as a whole as measured relative to similarly situated
companies in
the savings institution industry, or (ii) with respect to FFSW or Washington
Federal, any
effect that
would materially impair the ability of
FFSW and its
Subsidiaries or Washington Federal and its Subsidiaries, as
the case may be, to
perform their
respective obligations under this Agreement, the Agreement and
Plan of Merger and Liquidation or the Bank Merger Agreement on a
timely basis or
otherwise materially impede the consummation of the
Transaction.
"Material Contracts" has the meaning set forth in Section
5.03(k)(i).
"Maximum Insurance Amount" has the meaning set forth in Section
6.09(c).
"Measuring Date" has the meaning set forth in Section
7.03(f)(i).
"Merger" has the meaning set forth in Section 2.01(a).
"Merger Consideration" has the meaning set forth in Section
3.01(c).
"Merger Sub" has the meaning set forth in the preamble to this
Agreement.
"National Labor Relations Act" means the National Labor Relations
Act,
as amended.
"Option Merger Consideration" has the meaning set forth in
Section
3.04.
"OTS" means the Office of Thrift Supervision.
"Pension Plan" has the meaning set forth in Section
5.03(m)(ii).
"Person" means any individual, bank, corporation, partnership,
association,
joint-stock company,
business trust, limited liability company or
unincorporated organization.
"Previously Disclosed" by a party shall mean information set forth
in a
section of
its Disclosure Schedule corresponding to the section of this
Agreement where such term is used.
"Proxy Statement" has the meaning set forth in Section 6.03(a).
"REO" means real estate owned.
"Representatives" has the meaning set forth in Section 6.07(a).
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"Rights" means, with respect to any Person, warrants, options, rights,
convertible securities and other arrangements or commitments
of any character
that obligate the Person to purchase, issue or dispose of
any of its capital
stock or other ownership interests or other securities representing
the right to
purchase or
otherwise receive any of its capital stock or other
ownership
interests.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means
the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Securities Documents" has the meaning set forth in Section
5.03(g)(i).
"Shareholder
Agreements" has the
meaning set forth in the recitals to
this Agreement.
"Shareholders" means
each director and executive officer of FFSW,
except for Richard Kauzlaric.
"Significant
Subsidiaries" has
the meaning ascribed to such term
in
Rule l-02 of Regulation S-X of the SEC.
"Subsidiary" has
the meaning ascribed to such term in Rule l-02 of
Regulation S-X of the SEC.
"Superior Proposal" has the meaning set forth in Section
6.07(a).
"Surviving Corporation" has the meaning set forth in Section
2.01(a).
"Tax" and "Taxes" mean all federal, state, local or foreign income,
gross income, gains, gross receipts, sales, use, ad valorem, goods
and services,
capital,
production,
transfer,
franchise,
windfall
profits,
license,
withholding, payroll,
employment,
disability,
employer
health,
excise,
estimated, severance, stamp, occupation, property, environmental,
custom duties,
unemployment or other taxes of any kind whatsoever, together with any interest,
additions or penalties thereto and any interest in respect of such
interest and
penalties.
"Tax Returns"
means any return (including any amended return),
declaration or
other report
(including
elections,
declarations,
claims for
refund, schedules, estimates and information returns) with respect
to any Taxes
(including estimated taxes).
"Termination Fee" has the meaning set forth in Section 8.02(b).
"Transaction" means
the Merger, the Liquidation and any other
transactions contemplated by this Agreement.
"Treasury Stock" means shares of FFSW Common Stock held
by FFSW, other
than in a fiduciary (including custodial or agency) capacity or as a result of
debts previously contracted in good faith.
6
<PAGE>
"WBCA" means the Washington Business Corporation Act.
"Washington Federal" has the meaning set forth in the
preamble to this
Agreement.
"Washington Federal Benefit Plans" has the meaning set forth in
Section
6.10(a).
"Washington Federal Board" means the Board of Directors of Washington
Federal.
"WFS" means
Washington
Federal Savings and Loan Association, a
federally chartered
savings association and wholly owned subsidiary of
Washington Federal.
"WFS Board" means the Board of Directors of WFS.
ARTICLE II
THE MERGER
2.01
The Merger.
-----------
(a) The Merger. Subject to the terms and conditions of this
Agreement,
----------
at the Effective Time, Merger Sub shall merge with and into FFSW in
accordance with the applicable provisions of the DGCL ( the "Merger"), the
separate corporate
existence of Merger Sub shall cease and FFSW shall
survive and
continue to exist as a corporation incorporated under the DGCL
(FFSW, as the surviving corporation in the Merger, sometimes being
referred
to herein as the "Surviving Corporation"). Immediately following the
Merger, the
Surviving
Corporation
will
be merged and liquidated into
Washington Federal
(the "Liquidation")
in accordance with this Agreement
and the Agreement and Plan of Merger and Liquidation.
(b) Name. The name of the Surviving Corporation shall be "First
Federal
----
Banc of the Southwest,
Inc."
(c) Certificate
of Incorporation and Bylaws. The certificate of
------------------------------------------
incorporation and bylaws of the Surviving Corporation immediately after the
Merger shall be the FFSW Articles and FFSW Bylaws as in effect
immediately prior
to the Merger.
(d) Directors and Executive Officers of the Surviving Corporation.
The
-------------------------------------------------------------
directors of the Surviving Corporation immediately after the Merger
shall be the
directors of Merger Sub immediately prior to the Merger. The
executive officers
of the Surviving Corporation immediately after the Merger shall be
the executive
officers of Merger Sub immediately prior to the Merger, each of
whom shall serve
until such time as their successors shall be duly elected and
qualified.
(e) Effect of the Merger. At the Effective Time, the effect of the
--------------------
Merger shall be as provided in the DGCL.
7
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(f) Additional Actions. If, at any time after the Effective
Time, the
------------------
Surviving Corporation shall consider that any further assignments
or assurances
in law or any other acts are necessary or desirable to (i) vest, perfect or
confirm, of record or otherwise, in the Surviving Corporation its
right, title
or interest in, to or under any of the rights, properties or assets of FFSW or
Merger Sub acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger, or (ii) otherwise carry out
the purposes
of this Agreement, FFSW, Merger Sub and their proper officers and directors,
shall be deemed to have granted to the Surviving Corporation an irrevocable
power of attorney to execute and deliver all such proper deeds,
assignments and
assurances in law and to do all acts necessary or proper to vest, perfect or
confirm title to and possession of such rights, properties or assets in the
Surviving Corporation and otherwise to carry out the purposes of
this Agreement,
and the proper officers and directors of the Surviving Corporation are fully
authorized in the name of the Surviving Corporation or otherwise to
take any and
all such action.
2.02
Effective Date and Effective Time; Closing.
-------------------------------------------
(a) Subject to the satisfaction or waiver of the conditions
set forth
in Article VII (other than those conditions that by their nature are to be
satisfied at the consummation of the Merger, but subject to the
fulfillment
or
waiver of those conditions), the parties shall cause a certificate of merger
relating to the Merger to be filed with the Secretary of State
of the State
of
Delaware pursuant to the DGCL on (i) the fifth Business Day following such
satisfaction or waiver, or (ii) such other date to which the parties may
mutually agree in writing. The Merger provided for herein shall
become effective
upon such filings or on such date as may be specified therein. The
date of such
filings is herein called the "Effective Date." The "Effective Time" of the
Merger shall be the time of such filings or as set forth in such
filings.
(b) A closing (the "Closing") shall take place at the offices of
Patton
Boggs LLP, 2550 M Street, NW, Washington, DC 20037, or at such other place as
the parties may mutually agree upon, on the Effective Date. At the Closing,
there shall be delivered to Washington Federal and FFSW the
documents required
to be delivered under Article VII hereof.
ARTICLE III
MERGER CONSIDERATION; EXCHANGE PROCEDURES
3.01
Conversion of Shares. Subject to the provisions of this
--------------------
Agreement, at the Effective Time, automatically by virtue of the
Merger and
without any action on the part of any Person:
(a) Outstanding
Merger Sub Stock. Each share of common stock of Merger
----------------------------
Sub that is
issued and outstanding immediately prior to the Effective Time
shall, by virtue of the Merger, be converted into one validly
issued, fully paid
and nonassessable share of the Surviving Corporation.
(b) Treasury Stock. Each share of FFSW Common Stock held as
Treasury
--------------
Stock immediately prior to the Effective Time shall be canceled and
retired at
the Effective Time and no consideration shall be issued in exchange
therefor.
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(c) Effect on FFSW Common Stock. Subject to Sections 3.03 and 6.16,
---------------------------
each share of FFSW
Common Stock, except
for shares of Treasury Stock, shall be
converted, by virtue of the Merger, into the right to receive $24.14 in cash,
without interest (the "Merger Consideration").
3.02
Exchange Procedures.
-------------------
(a) Immediately prior to the Effective Time, for the benefit of
the
holders of Certificates, Washington Federal shall deliver to the Exchange Agent
an amount of cash sufficient to make all payments required to be
made pursuant
to this Article III,
in exchange
for Certificates representing outstanding
shares of FFSW Common Stock in accordance with this Article III (such cash
amount, the "Exchange Fund"). The Exchange Agent shall invest such deposited
cash as directed by Washington Federal, provided that such
investments shall
be
in obligations of or guaranteed by the United States of America,
in commercial
paper obligations rated A-1 or P-1 or better by Moody's Investors
Service, Inc.
or Standard & Poor's Corporation, respectively, or in
certificates of
deposit,
bank repurchase
agreements
or banker's acceptances of commercial banks
with
capital exceeding $500 million. Any net profit resulting from,
or interest or
income produced by, such investments will be payable to Washington
Federal.
