sv4
As filed with the Securities and Exchange Commission on
February 1, 2007
Registration
No. 333-
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
Form S-4
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF
1933
WESTERN ALLIANCE
BANCORPORATION
(Exact name of Registrant as
specified in its charter)
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Nevada
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6022
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88-0365922
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(State or other jurisdiction
of
incorporation or organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer
Identification No.)
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Western Alliance
Bancorporation
2700 West Sahara
Avenue
Las Vegas, Nevada
89102
Telephone:
(702) 248-4200
(Name, address and telephone of
principal executive offices)
Robert Sarver
President, Chief Executive
Officer
2700 West Sahara
Avenue
Las Vegas, Nevada
89102
Telephone:
(702) 248-4200
(Name, address, including zip
code and telephone number, including area code, of agent for
service)
with copies to:
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Stuart G. Stein, Esq.
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Alan B.
Rabkin, Esq.
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R. Daniel
Keating, Esq.
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Jones Vargas
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Hogan & Hartson
L.L.P.
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100 West Liberty,
12th Floor
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555 13th Street, N.W.
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Reno, NV 89501
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Washington, DC 20004
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Telephone: (775)
786-5000
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Telephone: (202)
637-8575
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Facsimile: (775)
786-1177
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Facsimile: (202)
637-5910
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Approximate date of commencement of proposed sale of the
securities to the public: As soon as practicable
after this Registration Statement becomes effective and all
other conditions to the consummation of the transaction
described herein have been satisfied or waived.
If the securities being registered on this Form are being
offered in connection with the formation of a holding company
and there is compliance with General Instruction G, check the
following box. o
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. o
If this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o
CALCULATION
OF REGISTRATION FEE
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Proposed Maximum
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Proposed Maximum
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Amount of
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Title of Each Class of
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Amount to be
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Offering Price
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Aggregate
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Registration
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Securities to be Registered
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Registered(1)
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per Unit
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Offering Price(2)
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Fee(3)
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Common Stock, par value
0.0001 per share
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2,942,636
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Not applicable
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$14,815,720
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$1,585.28
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(1)
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The maximum number of shares of
common stock of Western Alliance Bancorporation issuable to
shareholders of FICN upon consummation of the merger of FICN
with and into Western Alliance.
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(2)
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Estimated pursuant to
Rule 457(f)(2) under Securities Act of 1933, as amended,
based on the book value of FICN common stock expected to be
exchanged in connection with the merger and computed by
multiplying (a) the book value of the FICN common stock as
of the latest practicable date prior to the date of filing this
registration statement by (b) the maximum number of shares
of FICN common stock expected to be exchanged in connection with
the merger, less the estimated amount of cash to be paid by
Western Alliance in connection with the merger.
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(3)
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Calculated by multiplying
(a) the proposed maximum aggregate offering price for all
securities to be registered by (b) .000107.
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The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
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WESTERN ALLIANCE
BANCORPORATION
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FIRST INDEPENDENT CAPITAL OF
NEVADA
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2700 West Sahara
Avenue
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5335 Kietzke Lane
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Las Vegas, Nevada
89102
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Reno, Nevada 89511
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Telephone:
(702) 248-4200
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Telephone: (775)
828-2000
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PROSPECTUS
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PROXY
STATEMENT
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The Boards of Directors of Western Alliance Bancorporation
(Western Alliance) and First Independent Capital of
Nevada (FICN) have approved an agreement and plan of
merger, pursuant to which FICN will merge with and into Western
Alliance, with Western Alliance surviving (referred to herein as
the merger).
If the merger takes place, you may elect to receive either
$93.60 in cash or Western Alliance common stock of comparable
value for each share of FICN common stock you own so long as
Western Alliances weighted average trading price for the
twenty consecutive trading days ending on the last trading day
prior to the date the merger is completed is between $32.91 and
$39.13, unless you exercise your dissenters rights. If the
weighted average Western Alliance trading price at that date is
less than $32.91, you will receive, with respect to shares for
which you have elected to receive Western Alliance common stock,
shares of Western Alliance common stock based on an exchange
ratio that is fixed at 2.84412 shares of Western Alliance
common stock for each share of FICN common stock. If the
weighted average Western Alliance stock price is more than
$39.13, the exchange ratio will be fixed at 2.39203 shares
of Western Alliance common stock for each share of FICN common
stock. In either case, the amount of cash consideration paid per
share for which an election to receive cash is made will remain
$93.60 per share. You will have the opportunity to elect
the form of consideration to be received for your shares,
subject to proration and allocation procedures set forth in the
merger agreement which are intended to ensure that 80% of the
FICN shares are exchanged for shares of common stock of Western
Alliance. Therefore, your ability to receive cash or stock in
accordance with your election may depend on the elections of
other FICN shareholders. Western Alliance may opt to increase
the exchange ratio in specific circumstances where FICN could
otherwise terminate the merger agreement and likewise, FICN may
opt to decrease the exchange ratio in specific circumstances
where Western Alliance could otherwise terminate the merger
agreement.
If you hold options to purchase FICN common stock that are
outstanding at the effective time of the merger, you may choose
either to cancel the options to purchase FICN common stock in
exchange for cash consideration as provided in the merger
agreement or to convert the options into options to purchase
shares of Western Alliance common stock.
Shareholders and optionholders may also receive additional cash
consideration of up to $2.38 per share during the two year
period after the merger has been completed depending upon the
performance of certain credits in the FICN loan portfolio. Of
this amount, approximately $0.79 per share has become
payable as of the date of this proxy statement/prospectus,
pending the closing of the merger.
We expect that shareholders who receive Western Alliance common
stock for their FICN common stock will generally not recognize
any gain or loss with respect to the exchange. Shareholders who
receive a combination of Western Alliance common stock and cash
will generally recognize gain equal to the lesser of
(1) the amount of cash received and (2) the excess of
the amount realized in the transaction (i.e., the
fair market value of the Western Alliance common stock at the
effective time of the merger plus the amount of cash received),
over their tax basis in their FICN common stock.
Western Alliances common stock is traded on the New York
Stock Exchange under the symbol WAL.
This is a prospectus of Western Alliance relating to its
offering of up to 2,942,636 shares of Western Alliance
common stock to FICN shareholders in the proposed merger and a
proxy statement of FICN. This document and the documents
incorporated by reference contain important information about
Western Alliance, FICN, the merger and the conditions that must
be satisfied before the merger can occur. Please give all the
information your careful attention.
Important
Message for Holders of FICN Common Stock
Your vote is very important. The merger agreement must be
approved by the holders of at least a majority of the
outstanding shares of FICNs common stock entitled to vote.
To vote your shares, you may use the enclosed proxy card or
attend the special shareholders meeting we will hold to
allow you to consider and vote on the merger agreement. To
approve the merger agreement, you must vote for the proposal by
following the instructions on the enclosed proxy card. If you do
not vote at all, that will, in effect, count as a vote against
the proposal. Our board of directors urges you to vote FOR
this proposal.
On behalf of our board of directors, we thank you for your
continued support of our company and urge you to vote FOR
adoption of the merger agreement.
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Grant Markham
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John P. Sande, III
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Chief Executive Officer
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Chairman of the Board of Directors
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First Independent Capital of
Nevada
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First Independent Capital of
Nevada
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Western Alliances common stock has not been approved
or disapproved by the Securities and Exchange Commission, any
state securities commission, or the Federal Deposit Insurance
Corporation, nor have any of these institutions passed upon the
accuracy or adequacy of this proxy statement/prospectus. Any
representation to the contrary is a criminal offense. The shares
of Western Alliance common stock are not savings deposit
accounts or other obligations of any bank or savings
association, and are not insured by the Federal Deposit
Insurance Corporation or any other governmental agency.
Please see Risk Factors beginning on page 12
and in the documents incorporated by reference in this
prospectus for a discussion of risks associated with the merger
and in owning Western Alliance stock.
THIS PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND FINANCIAL
INFORMATION ABOUT WESTERN ALLIANCE THAT IS NOT INCLUDED IN OR
DELIVERED WITH THIS DOCUMENT. THIS INFORMATION IS AVAILABLE
WITHOUT CHARGE TO YOU IF YOU CALL OR WRITE TO DALE GIBBONS,
CHIEF FINANCIAL OFFICER, WESTERN ALLIANCE BANCORPORATION, 2700
WEST SAHARA AVENUE, LAS VEGAS, NV 89102, TELEPHONE:
(702) 248-4200,
OR LISA L. MILKE, CHIEF FINANCIAL OFFICER OF FIRST INDEPENDENT
CAPITAL OF NEVADA, 5335 KIETZKE LANE, RENO, NEVADA 89511,
TELEPHONE:
(775) 824-4345,
IN ORDER TO OBTAIN TIMELY DELIVERY OF DOCUMENTS YOU SHOULD
REQUEST INFORMATION AS SOON AS POSSIBLE, BUT NO LATER
THAN ,
2007
The date of this proxy statement/prospectus
is ,
2007
and is first being mailed to shareholders, together with the
attached proxy card,
on ,
2007.
FIRST
INDEPENDENT CAPITAL OF NEVADA
5335 Kietzke Lane
Reno, Nevada 89511
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD
ON ,
2007
A special meeting of shareholders of First Independent Capital
of Nevada (FICN) will be held
at
local time
on ,
2007, at its principal executive offices at 5335 Kietzke Lane,
Reno, Nevada 89511, for the following purposes:
1. To consider and vote on a proposal to adopt and approve
an agreement and plan of merger, pursuant to which FICN will
merge with and into Western Alliance Bancorporation with Western
Alliance Bancorporation surviving (referred to herein as the
merger).
2. To transact any other business that properly comes
before the special meeting, or any adjournments or postponements
of the meeting, including, without limitation, a motion to
adjourn the special meeting to another time and/or place for the
purpose of soliciting additional proxies in order to approve the
merger agreement or otherwise.
You are entitled to notice of and to vote at the special meeting
or any adjournments or postponements thereof only if you were a
holder of record of FICNs common stock at the close of
business
on ,
2007.
FICNs Board of Directors has determined that the merger is
advisable and is fair to and in the best interest of FICNs
shareholders, has approved the merger agreement and the merger,
and recommends that the holders of FICNs common stock vote
to approve the merger agreement.
The affirmative vote of a majority of the shares of FICNs
common stock outstanding
on ,
2007 is required to approve the merger agreement and the merger.
The required vote of FICNs shareholders is based on the
total number of shares of FICNs common stock outstanding
and not on the number of shares which are actually voted. Not
returning a proxy card, or not voting in person at the special
meeting or abstaining from voting will have the same effect as
voting AGAINST the merger agreement.
If you hold FICN common stock on the record date, you are
entitled to dissent from the merger under Sections 92A.300
through 92A.500 of the Nevada Revised Statutes. A copy of these
sections is attached to the proxy statement/prospectus at
Appendix B.
It is very important that all shares of FICN common stock be
represented at the special meeting. Whether or not you plan to
attend the special meeting, please complete, date and sign the
enclosed proxy card and return it as soon as possible in the
enclosed postage-paid envelope. A shareholder who executes a
proxy may revoke it at any time before it is exercised by giving
written notice to the Secretary of FICN at the address set forth
above, by subsequently filing another proxy or by attending the
special meeting and voting in person. Executed proxies with
respect to shares of FICN common stock with no instructions
indicated on the proxy card will be voted FOR the merger
agreement and the merger.
By order of the Board of Directors,
Grant Markham
Chief Executive Officer
Reno, Nevada
,
2007
Your vote is important. Please complete, sign, date and
return your proxy card.
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EX-23.1 |
EX-99.1 |
ii
SUMMARY
The following is a summary of information located elsewhere
in this document. It does not contain all of the information
that is important to you. Before you vote, you should give
careful consideration to all of the information contained in
this document and the information incorporated into this
document by reference to fully understand the merger. See
Where You Can Find More Information on page 57
and Information Incorporated by Reference on
page 58. Each item in this summary refers to the page where
that subject is discussed in more detail.
General
Western Alliance Bancorporation, or Western Alliance, and First
Independent Capital of Nevada, or FICN, have entered into an
agreement and plan of merger. Under the agreement, FICN will
merge with and into Western Alliance, with Western Alliance
surviving (referred to herein as the merger).
FICNs wholly owned subsidiary First Independent Bank of
Nevada will survive the merger as a wholly owned subsidiary of
Western Alliance.
The
Companies Involved in the Merger (page 23)
Western Alliance Bancorporation
2700 West Sahara Avenue
Las Vegas, Nevada 89102
Tel:
(702) 248-4200
Western Alliance is a Nevada corporation and is the parent
company of Bank of Nevada, Alliance Bank of Arizona, Torrey
Pines Bank, Alta Alliance Bank, Miller/Russell &
Associates, Premier Trust and Western Alliance Leasing Company.
Western Alliance provides a full range of banking and related
services to locally owned businesses, professional firms, real
estate developers and investors, local non-profit organizations,
high net worth individuals and other consumers through
subsidiary banks and financial services companies located in
Nevada, Arizona and California. On a consolidated basis, as of
September 30, 2006, Western Alliance had approximately
$4.0 billion in assets, $2.9 billion in total loans,
$3.3 billion in deposits and $393.1 million in
stockholders equity.
First Independent Capital of Nevada
5335 Kietzke Lane
Reno, Nevada 89511
Tel:
(775) 828-2000
FICN is a bank holding company headquartered in Reno, Nevada.
Through its wholly owned subsidiary, First Independent Bank of
Nevada, FICN operates four banking offices and a commercial real
estate brokerage division in the Reno/Sparks and Fallon
communities of northern Nevada. On a consolidated basis, as of
December 31, 2006, FICN had approximately
$428.0 million in assets, $288.4 million in total
loans, $386.2 million in deposits and $31.8 million in
stockholders equity. For a description of the business of
FICN, please see Information about FICN.