(b) As soon as reasonably practicable after the Effective Time (but
in no event later than five (5) Business
Days after the
Effective Time), the
Exchange Agent
shall mail to each holder of record of a Certificate or
Certificates, a form of letter of transmittal (which shall specify
that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent)
and instructions
for use in effecting the surrender of the Certificates in exchange for the
Merger Consideration into which the shares of FFSW Common Stock
represented
by
such Certificate or Certificates shall have been converted pursuant
to Section
3.01. Upon proper surrender of a Certificate for exchange
and cancellation to
the Exchange Agent,together with a properly completed letter of transmittal,
duly executed, the holder of such Certificate shall be entitled to receive in
exchange therefor, promptly after the Effective Time, the Merger Consideration.
Until surrendered as contemplated by this Section 3.02(b), each Certificate
(other than Certificates representing Treasury Stock and other
than Dissenting
Shares) shall be deemed at any time after the Effective Time to
represent only
the right to receive upon such surrender the Merger Consideration provided in
Section 3.01 and any unpaid dividends and distributions on the
shares of FFSW
Common Stock represented thereby with a record date prior
to the Effective
Time
and which remain unpaid at the Effective Time.
(c) If payment of the Merger Consideration is to be made
to a Person
other than the registered holder of the Certificate surrendered in exchange
therefor, it shall be a condition of payment that the Certificate
so surrendered
shall be properly endorsed (or accompanied by an appropriate form
of assignment
separate from the Certificate) and otherwise in proper form
for transfer, and
the Person requesting such payment shall pay to the Exchange Agent in advance
any transfer or other Taxes required by reason of the payment of the Merger
Consideration to a Person other than that of the registered holder of the
Certificate
surrendered or
otherwise establish to the satisfaction of the
Exchange Agent that such Taxes have been paid or are not
payable.
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<PAGE>
(d) At and after the Effective Time, the stock transfer books of
FFSW
shall be closed and there shall be no transfers on the stock
transfer books of
FFSW of the shares of
FFSW Common
Stock which were issued and outstanding
immediately prior to the Effective Time. At the Effective Time,
holders of FFSW
Common Stock
shall cease to be, and
shall have no rights as, shareholders of
FFSW other than to receive the consideration provided under this Article III,
subject to Section 3.03 of this Agreement. On or after the Effective Time,
any
Certificates presented
to Washington Federal or the Exchange Agent for transfer
shall be cancelled
and, subject to Section 3.03, exchanged for the Merger
Consideration as provided herein.
(e) Any portion of the Exchange Fund that remains unclaimed by the
shareholders of FFSW
for nine months after the Effective Time (as well as any
proceeds from any
investment thereof)
shall be delivered by the Exchange Agent
to Washington
Federal. Any shareholders of FFSW who have not theretofore
complied with Section 3.02(b) shall thereafter look only to Washington
Federal
for the Merger Consideration deliverable in respect of each share
of FFSW Common
Stock such shareholder holds as determined pursuant to this Agreement,
in each
case without any interest thereon. If outstanding Certificates for shares of
FFSW Common
Stock are not
surrendered
or the payment for
them is not claimed
prior to the date on which the applicable Merger Consideration would otherwise
escheat to or become the property of any Governmental Authority, the unclaimed
items shall,
to the extent permitted by abandoned property and any other
applicable law, become the property of Washington Federal (and to
the extent not
in its possession
shall be delivered
to it), free and clear of all claims
or
interest of any
Person previously entitled to such property. Neither the
Exchange Agent nor any party to this Agreement shall be liable to any holder
of
stock represented by
any Certificate
for any consideration paid to a public
official pursuant to
applicable abandoned
property, escheat or similar laws.
Washington Federal
and the Exchange Agent shall be entitled to rely
upon the
stock transfer books of FFSW to establish the identity of those
Persons entitled
to receive the Merger
Consideration
specified in this
Agreement, which
books
shall be conclusive with respect thereto. In the event of a dispute
with respect
to ownership of stock represented by any Certificate, Washington
Federal and the
Exchange Agent shall be entitled to deposit any Merger
Consideration represented
thereby in escrow with an independent third party and thereafter be relieved
with respect to any claims thereto.
(f) Washington Federal
(through the Exchange Agent, if applicable)
shall be entitled
to deduct and withhold from the consideration otherwise
payable pursuant to
this Agreement to any holder of shares of FFSW Common Stock
such amounts as Washington Federal or the Exchange Agent are
required to deduct
and withhold under the Code or applicable law. Any amounts so withheld shall
be
treated for all purposes of this Agreement as having been paid to
the holder of
FFSW Common Stock in respect of which such deduction and
withholding was made by
Washington Federal.
(g) In the event any
Certificate shall
have been lost, stolen or
destroyed, upon the
making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and, if
required by Washington
Federal, the
posting by such Person of a bond in such
amount as Washington
Federal may determine
is reasonably
necessary as indemnity
against any claim
10
<PAGE>
that may be made against it with respect to such Certificate, the
Exchange Agent
will issue in exchange for such lost, stolen or destroyed
Certificate the Merger
Consideration deliverable in respect thereof pursuant to this
Agreement.
3.03 Dissenting Shares. Each outstanding share of FFSW Common Stock,
-----------------
the holder of which has perfected his right to dissent pursuant to Section 262
of the DGCL and has
not effectively
withdrawn or lost such right as of the
Effective Time
(the "Dissenting Shares"), shall not be converted into or
represent a right to receive the Merger Consideration hereunder, and the holder
thereof shall be entitled only to such rights as are granted
by the DGCL. FFSW
shall give Washington
Federal prompt notice upon receipt by FFSW of any
such
written demands
for payment of the fair value of such
shares of FFSW
Common
Stock and of
withdrawals of such
demands and any other
instruments
provided
pursuant to the DGCL. If any holder of Dissenting Shares shall have effectively
withdrawn or
lost the right to dissent (through failure to perfect or
otherwise), the
Dissenting
Shares held by such
holder shall be converted on a
share by share basis
into the right to
receive the
Merger Consideration in
accordance with the applicable provisions of this Agreement.
Any payments made
in respect of
Dissenting
Shares shall be made by Washington Federal or the
Surviving Corporation.
3.04 FFSW Options. At the Effective Time, each FFSW Option which is
------------
outstanding, vested
and unexercised
immediately
prior to the Effective
Time,
shall be canceled in
exchange for the right to receive a single
lump sum cash
payment, equal to the
product of (i) the number of shares of FFSW Common Stock
subject to such FFSW Option immediately prior to the Effective
Time, and (ii)
the excess, if any, of
the Merger
Consideration over the
exercise price per
share of such FFSW Option (the "Option Merger Consideration") less any
applicable Taxes
required to be
withheld with respect to such payment. If the
exercise price per share of any such FFSW Option is equal to or
greater than the
Merger Consideration,
such FFSW Option shall be canceled without any cash
payment being
made in respect
thereof. FFSW shall use its reasonable best
efforts to
obtain the written acknowledgment of each holder of a
then-outstanding FFSW Option with regard to the cancellation of
such FFSW Option
and the payment therefor in accordance with the terms of this
Agreement. Subject
to the foregoing,
the FFSW Stock Option Plans and all FFSW Options issued
thereunder shall terminate at the Effective Time.
3.05 Bank Merger. As soon as practicable after the execution of
this
-----------
Agreement,or on such later date as Washington Federal shall
specify,
Washington
Federal and
FFSW shall cause WFS and FFB to enter into the Bank Merger
Agreement, which
provides for the merger of FFB with and into WFS
(the "Bank
Merger"), in
accordance with
applicable laws and
regulations and the terms of
the Bank Merger Agreement and as soon as practicable after consummation of the
Merger (or on such later date as Washington Federal shall specify). The Bank
Merger Agreement
provides that the
directors of WFS upon
consummation of
the
Bank Merger shall be the directors of WFS immediately prior to the
Bank Merger.
ARTICLE IV
ACTIONS PENDING ACQUISITION
4.01 Forbearances
of FFSW. From the date hereof until the
Effective
---------------------
Time, except as
expressly contemplated
or permitted by this Agreement or as
11
<PAGE>
Previously Disclosed,
without the prior
written consent of Washington Federal,
not to be unreasonably
withheld, FFSW will not, and will cause each of its
Subsidiaries not to:
(a) Ordinary Course.
Conduct its business other than in the
----------------
ordinary and usualcourse consistent with past practice or fail to
use reasonable
best efforts to preserve its business organization, keep available the present
services of its
employees and preserve
for itself and
Washington Federal
the
goodwill of the
customers of FFSW and its Subsidiaries and others with whom
business relations exist.
(b) Capital Stock. Other than pursuant to Rights set forth on
-------------
Schedule 4.01(b)of
FFSW's Disclosure Schedule and outstanding on the date
hereof, (i) issue, sell or otherwise permit to become outstanding,
or authorize
the creation of, any additional shares of stock or any Rights or
(ii) permit any
additional shares of
stock to become
subject to grants of employee or director
stock options or other Rights.
(c) Dividends; Etc. (i) Make, declare, pay or set aside for
payment
--------------
any dividend on or in
respect of, or declare or make any distribution on, any
shares of FFSW capital stock, other than (1) a cash dividend of
$0.07 per share
to be declared in
September 2006 and paid in October
2006 to holders of
FFSW
Common Stock,
(2) to the extent the
Merger is not
consummated by January
10,
2007, a cash dividend of $0.07 per share which shall be declared
and paid during
January 2007, or (3) dividends from wholly owned Subsidiaries of
FFSW to FFSW or
(ii) directly or indirectly adjust, split, combine, redeem,
reclassify, purchase
or otherwise acquire, any shares of its capital stock.
(d) Compensation;
Employment Agreements;
Etc. Enter into or amend
------------------------------------------
or renew any employment, consulting, severance, change in control,
bonus, salary
continuation or other
similar agreements or arrangements with any director,
officer or
employee of FFSW or its Subsidiaries or grant any salary or wage
increase or award any
incentive or other bonus payment or increase any employee
benefit (including incentive or bonus payments), except for (i)
changes that are
required by applicable law, and (ii) to satisfy contractual
obligations existing
as of the date hereof
and set forth in
Schedule 4.01(d) of
FFSW's Disclosure
Schedule.
(e) Hiring. Hire any person as an employee of FFSW or any of its
------
Subsidiaries or
promote any employee, except (i) to satisfy contractual
obligations existing
as of the date hereof and set forth on Schedule 4.01(e) of
FFSW's Disclosure
Schedule and (ii) persons hired to fill any vacancies arising
after the date hereof and whose employment is terminable at the
will of FFSW or
a Subsidiary of FFSW,
and who are not
subject to or eligible for any severance
or similar benefits or
payments that would
become payable as a result of the
Transaction or consummation thereof.
(f) Benefit
Plans. Enter into, establish, adopt, amend or
--------------
terminate, or make any
contributions
to (except (i) as may be required by
applicable law, (ii) for contributions to FFSW's defined
contribution
Benefit
Plan in the ordinary
course and
consistent
with prior
practice or (iii) to
satisfy contractual
obligations existing as of the date hereof and set forth on
Schedule 4.01(f) of FFSW's Disclosure Schedule), any pension,
retirement, stock
option, stock
purchase, savings, profit sharing, deferred compensation,
12
<PAGE>
consulting, bonus,
group insurance or other employee benefit, incentive or
welfare contract,
plan or arrangement, or any trust agreement (or similar
arrangement) related thereto, in respect of any director, officer
or employee of
FFSW or its
Subsidiaries or take
any action
to accelerate the vesting or
exercisability of
stock options,
restricted
stock or other
compensation
or
benefits payable thereunder.
(g) Dispositions.
Except as required by this Agreement, sell,
------------
transfer, mortgage, license, encumber or otherwise dispose of or
discontinue any
of its assets, rights,
deposits, business or
properties except in the ordinary
course of business
consistent with past
practice and in a
transaction
that,
together with all
other such
transactions,
is not material to FFSW and its
Subsidiaries taken as a whole.
(h) Acquisitions. Acquire (other than by way of foreclosures or
------------
acquisitions of control in a bona fide fiduciary capacity or in satisfaction of
debts previously
contracted
in good faith,
in each case in the
ordinary and
usual course of business consistent with past practice),
including by merger
or
consolidation or by
investment in a partnership or joint venture, all or any
portion of the assets, business, securities (other than as
permitted by Section
4.01(r)), deposits or properties of any other entity.
(i) Capital Expenditures. Make any capital expenditures other
than
--------------------
those identified on
Schedule 4.01(i) of
FFSW's Disclosure
Schedule and other
than capital
expenditures in the
ordinary course of
business consistent
with
past practice in amounts not exceeding $10,000 individually or $50,000 in the
aggregate.
(j) Governing Documents. Amend the FFSW Articles or the FFSW
Bylaws
-------------------
or the articles of
incorporation or
bylaws (or equivalent
documents)
of any
Subsidiary of FFSW or enter into a plan of consolidation, merger,
share exchange
or reorganization
with any person (other than consolidations, mergers or
reorganizations solely
among wholly owned Subsidiaries of FFSW), or a letter of
intent or agreement in principle with respect thereto.
(k) Accounting
Methods. Implement
or adopt any change in its
-------------------
accounting principles,
practices or methods,
other than as may be
required by
changes in laws or regulations or GAAP.
(l) Contracts. Except as otherwise permitted under this Section
---------
4.01, enter into,
cancel, fail to renew
or terminate any Material Contract or
amend or modify in any material respect any of its existing
Material Contracts.
(m) Claims. Enter into any settlement or similar agreement with
------
respect to any action, suit, proceeding, order or investigation to
which FFSW or
any of its
Subsidiaries is or becomes a party after the date of this
Agreement,
which settlement,
agreement or action
involves payment by FFSW or any of its
Subsidiaries of an amount which exceeds $10,000 and/or would impose
any material
restriction on the
business of FFSW or any of its Subsidiaries or create
precedent for claims that are reasonably likely to be material to FFSW and
its
Subsidiaries taken as a whole.
(n) Banking
Operations.
Enter into any new material line of
-------------------
business; introduce
any material new products or services; change its material
lending, investment,
underwriting, pricing, servicing, risk and asset liability
13
<PAGE>
management and other material banking and operating policies,
except as required
by applicable law, regulation or policies imposed by any
Governmental Authority,
or the manner in which its investment securities or loan portfolio
is classified
or reported; or invest in any mortgage-backed or mortgage-related
security that
would be considered "high risk" under applicable regulatory guidance; or file
any application
or enter into any contract with respect to the opening,
relocation or
closing of, or open, relocate or close, any branch, office
servicing center or
other facility
other than those
identified
on Schedule
4.01(n) of FFSW's Disclosure Schedule.
(o) Marketing.
Introduce any material
marketing campaigns or
any
---------
material new sales
compensation or incentive programs or arrangements
(except
those the material
terms of which
have been fully disclosed in writing to
Washington Federal prior to the date hereof).
(p) Derivatives Contracts. Enter into any Derivatives Contract.
---------------------
(q) Indebtedness. Incur any indebtedness for borrowed money
(other
------------
than deposits, federal
funds purchased, cash management accounts, Federal Home
Loan Bank borrowings
that mature within 90 days and that have no
put or call
features and securities sold under agreements to repurchase that
mature within
90 days, in each case in the ordinary course of business consistent with past
practice); or assume, guarantee, endorse or otherwise as an
accommodation become
responsible for the obligations of any other Person, other than with respect to
the collection of checks and other negotiable instruments in the
ordinary course
of business consistent with past practice.
(r) Investment
Securities.
Acquire (other
than
by way of
-----------------------
foreclosures or
acquisitions
in a bona fide fiduciary capacity or in
satisfaction of debts
previously contracted
in good faith, in each case in the
ordinary course of business consistent with past practice) any
debt security or
Equity
Investment other
than federal funds or United States Government
securities or United States Government agency securities, in each case, with a
term of 90 days or less.
(s) Loans. (A)
Make, renew or otherwise modify any loan,
loan
-----
commitment, letter
of credit or other extension of credit (collectively,
"Loans"), other than
Loans made or acquired in the ordinary course of business
consistent with past
practice which have (y) in the case of
non-real estate
secured loans that are originated in compliance with the entity's
internal loan
policies, a principal
balance not in excess of $250,000 and, (z) in the case of
real estate secured
loans that are
originated in compliance with the entity's
internal loan policies, a principal balance not in excess
of $1.0 million;
(B)
take any action that would result in any discretionary release of collateral or
guarantees or otherwise restructure the respective
amounts set forth in
clause
(A) above; or (C)
enter into any Loan
securitization
or create any special
purpose funding entity.
(t) Investments in Real Estate. Make any investment or commitment
--------------------------
to invest in real estate or in any real estate development project (other than
by way of foreclosure or acquisitions in a bona fide fiduciary
capacity or in
satisfaction of a debt previously contracted in good faith, in each
case in the
ordinary course of business consistent with past practice).
14
<PAGE>
(u) Adverse
Actions. Take any action that is intended or is
----------------
reasonably likely to result in (x) any of its representations and
warranties set
forth in this Agreement being or becoming untrue in any material
respect at any
time at or prior to the Effective Time, (y) any of the conditions to
the Merger
set forth in Article VII not being satisfied or (z) a material
violation of any
provision of this Agreement, the Agreement and Plan of Merger and
Liquidation or
the Bank Merger
Agreement,
in either case, except as may be required by
applicable law or regulation.
(v) Tax Elections. Make or change any material Tax election,
settle
-------------
or compromise
any material Tax
liability of FFSW or
any of its
Subsidiaries,
agree to an extension
or waiver of the statute of limitations with respect to
the assessment or
determination of a material amount of Taxes of FFSW or any of
its Subsidiaries,
enter into any closing agreement with respect to any material
amount of Taxes or surrender any right to claim a material Tax
refund, adopt or
change any method of accounting with respect to Taxes,
or file any amended
Tax
Return.
(w) Antitakeover Statutes. Take any action (i) that would cause
---------------------
this Agreement or the
Transaction to be
subject to the provisions of any state
antitakeover law or
state law that
purports to limit or restrict business
combinations or the
ability to acquire or vote shares or (ii) to exempt or make
not subject to the
provisions of any state antitakeover law or state law that
purports to limit or restrict business combinations or the ability
to acquire or
vote shares, any
Person (other than Washington Federal or its Subsidiaries)
or
any action taken
thereby, which Person or action
would have
otherwise been
subject to the restrictive provisions thereof and not exempt
therefrom.