Merger
Consideration (page 27)
Cash or Stock Consideration. You may elect to
receive either $93.60 in cash or Western Alliance common stock
of comparable value for each share of FICN common stock you own
so long as Western Alliances weighted average trading
price for the twenty consecutive trading days ending on the last
trading day prior to the date the merger is completed is between
$32.91 and $39.13, unless you exercise your dissenters
rights. If the weighted average Western Alliance trading price
at that date is less than $32.91, you will receive, with respect
to shares for which you have elected to receive Western Alliance
common stock, shares of Western Alliance common stock based on
an exchange ratio that is fixed at 2.84412 shares of
Western Alliance common stock for each share of FICN common
stock. If the weighted average Western Alliance stock price is
more than $39.13, the exchange ratio will be fixed at
2.39203 shares of Western Alliance common stock for each
share of FICN common stock. In either case, the amount of cash
1
consideration paid per share for which an election to receive
cash is made will remain $93.60 per share. You will have the
opportunity to elect the form of consideration to be received
for your shares, subject to proration and allocation procedures
set forth in the merger agreement which are intended to ensure
that 80% of the FICN shares are exchanged for shares of common
stock of Western Alliance. Therefore, your ability to receive
cash or stock in accordance with your election may depend on the
elections of other FICN shareholders.
Western Alliance may opt to increase the exchange ratio in
specific circumstances where FICN could otherwise terminate the
merger agreement and likewise, FICN may opt to decrease the
exchange ratio in specific circumstances where Western Alliance
could otherwise terminate the merger agreement. For more
information regarding these termination rights and the
adjustments that may result to the merger consideration, see
The Merger Termination of the Merger
Agreement.
Potential Additional Cash
Consideration. Shareholders and optionholders may
also receive additional cash consideration of up to $2.38 per
share during the two year period after the merger has been
completed depending upon the performance of certain credits in
the FICN loan portfolio. Of this amount, approximately $0.79 per
share has become payable as of the date of this proxy
statement/prospectus, pending the closing of the merger.
FICN Stock Options. If you hold options to
purchase FICN common stock that are outstanding at the effective
time of the merger, you may choose either to cancel the options
to purchase FICN common stock in exchange for cash consideration
as provided in the merger agreement or to convert the options
into options to purchase shares of Western Alliance common stock.
If you elect to receive cash consideration for your options, you
will receive an amount of cash, without interest, equal to the
product of:
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the excess of the per share cash consideration of $93.60 over
the exercise price per share of such option and
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the number of shares of FICN common stock subject to such option.
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If you elect to convert your options to purchase shares of FICN
common stock into options to purchase shares of Western Alliance
common stock, then:
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the number of shares of FICN common stock subject to the option
immediately before the effective time of the merger shall be
multiplied by the applicable exchange ratio, rounded down to the
nearest whole share, and
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the exercise price per share of Western Alliance common stock
under the option immediately after the effective time of the
merger shall be equal to the exercise price per share of FICN
common stock under the option immediately before the effective
time of the merger, divided by the applicable exchange ratio,
provided that such exercise price shall be rounded up to the
nearest cent. The options you receive from Western Alliance will
be exercisable immediately. The duration and other terms of the
FICN options will otherwise be unchanged.
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Election
Procedures for Shareholders; Surrender of Stock Certificates
(page 30)
If you own FICN common stock, you will soon receive under
separate cover an election form that you may use to indicate
whether your preference is to receive cash or shares of Western
Alliance common stock. The election deadline will be
5:00 p.m., New York time,
on ,
2007, the day prior to the date of the special meeting (the
election deadline). To make an election, a holder of
FICN common stock must submit a properly completed election form
and return it, together with all stock certificates, so that the
form and certificates are actually received by the exchange
agent at or before the election deadline in accordance with the
instructions on the election form. FICN shareholders will be
unable to sell their FICN stock from the time when the election
is made until the merger is completed.
FICN shareholders who make no election to receive cash or
Western Alliance common stock in the merger, or who do not make
a valid election, will be deemed not to have made an election.
Shareholders not
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making an election may be paid in cash, Western Alliance common
stock or a mix of cash and shares of Western Alliance common
stock depending on, and after giving effect to, the number of
valid cash elections and stock elections that have been made by
other FICN stockholders.
Election
Procedures for Option Holders (page 31)
If you own options to purchase shares of FICN common stock, you
will soon receive under separate cover an election form that you
may use to indicate whether your preference is to receive cash
in exchange for your options or to convert your options into
options to purchase shares of Western Alliance common stock. The
election deadline will be the same as for elections with respect
to shares of FICN common stock, which is 5:00 p.m., New
York City time, on , 2007, the date prior to the date of the
special meeting. To make an election, an optionholder must
submit a properly completed election form and return it so that
the form is actually received by American Stock
Transfer & Trust Company at or before the election
deadline in accordance with the instructions on the election
form. FICN option holders who make no election with respect to
their options, or who do not make a valid election, will be
deemed to have elected to receive cash in exchange for their
options.
Material
Federal Income Tax Consequences (page 49)
The merger is intended to qualify as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of
1986, as amended (the Code). Assuming that the
merger so qualifies, FICN shareholders who receive Western
Alliance common stock for their FICN common stock will generally
not recognize any gain or loss with respect to the exchange.
FICN shareholders who receive a combination of Western Alliance
common stock and cash will generally recognize gain equal to the
lesser of (1) the amount of cash received and (2) the
excess of the amount realized in the transaction
(i.e., the fair market value of the Western Alliance
common stock at the effective time of the merger plus the amount
of cash received), over their tax basis in their FICN common
stock. Those holders receiving solely cash for their FICN common
stock will generally recognize gain or loss equal to the
difference between the amount of cash received and their tax
basis in their shares of FICN common stock. For optionholders
who choose the cash consideration, the cash payment will be
treated as compensation and shall be net of any applicable
withholding tax.
However, because every exchanging FICN shareholder and
optionholder will be eligible to receive, in addition to the
combination of cash and stock that such holder would otherwise
receive, a contingent right to an additional $2.38 per share,
the merger will likely result in an application of the
installment sale rules of Section 453 of the
Code. These rules are extremely complex and are described in
greater detail under MATERIAL U.S. FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER.
Tax matters are very complicated. You should consult your
tax advisor for a full explanation of the tax consequences of
the merger to you, including the effects of the installment sale
rules.
FICN
Board of Directors Recommends Approval (page 25)
The FICN Board of Directors unanimously approved the merger
agreement and the merger and unanimously recommends that all
holders of FICN common stock vote FOR approval of these matters.
Opinion
of Financial Advisor to FICN (page 36)
In deciding to approve the merger, FICNs Board of
Directors considered the opinion of Hovde Financial, Inc.,
FICNs financial advisor. The opinion concluded that the
proposed consideration to be received by the holders of
FICNs common stock in the merger is fair to the
shareholders from a financial point of view. This opinion is
attached as Appendix C to this document. We
encourage you to read this opinion carefully in order to
completely understand the assumptions made, matters considered
and limitations of the review made by Hovde in providing this
opinion.
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Dissenters
Appraisal Rights (page 45)
Under Nevada law, you are entitled to dissenters rights of
appraisal in connection with the merger. If you want to assert
your appraisal rights, you must follow carefully the procedures
described at Appendix B of this document.
Differences
in the Rights of Shareholders (page 58)
The rights of FICN shareholders who continue as Western Alliance
shareholders after the merger will be governed by the articles
of incorporation and bylaws of Western Alliance rather than the
articles of incorporation and bylaws of FICN. These rights will
continue to be governed by the laws of Nevada, as the state of
both Western Alliances and FICNs incorporation.
Interests
of FICN Directors and Executive Officers in the Merger That are
Different From Yours (page 43)
At the close of business on December 31, 2006, excluding
all options to purchase FICN common stock, FICNs directors
and executive officers and their affiliates owned a total of
273,620 shares of FICNs common stock, which was
approximately 24.43% of the total number of shares of
FICNs common stock that were outstanding on that date.
Each of FICNs directors and executive officers has agreed
to vote his or her shares in favor of the merger agreement. Each
of FICNs directors who is not an employee of FICN has also
agreed not to exercise any options to purchase shares of FICN
common stock held by such director prior to the closing of the
merger, to elect to receive options to purchase shares of
Western Alliance common stock for such options at the effective
time of the merger, and to exercise within 30 days of the
closing date of the merger all options to purchase shares of
Western Alliance common stock received by such director.
Additionally, some of FICNs directors and executive
officers may have interests in the merger as directors and
employees that may be different from yours as an FICN
shareholder. These interests include rights of executive
officers under severance agreements with FICN, rights under
stock-based benefit programs and awards of FICN, and rights to
continued indemnification and insurance coverage by Western
Alliance after the merger for acts or omissions occurring before
the merger. Following the completion of the merger, the board of
directors of Western Alliance will appoint Mr. John P.
Sande III, currently the chairman of FICN and First Independent
Bank of Nevada, to Western Alliances board of directors.
Mr. Sande will remain the chairman of First Independent
Bank of Nevada. The FICN board of directors was aware of these
interests and considered them in approving the merger agreement
and the merger.
Regulatory
Approvals We Must Obtain to Complete the Merger
(page 31)
For the merger to take place, we need to receive the regulatory
approvals of the Board of Governors of the Federal Reserve
System and the Nevada Financial Institutions Division. We have
filed applications with these regulators.
As of the date of this document, we have not yet received the
required approvals. We cannot be certain when or if we will
obtain them.
Termination
of the Merger Agreement (page 42)
The merger agreement specifies a number of situations when
Western Alliance and FICN may terminate the merger agreement.
For example, the merger agreement may be terminated at any time
prior to the effective time by our mutual consent and by either
of us under specified circumstances, including if the merger is
not consummated by September 30, 2007, if we do not receive
the necessary shareholder or regulatory approvals or if the
other party breaches its agreements. In addition, FICN may
terminate if Western Alliances common stock price falls
below thresholds set forth in the merger agreement and Western
Alliance does not increase the exchange ratio pursuant to a
prescribed formula. Likewise, Western Alliance may terminate if
its common
4
stock price exceeds certain thresholds set forth in the merger
agreement and FICN does not decrease the exchange ratio pursuant
to a prescribed formula.
Information
About the Special Meeting (page 14)
A special meeting of FICN shareholders will be held
at local time
on ,
2007, at FICNs principal executive offices at 5335 Kietzke
Lane, Reno, Nevada 89511, for the following purposes:
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to vote on the merger agreement; and
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to address any other matters that properly come before the
special meeting, or any adjournments or postponements of the
meeting, including a motion to adjourn the special meeting to
another time and/or place to solicit additional proxies in favor
of the merger agreement and the merger or otherwise.
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Share
Information and Market Prices (page 60)
Western Alliances common stock is traded on the New York
Stock Exchange under the trading symbol WAL. No
established trading market exists for FICNs common stock.
The table below presents the per share closing prices of Western
Alliances common stock as of December 18, 2006, the
last trading date before execution of the merger agreement
and ,
2007, the last practicable day before the date of this proxy
statement/prospectus. The equivalent per share data column shows
the value of Western Alliance common stock FICN shareholders
would have received for each share of FICN common stock if the
closing had occurred on such date. The market price of Western
Alliances common stock will fluctuate between the date of
this proxy statement/prospectus and the date on which the merger
takes place. For more information about the merger consideration
and the possibility that the exchange ratio will be fixed, see
The Merger Merger Consideration, and for
more information about the stock prices and dividends of Western
Alliance and FICN, see Market Prices and Dividends.
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Last Reported Sale Price of
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Western Alliances
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Equivalent per Share
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Date
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Common Stock
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Data
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December 18, 2006
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$
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34.83
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$
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93.60
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,
2007
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$
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$
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FICNs shareholders are advised to obtain current market
quotations for Western Alliances common stock. The total
dollar value of the Western Alliance common stock that a FICN
stockholder will be entitled to receive as a result of the
merger may be significantly higher or lower than its current
value if the weighted average trading price for the twenty
consecutive trading days ending on the last trading day prior to
the date the merger is completed is less than $32.91 or more
than $39.13. No assurance can be given as to the market price of
Western Alliances common stock at the time of the merger.
Comparative
Unaudited Per Share Data
The following table shows information, at and for the period
indicated, about Western Alliances and FICNs
historical book value per share, tangible book value per share
and earnings per share. The table also contains pro forma
information that reflects the merger of Western Alliance and
FICN using the purchase method of accounting. The unaudited pro
forma equivalent information was obtained by multiplying the
combined company pro forma information by the applicable
exchange ratio for each share of FICN common stock. The pro
forma combined company and pro forma equivalent information has
been provided assuming that, on an aggregate basis, 80% of the
shares of FICN common stock are exchanged for shares of Western
Alliance common stock, as required by the merger agreement. The
cash consideration is fixed at $93.60 per share, but the stock
consideration is based on a floating exchange ratio so long as
the base trading price is between $32.91 and $39.13. The table
below reflects: (i) an exchange ratio of 2.39203, which
shall apply if the base trading price is greater than $39.13,
and (ii) an exchange ratio of 2.84412, which shall apply if
the base trading price is less than $32.91. If the base trading
price is between $32.91 and $39.13, the exchange ratio will be
between 2.39203 and 2.84412. The base trading price
means the weighted average trading prices per share for Western
Alliance common stock for the twenty consecutive trading days
during which
5
shares of Western Alliance common stock are actually traded (as
reported on the New York Stock Exchange) ending on the last
trading day immediately preceding the closing date of the merger.
Neither Western Alliance nor FICN has ever paid a cash dividend
on its common stock and neither company anticipates paying any
cash dividends in the foreseeable future.
You should read the information in the following table in
conjunction with Western Alliances consolidated financial
statements and related notes for the years ended
December 31, 2003 through 2005 and for the nine months
ended September 30, 2006 and 2005 that are incorporated in
this joint proxy statement/prospectus and from which this
information is derived. You should not rely on the pro forma
information as being indicative of the results that Western
Alliance will achieve in the transaction. See also Where
You Can Find More Information on page 61 and
Information Incorporated by Reference on
page 62.