(x) Commitments. Enter
into any contract with respect to, or
-----------
otherwise agree or commit to do, any of the foregoing.
4.02
No Fundamental Washington Federal Changes. Except as expressly
---------------------------------------------
contemplated or
permitted by this
Agreement or as required by applicable law,
rule or regulation,
during the period from
the date of this
Agreement to the
Effective Time,
Washington Federal shall not, without the prior written consent
of FFSW (which consent shall not be unreasonably withheld),
(i) take any
action
that is intended or may reasonably be expected to result in any of the
conditions to the Merger set forth in Article VII not being
satisfied, (ii) take
any action or fail to take any action which would reasonably be expected to
materially and
adversely impair or delay consummation of the transactions
contemplated hereby
beyond the time period
contemplated by this
Agreement or
(iii) agree to, or make any commitment to, take any of the actions
prohibited by
this Section 4.02.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01
Disclosure
Schedules.
On or prior to the date hereof, FFSW has
---------------------
delivered to Washington Federal a schedule and Washington
Federal has delivered
to FFSW a schedule
(respectively, its
"Disclosure
Schedule")
setting forth,
among other things,
items the disclosure
of which is necessary or appropriate
15
<PAGE>
either in response to an express disclosure requirement contained
in a provision
hereof or as an exception to one or more representations or
warranties contained
in Section 5.03 or 5.04 or to one or more of its covenants
contained in
Article
IV or Article
VI; provided, however, the mere inclusion of an item in a
Disclosure Schedule as an exception to a representation or warranty
shall not be
deemed an admission by a party that such item represents a material
exception or
fact, event or
circumstance
or that, absent such inclusion in the
Disclosure
Schedule, such item is
or would be reasonably
likely to result in a
Material
Adverse Effect.
5.02
Standard. Solely for purposes of determining whether the condition
set
--------
forth in Section 7.02(a) or 7.03(a), as the case may be, has been
satisfied (and
without otherwise
qualifying any
representation
or warranty made on
the date
hereof), no
representation or warranty of FFSW or Washington Federal contained
in Sections
5.03 or 5.04,
respectively,
other than the
representations
and
warranties set
forth in Section 5.03(b), the last sentence of Section
5.03(m)(vi), and
Section 5.03(m)(viii),
which shall be true in all material
respects, shall be deemed untrue or incorrect for purposes of
Section 7.02(a) or
7.03(a), and no party
hereto shall be deemed to have breached a representation
or warranty for purposes of such Sections, as a consequence of the existence
of
any fact, event or circumstance unless such fact, circumstance or event,
individually or taken
together with all
other facts, events or
circumstances
inconsistent with any
representation or warranty contained in Sections 5.03 or
5.04, has had or is reasonably likely to have a Material
Adverse Effect on
the
party making such representation or warranty.
5.03
Representations and
Warranties of FFSW. Subject to Section 5.01, FFSW
--------------------------------------
hereby represents and warrants to Washington Federal:
(a) Organization, Standing and Authority. FFSW is duly organized,
------------------------------------
validly existing and
in good standing under
the laws of the State of Delaware.
FFSW is duly licensed
or qualified to do
business and is in
good standing in
each jurisdiction
where its ownership or leasing of property
or assets or the
conduct of its business requires it to be so licensed or qualified,
except where
the failure to be so
licensed or qualified
would not have nor
reasonably
be
expected to have a
Material Adverse Effect on FFSW. FFSW 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 now
conducted. The copies of the FFSW Articles and FFSW Bylaws which
have previously
been made available to Washington Federal are true, complete and correct copies
of such documents as in effect on the date of this Agreement. The minute books
of FFSW and each of its Subsidiaries previously made available to Washington
Federal contain true,
complete and correct records in all material respects of
all meetings
and other material corporate actions held or taken of their
respective
stockholders and Board of Directors (including committees of their
respective Boards of Directors) through the date hereof.
(b) FFSW Capital
Stock. The authorized capital stock of FFSW
--------------------
consists solely of
6,000,000 shares of
FFSW Common Stock, of
which 3,992,453
shares are issued and
outstanding as of the date hereof, and 500,000 shares of
FFSW Preferred Stock,
of which no shares are
issued and outstanding
as of the
date hereof.
As of the date hereof,
320,592 shares of FFSW Common Stock
were
held in treasury by FFSW or otherwise directly or indirectly owned by
FFSW. The
outstanding shares of
FFSW Common Stock have been duly authorized and validly
16
<PAGE>
issued and are fully paid and non-assessable, and none of the
outstanding shares
of FFSW Common Stock have been issued in violation of the
preemptive
rights of
any Person. Section
5.03(b) of FFSW's
Disclosure Schedule
sets forth for each
FFSW Option the name of the grantee, the date of the grant,
the type of grant,
the status of the option grant as qualified or non-qualified under Section 422
of the Code, the
number of shares of
FFSW Common
Stock subject to each FFSW
Option, the number of
shares of FFSW Common Stock subject to FFSW Options that
are currently
exercisable and the exercise price per share. Except as set
forth
in the preceding sentence, there are no shares of FFSW Common Stock
reserved for
issuance, FFSW does
not have any Rights issued or outstanding with respect to
FFSW Common Stock and FFSW does not have any commitment to authorize,
issue or
sell any FFSW Common
Stock or Rights. No bonds, debentures, notes or other
indebtedness having
the right to vote on any matters on which stockholders of
FFSW may vote are
outstanding.
No Equity Securities have been issued or
authorized for issuance by FFSW from June 30, 2006 through the date
hereof.
(c) Subsidiaries.
------------
(i) (A) FFSW has Previously Disclosed a list of all of
its Subsidiaries
together with the
jurisdiction
of organization of
each such
Subsidiary, (B) except
as set forth in Section 5.03(c)(i) of FFSW's
Disclosure
Schedule, FFSW owns,
directly or
indirectly,
all the issued and
outstanding
Equity Securities of each of its Subsidiaries, (C) no Equity Securities of
any
of its Subsidiaries are or may become required to be issued (other
than to FFSW)
by reason of any Right or otherwise, (D) there are no contracts, commitments,
understandings or
arrangements
by which any of its
Subsidiaries is or may
be
bound to sell or otherwise transfer any of its Equity
Securities (other than to
FFSW or any of its
wholly owned
Subsidiaries),
(E) there are no contracts,
commitments,
understandings, or
arrangements relating to FFSW's rights to vote
or to dispose of such
securities and (F) all
the Equity Securities
of FFSW's
Subsidiaries held by
FFSW or its Subsidiaries are fully paid and nonassessable
and are owned by FFSW or its Subsidiaries free and clear of any
Liens. No bonds,
debentures, notes or
other indebtedness having the right to vote on any matters
on which stockholders of any of the FFSW Subsidiaries may vote are
outstanding.
(ii) Except as
set forth in Section 5.03(c)(ii) of
FFSW's Disclosure Schedule and except for securities and other
interests held in
a fiduciary
capacity and beneficially owned by third parties or taken in
consideration of debts
previously
contracted,
ownership interests in FFSW's
Subsidiaries and stock in the FHLB, FFSW does not own beneficially,
directly or
indirectly, any Equity
Securities
or similar
interests of any Person or any
interest in a partnership or joint venture of any kind.
(iii) Each
of FFSW's Subsidiaries has been duly
organized, is validly
existing and, with
respect to each FFSW Subsidiary other
than FFB, is in good standing, in each case under the laws of the
jurisdiction
of its organization,
and is duly
licensed or
qualified to do
business and in
good standing in the jurisdictions where its ownership or leasing
of property or
the conduct of its business requires it to be so licensed or
qualified, except
where the failure to be so licensed or qualified would not have nor reasonably
be expected
to have a Material Adverse Effect on FFSW. Each of FFSW's
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 now conducted.
17
<PAGE>
(iv) The deposit
accounts of FFB are insured by the
FDIC, in the manner and to the maximum extent provided by applicable
law, and
FFB has paid
all deposit insurance premiums and assessments required by
applicable laws and regulations.
(d) Corporate Power.
Each of FFSW 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 properties and assets; and FFSW has the corporate
power and authority to execute, deliver and perform its
obligations under
this
Agreement and the Agreement and Plan of Merger and Liquidation and
to consummate
the Transaction and to
cause FFB to consummate the Bank Merger Agreement, and
FFB has the corporate
power and authority to
execute, deliver and
perform its
obligations under the Bank Merger Agreement, in each case, subject
to receipt of
all necessary
approvals of Governmental Authorities and the approval by
FFSW's
stockholders of this Agreement.
(e) Corporate Authority. Subject to the approval of this Agreement
-------------------
by the holders of the
outstanding
FFSW Common Stock, this Agreement, the
Agreement and Plan of Merger and Liquidation and the Transaction and the Bank
Merger and Bank Merger Agreement have been authorized by all
necessary corporate
action of FFSW and FFB
and the FFSW Board and
the FFB Board on or prior to the
date hereof and the FFSW Board has recommended that stockholders of FFSW adopt
this Agreement and directed that such matter be submitted for
consideration
by
FFSW's stockholders
at the FFSW Meeting.
FFSW has duly executed
and delivered
this Agreement
and, assuming due authorization, execution and delivery by
Washington Federal and Merger Sub, this Agreement is a valid and
legally binding
obligation of FFSW,
enforceable
in accordance with its terms (except as
enforceability
may be limited by applicable bankruptcy, insolvency,
reorganization,
moratorium, fraudulent
transfer and similar laws of general
applicability relating
to or affecting
creditors' rights or
by general equity
principles).
(f) Regulatory Approvals; No Defaults.
---------------------------------
(i) No consents or
approvals of,
or waivers by, or
filings or
registrations with,
any Governmental Authority or with any third
party are required to be made or obtained by FFSW or any of its
Subsidiaries in
connection with the execution, delivery or performance by FFSW of
this Agreement
and the Agreement
and Plan of Merger
and Liquidation and by FFB of the Bank
Merger Agreement,
or to consummate the Transaction, except as Previously
Disclosed and except for (A) filings of applications or notices,
and articles of
combination with, and approvals or waivers by, the OTS, (B) filings
with the SEC
and state securities authorities, as applicable, in connection with the
submission of this
Agreement for the approval of the holders of FFSW Common
Stock, (C) the filing
of a certificate of merger with the Secretary of State of
the State of Delaware
pursuant to the DGCL with respect to the Merger, (D) the
filing of articles of merger with the Secretary of State of the State of
Washington pursuant to
the WBCA and a certificate of merger with the Secretary
of State of the State
of Delaware
pursuant to the DGCL, in each case with
respect to the Liquidation and (E) the approval of this Agreement
by the holders
of a majority of the outstanding shares of FFSW Common Stock.
18
<PAGE>
(ii) Subject to receipt, or the making, of the consents,
approvals, waivers and
filings referred to in
the preceding
paragraph and the
expiration of related waiting periods, the execution, delivery and performance
of this Agreement, the Agreement and Plan of Merger and Liquidation
and the Bank
Merger Agreement by
FFSW and FFB, as applicable, and the consummation of the
Transaction do not and will not (A) except as Previously Disclosed,
constitute a
breach or violation of, or a default under, or give rise to any Lien,
any
acceleration of
remedies or any right
of termination
under, any law, code,
ordinance, rule or
regulation
or any judgment, decree, injunction, order,
governmental permit or license, or agreement, indenture or
instrument of FFSW or
any of its
Subsidiaries or to
which FFSW or any of its Subsidiaries or any of
their respective
properties
is subject or bound,
(B) constitute a breach or
violation of, or a default under, the FFSW Articles, the FFSW Bylaws or similar
governing documents
of FFSW's Subsidiaries or (C) require any consent or
approval under any
such law, code, ordinance, rule, regulation, judgment,
decree, injunction, order, governmental permit or license,
agreement,
indenture
or instrument.
(g) Financial Reports; Undisclosed Liabilities; Internal
Controls.
-------------------------------------------------------------
(i) FFSW's Annual Report on Form 10-KSB for the fiscal
year ended September
30, 2005 and all other reports, registration statements,
definitive proxy statements or information statements filed or to
be filed by it
subsequent to September 30, 2002 with the SEC (collectively,
FFSW's "Securities
Documents"), as of the
date filed or to be
filed and as amended
prior to the
date hereof, (A)
complied or will
comply in all material
respects as to
form
with the applicable
regulations
of the SEC as the case
may be and (B) 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
therein, in the light
of the circumstances
under which they were made, not
misleading; and each
of the consolidated
statements
of financial condition
contained in any such
Securities Documents
(including
the related
notes and
schedules thereto)
fairly presents,
or will fairly
present, the
consolidated
financial position of
FFSW and its Subsidiaries as of its date, and each of the
consolidated
statements of
income, stockholders' equity and cash flows or
equivalent statements
in such Securities Documents (including any related notes
and schedules thereto) fairly presents, or will fairly present, the
consolidated
results of operations,
changes in
stockholders' equity
and cash flows of FFSW
and its Subsidiaries
for the periods to which they relate, in each case in
accordance with GAAP consistently applied during the periods
involved, except in
each case as may be noted therein. Each of such financial statements
(including
any related notes and schedules thereto) complies in all material
respects with
applicable accounting
requirements and with the published rules and regulations
of the SEC with
respect thereto. The books and records of FFSW and its
Subsidiaries have
been, and are being,
maintained in all material respects in
accordance with GAAP and any other applicable legal and accounting
requirements
and reflect only actual transactions.
(ii) FFSW has
filed all forms, reports, statements,
certifications and
other documents
(including
all exhibits,
amendments
and
supplements thereto) required to be filed by it with the SEC since
September 30,
2002. None of FFSW's
Subsidiaries is required to file periodic reports with the
SEC pursuant to the Exchange Act. FFSW has made available to
Washington Federal
true, correct and complete copies of all written correspondence
between the SEC,
on the one hand,
and FFSW and any of its Subsidiaries, on the other hand,
19
<PAGE>
occurring since September 30, 2002. As of the date of this
Agreement, there
are
no outstanding or unresolved comments in comment letters
received from the
SEC
staff with respect to FFSW's Securities Documents. To the knowledge of FFSW,
none of the FFSW's Securities Documents is the subject of
ongoing SEC review or
outstanding SEC comment.
(iii) Except as set forth on the statement of financial
condition of FFSW
dated as of June 30, 2006 and included in FFSW's Securities
Documents filed
prior to the date hereof, neither FFSW nor any of its
Subsidiaries has any material liability (whether absolute,
contingent or accrued
or otherwise and whether due or to become due) other than
liabilities
incurred
after June 30, 2006 in
the ordinary
course of business
consistent
with past
practice and, to
FFSW's knowledge,
there is no existing
condition,
event or
circumstance which
could result in any
such material
liability in the
future
other than the sale of certain assets required by this
Agreement.
(iv) Since June 30, 2006, (A) FFSW and its Subsidiaries
have conducted
their respective businesses in the ordinary and usual
course
consistent with past practice, (B) except as Previously Disclosed,
neither FFSW
nor any of its Subsidiaries has taken nor permitted or entered into
any contract
with respect to, or
otherwise agreed or
committed to do or take, any of the
actions set forth in Section 4.01 and (C) no event has occurred or
circumstance
arisen that, individually or taken together with all other facts,
circumstances
and events (described
in any paragraph of this Section 5.03 or otherwise), has
had or is reasonably
likely to have a Material Adverse Effect with respect to
FFSW.
(v) No agreement pursuant to which any loans or other
assets have been or shall be sold by FFSW or its Subsidiaries
entitled the buyer
of such loans or other assets, unless there is material breach of a
representation or
covenant by FFSW or
its Subsidiaries,
to cause FFSW or
its
Subsidiaries to
repurchase such loan
or other asset or the buyer to pursue any
other form of recourse against FFSW or its Subsidiaries.
Section 5.03(g)(v) of
FFSW's Disclosure
Schedule sets forth
all cash, stock or other dividend or any
other distribution
with respect to the capital stock of FFSW or any of its
Subsidiaries that has
been declared, set
aside or paid for the past two years,
as well as all shares
of capital stock of FFSW that have been purchased,
redeemed or otherwise
acquired, directly or
indirectly, by FFSW or
any of its
Subsidiaries for the past two years.
(vi) The
records,
systems,
controls,
data
and
information of FFSW and its Subsidiaries are recorded,
stored, maintained and
operated under means
(including
any electronic, mechanical or photographic
process, whether computerized or not) that are under the exclusive
ownership and
direct control of FFSW or its Subsidiaries or accountants
(including all
means
of access thereto and
therefrom), except for
any non-exclusive
ownership and
non-direct control
that would not
reasonably
be expected to have a material
adverse effect on the system of internal accounting controls described
below in
this Section
5.03(g)(vi). FFSW (i)
has implemented
and maintains
disclosure
controls and
procedures (as defined
in Rule 13a-15(e) of
the Exchange Act) to
ensure that material
information relating
to FFSW, including its
consolidated
Subsidiaries, is made
known to the chief executive officer and the chief
financial officer
of FFSW by others within those entities and (ii) has
disclosed, based on
its most recent
evaluation prior to
the date hereof,
to
20
<PAGE>
FFSW's outside
auditors and the audit committee of the FFSW Board (x) any
significant
deficiencies and material weaknesses in the design or
operation of
internal controls over financial reporting (as defined in Rule
13a-15(f) of the
Exchange Act) which are reasonably likely to adversely affect FFSW's
ability to
record, process,
summarize and report
financial information and (y) any fraud,
whether or not material, that involves management or other
employees who have a
significant role in
FFSW's internal
controls over financial reporting. These
disclosures were made
in writing by
management to FFSW's
auditors and audit
committee and a copy has previously been made available to Washington
Federal.
The Chief Executive Officer and the Chief Financial Officer of FFSW
have signed,
and FFSW has furnished to the SEC, all certifications required by
Rule 13a-14 or
15d-14 under the Exchange Act or 18 U.S.C. ss. 1350; such
certifications contain
no qualifications
or exceptions to the
matters certified
therein and have not
been modified
or withdrawn; and neither FFSW nor any of its officers has
received notice from any Governmental Authorities questioning or
challenging the
accuracy,
completeness, form
or manner of filing or submission of such
certifications.