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At
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December 31,
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2006
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Book value per share:
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Western Alliance historical
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$
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15.09
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FICN historical
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28.43
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Pro forma 2.39203
exchange ratio
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16.85
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Pro forma 2.84412
exchange ratio
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16.62
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FICN pro forma
equivalent 2.39203 exchange ratio
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40.30
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FICN pro forma
equivalent 2.84412 exchange ratio
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47.26
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Tangible book value per
share:
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Western Alliance historical
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$
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9.64
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FICN historical
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28.43
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Pro forma 2.39203
exchange ratio
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8.91
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Pro forma 2.84412
exchange ratio
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8.79
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FICN pro forma
equivalent 2.39203 exchange ratio
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21.31
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FICN pro forma
equivalent 2.84412 exchange ratio
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24.99
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Year Ended
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December 31,
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2006
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Basic earnings per
share:
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Western Alliance historical
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$
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1.56
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FICN historical
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4.63
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Pro forma 2.39203
exchange ratio
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1.57
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Pro forma 2.84412
exchange ratio
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1.55
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FICN pro forma
equivalent 2.39203 exchange ratio
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3.75
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FICN pro forma
equivalent 2.84412 exchange ratio
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4.40
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Diluted earnings per
share:
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Western Alliance historical
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$
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1.41
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FICN historical
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4.26
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Pro forma 2.39203
exchange ratio
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1.43
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Pro forma 2.84412
exchange ratio
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1.41
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FICN pro forma
equivalent 2.39203 exchange ratio
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3.41
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FICN pro forma
equivalent 2.84412 exchange ratio
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4.00
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6
QUESTIONS
AND ANSWERS ABOUT THE MERGER
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Q: |
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Why are Western Alliance and FICN proposing the
transaction? |
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A: |
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Western Alliance and FICN have a shared commitment to play
integral roles in the growth and expansion of Nevadas
banking industry. The proposed merger provides an opportunity
for Western Alliance to substantially expand its presence in
Reno and throughout northern Nevada. FICN believes that the
proposed merger will enable FICN to align with a partner who
will enhance the banking services available to its customers
without sacrificing the personal attention and dedication that
FICN has always offered. |
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Q: |
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What will I receive in the merger? |
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A: |
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You may elect to receive either $93.60 in cash or Western
Alliance common stock of comparable value for each share of FICN
common stock you own so long as Western Alliances weighted
average trading price for the twenty consecutive trading days
ending on the last trading day prior to the date the merger is
completed is between $32.91 and $39.13, unless you exercise your
dissenters rights. If the weighted average Western
Alliance trading price at that date is less than $32.91, you
will receive, with respect to shares for which you have elected
to receive Western Alliance common stock, shares of Western
Alliance common stock based on an exchange ratio that is fixed
at 2.84412 shares of Western Alliance common stock for each
share of FICN common stock. If the weighted average Western
Alliance stock price is more than $39.13, the exchange ratio
will be fixed at 2.39203 shares of Western Alliance common
stock for each share of FICN common stock. In either case, the
amount of cash consideration paid per share for which an
election to receive cash is made will remain $93.60 per
share. You will have the opportunity to elect the form of
consideration to be received for your shares, subject to
proration and allocation procedures set forth in the merger
agreement which are intended to ensure that 80% of the FICN
shares are exchanged for shares of common stock of Western
Alliance. Therefore, your ability to receive cash or stock in
accordance with your election may depend on the elections of
other FICN shareholders. |
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Western Alliance may opt to increase the exchange ratio in
specific circumstances where FICN could otherwise terminate the
merger agreement and likewise, FICN may opt to decrease the
exchange ratio in specific circumstances where Western Alliance
could otherwise terminate the merger agreement. For more
information regarding these termination rights and the
adjustments that may result to the merger consideration, see
The Merger Termination of the Merger
Agreement. |
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You may also receive additional cash consideration of up to
$2.38 per share during the two year period after the merger
has been completed depending upon the performance of certain
credits in the FICN loan portfolio. Of this amount,
approximately $0.79 per share has become payable as of the
date of this proxy statement/prospectus, pending the closing of
the merger. |
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Q: |
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What if I hold options to purchase shares of FICN? |
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If you hold options to purchase FICN common stock that are
outstanding at the effective time of the merger, you may choose
either to cancel the options to purchase FICN common stock in
exchange for cash consideration as provided in the merger
agreement or to convert the options into options to purchase
shares of Western Alliance common stock. See The
Merger Merger Consideration. If you fail to
properly make an election, you will be deemed to have elected to
cancel your options in exchange for the cash consideration. You
may also receive additional cash consideration of up to
$2.38 per share depending upon the performance of certain
credits in the FICN loan portfolio during the two year period
after the merger has been completed. Of this amount,
approximately $0.79 per share has become payable as of the
date of this proxy statement/prospectus, pending the closing of
the merger. |
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If you elect to receive cash consideration for your options, you
will receive an amount of cash, without interest, equal to the
product of: |
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the excess of the per share cash consideration of
$93.60 over the exercise price per share of such option and
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the number of shares of FICN common stock subject to
such option.
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7
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If you elect to convert your options to purchase shares of FICN
common stock into options to purchase shares of Western Alliance
common stock, then: |
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the number of shares of FICN common stock subject to
the option immediately before the effective time of the merger
shall be multiplied by the applicable exchange ratio, rounded
down to the nearest whole share and
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the exercise price per share of Western Alliance
common stock under the option immediately after the effective
time of the merger shall be equal to the exercise price per
share of FICN common stock under the option immediately before
the effective time of the merger, divided by the applicable
exchange ratio, provided that such exercise price shall be
rounded up to the nearest cent. The options you receive from
Western Alliance will be exercisable immediately. The duration
and other terms of the FICN options will otherwise be unchanged.
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Q: |
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How do I make an election with respect to my shares of FICN
common stock? |
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A: |
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Each FICN shareholder will receive an election form, which you
should complete and return, along with your FICN stock
certificate(s), according to the instructions printed on the
form. The election deadline will be 5:00 p.m., New York
City time,
on ,
2007, the date prior to the date of the special meeting (the
election deadline). A copy of the election form is
being mailed under separate cover on or about the date of this
proxy statement/prospectus. If you do not send in the election
form with your stock certificates by the deadline, you will be
deemed not to have made an election and you may be paid in cash,
Western Alliance common stock or a combination of cash and stock
depending on, and after giving effect to, the number of valid
cash elections and stock elections that have been made by other
FICN shareholders. See The Merger Election
Procedures for Shareholders; Surrender of Stock
Certificates. |
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Q: |
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Can I change my election with respect to my shares of FICN
common stock? |
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A: |
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You may change your election at any time prior to the election
deadline by submitting to American Stock Transfer &
Trust Company written notice accompanied by a properly completed
and signed, revised election form. You may revoke your election
by submitting written notice to American Stock
Transfer & Trust Company prior to the election deadline
or by withdrawing your stock certificates prior to the election
deadline. Shareholders will not be entitled to change or revoke
their elections following the election deadline. All elections
will be revoked automatically if the merger agreement is
terminated. |
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Q: |
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How do I make an election with respect to my options to
purchase shares of FICN common stock? |
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A: |
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If you own options to purchase shares of FICN common stock, you
will receive an election form which you should complete and
return to American Stock Transfer & Trust Company
according to the instructions printed on the form. The election
deadline will be the same as for elections with respect to
shares of FICN common stock, which is 5:00 p.m., New York
City time,
on ,
2007, the date prior to the date of the special meeting. A copy
of the election form is being mailed under separate cover on or
about the date of this proxy statement/prospectus. If you do not
complete and return your election form, you will be deemed to
have elected to cancel your options in exchange for the cash
consideration. |
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Q: |
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Can I change my election with respect to my options to
purchase shares of FICN common stock? |
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A: |
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You may change or revoke your election by written notice
received by American Stock Transfer & Trust Company
prior to the election deadline. Optionholders will not be
entitled to revoke or change their election following the
election deadline, but may exercise their options in accordance
with the terms thereof. Any exercise of options for which an
election has been made will have the effect of automatically
revoking such election. Once an option is exercised, such
exercise cannot be revoked or undone. All elections will be
revoked automatically if the merger agreement is terminated. |
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Q: |
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Will I receive any dividends? |
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A: |
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Before the merger takes place, FICN has agreed not to pay any
dividends to its shareholders. After the merger, any dividends
will be based on what Western Alliance pays to its shareholders.
Western Alliance has not paid dividends in the past and does not
presently intend to pay dividends. |
8
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Q: |
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How many votes are needed to approve the merger? |
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A: |
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A majority of the outstanding shares of FICNs common stock
entitled to vote must vote in favor of the merger agreement in
order for it to be adopted and for the merger to be approved.
Accordingly, the failure of any holder of FICN common stock to
vote on this proposal will have the same effect as a vote
against the proposal. Each of the executive officers and
directors of FICN individually have entered into an agreement
with Western Alliance to vote their shares of FICN common stock
in favor of the merger agreement and against any competing
proposal. These shareholders held approximately 24.43% of
FICNs outstanding common stock as of December 31,
2006. |
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Q: |
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Who can vote? |
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A: |
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You are entitled to vote at the FICN special meeting if you
owned FICN common stock at the close of business
on ,
2007. You will have one vote for each share of FICN common stock
that you owned at that time. |
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Q: |
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What do I need to do now? |
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A: |
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You should first carefully read this proxy statement/prospectus.
If you are a FICN stockholder: |
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After you have decided how to vote your shares,
please indicate on the enclosed proxy card how you want to vote,
and sign, date and return it as soon as possible in the enclosed
envelope. If you sign and send in your proxy card and do not
indicate how you want to vote, your proxy card will be voted FOR
approval of the merger agreement. Not returning a proxy card, or
not voting in person at the special meeting or abstaining from
voting, will have the same effect as voting AGAINST the merger
agreement.
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You can choose to attend the special meeting and vote your
shares in person instead of completing and returning a proxy
card. If you do complete and return a proxy card, you may change
your vote at any time up to and including the time of the vote
on the day of the special meeting by following the directions in
the section Shareholder Meeting Revocability
of Proxies.
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You should complete and return the election form,
together with your stock certificate(s), to American Stock
Transfer & Trust Company according to the instructions
printed on the form. Do not send your FICN stock certificates
and/or your
election form with your proxy card.
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If you are a FICN option holder, you should complete and return
the election form with respect to your options to American Stock
Transfer & Trust Company according to the instructions
printed on the form. |
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Q: |
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Can I change my vote after I have mailed my signed proxy
card? |
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A: |
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Yes. There are three ways for you to revoke your proxy and
change your vote. First, you may send a written notice to the
Secretary of FICN at First Independent Capital of Nevada, 5335
Kietzke Lane, Reno, Nevada 89511, stating that you would like to
revoke your proxy. Second, you may complete and submit a new
proxy card. Third, you may vote in person at the special meeting. |
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Q: |
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When will the merger close? |
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A: |
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The merger is expected to close as soon as possible after the
receipt of FICN shareholder and regulatory approvals, which is
expected in the first half of 2007. However, we cannot assure
you when or if the merger will occur. |
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Q: |
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What do I do with my stock certificates? |
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A: |
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You should send your FICN common stock certificates to the
exchange agent, American Stock Transfer & Trust
Company, with your completed, signed election form prior to the
election deadline. If you do not send in the election form with
your stock certificates by the election deadline, you will be
deemed not to have made an election and you may receive cash,
Western Alliance common stock or a mixture of cash and stock,
for each share of your FICN common stock in the merger. Please
DO NOT send your stock certificates with your proxy card. |
9
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Q: |
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What needs to be done to complete the merger? |
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A: |
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Completion of the merger depends on a number of conditions being
met. In addition to compliance with the merger agreement, these
include: |
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1. Approval of the merger agreement by FICN shareholders. |
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2. Approval of the merger by federal and state regulatory
authorities. |
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3. Approval by the New York Stock Exchange of listing of Western
Alliances common stock to be issued in the merger. |
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4. The absence of any injunction or legal restraint blocking the
merger or government proceedings trying to block the merger. |
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5. The registration statement filed with the SEC to register the
shares of Western Alliances common stock to be issued in
the merger shall have been declared effective by the SEC. |
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6. Receipt by FICN of a satisfactory legal opinion regarding
certain tax matters. |
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When the law permits, Western Alliance or FICN could decide to
complete the merger even though one or more of these conditions
has not been met. We cannot be certain when, or if, the
conditions to the merger will be satisfied or waived, or that
the merger will be completed. |
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Q: |
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Who can I call with questions or to obtain copies of this
proxy statement/prospectus and other documents? |
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A: |
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Lisa L. Milke, Chief Financial Officer of FICN, at
(775) 824-4345. |
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A copy of the merger agreement and any of the documents
incorporated by reference in this proxy statement/prospectus
will be provided to you promptly without charge if you call or
write to Dale Gibbons, Chief Financial Officer, Western Alliance
Bancorporation, 2700 West Sahara Avenue, Las Vegas, Nevada
89102, Telephone:
702-248-4200.
The merger agreement and the documents incorporated herein by
reference have been previously filed with the SEC. See
Where You Can Find More Information on page 61
and Information Incorporated by Reference on
page 62. |
10
CAUTIONARY
NOTE CONCERNING FORWARD-LOOKING STATEMENTS
Some of the statements contained in Summary and
Risk Factors, and elsewhere in this proxy
statement/prospectus and in the documents incorporated by
reference to this document constitute forward-looking
statements. Forward-looking statements relate to expectations,
beliefs, projections, future plans and strategies, anticipated
events or trends and similar expressions concerning matters that
are not historical facts. In some cases, you can identify
forward looking statements by terms such as may,
will, should, expect,
intend, plan, anticipate,
believe, estimate, predict,
potential or the negative of these terms or other
comparable terminology.
The forward-looking statements contained in this proxy
statement/prospectus reflect our current views about future
events and financial performance and are subject to risks,
uncertainties, assumptions and changes in circumstances that may
cause our actual results to differ significantly from historical
results and those expressed in any forward-looking statement,
including those risks discussed under the heading Risk
Factors in this proxy statement/prospectus and the
documents incorporated herein by reference. Some factors that
could cause actual results to differ materially from historical
or expected results include:
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changes in general economic conditions, either nationally or
locally in the areas in which we conduct or will conduct our
business;
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inflation, interest rate, market and monetary fluctuations;
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the inability to obtain the regulatory approvals for the merger
on acceptable terms, on the anticipated schedule or at all;
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lower revenues following the merger than we expect;
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changes in gaming or tourism in our primary market area;
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risks associated with our growth and expansion strategy and
related costs;
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increased lending risks associated with our high concentration
of commercial real estate, construction and land development and
commercial, industrial loans;
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increases in competitive pressures among financial institutions
and businesses offering similar products and services;
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higher defaults on our loan portfolio than we expect;
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changes in managements estimate of the adequacy of the
allowance for loan losses;
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legislative or regulatory changes or changes in accounting
principles, policies or guidelines;
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managements estimates and projections of interest rates
and interest rate policy;
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the execution of our business plan; and
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other factors affecting the financial services industry
generally or the banking industry in particular.
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For more information regarding risks that may cause our actual
results to differ materially from any forward-looking
statements, see Risk Factors in this proxy
statement/prospectus and the documents incorporated herein by
reference. We do not intend and disclaim any duty or obligation
to update or revise any industry information or forward-looking
statements set forth in this proxy statement/prospectus to
reflect new information, future events or otherwise, except as
may be required by the securities laws.
11
RISK
FACTORS
In addition to the other information included in this proxy
statement/prospectus (including the matters addressed in
Cautionary Note Concerning Forward-Looking
Statements) and incorporated by reference into this
document, you should carefully consider the matters described
below in determining whether to approve the merger agreement and
in connection with your election with respect to the form of
merger consideration you will receive for your FICN shares or
options. Please also refer to the additional risk factors
identified in the periodic reports and other documents of
Western Alliance incorporated by reference into this document
and listed in Information Incorporated by Reference
on page 62. Any of these risks could have an adverse effect
on Western Alliances business, financial condition,
results of operations or prospects, which could in turn affect
the price of its shares.
Risks
Related to the Merger
The
integration of the companies will present significant challenges
that may result in the combined business not operating as
effectively as expected or in the failure to achieve some or all
of the anticipated benefits of the transaction.
The benefits and synergies expected to result from the proposed
transaction will depend in part on whether the operations of
FICN can be integrated in a timely and efficient manner with
those of Western Alliance. Western Alliance will face challenges
in consolidating its functions with those of FICN, and
integrating the organizations, procedures and operations of the
two businesses. The integration of Western Alliance and FICN
will be complex and time-consuming, and the management of both
companies will have to dedicate substantial time and resources
to it. These efforts could divert managements focus and
resources from other strategic opportunities and from
day-to-day
operational matters during the integration process. Failure to
successfully integrate the operations of Western Alliance and
FICN could result in the failure to achieve some of the
anticipated benefits from the transaction, including cost
savings and other operating efficiencies, and could have an
adverse effect on the business, results of operations, financial
condition or prospects of Western Alliance after the transaction.
The
price of Western Alliance common stock will fluctuate before and
after the merger, which could increase or decrease the value of
the merger consideration received by FICN shareholders receiving
Western Alliance common stock.
As long as Western Alliances weighted average trading
price for the twenty consecutive trading days ending on the
trading day immediately prior to the date the merger is
completed is between $32.91 and $39.13, each share of FICN
common stock for which stock consideration is paid will receive
$93.60 in Western Alliance common stock. However, if Western
Alliances weighted average trading price is less than
$32.91, the exchange ratio will be fixed at 2.84412, and if the
weighted average trading price is more than $39.13, the exchange
ratio will be fixed at 2.39203. On December 18, 2006, the
day before the merger agreement was executed, the closing price
of a share of Western Alliance common stock was $34.83.
On ,
2007, the most recent practicable date before the mailing of
this proxy statement/prospectus, the closing price was
$ . Based on the 2.84412 exchange
ratio, the implied value of the merger consideration consisting
of Western Alliance common stock was $99.06 per share of FICN
common stock on December 18, 2006 and
$ per share FICN common stock
on ,
2007. Based on the 2.39203 exchange ratio, the implied value of
the merger consideration consisting of Western Alliance common
stock was $83.31 per share FICN common stock on
December 18, 2006 and
$ per share FICN common stock
on ,
2007.
The price of Western Alliance common stock may increase or
decrease before and after completion of the merger. Therefore,
the market value of Western Alliance common stock received by a
FICN shareholder in connection with the merger could be lower
than the market value of Western Alliance stock on
December 18,
2006, ,
2007 or the closing date of the merger, and the market value of
the stock consideration could be less than the $93.60 cash
consideration received by shareholders receiving the cash
consideration. The market value of Western Alliance common stock
received by a FICN shareholder in connection with the merger
could also be higher than those trading prices, and shareholders
receiving the cash consideration could
12
receive cash in an amount less than the market value of the
stock consideration. The market price of Western Alliance stock
fluctuates based upon general market economic conditions,
Western Alliances business and prospects and other factors
described herein and in the documents incorporated herein by
reference.
Shareholders
may receive a form of consideration different from what they
elect.
While each FICN shareholder may elect to receive cash or Western
Alliance common stock in the merger, 80% of the FICN common
stock outstanding at the completion of the merger will be
converted into Western Alliance common stock. Therefore, if FICN
shareholders elect more cash or stock than is available under
the merger agreement, their elections will be prorated to permit
80% of the FICN common stock outstanding at the completion of
the merger to be converted into Western Alliance common stock.
As a result, your ability to receive cash or stock in accordance
with your election may depend on the elections of other FICN
shareholders.
If you
tender shares of FICN common stock to make an election, you will
not be able to transfer those shares until after the merger,
unless you revoke your election prior to the election
deadline.
To make a cash or stock election, you must deliver your stock
certificate(s) to the exchange agent. The deadline for doing
this is 5:00 p.m. New York City time,
on ,
2007, the day before the special meeting of shareholders. You
will not be able to sell any shares of FICN common stock that
you have delivered, unless you revoke your election before the
deadline by providing written notice to the exchange agent. If
you do not revoke your election, you will not be able to
liquidate your investment in FICN common stock for any reason
until you receive cash or Western Alliance common stock, or
both, in the merger. During the period between delivery of your
shares and the closing of the merger, the trading price of
Western Alliance common stock may decrease.
The date that you will receive your merger consideration depends
on the completion date of the merger, which is expected to occur
in the first half of 2007. The completion date of the merger
might be later than expected due to unforeseen events, such as
delays in obtaining regulatory approvals.
The
merger agreement limits FICNs ability to pursue
alternatives to the merger.
The merger agreement contains terms and conditions that make it
more difficult for FICN to sell its business to a party other
than Western Alliance. These no shop provisions
impose restrictions on FICN that, subject to certain exceptions,
limit FICNs ability to discuss or facilitate competing
third-party proposals to acquire all or a significant part of
FICN.
In addition, the board of directors of FICN has agreed that it
will not, directly or indirectly, facilitate or recommend a
competing acquisition proposal, subject to limited exceptions.
While the board of directors could take such actions if it
determined that the failure to do so would violate its fiduciary
duties, doing so would entitle Western Alliance to terminate the
merger agreement and may entitle it to receive a termination
fee. FICN will also be required to pay the termination fee if a
competing acquisition proposal has been made known to FICN or
its shareholders and the merger agreement is subsequently
terminated for a variety of reasons (including because FICN
shareholders fail to approve the merger or because FICN
willfully breaches the merger agreement), and FICN completes, or
enters into an agreement for, an alternative acquisition
transaction during the 12 months after the termination of
the merger agreement.
Western Alliance required FICN to agree to these provisions as a
condition to Western Alliances willingness to enter into
the merger agreement. However, these provisions might discourage
a third party that might have an interest in acquiring all or a
significant part of FICN from considering or proposing that
acquisition even if it were prepared to pay consideration with a
higher per share market price than the current proposed merger
consideration, and the termination fee might result in a
potential competing acquirer proposing to pay a lower per share
price to acquire FICN than it might otherwise have proposed to
pay.
13
FICNs
executive officers and directors have interests in the merger
that are different from your interest as an FICN
shareholder.
FICN executive officers negotiated the merger agreement with
Western Alliance, and the board of directors approved the
agreement and is recommending that FICN shareholders who are
entitled to vote, vote for the agreement. In considering these
facts and the other information contained in this proxy
statement/prospectus, you should be aware that FICNs
executive officers and directors have interests in the merger in
addition to the interests that they share with you as an FICN
shareholder. As described in detail under the heading
Interests of FICN Directors and Executive Officers in the
Merger That are Different Than Yours, there are
substantial interests to be conveyed to each director and
executive officer of FICN as a result of the accelerated vesting
of stock options and payments pursuant to severance agreements,
as well as other considerations. Following the completion of the
merger, the board of directors of Western Alliance will appoint
Mr. John P. Sande III, currently the chairman of FICN
and First Independent Bank of Nevada, to its board of directors.
Mr. Sande will remain the chairman of First Independent
Bank of Nevada.
SHAREHOLDER
MEETING
Matters
to be Considered at the Special Meeting
We are first mailing this document to the holders of FICNs
common stock on or
about ,
2007. It is accompanied by a proxy card furnished in connection
with the solicitation of proxies by the FICN Board of Directors
for use at the special meeting of FICNs shareholders
at local time
on ,
2007, at its principal executive offices at 5335 Kietzke Lane,
Reno, Nevada 89511. At the special meeting, the holders of
FICNs common stock will consider and vote on proposals:
1. To adopt and approve an agreement and plan of merger,
pursuant to which FICN will merge with and into Western Alliance
with Western Alliance surviving (referred to herein as the
merger).
2. To transact any other business that properly comes
before the special meeting, or any adjournments or postponements
of the meeting, including, without limitation, a motion to
adjourn the special meeting to another time
and/or place
for the purpose of soliciting additional proxies in order to
approve the merger agreement or otherwise.
Eligible
Votes
The common stock is the only class of capital stock of FICN in
which there are shares outstanding. Therefore, if you hold
shares of common stock, you are entitled to vote those shares at
the special meeting of shareholders.
Record
Date and Voting
The FICN Board of Directors has fixed the close of business
on ,
2007 as the record date for determining the FICN shareholders
entitled to receive notice of and to vote at the special
meeting. Only holders of record of FICNs
common stock at the close of business on that day will be
entitled to vote at the special meeting or at any adjournment or
postponement of the meeting. At the close of business
on ,
2007, there
were shares
of FICNs common stock outstanding and entitled to vote at
the special meeting, held by
approximately shareholders
of record.
Each holder of FICNs common stock
on ,
2007 will be entitled to one vote for each share held of record
on each matter that is properly submitted at the special meeting
or any adjournment or postponement of the meeting. The presence,
in person or by proxy, of the holders of a majority of
FICNs common stock issued and outstanding and entitled to
vote at the special meeting is necessary to constitute a quorum.
Abstentions with respect to shares of FICN common stock will be
included in the calculation of the number of shares represented
at the special meeting in order to determine whether a quorum
has been achieved. Since approval of the merger agreement
requires the affirmative vote of the holders of at least a
majority of the
14
shares of FICNs common stock issued and outstanding,
abstentions with respect to shares of FICN common stock will
have the same effect as a vote against the merger agreement.
If a quorum is not obtained, or if fewer shares of FICNs
common stock are voted in favor of the proposal for approval of
the merger agreement than the number required for approval, it
is expected that the special meeting will be adjourned to allow
additional time for obtaining additional proxies. In that event,
proxies will be voted to approve an adjournment, except for
proxies as to which instructions have been given to vote against
the merger agreement.
If you hold shares of FICN common stock and your proxy card is
properly executed and received by FICN in time to be voted at
the special meeting, the shares represented by the proxy card
will be voted in accordance with the instructions marked on the
proxy card. Executed proxies with respect to shares of FICN
common stock with no instructions indicated on the proxy card
will be voted FOR the merger agreement and the merger.
The FICN board of directors is not aware of any other matters
that may properly come before the special meeting. If any other
matters properly come before the special meeting, the persons
named in the accompanying proxy will vote the shares represented
by all properly executed proxies on those matters as determined
by a majority of the FICN board of directors.
If you hold shares of FICN common stock, you are requested to
complete, date and sign the accompanying proxy form and to
return it promptly in the enclosed postage-paid envelope. The
enclosed proxy card is different from the election form that you
can use to elect to receive cash or stock in the merger. Do not
return your proxy card with the election form. For information
about the election form, see The Merger-Election
Procedures; Surrender of Stock Certificates. To vote on
the merger agreement, you need to hold shares of FICN common
stock and complete the proxy card properly and return it in the
enclosed envelope or attend the special meeting and vote in
person.
You should not forward any stock certificates with your
proxy card. If you complete a stockholder election form, you
should forward your FICN stock certificates to the exchange
agent with the election form. If you do not complete a
stockholder election form, if the merger takes place, FICN stock
certificates should be delivered in accordance with instructions
that will be sent to you by the exchange agent promptly after
the effective time of the merger.
Required
Vote
In order to approve and adopt the merger agreement, the holders
of at least a majority of the shares of FICNs common stock
issued and outstanding
on ,
2007, must affirmatively vote FOR the merger agreement.
The required vote of FICNs shareholders is based on the
total number of outstanding shares of FICNs common stock
entitled to vote and not on the number of shares which are
actually voted. Not returning a proxy card, not voting in person
at the special meeting or abstaining from voting all will have
the same effect as voting AGAINST the merger agreement.
The directors and executive officers of FICN have agreed to vote
their shares in favor of the merger agreement and against
competing proposals. The directors and executive officers
beneficially owned as of December 31, 2006 a total of
273,620 shares of FICNs common stock (excluding all
options to purchase shares of FICNs common stock), which
was approximately 24.43% of the outstanding shares of
FICNs common stock on that date.