(vii) Since the enactment of the Sarbanes-Oxley Act, (i)
neither FFSW nor any of its Subsidiaries nor, to the knowledge of FFSW, any
director, officer,
employee, auditor,
accountant or
representative of FFSW or
any of its Subsidiaries, has received or otherwise had or
obtained knowledge of
any material complaint, allegation, assertion or claim, whether
written or oral,
regarding the accounting or auditing practices, procedures, methodologies or
methods of
FFSW or any of its Subsidiaries or their respective internal
accounting controls, including any material complaint, allegation, assertion or
claim that
FFSW or any of its Subsidiaries has engaged in questionable
accounting or auditing practices, and (ii) no attorney representing
FFSW or any
of its Subsidiaries, whether or not employed by FFSW or any of its
Subsidiaries,
has reported evidence
of a material
violation of
securities laws,
breach of
fiduciary duty or similar violation by FFSW or any of its
Subsidiaries or their
respective officers,
directors,
employees or agents to the FFSW Board or
any
committee thereof or,
to the knowledge of
FFSW, to any director
or officer of
FFSW.
(h) Legal Proceedings. Except as Previously Disclosed, no
-----------------
litigation,
arbitration, claim
or other proceeding before any court or
governmental agency is
pending against FFSW or any of its Subsidiaries and, to
FFSW's knowledge, no such litigation, arbitration, claim or other
proceeding has
been threatened and there are no facts which could reasonably give rise to such
litigation,
arbitration, claim or other proceeding. Neither FFSW nor any of
its
Subsidiaries nor any of their respective properties is a party to or
subject to
any order, judgment,
decree or regulatory restriction that, individually or in
the aggregate,
has had or could
reasonably
be expected to have a Material
Adverse Effect with respect to FFSW.
(i) Regulatory Matters.
------------------
(i) Neither FFSW nor any of its Subsidiaries nor any of
their respective
properties is a party
to or is subject to any order, decree,
directive, agreement,
memorandum of
understanding or similar arrangement with,
or a commitment letter
or similar submission
to, or extraordinary
supervisory
letter from,
nor has FFSW or any of
its Subsidiaries
adopted any policies,
procedures or
board resolutions at the request or suggestion of, any
Governmental Authority. FFSW and its Subsidiaries have paid all
assessments made
or imposed by any Governmental Authority.
(ii) Except as
Previously
Disclosed, neither
FFSW nor
any of its
Subsidiaries has been
advised by, nor does it have any knowledge of
21
<PAGE>
facts which could give rise to an advisory notice by, any
Governmental Authority
that such Governmental
Authority is contemplating issuing or requesting (or is
considering the
appropriateness
of issuing
or requesting) any such order,
decree, directive,
agreement, memorandum
of understanding,
commitment letter,
supervisory letter or
similar submission or any request for the adoption of any
policy, procedure or board resolution.
(iii) (A)
Except
as Previously Disclosed, no
Governmental Authority has initiated since September 30, 2001 or
has pending any
proceeding,
enforcement action or,
to the knowledge of FFSW, investigation or
inquiry into the business, operations, policies, practices or disclosures of
FFSW or any of its Subsidiaries (other than normal examinations conducted by a
Governmental Authority
in the ordinary
course of the business
of FFSW and its
Subsidiaries), or, to
the knowledge of FFSW,
threatened any of the
foregoing,
and (B) there is no unresolved violation, criticism, comment or
exception by any
Governmental Authority
with respect to any report or statement relating to any
examinations or inspections of FFSW or any of its Subsidiaries.
(iv) The most recent regulatory rating given to FFB as
to compliance
with the Community
Reinvestment
Act is "outstanding." To the
knowledge of FFSW, since the last regulatory examination of FFB with respect
to
Community Reinvestment Act compliance, FFB has not received any
complaints as to
Community Reinvestment Act compliance.
(j) Compliance With Laws. Each of FFSW and its Subsidiaries:
--------------------
(i) except as Previously Disclosed, is and at all times
since September 30,
2002 has been in material compliance with all applicable
federal, state,
local and foreign statutes, laws, codes, regulations,
ordinances, rules,
judgments,
injunctions, orders,
decrees or policies and/or
guidelines of any Governmental Authority applicable thereto or to
the employees
conducting such businesses, including, without limitation,
Sections 23A and 23B
of the Federal
Reserve Act and OTS
regulations
pursuant thereto, the Equal
Credit Opportunity
Act, the Fair Housing Act, the Community Reinvestment Act,
the Home Mortgage Disclosure Act, the Bank Secrecy Act, the USA
PATRIOT Act, all
other applicable
fair lending laws and
other laws relating to
discriminatory
business practices and
Environmental Laws and
all posted and internal policies
of FFSW and its Subsidiaries relating to customer data, privacy and
security;
(ii) has and at all times since September 30, 2002 has
had all permits, licenses, franchises, authorizations, orders and
approvals of,
and has made all filings, applications and registrations
with, all Governmental
Authorities (and has paid all fees and assessments due and payable
in connection
therewith) that
are required in order to permit it to own or lease its
properties and to conduct its business as presently conducted; all
such permits,
licenses, franchises,
certificates
of authority,
orders and approvals
are in
full force and effect and, to FFSW's knowledge, no suspension or
cancellation of
any of them is threatened; and
(iii) except
as Previously Disclosed, has received,
since September 30, 2001, no notification or communication from any
Governmental
Authority (A)
asserting that FFSW or any of its Subsidiaries is not in
compliance with any of
the statutes,
regulations
or ordinances which such
22
<PAGE>
Governmental Authority
enforces or (B) threatening to revoke any license,
franchise, permit or
governmental
authorization (nor, to FFSW's knowledge, do
any grounds for any of the foregoing exist).
(k) Material Contracts; Defaults.
----------------------------
(i) Except for documents listed as exhibits to FFSW's
Securities Documents,
neither FFSW nor any
of its Subsidiaries is
a party to,
bound by or subject to
any agreement,
contract, arrangement, commitment or
understanding (whether
written or oral) (A)
with respect to the
employment of
any of its directors,
officers, employees or consultants, (B) which would
entitle any present or former director, officer, employee or agent of FFSW or
any of its Subsidiaries to indemnification from FFSW or any of its
Subsidiaries,
(C) which is a material contract (as defined in Item
601(b)(10)
of Regulation
S-K of the SEC), (D) which is an agreement (including data
processing,
software
programming,
consulting and
licensing contracts)
not terminable on 60 days or
less notice and
involving the payment
or value of more than $20,000 per annum,
(E) which is with or to a labor union or guild (including any collective
bargaining agreement),
(F) which relates to the incurrence of indebtedness
(other than deposit liabilities, advances and loans from the FHLB,
and sales of
securities subject
to repurchase, in each case in the ordinary course of
business), (G) which
grants any person a right of first refusal, right of first
offer or similar right with respect to any material properties,
rights, assets
or businesses of FFSW or its Subsidiaries, (H) which involves the purchase or
sale of assets with a
purchase price of
$100,000 or more in any single case or
$250,000 in all such
cases, other than purchases and sales of investment
securities and loans
in the ordinary course
of business consistent
with past
practice, (I) which is
a consulting
agreement,
license or
service contract
(including data
processing, software
programming and
licensing contracts
and
outsourcing contracts)
which involve the payment of $20,000 or
more in annual
fees (other
than any such
agreement,
license or
contract listed in Section
5.03(k)(i)(I) of FFSW's Disclosure Schedule), (J) which provides
for the payment
by FFSW or its
Subsidiaries of
payments upon a change of control thereof other
than as set forth in Section 5.03(k)(i)(J) of FFSW's Disclosure
Schedule, (K)
which is a lease for any real or material personal property owned or presently
used by FFSW or any of its Subsidiaries, (L) which materially restricts the
conduct of any
business by FFSW or by any of its
Subsidiaries
or limits the
freedom of FFSW or any of its Subsidiaries to engage in any line
of business in
any geographic
area (or would so
restrict the Surviving
Corporation or any of
its affiliates
after consummation of the Transaction) or which requires
exclusive referrals of
business or requires FFSW or any of its Subsidiaries to
offer specified
products or services
to their customers
or depositors on a
priority or exclusive
basis, or (M) which is with respect to, or otherwise
commits FFSW
or any of its Subsidiaries to do, any of the foregoing
(collectively,
"Material Contracts").
FFSW has Previously
Disclosed and made
available to
Washington Federal
true and correct
copies of each such Material
Contract.
(ii) Each Material Contract is valid and binding on FFSW
and its Subsidiaries
and is in full
force and effect
(other than due to the
ordinary expiration thereof) and, to the knowledge of FFSW, is
valid and binding
on the other parties thereto. Neither FFSW or any of its
Subsidiaries
nor, to
the knowledge of FFSW, any other parties thereto, is in material default under
any contract,
agreement, commitment,
arrangement,
lease, insurance
policy or
23
<PAGE>
other instrument
to which it is a
party, by which its
assets, business, or
operations may be bound or affected, or under which it or its
respective assets,
business, or operations receives benefits, and there has not occurred any
event
that, with the lapse of time or the giving of notice or both,
would constitute
such a default. Except
as provided in this
Agreement, no power of
attorney or
similar authorization
given directly or indirectly by FFSW or any of its
Subsidiaries is currently outstanding.
(iii) Section 5.03(k)(iii) of FFSW's Disclosure Schedule
sets forth a schedule of all officers and directors of FFSW and its
Subsidiaries
who have outstanding loans from FFSW or any of its Subsidiaries, and there has
been no default on, or
forgiveness or waiver
of, in whole or in part, any such
loan during the two years immediately preceding the date
hereof.
(l) No Brokers. No action has been taken by FFSW or any of its
----------
Subsidiaries that
would give rise to any valid claim against any party hereto
for a brokerage
commission, finder's
fee or other like payment with respect to
the Transaction,
excluding a Previously Disclosed fee to be paid to Baxter
Fentriss and Company.