Revocability
of Proxies
If you submit a proxy card, attending the special meeting will
not automatically revoke your proxy. However, you may revoke a
proxy at any time before it is voted by:
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delivering to Brett Coleman, Corporate Secretary of FICN, a
written notice of revocation before the special meeting,
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15
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delivering to FICN a duly executed proxy bearing a later date
before the special meeting, or
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attending the special meeting and voting in person.
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Solicitation
of Proxies
In addition to solicitation by mail, directors, officers and
employees of FICN may solicit proxies for the special meeting
from stockholders personally or by telephone or telecopier
without receiving additional compensation for these activities.
The cost of soliciting proxies will be paid by FICN.
RECENT
DEVELOPMENTS OF WESTERN ALLIANCE
Unaudited
Consolidated Financial Results for 2006 and the Fourth Quarter
of 2006
On January 23, 2007, Western Alliance announced its
unaudited consolidated financial results for 2006 and the fourth
quarter of 2006.
Total assets increased 45.9% to $4.17 billion at
December 31, 2006 from $2.86 billion at
December 31, 2005. Of this growth, $467 million was
organic, while $845 million represents the assets acquired
through the Bank of Nevada and Intermountain mergers completed
on April 28, 2006 and March 31, 2006, respectively.
Loans were $3.0 billion at December 31, 2006, an
increase of 67.5%, or $1.21 billion, from December 31,
2005. Deposits were $3.4 billion at December 31, 2006,
an increase of 42%, or $1.01 billion, from
December 31, 2005.
Net Income. Net income was $39.9 million
for 2006, up 42.1% from $28.1 million for 2005. Diluted
earnings per share were $1.41, compared to $1.24 for 2005.
During the fourth quarter 2006, we liquidated $159 million
of our securities portfolio and recognized a pre-tax loss of
$4.4 million, or $0.10 per share.
Net Interest Income. Net interest income
increased 41.8% to $40.6 million in the fourth quarter of
2006 from $28.6 million in the fourth quarter of 2005. The
net interest margin was 4.41% in the fourth quarter of 2006,
compared with 4.42% in the third quarter of 2006. The margin was
4.44% in the fourth quarter of 2005.
Provision for Loan Losses. The provision for
loan losses was $0.7 million for the fourth quarter of 2006
compared with $1.0 million for the third quarter of 2006
and $2.0 million for the fourth quarter of 2005.
Non-accrual loans were $1.4 million representing 0.05% of
total loans at December 31, 2006, compared with 0.01% of
total loans at December 31, 2005. Net charge offs were
$0.3 million for the fourth quarter of 2006, compared with
$0.1 million for the same period in 2005.
Non-Interest Income. Non-interest income was
$5.3 million for the fourth quarter of 2006, up 54.6% from
$3.4 million for the same period in 2005. For the third
quarter of 2006, non-interest income was $4.6 million.
Net Revenue. Net revenue (the sum of net
interest income and non-interest income) was $167.0 million
for 2006, up 45.6% from $114.0 million for 2005. Net
revenue was $45.8 million for the fourth quarter of 2006,
up 43.2% from $32.0 million for the fourth quarter of 2005.
For the third quarter of 2006, net revenue was
$43.9 million.
Non-Interest Expense. Non-interest expense was
$26.9 million for the fourth quarter of 2006, up 58.0% from
$17.1 million for the same period in 2005. For the third
quarter of 2006, noninterest expense was $25.1 million.
Western Alliance had 785 full-time equivalent employees on
December 31, 2006 compared with 763 on September 30,
2006 and 537 on December 31, 2005. Western Alliance had 31
full-service banking offices on December 31, 2006 compared
with 29 at September 30, 2006 and 16 on December 31,
2005.
16
The following tables contain selected consolidated financial and
other data of Western Alliance at the dates and for the periods
indicated. You should read this information in conjunction with
the consolidated financial statements included in this document.
The information at and for the three months and year ended
December 31, 2006 is unaudited. However, in the opinion of
Western Alliance management, all adjustments (consisting only of
normal recurring adjustments) which are necessary to fairly
present the results for the periods included have been made.
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Years Ended
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December 31,
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2006
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2005
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($ in millions)
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Selected Balance Sheet
Data:
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Total assets
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$
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4,169.6
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$
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2,857.3
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Gross loans, including net
deferred fees
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3,003.3
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1,793.4
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Securities
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542.0
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748.5
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Federal funds sold
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121.2
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63.2
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Deposits
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3,400.4
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2,393.8
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Borrowings
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239.7
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158.7
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Junior subordinated debt and
subordinated debt
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101.9
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30.9
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Stockholders equity
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408.6
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244.2
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Three Months Ended
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Years Ended
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December 31,
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December 31,
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2006
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2005
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2006
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2005
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($ in thousands, except per share data)
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Selected Income Statement
Data:
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Interest income
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$
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67,163
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$
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38,975
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$
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233,085
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$
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134,910
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Interest expense
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26,588
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10,360
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84,297
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32,568
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Net interest income
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40,575
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28,615
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148,788
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102,342
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Provision for loan losses
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709
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1,962
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4,660
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6,179
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Net interest income after
provision for loan losses
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39,866
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26,653
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144,128
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96,163
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Loss from sale of securities
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4,436
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4,436
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Non-interest income
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5,260
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3,403
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17,870
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12,138
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Non-interest expense
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26,939
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17,050
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96,086
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64,864
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Income before income taxes
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13,751
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13,006
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61,476
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43,437
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Income tax expense
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4,744
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4,564
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21,587
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15,372
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Net Income
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$
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9,007
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$
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8,442
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$
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39,889
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$
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28,065
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Common Share Data:
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Net income per share:
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Basic
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$
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0.34
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$
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0.37
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$
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1.56
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$
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1.36
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Diluted
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0.31
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0.34
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1.41
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1.24
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Book value per share
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15.09
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10.71
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Tangible book value per share
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9.64
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10.48
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17
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Three Months Ended
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Year Ended
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December 31,
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December 31,
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2006
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2005
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2006
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2005
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Selected Performance
Ratios:
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Return on average assets(1)
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0.87
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%
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1.22
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%
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1.09
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%
|
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1.13
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%
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Return on average
stockholders equity(1)
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8.94
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13.42
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11.45
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14.37
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Return on average tangible
stockholders equity(1)
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13.18
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13.70
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14.20
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14.76
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Net interest margin(1)
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4.41
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4.44
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4.52
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4.40
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Net interest spread
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3.28
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3.44
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3.40
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3.54
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Efficiency ratio
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58.77
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53.25
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57.65
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56.66
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Loan to deposit ratio
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88.32
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74.92
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Capital Ratios:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible Common Equity
|
|
|
6.5
|
%
|
|
|
8.4
|
%
|
|
|
|
|
|
|
|
|
Leverage ratio
|
|
|
8.4
|
|
|
|
10.2
|
|
|
|
|
|
|
|
|
|
Tier 1 Risk Based Capital
|
|
|
9.3
|
|
|
|
12.8
|
|
|
|
|
|
|
|
|
|
Total Risk Based Capital
|
|
|
11.3
|
|
|
|
13.8
|
|
|
|
|
|
|
|
|
|
Asset Quality Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs to average loans
outstanding(1)
|
|
|
0.04
|
%
|
|
|
0.02
|
%
|
|
|
|
|
|
|
|
|
Non-accrual loans to gross loans
|
|
|
0.05
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
Non-accrual loans to total assets
|
|
|
0.03
|
|
|
|
0.00
|
|
|
|
|
|
|
|
|
|
Loans past due 90 days and
still accruing to total loans
|
|
|
0.03
|
|
|
|
0.00
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses to gross
loans
|
|
|
1.12
|
|
|
|
1.18
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses to
non-accrual loans
|
|
|
> 10 times
|
|
|
|
> 10 times
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Annualized for the three and twelve-month periods ended
December 31, 2006 and 2005. |
18
RECENT
DEVELOPMENTS OF FICN
Unaudited
Consolidated Financial Results for 2006 (Compared to
2005)
Total assets were $428.0 million at December 31, 2006,
an increase of 21.0% from $353.8 million at
December 31, 2005. Loans were $288.4 million at
December 31, 2006, an increase of $56.4 million from
December 31, 2005. Deposits were $386.2 million at
December 31, 2006, an increase of $65.7 million from
December 31, 2005. Stockholders equity increased
approximately $6.2 million to $31.8 million at
December 31, 2006. FICN had 89 full-time equivalent
employees on December 31, 2006, compared to
84 full-time equivalent employees on December 31,
2005. Net income was $5.1 million, or $4.26 per
diluted share, for 2006, compared with $4.4 million, or
$3.74 per diluted share, for 2005.
The following tables contain selected consolidated financial and
other data of FICN at the dates and for the periods indicated.
The information at and for the year ended December 31, 2006
is unaudited. However, in the opinion of FICN management, all
adjustments (consisting only of normal recurring adjustments)
which are necessary to fairly present the results for the
periods included have been made.
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended
|
|
|
|
December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
|
($ in millions)
|
|
|
Selected Balance Sheet
Data:
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
428.0
|
|
|
$
|
353.8
|
|
Loans
|
|
|
288.4
|
|
|
|
232.0
|
|
Investment securities
|
|
|
64.4
|
|
|
|
73.9
|
|
Federal funds sold
|
|
|
37.5
|
|
|
|
12.4
|
|
Deposits
|
|
|
386.2
|
|
|
|
318.7
|
|
Other Liabilities
|
|
|
2.7
|
|
|
|
2.2
|
|
Junior subordinated debt
|
|
|
7.2
|
|
|
|
7.2
|
|
Stockholders equity
|
|
|
31.8
|
|
|
|
25.6
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended
|
|
|
|
December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
|
($ in thousands)
|
|
|
Selected Income Statement
Data:
|
|
|
|
|
|
|
|
|
Interest income
|
|
$
|
25,495
|
|
|
$
|
18,799
|
|
Interest expense
|
|
|
7,683
|
|
|
|
3,568
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
|
17,812
|
|
|
|
15,231
|
|
|
|
|
|
|
|
|
|
|
Non-interest income
|
|
|
933
|
|
|
|
885
|
|
Non-interest expense
|
|
|
10,690
|
|
|
|
8,967
|
|
Gain (loss) on securities
|
|
|
(27
|
)
|
|
|
(8
|
)
|
Gain (loss) on fixed assets
|
|
|
0
|
|
|
|
(3
|
)
|
Provision for loan losses
|
|
|
455
|
|
|
|
645
|
|
|
|
|
|
|
|
|
|
|
Net income before tax provision
|
|
|
7,573
|
|
|
|
6,493
|
|
Provision for Taxes
|
|
|
2,496
|
|
|
|
2,097
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
5,077
|
|
|
$
|
4,396
|
|
|
|
|
|
|
|
|
|
|
Common Share Data:
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
4.63
|
|
|
$
|
4.04
|
|
Diluted
|
|
|
4.26
|
|
|
|
3.74
|
|
Book value per share
|
|
|
28.43
|
|
|
|
23.47
|
|
Tangible book value per share
|
|
|
28.43
|
|
|
|
23.47
|
|
19
SELECTED
CONSOLIDATED FINANCIAL AND OTHER DATA
Set forth below are highlights from Western Alliances
consolidated financial data of and for the years ended
December 31, 2001 through 2005 and Western Alliances
unaudited consolidated financial data as of and for the nine
months ended September 30, 2005 and 2006. The results of
operations for the nine months ended September 30, 2006 are
not necessarily indicative of the results of operations of
Western Alliance for the full year. Western Alliances
management prepared the unaudited information on the same basis
as it prepared Western Alliance audited consolidated financial
statements. In the opinion of Western Alliances
management, this information reflects all adjustments,
consisting only of normal recurring adjustments, necessary for a
fair presentation of this data for these periods. You should
read this information in conjunction with Western
Alliances consolidated financial statements and related
notes for the years ended December 31, 2003 through 2005
and for the nine months ended September 30, 2006 and 2005
that are incorporated by reference to this joint proxy
statement/prospectus and from which this information is derived.
See also Where You Can Find More Information on
page 61 and Information Incorporated by
Reference on page 62.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At or for the
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
September 30,
|
|
|
At or for the Years Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
2002
|
|
|
2001
|
|
|
|
(Unaudited)
|
|
|
($ in thousands, except per share data)
|
|
|
Selected Balance Sheet
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
4,002,793
|
|
|
$
|
2,745,014
|
|
|
$
|
2,857,271
|
|
|
$
|
2,176,849
|
|
|
$
|
1,576,773
|
|
|
$
|
872,074
|
|
|
$
|
602,703
|
|
Loans receivable (net)
|
|
|
2,886,533
|
|
|
|
1,598,253
|
|
|
|
1,772,145
|
|
|
|
1,173,264
|
|
|
|
721,700
|
|
|
|
457,906
|
|
|
|
400,647
|
|
Securities available for sale
|
|
|
448,140
|
|
|
|
595,959
|
|
|
|
633,362
|
|
|
|
659,073
|
|
|
|
583,684
|
|
|
|
227,238
|
|
|
|
73,399
|
|
Securities held to maturity
|
|
|
105,993
|
|
|
|
117,116
|
|
|
|
115,171
|
|
|
|
129,549
|
|
|
|
132,294
|
|
|
|
5,610
|
|
|
|
6,055
|
|
Federal funds sold
|
|
|
103,789
|
|
|
|
203,999
|
|
|
|
63,186
|
|
|
|
23,115
|
|
|
|
4,015
|
|
|
|
113,789
|
|
|
|
73,099
|
|
Deposits
|
|
|
3,250,279
|
|
|
|
2,347,498
|
|
|
|
2,393,812
|
|
|
|
1,756,036
|
|
|
|
1,094,646
|
|
|
|
720,304
|
|
|
|
549,354
|
|
Short-term borrowings and long-term
debt
|
|
|
110,038
|
|
|
|
119,510
|
|
|
|
158,682
|
|
|
|
249,194
|
|
|
|
338,661
|
|
|
|
50,000
|
|
|
|
|
|
Junior subordinated debt
|
|
|
61,857
|
|
|
|
30,928
|
|
|
|
30,928
|
|
|
|
30,928
|
|
|
|
30,928
|
|
|
|
30,928
|
|
|
|
15,464
|
|
Subordinated debt
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity
|
|
|
393,070
|
|
|
|
238,253
|
|
|
|
244,223
|
|
|
|
133,571
|
|
|
|
97,451
|
|
|
|
67,442
|
|
|
|
35,862
|
|
Selected Income Statement
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
165,923
|
|
|
|
95,935
|
|
|
|
134,910
|
|
|
$
|
90,855
|
|
|
$
|
53,823
|
|
|
$
|
39,117
|
|
|
$
|
35,713
|
|
Interest expense
|
|
|
57,710
|
|
|
|
22,208
|
|
|
|
32,568
|
|
|
|
19,720
|
|
|
|
12,798
|
|
|
|
9,771
|
|
|
|
9,140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
|
108,213
|
|
|
|
73,727
|
|
|
|
102,342
|
|
|
|
71,135
|
|
|
|
41,025
|
|
|
|
29,346
|
|
|
|
26,573
|
|
Provision for loan losses
|
|
|
3,950
|
|
|
|
4,217
|
|
|
|
6,179
|
|
|
|
3,914
|
|
|
|
5,145
|
|
|
|
1,587
|
|
|
|
2,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income after provision
for loan losses
|
|
|
104,263
|
|
|
|
69,510
|
|
|
|
96,163
|
|
|
|
67,221
|
|
|
|
35,880
|
|
|
|
27,759
|
|
|
|
23,773
|
|
Noninterest income
|
|
|
12,609
|
|
|
|
8,735
|
|
|
|
12,138
|
|
|
|
8,726
|
|
|
|
4,270
|
|
|
|
3,935
|
|
|
|
3,437
|
|
Noninterest operating expenses
|
|
|
69,147
|
|
|
|
47,814
|
|
|
|
64,864
|
|
|
|
44,929
|
|
|
|
27,290
|
|
|
|
19,050
|
|
|
|
18,256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
47,725
|
|
|
|
30,431
|
|
|
|
43,437
|
|
|
|
31,018
|
|
|
|
12,860
|
|
|
|
12,644
|
|
|
|
8,954
|
|
Income taxes
|
|
|
16,844
|
|
|
|
10,808
|
|
|
|
15,372
|
|
|
|
10,961
|
|
|
|
4,171
|
|
|
|
4,235
|
|
|
|
3,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
30,881
|
|
|
$
|
19,623
|
|
|
$
|
28,065
|
|
|
$
|
20,057
|
|
|
$
|
8,689
|
|
|
$
|
8,409
|
|
|
$
|
5,953
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Share Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.22
|
|
|
$
|
0.99
|
|
|
$
|
1.36
|
|
|
$
|
1.17
|
|
|
$
|
0.61
|
|
|
$
|
0.79
|
|
|
$
|
0.55
|
|
Diluted
|
|
|
1.11
|
|
|
|
0.90
|
|
|
|
1.24
|
|
|
|
1.09
|
|
|
|
0.59
|
|
|
|
0.78
|
|
|
|
0.54
|
|
Book value per share
|
|
|
14.57
|
|
|
|
10.45
|
|
|
|
10.71
|
|
|
|
7.32
|
|
|
|
5.84
|
|
|
|
4.85
|
|
|
|
3.31
|
|
Average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
25,216,135
|
|
|
|
19,841,670
|
|
|
|
20,583,022
|
|
|
|
17,189,687
|
|
|
|
14,313,611
|
|
|
|
10,677,736
|
|
|
|
10,730,738
|
|
Diluted
|
|
|
27,832,951
|
|
|
|
21,856,613
|
|
|
|
22,666,161
|
|
|
|
18,405,120
|
|
|
|
14,613,173
|
|
|
|
10,715,448
|
|
|
|
11,038,275
|
|
Common shares outstanding
|
|
|
26,977,063
|
|
|
|
22,793,241
|
|
|
|
22,810,491
|
|
|
|
18,249,554
|
|
|
|
16,681,273
|
|
|
|
13,908,279
|
|
|
|
10,850,787
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At or for the
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
September 30,
|
|
|
At or for the Years Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
2002
|
|
|
2001
|
|
|
|
(Unaudited)
|
|
|
($ in thousands, except per share data)
|
|
|
Selected Performance
Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets(1)
|
|
|
1.16
|
%
|
|
|
1.09
|
%
|
|
|
1.13
|
%
|
|
|
1.05
|
%
|
|
|
0.76
|
%
|
|
|
1.22
|
%
|
|
|
1.11
|
%
|
Return on average
stockholders equity(1)
|
|
|
12.09
|
|
|
|
14.82
|
|
|
|
14.37
|
|
|
|
17.48
|
|
|
|
12.19
|
|
|
|
19.39
|
|
|
|
15.04
|
|
Net interest margin(1)
|
|
|
4.42
|
|
|
|
4.39
|
|
|
|
4.40
|
|
|
|
4.00
|
|
|
|
3.83
|
|
|
|
4.57
|
|
|
|
5.50
|
|
Net interest spread(1)
|
|
|
3.29
|
|
|
|
3.58
|
|
|
|
3.53
|
|
|
|
3.43
|
|
|
|
3.27
|
|
|
|
3.72
|
|
|
|
4.39
|
|
Efficiency ratio
|
|
|
57.07
|
|
|
|
57.98
|
|
|
|
56.66
|
|
|
|
56.26
|
|
|
|
60.25
|
|
|
|
57.24
|
|
|
|
60.83
|
|
Selected Liquidity and Capital
Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan to deposit ratio
|
|
|
89.83
|
%
|
|
|
68.90
|
%
|
|
|
74.92
|
%
|
|
|
67.68
|
%
|
|
|
66.97
|
%
|
|
|
64.47
|
%
|
|
|
74.13
|
%
|
Risk based capital:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leverage capital
|
|
|
8.4
|
|
|
|
10.3
|
|
|
|
10.2
|
|
|
|
7.7
|
|
|
|
8.9
|
|
|
|
11.2
|
|
|
|
8.5
|
|
Tier 1
|
|
|
9.5
|
|
|
|
13.6
|
|
|
|
12.8
|
|
|
|
10.9
|
|
|
|
13.3
|
|
|
|
15.4
|
|
|
|
10.4
|
|
Total
|
|
|
11.0
|
|
|
|
14.6
|
|
|
|
13.8
|
|
|
|
12.0
|
|
|
|
14.4
|
|
|
|
18.1
|
|
|
|
12.3
|
|
Asset Quality Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs (recoveries) to
average loans outstanding
|
|
|
0.05
|
%
|
|
|
0.02
|
%
|
|
|
0.02
|
%
|
|
|
0.00
|
%
|
|
|
0.17
|
%
|
|
|
0.19
|
%
|
|
|
0.27
|
%
|
Non-accrual loans to gross loans
|
|
|
0.02
|
|
|
|
0.01
|
|
|
|
0.01
|
|
|
|
0.13
|
|
|
|
0.03
|
|
|
|
0.22
|
|
|
|
0.17
|
|
Non-accrual assets to total assets
|
|
|
0.00
|
|
|
|
0.01
|
|
|
|
0.00
|
|
|
|
0.07
|
|
|
|
0.01
|
|
|
|
0.12
|
|
|
|
0.11
|
|
Allowance for loan losses to gross
loans
|
|
|
1.13
|
|
|
|
1.19
|
|
|
|
1.18
|
|
|
|
1.28
|
|
|
|
1.55
|
|
|
|
1.39
|
|
|
|
1.61
|
|
Allowance for loan losses to
non-accrual loans
|
|
|
5,481.79
|
|
|
|
720.24
|
|
|
|
19,805.61
|
|
|
|
959.84
|
|
|
|
4,137.45
|
|
|
|
181.71
|
|
|
|
711.82
|
|
Growth Ratios and Other
Data:(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage change in net income
|
|
|
57.4
|
%
|
|
|
44.0
|
%
|
|
|
39.9
|
%
|
|
|
130.8
|
%
|
|
|
3.3
|
%
|
|
|
41.3
|
%
|
|
|
17.6
|
%
|
Percentage change in diluted net
income per share
|
|
|
23.3
|
|
|
|
18.4
|
|
|
|
13.8
|
|
|
|
84.7
|
|
|
|
(24.4
|
)
|
|
|
44.4
|
|
|
|
17.4
|
|
Percentage change in assets
|
|
|
45.8
|
|
|
|
29.1
|
|
|
|
31.3
|
|
|
|
38.1
|
|
|
|
80.1
|
|
|
|
44.7
|
|
|
|
35.7
|
|
Percentage change in gross loans,
including deferred fees
|
|
|
80.5
|
|
|
|
49.0
|
|
|
|
50.9
|
|
|
|
62.1
|
|
|
|
57.9
|
|
|
|
14.0
|
|
|
|
25.5
|
|
Percentage change in deposits
|
|
|
38.5
|
|
|
|
38.9
|
|
|
|
36.3
|
|
|
|
60.4
|
|
|
|
52.0
|
|
|
|
31.1
|
|
|
|
33.9
|
|
Percentage change in equity
|
|
|
65.0
|
|
|
|
86.2
|
|
|
|
82.8
|
|
|
|
37.1
|
|
|
|
44.5
|
|
|
|
88.1
|
|
|
|
11.0
|
|
Number of branches
|
|
|
29
|
|
|
|
15
|
|
|
|
16
|
|
|
|
13
|
|
|
|
10
|
|
|
|
5
|
|
|
|
5
|
|
|
|
|
(1) |
|
Annualized for the nine-month periods ended September 30,
2006 and 2005. |
|
(2) |
|
Ratios of changes in income are computed based upon the growth
over the comparable prior period. Ratios of changes in balance
sheet data compare period-end data against the same data from
the comparable period-end for the prior year. |
INFORMATION
ABOUT FICN
General
FICN is a registered bank holding company under the Bank Holding
Company Act of 1956. FICN was incorporated in 2001 in order to
serve as the holding company for First Independent Bank of
Nevada, or First Independent Bank. FICNs principal office
is located at 5335 Kietzke Lane, Reno, Nevada 89511. FICN had
approximately 111 shareholders as of December 31, 2006
and 1,120,074 shares of common stock issued and
outstanding. On a consolidated basis, as of December 31,
2006, FICN had approximately $428.0 million in total
assets, $288.4 million in total loans, $386.2 million
in deposits and $31.8 million in total equity. There is no
established public trading market for the common stock of FICN.
First Independent Bank was organized as a Nevada banking
corporation in 1999 and began operations in September 1999.
First Independent Bank is chartered to engage in the business of
banking by the Nevada
21
Division of Financial Institutions and receives deposit
insurance from and is regulated by the Federal Deposit Insurance
Corporation. First Independent Bank provides a full range of
traditional banking services, with a special emphasis on serving
the banking needs of the Northern Nevada areas business
community. Although First Independent Bank also offers
consumer-banking services, it generally targets its services to
the needs of commercial customers. First Independent Banks
services include the acceptance of checking, savings, and money
market deposits (all of which are insured by the FDIC up to
applicable limits), and the granting of commercial, real estate,
construction, small business administration and consumer loans.
First Independent Bank also offers travelers checks, safe
deposit boxes, courier and other services. Its headquarters is
located at 5335 Kietzke Lane, Reno, Nevada 89511 and it operates
four branch locations in the greater Reno-Sparks area and in the
Fallon central business district.
Bank
Lending
First Independent Bank grants commercial, construction, real
estate and consumer loans to customers. First Independent
Banks loans are expected to be repaid from cash flows or
proceeds from the sale of selected assets of the borrower. First
Independent Banks policy for requiring collateral is to
obtain collateral whenever it is available or desirable,
depending upon the degree of risk that First Independent Bank is
willing to accept.
First Independent Bank had loan loss reserves of approximately
$3.5 million (approximately 1.20% of its total loan
portfolio) as of December 31, 2006. The allowance for loan
losses is established through a provision for loan losses
charged to expense. Loans are charged against allowance for loan
losses when management of First Independent believes the
collection of loan principal is unlikely. The allowance is an
amount that management believes will be adequate to absorb
probable losses on existing loans that may become uncollectible,
based on evaluation of the collectability of loans, prior credit
loss experience and peer bank experience. This evaluation also
takes into consideration such factors as changes in the nature
and volume of the loan portfolio, overall quality, review of
specific problem credits, and current economic conditions that
may affect the banks borrowers. In addition, the FDIC, as
an integral part of its examination process, periodically
reviews First Independent Banks allowance for loan losses,
and may require it to make additions to the allowance based on
its judgment about information available to the FDIC at the time
of its examination.
Employees/Labor
Relations
As of December 31, 2006, FICN had no employees and First
Independent Bank had a total of 89 full time equivalent
employees. None of the companies employees is represented
by a union. Management considers their working relationships
with the First Independent Bank employees to be good and the
companies have never experienced an interruption of operation
due to any labor dispute.
Properties
First Independent Bank owns a 30,000 square foot commercial
office building on over two acres on Kietzke Lane in Reno,
Nevada. Such property is used for its retail banking business,
for certain administrative and support functions and for the
principal executive offices of FICN and First Independent Bank.
The property is unencumbered by any mortgage debt. First
Independent Bank subleases a small portion of the premises to a
third party. In addition, First Independent Bank owns a
4,917 square foot free standing full service branch bank
facility on approximately one acre of land in Sparks, Nevada.