Copies of all agreements with Baxter Fentriss and Company
have been previously furnished to Washington Federal.
(m) Employee Benefit Plans.
----------------------
(i) All benefit and compensation plans, contracts,
policies or arrangements covering current or former employees of FFSW and its
Subsidiaries (the
"Employees")
and current or former
directors or independent
contractors of FFSW
and its Subsidiaries including, but not limited to,
"employee benefit
plans" within the meaning of Section 3(3) of ERISA, and
severance, employment, change in control, fringe benefit, deferred
compensation,
stock option, stock purchase, stock appreciation rights, stock
based, incentive
and bonus plans,
agreements,
programs, policies or other arrangements (the
"Benefit Plans"), have been Previously Disclosed to Washington
Federal. True and
complete copies of (A)
all Benefit
Plans including, but not limited to, any
trust instruments and
insurance contracts
forming a part of any
Benefit Plans
and all amendments
thereto; (B) the most recent annual report (Form 5500),
together with all
schedules,
as required, filed with the Internal Revenue
Service ("IRS") or
Department
of Labor (the "DOL"),
as applicable, and any
financial statements
and opinions required
by Section 103(e)(3)
of ERISA with
respect to each
Benefit Plan;
(C) for each
Benefit Plan which is
a "top-hat"
plan, a copy of filings with the DOL; (D) the most recent
determination
letter
issued by the IRS for each Benefit Plan that is intended to be
"qualified" under
Section 401(a) of the Code; (E) the most recent summary plan
description and any
summary of material
modifications, as
required, for each Benefit Plan; (F) the
most recent actuarial report, if any relating to each Benefit Plan;
(G) the most
recent actuarial
valuation,
study or estimate of
any retiree medical and life
insurance benefits
plan or supplemental
retirement benefits
plan; and (H) the
most recent summary
annual report for each Benefit
Plan required to provide
summary annual
reports by Section
104 of ERISA,
have been provided or made
available to Washington Federal.
(ii) Each
Benefit
Plan
has been established and
administered to date in all material respects in accordance with the
applicable
provisions of
ERISA, the Code and applicable law and with the terms and
provisions of all
documents,
contracts or
agreements
pursuant to which
such
Benefit Plan is
maintained. Each
Benefit Plan which is an "employee
pension
24
<PAGE>
benefit plan" within the meaning of Section 3(2) of ERISA (a
"Pension Plan") and
which is intended to be qualified under Section 401(a) of the Code,
has received
a favorable
determination
letter from the IRS, and FFSW is not aware of any
circumstances likely to result in revocation of any such favorable
determination
letter or the loss of the qualification of such Pension Plan under Section
401(a) of the Code.
Neither FFSW nor any of its Subsidiaries has received any
correspondence or
written or verbal notice from the IRS, DOL, any other
governmental agency,
any participant in or beneficiary of,
a Benefit Plan, or
any agent representing
any of the
foregoing that brings into question the
qualification of any
such Benefit
Plan. There is no material pending or, to
FFSW's knowledge,
threatened litigation
relating to the Benefit Plans. Neither
FFSW nor any of its
Subsidiaries has
engaged in a transaction with respect to
any Benefit
Plan or Pension Plan that could subject FFSW or any of its
Subsidiaries to a tax
or penalty imposed by
either Section 4975 of the Code or
Section 502(i)
of ERISA in an amount
which would be material. There are no
matters pending before the IRS, DOL or other governmental agency
with respect to
any Benefit Plan.
No Benefit Plan or
related trust has been
the subject of an
audit, investigation or examination by a Governmental
Authority.
(iii) No liability under Title IV of ERISA has been or
is expected to be incurred by FFSW or any of its Subsidiaries with respect to
any ongoing, frozen or terminated "single-employer plan," within the
meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by
any of them or
the single-employer
plan of any entity
which is considered
one employer with
FFSW under
Section 4001 of ERISA or Section 414 of the Code (an "ERISA
Affiliate"). Neither
FFSW nor any of its Subsidiaries has incurred, and neither
expects to incur, any withdrawal liability with respect to a
multiemployer plan
(as defined in
4001(a)(3) of ERISA) under of Title IV of ERISA (regardless of
whether based
on contributions of an ERISA Affiliate). No notice of a
"reportable event,"
within the meaning of
Section 4043 of ERISA
for which the
30-day reporting
requirement has not been waived, has been required to be filed
for any Pension Plan
or by any ERISA
Affiliate or will be required to be filed
in connection with the
Transaction.
There has been no
termination or
partial
termination, as
defined in Section 411(d) of the Code and the regulations
thereunder, of any Pension Plan.
(iv) All contributions required to be made under the
terms of any Benefit
Plan have been timely made or have been reflected on the
financial statements
of FFSW included in FFSW's Securities Documents. Neither
any Pension
Plan nor any
single-employer
plan of an ERISA
Affiliate has an
"accumulated funding
deficiency" (whether
or not waived) within the meaning of
Section 412 of the
Code or Section 302 of ERISA and no ERISA Affiliate has an
outstanding funding waiver. Except as Previously Disclosed, neither
FFSW nor any
of its Subsidiaries
has provided,
or is required to
provide, security to
any
Pension Plan or to any
single-employer plan
of an ERISA Affiliate
pursuant to
Section 401(a)(29) of the Code.
(v) Neither FFSW
nor any of its Subsidiaries has any
obligations for
retiree health and life benefits under any Benefit Plan,
other
than coverage as may
be required under
Section 4980B of the
Code or Part 6 of
Title I of ERISA, or under the continuation of coverage
provisions of the
laws
of any state or locality. FFSW or any of its Subsidiaries may amend
or terminate
any such Benefit Plan in accordance with and to the extent
permitted by their
terms at any time
without incurring any liability thereunder. No event or
condition exists with
respect to a Benefit
Plan that could
subject FFSW to a
material tax under Section 4980B of the Code.
25
<PAGE>
(vi) None of the execution of this Agreement,
shareholder approval
of this Agreement
or consummation of the Transaction,
either along
or in connection with a subsequent event, will, except as
Previously Disclosed,
(A) entitle any Employees or any current or former
director or
independent
contractor
of FFSW or any of its Subsidiaries to
severance pay
or any increase in severance pay upon any termination of
employment after the date hereof, (B) accelerate the time of payment
or vesting
or trigger any payment
or funding (through a
grantor trust or
otherwise)
of
compensation or benefits under, increase the amount payable or
trigger any other
material obligation
pursuant to, any of
the Benefit Plans,
(C) result in any
breach or violation
of, or a default
under, any of the Benefit Plans or (D)
result in any payment
that would be a
"parachute payment" to
a "disqualified
individual" as those
terms are defined in Section 280G of the Code, without
regard to whether such payment is reasonable compensation for personal
services
performed or to be performed in the future.
(vii) All required reports and descriptions (including
but not limited to Form 5500 annual reports and required attachments, Forms
1099-R, summary annual reports, Forms PBGC-1 and summary plan
descriptions) have
been filed or distributed appropriately with respect to each Benefit Plan.
All
required tax filings
with respect to each Benefit Plan have been made, and any
taxes due in connection with such filings have been paid.
(viii) Section
5.03(m)(viii)
of the FFSW Disclosure
Schedule sets forth the following: (A) the maximum amount of all payments and
benefits to which each
individual
set forth on such
schedule is entitled to
receive, pursuant to
all employment,
salary continuation, bonus, change in
control, and all other agreements, plans and arrangements,
in connection with
a
termination of employment before or following, or otherwise in connection
with
or contingent upon, the transactions contemplated under this Agreement, such
amounts to be
adjusted to take into account only those changes expressly
identified in Section
5.03(m)(viii) of the FFSW Disclosure Schedule (each such
total amount in
respect of each such individual, the "Change in Control
Benefit"), other
than the payment any such individual shall otherwise be
entitled to receive as
a gross-up payment in
respect of any excise tax imposed
on the individual pursuant to Section 4999 of the Code as
calculated pursuant to
the applicable
agreement (each such
payment, a "Gross-Up
Payment");
(B) the
amount of any Gross-Up
Payment payable to each such individual; and (C) the
maximum aggregate
amount of all Change in Control Benefits and Gross-Up
Payments.
(ix) No
Benefit Plan is or has been funded by,
associated with, or related to a "voluntary employee's beneficiary
association"
within the meaning of Section 501(c)(9) of the Code, a "welfare
benefit fund"
within the meaning of
Section 419 of the
Code, a "qualified asset account"
within the meaning of Section 419A of the Code or a "multiple
employer welfare
arrangement" within the meaning of Section 3(40) of ERISA.
(x) Each Benefit Plan which is a "nonqualified deferred
compensation plan"
(within the
meaning of Section
409A of the Code) has
been
operated in compliance
with Section 409A of the Code and the guidance issued by
the IRS with respect to such plans.
(n) Labor Matters.
Neither FFSW
nor any of its
Subsidiaries is a
-------------
party to or is bound by any collective bargaining agreement, contract or other
26
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agreement or understanding with a labor union or labor
organization, nor is FFSW
or any of its
Subsidiaries the
subject of a proceeding asserting that it has
committed an unfair
labor practice
(within the meaning of
the National Labor
Relations Act) or seeking to compel FFSW or any of its Subsidiaries to bargain
with any labor
organization as to
wages or conditions of
employment,
nor is
there any strike or other labor dispute involving it or any of its
Subsidiaries
pending or,
to FFSW's knowledge, threatened, nor is FFSW or any of its
Subsidiaries aware of
any activity involving its employees seeking to certify a
collective bargaining unit or engaging in other organizational
activity. Each of
FFSW and its
Subsidiaries has paid
in full all wages,
salaries,
commissions,
bonuses, benefits
and other compensation currently due to its employees or
otherwise arising on a
current basis
under any policy,
practice, agreement,
plan, program, statute or other law.