The property is unencumbered by any mortgage debt and no rent is
charged for the use of these facilities. First Independent Bank
also owns a 4,324 square foot free standing full service
branch bank facility on approximately one acre of land off
Interstate 80 and the Robb Drive interchange in West Reno,
Nevada. Directly adjacent to the Robb Drive property, First
Independent Bank owns an approximately one acre vacant parcel of
land. This property is currently for sale and the bank, through
its brokerage representation, is actively soliciting
buyers. Both Robb Drive properties are unencumbered by any
mortgage debt and no rent is charged for the use of these
facilities or the vacant land.
First Independent Bank has agreed to lease approximately
3,920 square feet in Fallon, Nevada for a full service
branch bank facility under a non-cancelable operating lease
expiring in December 2017. The lease
22
includes two renewal option periods of five years. The monthly
rental for 2007 is $13,600 with annual increases of
approximately 3.5% thereafter beginning in January of each
subsequent year. In September 2005, First Independent Bank also
entered into a ground lease for approximately one acre of land
in the Spanish Springs area of Sparks, Nevada under a
non-cancelable operating lease expiring September 2025. The
lease includes four renewal option periods of five years. First
Independent Bank entered into this ground lease for purposes of
constructing a new branch bank facility. The land lease calls
for monthly payments of $5,740 with a 10% increase on each five
year anniversary of the initial lease.
Legal
Proceedings
In the normal course of business, FICN and First Independent
Bank may be involved in various legal proceedings. FICN is not
aware of any proceedings, which are likely to have a material
adverse effect on FICNs financial position. FICN is
currently not a party to any legal proceedings.
Securities
Authorized for Issuance
The following table provides information regarding FICNs
equity compensation plans in effect at December 31, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
Remaining Available
|
|
|
|
|
|
|
|
|
|
for Future Issuance
|
|
|
|
Number of Securities
|
|
|
|
|
|
under Equity
|
|
|
|
to be Issued upon
|
|
|
Weighted-Average
|
|
|
Compensation Plans
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
(Excluding
|
|
|
|
Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
Securities Reflected
|
|
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
in Column (a))
|
|
Plan Category
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity compensation plans approved
by shareholders
|
|
|
138,579
|
|
|
$
|
20.42
|
|
|
|
33,942
|
|
Equity compensation plans not
approved by shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
THE
MERGER
The information in this section is qualified in its entirety
by reference to the full text of the merger agreement, a copy of
which is attached to this proxy statement/prospectus as
Appendix A beginning on
page A-1
and which is incorporated by reference into this document.
The
Parties
Western Alliance and FICN have entered into an agreement and
plan of merger pursuant to which Western Alliance will acquire
FICN and its wholly owned subsidiary First Independent Bank of
Nevada through the merger of FICN with and into Western
Alliance, with Western Alliance surviving. FICNs wholly
owned subsidiary First Independent Bank of Nevada will survive
the merger as a wholly owned subsidiary of Western Alliance.
Western Alliance is a bank holding company headquartered in Las
Vegas, Nevada that provides a full range of banking and related
services to locally owned businesses, professional firms, real
estate developers and investors, local non-profit organizations,
high net worth individuals and other consumers through
subsidiary banks and financial services companies located in
Nevada, Arizona and California. On a consolidated basis, as of
September 30, 2006, Western Alliance had approximately
$4.0 billion in assets, $2.9 billion in total loans,
$3.3 billion in deposits and $393.1 million in
stockholders equity.
FICN is a bank holding company headquartered in Reno, Nevada.
Through its wholly owned subsidiary, First Independent Bank of
Nevada, FICN operates four banking offices and a commercial real
estate brokerage division in the Reno/Sparks and Fallon
communities of northern Nevada. On a consolidated basis, as of
December 31, 2006, FICN had approximately
$428.0 million in assets, $288.4 million in total
loans, $386.2 million in deposits and $31.8 million in
stockholders equity.
23
Background
of the Merger
During the normal course of its business, the management and
board of directors of FICN periodically reviewed and assessed
the strategic options of the Company. Consistent with its
fiduciary obligations to its shareholders, the board of
directors of FICN periodically considered strategic options
including strategies to grow and enhance FICNs business
through internal and external means. Those discussions included
analyses of the financial institution merger market on a
national and regional basis, the potential value of the FICN
franchise based on current merger market fundamentals, and the
potential market value of the FICN stock assuming the execution
of its current business plan under various scenarios. The board
of directors and management of FICN also routinely discussed the
increasing level of competition, continuing consolidation,
regulatory burden and related costs, and other developments in
the financial services industry.
In this regard, a number of strategic alternatives to maximize
value for shareholders including potential acquisitions, organic
growth opportunities, and capital management options were
discussed at a board of directors meeting on October 26,
2006. Furthermore, the potential alternative of merging with a
larger organization was also discussed. In a presentation by
Hovde Financial, Inc. (Hovde), an investment banking
firm used by the board to provide financial analysis from time
to time, the board reviewed managements financial
forecasts as well as the potential value of FICN on a sale.
Additionally, the board discussed the characteristics of several
potential partners, including Western Alliance, and the
requirements that would have to be satisfied in order to be
considered as a candidate for a merger.
In light of the potential sale alternative discussed, the board
agreed at the October 26, 2006 board meeting to accept an
invitation that had been previously extended to meet with
representatives from Western Alliance. On November 6, 2006
Robert Sarver, Chairman and CEO of Western Alliance, Dale
Gibbons, CFO of Western Alliance, Larry Woodrum, former CEO of
Bank of Nevada and current director of Western Alliance, and
James Lundy, current CEO of Alliance Bank of Arizona met in Reno
with FICNs strategic planning committee and executive
management team, including John P. Sande, III, Chairman,
Leo Seevers, Vice Chairman, Blake Smith, director, Grant
Markham, CEO and director, Jim DeVolld, President, and Lisa
Milke, CFO. In addition to discussing operational topics,
Mr. Sarver communicated to the FICN representatives Western
Alliances desire for a partnership with FICN, including
integration strategies and the potential both companies could
achieve as a combined entity. No pricing was discussed at this
meeting.
Following the November 6, 2006 meeting and through a letter
dated November 14, 2006, Western Alliance submitted a
non-binding indication of interest to acquire FICN. In addition
to pricing and a stock and cash mixture consideration, the
indication detailed structural and social considerations
including First Independent Bank remaining as a separate
subsidiary, the management team and board of directors remaining
in place, and one board member being added to the Western
Alliance board. Western Alliance also expressed confidence in
getting a transaction announced by the end of 2006 and closed in
the first or second quarter of 2007. After discussion, the board
determined that it was in the best interest of FICN and its
shareholders to explore the prospect of a combination,
concluding that a partnership could provide an attractive return
on shareholder investment while providing access to additional
capital to promote expansion opportunities and maintaining the
people and structure in place at First Independent Bank.
In consideration of the Western Alliance indication and other
potential partnership opportunities, the board of directors
decided to retain Hovde to assist and advise in evaluating the
offer from Western Alliance, explore other potential
transactions, and issue a fairness opinion in the event such a
transaction were to occur. FICN entered into an engagement
agreement with Hovde on November 15, 2006.
In parallel to evaluating the Western Alliance indication of
interest, the board of directors, with input and analysis from
its advisors, authorized Hovde to contact on a confidential
basis two other parties to gauge interest in a potential
transaction. No due diligence material was distributed and no
confidentiality agreements were requested. One of the parties
indicated they would not be interested in a potential
transaction at this time. The other party indicated that they
would be interested in making an acquisition in the region;
however, they referenced a significant concern about pricing in
the current merger market. After considering the high-level
feedback received from the additional parties and the offer from
Western Alliance, the board of directors elected to begin
negotiations of an agreement exclusively with Western Alliance
and to begin due diligence. A
24
confidentiality agreement was executed by Western Alliance on
November 15, 2006 and due diligence took place over the
next few weeks, including an onsite review of FICNs loan
portfolio, operations, and facilities. FICN also reviewed public
information available on Western Alliance to gain comfort on the
reinvestment opportunity in Western Alliances common stock.
FICN retained Jones Vargas as legal counsel in connection with
the negotiations with Western Alliance. On November 24,
2006, Western Alliance provided to FICN and its representatives
an initial draft of the merger agreement. During the following
weeks, the parties and their representatives continued due
diligence and negotiated the terms of the merger agreement and
ancillary agreements. The terms of the employment agreements for
certain executives and managers of FICN and First Independent
Bank were also negotiated during this period.
Western Alliances board of directors met on
December 18, 2006 to discuss the proposed transaction and
terms of the agreement. After this discussion, Western
Alliances board approved the transaction by the unanimous
vote of all directors, and authorized management to execute and
deliver the merger agreement, with such changes as management,
on the advice of legal counsel, deemed necessary or appropriate.
A special meeting of FICNs board of directors was held on
December 19, 2006 to discuss the proposed transaction and
terms of the agreement. Jones Vargas provided a review of the
merger agreement and ancillary agreements and directors
fiduciary duties in connection with a possible transaction with
Western Alliance. Hovde presented a summary of its financial
analyses relating to the proposed merger and responded to
questions posed by the board of directors. Hovde provided its
written opinion that, as of the date of the opinion and based
upon and subject to the considerations described in the opinion,
the consideration to be received by the holders of common stock
in the proposed merger was fair, from a financial point of view,
to such holders. The board meeting included, among other things,
discussions of the form of consideration to be received by the
shareholders of FICN, the
break-up
fee, potential price adjustments, caps and collars, the current
stock price of Western Alliance, and the implications to
FICNs shareholders, employees and customers. Also
discussed were the reasons for completing the merger weighed
against the implications of FICN remaining independent.
FICNs board of directors evaluated the information
provided in the presentation made by Hovde and fairness opinion
that was presented. After due deliberations, the board of
directors unanimously determined that the merger agreement and
the transactions contemplated thereby, including the merger,
were advisable to, fair to and in the best interests of FICN and
its shareholders and voted unanimously to approve the terms of
the merger agreement and the merger.
FICN and Western Alliance executed the definitive merger
agreement on December 19, 2006, and a joint press release
was issued later that evening.
Reasons
for the Merger and Recommendation of the FICN Board of
Directors
FICNs board of directors has determined that the merger is
fair to and in the best interests of FICN and its shareholders
and, by the unanimous vote of all the directors of FICN present
at the meeting, approved and adopted the merger agreement and
the merger. ACCORDINGLY, FICNS BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT ALL HOLDERS OF FICN COMMON STOCK
VOTE FOR APPROVAL OF THE MERGER AGREEMENT.
In the course of reaching its determination, FICNs board
of directors consulted with its legal counsel regarding its
fiduciary duties, the terms of the merger agreement and related
issues, and reviewed with its financial advisors, Hovde, Inc,
and its senior management of FICN, among other things,
operational matters, the financial aspects and the fairness of
the transaction to the shareholders from a financial point of
view.
In reaching its determination to approve the merger agreement,
FICNs board of directors considered all factors it deemed
material. The board of directors analyzed information with
respect to the financial condition, results of operations,
businesses and prospects of FICN. In this regard, FICNs
board of directors considered the performance trends of FICN
over the past several years. The board of directors compared
FICNs current and anticipated future operating results to
publicly available financial and other information for other
similarly sized banking institutions. The board also considered
the ability of FICN to grow as an independent institution,
25
the prospects of FICN to make potential acquisitions, and its
ability to further enhance shareholder value without engaging in
a strategic transaction. In this regard, FICNs board of
directors considered the long-term as well as the short-term
interests of FICN and its shareholders, including whether those
interests may best be served by continued independence.
The board of directors used this information in analyzing the
options available to FICN.
In reaching its decision to approve the merger agreement and the
merger, the board of directors also considered a number of
factors, including the following:
1. FICNs board of directors considered the opinion,
dated December 19, 2006, of its financial advisor, Hovde
Financial, Inc. to the effect that, as of the date of the
opinion and based on and subject to the assumptions made,
procedures followed, matters considered and limitations on the
review undertaken described in its written opinion, the merger
consideration was fair, from a financial point of view, to the
holders of FICN common stock. The fairness opinion is included
in this proxy statement/prospectus in Appendix C
beginning on
page C-1.
2. FICNs board compared the purchase price offered
for the common stock to the purchase prices obtained by
comparable companies in recent transactions.
3. FICNs board of directors considered the current
operating environment, including but not limited to the
continued consolidation and increasing competition in the
banking and financial services industries, the prospects for
further changes in these industries, and the importance of being
able to capitalize on developing opportunities in these
industries. FICNs board of directors also considered the
current and prospective economic and competitive conditions
facing FICN in its market areas. FICNs board also
considered the challenges facing FICN in remaining an
independent banking institution, the lack of opportunities to
grow through potential acquisitions or merger of
equals, and the difficulties of further enhancing
shareholder value.
4. FICNs board of directors reviewed the terms and
conditions of the merger agreement, including the parties
respective representations, warranties and covenants, the
conditions to closing, and the fact that the merger agreement
permits FICNs board of directors, in the exercise of its
fiduciary duties, under certain conditions, to furnish
information to, or engage in negotiations with, a third party
which has submitted an unsolicited superior proposal to acquire
FICN, and provisions providing for FICNs payment of a
termination fee to Western Alliance in certain circumstances.
5. FICNs board of directors considered the ability of
Western Alliance to pay the merger consideration, and
accordingly, reviewed Western Alliances financial
condition, results of operations, liquidity and capital position.
6. FICNs board of directors considered the ability of
Western Alliance to consummate the transaction in an efficient
and timely manner based on its history of consummating other
acquisitions.
7. FICNs board of directors considered the likelihood
of the merger being approved by the appropriate regulatory
authorities. See The Merger Regulatory
Approvals beginning on page 28 of this proxy
statement/prospectus for more information.
8. FICNs board of directors examined current
financial market conditions with respect to shares of FICN
common stock. In particular, the board noted that shares of
Western Alliance common stock are publicly traded on the New
York Stock Exchange while FICNs common stock is relatively
illiquid.
9. FICNs board of directors considered the potential
impact of the merger on FICNs customers. The board viewed
the potential impact on customers as positive in view of Western
Alliances history of providing exceptional service to
customers, and the fact that the merger will enhance the
services available to FICNs customers without sacrificing
the personal attention and dedication that FICN has offered.