(o) Environmental Matters. Except as Previously Disclosed, there
---------------------
are no legal,
administrative,
arbitral or other proceedings, claims, actions,
causes of action, private environmental investigations, remediation activities
or governmental
investigations
of any nature seeking to impose, or that
reasonably could be expected to result in the imposition,
on FFSW or any of
its
Subsidiaries of any liability or obligation arising under any
Environmental Laws
pending or, to the
knowledge of FFSW,
threatened
against FFSW or any of its
Subsidiaries, which
liability or obligation could have or could reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect on
FFSW or its Subsidiaries taken as a whole. To the knowledge of
FFSW, there is no
reasonable basis
for any such proceeding, claim, action, environmental
remediation or investigation that could impose any liability or
obligation that
could have or could
reasonably be
expected to have, individually or in the
aggregate, a Material
Adverse Effect on FFSW or its Subsidiaries taken as a
whole. FFSW and its Subsidiaries are in compliance in all material
respects with
applicable
Environmental Laws. To FFSW's knowledge, no real property
(including
buildings or other
structures) currently
or formerly owned or operated by FFSW
or any of its Subsidiaries, or any property in which FFSW or any of its
Subsidiaries has held
a security interest,
Lien or a fiduciary or
management
role ("FFSW Loan Property"), has been contaminated with, or has
had any release
of, any Hazardous
Substance that has resulted, or would reasonably be
expected
to result, in a
Material Adverse Effect with respect to FFSW. Neither FFSW nor
any of its
Subsidiaries could be
deemed the owner or
operator of, nor has
it
participated in the management regarding Hazardous Substances of,
any FFSW Loan
Property which has
been contaminated
with, or has had any release of, any
Hazardous Substance
that has resulted, or would reasonably be expected to
result, in a Material Adverse Effect with respect to FFSW.
Neither FFSW nor
any
of its Subsidiaries
has any liability for any Hazardous Substance disposal or
contamination on
any third party property. Neither FFSW nor any of its
Subsidiaries nor, to FFSW's knowledge, any Person whose liability
FFSW or any of
its Subsidiaries has
assumed whether
contractually or by operation of law, has
received any notice,
demand letter, claim
or request for information alleging
any material violation
of, or material
liability under, any Environmental Law.
Neither FFSW nor any
of its Subsidiaries
is subject to any order, decree,
injunction or other agreement with any Governmental Authority or
any third party
relating to
any Environmental Law. To FFSW's knowledge, there are no
circumstances or
conditions (including
the presence of
asbestos,
underground
storage tanks, lead products, polychlorinated biphenyls, prior manufacturing
operations,
dry-cleaning, or
automotive services) involving FFSW or any of its
Subsidiaries, any
currently or formerly
owned or operated
property, any FFSW
Loan Property, or, to
FFSW's knowledge, any
Person whose liability FFSW or any
of its Subsidiaries has assumed whether contractually or by operation of
27
<PAGE>
law,that could
reasonably
be expected to result in any material claims,
liability or investigations against FFSW or any of its
Subsidiaries, result
in
any material
restrictions on the
ownership,
use, or transfer of
any property
pursuant to any
Environmental Law, or
adversely affect the value of any FFSW
Loan Property. FFSW
has Previously
Disclosed and made
available to Washington
Federal copies
of all environmental reports or studies, sampling data,
correspondence and
filings in its
possession or
reasonably
available to it
relating to FFSW, its
Subsidiaries
and any currently or formerly owned or
operated property.
As used herein, the term "Environmental Laws" means any federal,
state, local or foreign law, statute, code, ordinance, injunction, regulation,
order, decree,
permit, authorization, opinion or agency or Governmental
Authority requirement
relating to: (A) the
protection or
restoration
of the
environment, health,
safety, or natural resources, (B) the handling, use,
presence, disposal,
release or threatened release of any Hazardous Substance or
(C) wetlands, indoor
air, pollution,
contamination or any
injury or threat of
injury to persons or property in connection with any Hazardous Substance; and
the term "Hazardous Substance" means any substance that is: (A) listed,
classified or regulated pursuant to any Environmental Law, (B) any petroleum,
petroleum product or by-product, asbestos-containing material,
lead-containing
paint or plumbing,
polychlorinated
biphenyls, radioactive
materials, radon or
urea-formaldehyde
insulation or (C) any other substance which is the subject of
regulatory action
by any Governmental Authority in connection with any
Environmental Law.
(p) Tax Matters.
-----------
(i) (A) All Tax Returns that are required to be filed
on or before the
Effective Date (taking
into account any
extensions
of time
within which to file
which have not
expired) by or with respect to the FFSW
Group, including FFSW and its Subsidiaries, have been or will be
timely filed on
or before the Effective Date, (B) all such Tax Returns are or
will be true and
complete in all
material respects, (C) all Taxes shown to be due on the Tax
Returns referred
to in clause (A) have
been or will be timely paid in full and
all other Taxes that
are imposed on any
member of the FFSW Group and that have
due dates on or before
the Effective Date have or will be paid,
(D) the Tax
Returns referred to in
clause (A) are not currently under examination and have
not been examined by the IRS or the appropriate Tax authority, the FFSW Group
has not extended or waived the statute of limitations for any such Tax Returns
and the period for
assessment of the Taxes in respect of which such Tax Returns
were required
to be filed has expired, (E) all deficiencies asserted or
assessments made as a
result of examinations
conducted by any taxing authority
have been paid in full, (F) no issues that have been
raised by the
appropriate
taxing authority in writing in connection with the examination of
any of the Tax
Returns referred to in clause (A) are currently pending and (G) no
member of the
FFSW Group has extended or waived any statutes of limitation with
respect to any
Taxes of FFSW. There
are no material Liens for Taxes upon the assets of FFSW or
its Subsidiaries,
other than with
respect to Taxes not
yet due and payable or
that are being contested in good faith by appropriate proceedings and for which
reserves adequate in
accordance with GAAP have been provided. No written claim
has ever been made by any Governmental Authority in a jurisdiction
where neither
FFSW nor any of its Subsidiaries files Tax Returns that it is or
may be subject
to taxation by that jurisdiction.
28
<PAGE>
(ii) FFSW has made available to Washington Federal true
and correct copies of the United States federal income Tax Returns
filed by FFSW
for each of the three most recent fiscal years for which such
returns have been
filed.
(iii) Neither FFSW nor any of its Subsidiaries has any
liability with respect to income, franchise or similar Taxes that
accrued on or
before the end of the most recent period covered by FFSW's
Securities
Documents
filed prior to the date hereof in excess of the amounts
accrued or subject to
a
reserve with respect
thereto that are
reflected in the
financial statements
included in FFSW's Securities Documents filed on or prior to the
date hereof.
(iv) Neither FFSW nor any of its Subsidiaries is a party
to any Tax allocation,
Tax indemnity or Tax sharing agreement, is or has been a
member of an
affiliated group
filing consolidated unitary or combined Tax
Returns (other
than a group the
common parent of which
is or was FFSW) or, to
the knowledge of FFSW,
has any liability for
Taxes of any Person (other than a
member of the FFSW Group) arising from the application of Treasury Regulation
section 1.1502-6 or any analogous provision of state, local or foreign law, or
otherwise has any
liability for the Taxes of any Person (other than a member of
the FFSW Group) as a transferee or successor, by contract, or
otherwise.
(v) No closing agreements, private letter rulings,
technical advice
memoranda or similar
agreements or rulings
have been entered
into or issued by any taxing authority with respect to FFSW and its
Subsidiaries
and no such agreement or ruling has been applied for and is
currently pending.
(vi) Except as
set forth in Section 5.03(p)(vi) of
FFSW's Disclosure Schedule, neither FFSW nor any of its
Subsidiaries
maintains
any compensation or benefits plans, programs or arrangements the
payments under
which would not
reasonably
be expected
to be deductible as a result of the
limitations under
Section 162(m),
280G or 424 of the
Code and the regulations
issued thereunder (or any similar provision of state or local
laws).
(vii) (A)
No Tax is required to be withheld pursuant to
Section 1445 of the Code as a result of the Transaction and (B) all Taxes that
FFSW or any of its
Subsidiaries is or was required by law to withhold, collect
or deposit have been duly withheld, collected or deposited
and, to the extent
required by applicable law, have been paid to the proper
Governmental
Authority
or other Person.
(viii) None of FFSW or any of its Subsidiaries has been
either a "distributing corporation" or a "controlled corporation" in a
distribution occurring
during the last five
years in which the parties to such
distribution treated the distribution as one to which Section 355
of the Code is
applicable.
(ix) None of FFSW or any of its Subsidiaries will be
required to include
amounts in income,
or exclude
items of deduction, in a
taxable period beginning after the Effective Date as a result of
(i) a change in
method of accounting
occurring prior to the Effective Date, (ii) an installment
sale or open transaction arising in a taxable period (or portion
thereof) ending
29
<PAGE>
on or before the Effective Date, (iii) a prepaid amount received,
or paid, prior
to the Effective Date or (iv) deferred intercompany gains or losses,
intercompany items, or similar items arisin