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10. FICNs board of directors considered the
mergers impact on FICNs employees and offices. The
board viewed the impact on employees as generally positive, in
that they would become part of a more geographically diversified
institution with greater resources and opportunities than FICN.
11. FICNs board of directors considered community and
societal considerations, and Western Alliances commitment
to local civic groups, charitable organizations, and the towns
and cities in which it operates.
12. FICNs board of directors considered the fact that
the shareholders of Western Alliance would not be required to
approve the merger agreement.
This description of the information and factors considered by
FICNs board of directors is not intended to be exhaustive,
but is believed to include all material factors the board
considered. In determining whether to approve and recommend the
merger agreement, FICNs board of directors did not assign
any relative or specific weights to any of the foregoing
factors, and individual directors may have weighed factors
differently. After deliberating with respect to the merger and
the merger agreement, considering, among other things, the
reasons discussed above, FICNs board of directors approved
and adopted the merger agreement and the merger as being in the
best interests of FICN and its shareholders, based on the total
mix of information available to the board.
Purpose
and Effects of the Merger
The purpose of the merger is to enable Western Alliance to
acquire the assets and business of FICN and its subsidiary First
Independent Bank of Nevada. First Independent Bank of Nevada
will continue to operate following the merger as a subsidiary of
Western Alliance.
Structure
FICN will merge into Western Alliance with Western Alliance
continuing as the surviving entity following the merger. When
the merger takes place, except as discussed below, each issued
and outstanding share of FICNs common stock will be
converted into the right to receive cash and shares of Western
Alliances common stock based on the merger consideration,
as described below. Cash will be paid instead of fractional
shares of Western Alliance common stock. Shares of FICNs
common stock held as treasury stock or held directly or
indirectly by FICN, Western Alliance or any of their
subsidiaries will be canceled and shall cease to exist.
Western Alliance and FICN expect that the merger will take place
in the first half of 2007, or as soon as possible after we
receive all required regulatory and shareholder approvals and
all regulatory waiting periods expire. If the merger does not
take place by September 30, 2007, the merger agreement may
be terminated by either party unless both parties agree to
extend it.
Merger
Consideration
Cash or Stock Consideration. You may elect to
receive either $93.60 in cash or Western Alliance common stock
of comparable value for each share of FICN common stock you own
so long as Western Alliances weighted average trading
price for the twenty consecutive trading days ending on the last
trading day prior to the date the merger is completed is between
$32.91 and $39.13, unless you exercise your dissenters
rights. If the weighted average Western Alliance trading price
at that date is less than $32.91, you will receive, with respect
to shares for which you have elected to receive Western Alliance
common stock, shares of Western Alliance common stock based on
an exchange ratio that is fixed at 2.84412 shares of
Western Alliance common stock for each share of FICN common
stock. If the weighted average Western Alliance stock price is
more than $39.13, the exchange ratio will be fixed at
2.39203 shares of Western Alliance common stock for each
share of FICN common stock. In either case, the amount of cash
consideration paid per share for which an election to receive
cash is made will remain $93.60 per share. You will have
the opportunity to elect the form of consideration to be
received for your shares, subject to proration and allocation
procedures set forth in the merger agreement which are intended
to ensure that 80% of the
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FICN shares are exchanged for shares of common stock of Western
Alliance. Therefore, your ability to receive cash or stock in
accordance with your election may depend on the elections of
other FICN shareholders.
Western Alliance may opt to increase the exchange ratio in
specific circumstances where FICN could otherwise terminate the
merger agreement and likewise, FICN may opt to decrease the
exchange ratio in specific circumstances where Western Alliance
could otherwise terminate the merger agreement. In the case of
any increase or decrease in the exchange ratio, because the
formula with respect to the adjusted exchange ratio is dependent
on the future price of Western Alliances common stock, it
is not possible presently to determine what the adjusted ratio
would be. For more information regarding these termination
rights and the adjustments that may result to the merger
consideration, see Termination of the Merger
Agreement.
Potential Additional Cash
Consideration. Shareholders and optionholders may
also receive additional cash consideration of up to
$2.38 per share depending upon the performance of certain
credits in the FICN loan portfolio. Payment of additional cash
consideration may occur at any time until two years following
the closing of the merger. If certain loans identified in the
merger agreement are repaid, this payment, which will not exceed
$3.0 million in the aggregate, will be distributed to the
shareholders and optionholders as additional cash consideration
for the merger on a pro rata per share basis, including shares
issuable pursuant to options outstanding as of the closing date
of the merger. If, however, FICN, Western Alliance or their
subsidiaries record a loss with respect to any of these loans,
any distributions to be made as additional cash consideration
will be reduced by the amount of such recorded loss and by
expenses paid to third parties in connection with the attempted
recovery of amounts due from those loans. Of this amount,
approximately $0.79 per share, or $1.0 million in the
aggregate, has become payable as of the date of this proxy
statement/prospectus, pending the closing of the merger.
FICN Stock Options. If you hold options to
purchase FICN common stock that are outstanding at the effective
time of the merger, you may choose either to cancel the options
to purchase FICN common stock in exchange for cash consideration
as provided in the merger agreement or to convert the options
into options to purchase shares of Western Alliance common
stock. If you do not make an election prior to the merger
becoming effective, you will be deemed to have elected to
receive the cash consideration.
If you elect to receive the cash consideration, you will receive
an amount of cash, without interest, equal to the product of
(i) the excess of (A) the per share cash consideration
of $93.60 over (B) the exercise price per share of such
option and (ii) the number of shares of FICN common stock
subject to such option.
If you elect to convert your options to purchase shares of FICN
common stock into options to purchase shares of Western Alliance
common stock, then:
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the number of shares of FICN common stock subject to the option
immediately before the effective time of the merger shall be
multiplied by the applicable exchange ratio, provided that any
fractional shares of Western Alliance common stock resulting
from such multiplication shall be rounded down to the nearest
whole share and
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the exercise price per share of Western Alliance common stock
under the option immediately after the effective time of the
merger shall be equal to the exercise price per share of FICN
common stock under the option immediately before the effective
time of the merger, divided by the applicable exchange ratio,
provided that such exercise price shall be rounded up to the
nearest cent.
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The adjustment will be made in a manner consistent with
Section 424(a) of the Internal Revenue Code of 1986, as
amended. The options you receive from Western Alliance will be
exercisable immediately. The duration and other terms of the
FICN options will otherwise be unchanged except that all
references to FICN in any of the FICN stock plans (and
corresponding references in any option agreement documenting
such option) shall be deemed to be references to Western
Alliance.
The merger will also result in acceleration of the vesting of
all options issued under FICNs stock option plan.
Non-Electing Shares. FICN shareholders who
make no election to receive cash or Western Alliance common
stock in the merger, and FICN shareholders who do not make a
valid election, will be deemed not to
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have made an election. Shareholders not making an election may
be paid in cash, Western Alliance common stock or a mix of cash
and shares of Western Alliance common stock depending on, and
after giving effect to, the number of valid cash elections and
stock elections that have been made by other FICN shareholders
using the proration adjustment described below.
Election Limitations. The merger agreement
provides proration and allocation procedures to ensure that 80%
of the FICN shares of common stock are exchanged for shares of
Western Alliance common stock. The remaining shares of FICN
common stock will be converted into cash. Therefore, the cash
elections are subject to proration to preserve this requirement
regarding the number of shares of FICN common stock to be
converted into Western Alliance common stock in the merger. As a
result, if you elect to receive only cash, or only stock, you
may nevertheless receive a mix of cash and stock. In addition,
the total number of shares to be issued by Western Alliance is
not to exceed one share less than 20% of the total number of
shares of Western Alliance common stock outstanding immediately
prior to the effective time of the merger.
Proration if Too Much Stock is Elected. If
FICN shareholders elect to receive more Western Alliance common
stock than Western Alliance has agreed to issue in the merger,
then all FICN shareholders who elected to receive cash will
receive cash and those shareholders who have elected Western
Alliance common stock or have made no election will be treated
in the following manner:
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If the number of shares held by FICN shareholders who have made
no election is sufficient to make up the shortfall in the number
of shares of FICN common stock to be converted into cash, then
all FICN shareholders who made a stock election with respect to
some or all of their shares will receive Western Alliance common
stock for all of the shares with respect to which they made a
stock election, and those shareholders who made no election will
receive a combination of cash and Western Alliance common stock
in whatever proportion is necessary to make up the shortfall.
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If the number of shares held by FICN shareholders who have made
no election is insufficient to make up the shortfall, then all
of those shares will be converted into cash and those FICN
shareholders who made a stock election with respect to some or
all of their shares will receive a combination of cash and
Western Alliance common stock in whatever proportion is
necessary to make up the shortfall.
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Proration if Too Much Cash is Elected. If FICN
shareholders elect to receive shares of Western Alliance common
stock in exchange for less than 80% of FICN common stock, then
all FICN shareholders who elected to receive Western Alliance
common stock will receive Western Alliance common stock and
those shareholders who have elected cash or have made no
election will be treated in the following manner:
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If the number of shares held by FICN shareholders who have made
no election is sufficient to make up the shortfall in the number
of shares of FICN common stock to be converted into shares of
Western Alliance common stock, then all FICN shareholders who
made a cash election with respect to some or all of their shares
will receive cash for all of the shares with respect to which
they made a cash election, and those shareholders who made no
election will receive a combination of cash and Western Alliance
common stock in whatever proportion is necessary to make up the
shortfall.
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If the number of shares held by FICN shareholders who have made
no election is insufficient to make up the shortfall, then all
of those shares will be converted into Western Alliance common
stock and those FICN shareholders who made a cash election with
respect to some or all of their shares will receive a
combination of cash and Western Alliance common stock in
whatever proportion is necessary to make up the shortfall.
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Fractions of Shares. Certificates for
fractions of shares of Western Alliances common stock will
not be issued. Instead of a fractional share of Western
Alliances common stock, an FICN shareholder will be
entitled to receive an amount of cash equal to the product
obtained by multiplying (A) the fractional share interest
to which the holder would otherwise be entitled by (B) the
average of the 4:00 p.m. Eastern time closing sales prices
of Western Alliance common stock reported on the New York Stock
Exchange composite tape for the five consecutive trading days
immediately preceding the last trading day prior to the closing
date for the merger.
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Conversion. The conversion of FICNs
common stock into the merger consideration will occur
automatically upon completion of the merger. Under the merger
agreement, after the effective time of the merger, Western
Alliance will cause its exchange agent to pay the purchase
price to each FICN shareholder who surrenders the
appropriate documents to the exchange agent. In this document,
we use the term purchase price to refer to the
(i) shares (if any) of Western Alliances common
stock, (ii) cash (if any) and (iii) any cash to be
paid instead of a fraction of a share of Western Alliances
common stock, payable to each holder of FICNs common stock.
Election
Procedures for Shareholders; Surrender of Stock
Certificates
An election form is being mailed under separate cover on or
about the date of this proxy statement/prospectus. The election
form entitles the record holder of FICN common stock to specify
(a) the number of shares of FICN common stock owned by such
holder for which the holder elects to receive shares of Western
Alliance common stock, or (b) the number of shares of FICN
common stock owned by such holder for which the holder elects to
receive $93.60 in cash, without interest. If no election is
made, then such holder shall receive cash, stock or a
combination of cash and stock in the merger as outlined above.
To make an effective election, a record shareholder must submit
a properly completed election form to American Stock
Transfer & Trust Company, which will be acting as the
exchange agent, on or before the election deadline, which is
5:00 p.m., New York City time,
on ,
2007. An election form will be deemed properly completed only if
accompanied by stock certificates representing all shares of
FICN common stock covered by the election form. You may change
your election at any time prior to the election deadline by
written notice accompanied by a properly completed and signed,
revised election form received by the exchange agent prior to
the election deadline. You may revoke your election by written
notice received by the exchange agent prior to the election
deadline or by withdrawal of your stock certificates prior to
the election deadline. All elections will be revoked
automatically if the merger agreement is terminated.
Shareholders will not be entitled to revoke or change their
elections following the election deadline. As a result,
shareholders who have made elections will be unable to transfer
their shares of FICN common stock during the interval between
the election deadline and the date of completion of the merger.
FICN shareholders who do not submit a properly completed
election form or revoke their election form prior to the
election deadline will have their shares of FICN common stock
designated as non-election shares and will receive cash, stock
or a combination of stock and cash in the merger as outlined
above. FICN stock certificates represented by elections that
have been revoked will be returned without charge.
Western Alliance will deposit with the exchange agent the
certificates representing Western Alliances common stock
and the cash to be issued to FICN shareholders in exchange for
FICNs common stock. As soon as practicable after the
completion of the merger, the exchange agent will mail to FICN
shareholders who do not submit election forms a letter of
transmittal, together with instructions for the exchange of
their FICN stock certificates for the merger consideration. Upon
surrendering his or her certificate(s) representing shares of
FICNs common stock, together with the signed letter of
transmittal, the FICN shareholder shall be entitled to receive,
as applicable, (i) certificate(s) representing a number of
whole shares of Western Alliances common stock determined
in accordance with the applicable exchange ratio, (ii) a
check representing the amount of cash to which such holder shall
have become entitled to, and (iii) a check representing the
amount of cash in lieu of fractional shares. You will not be
paid dividends or other distributions declared after the merger
with respect to any Western Alliance common stock into which
your shares have been converted until you surrender your FICN
stock certificates for exchange. No interest will be paid or
accrue to FICN shareholders on the cash consideration, cash
instead of fractional shares or unpaid dividends and
distributions, if any. After the effective time of the merger,
there will be no further transfers of FICN common stock. FICN
stock certificates presented for transfer after the completion
of the merger will be cancelled and exchanged for the merger
consideration.
If your stock certificates have been lost, stolen or destroyed,
you will have to prove your ownership of these certificates and
certify that they were lost, stolen or destroyed before you
receive any consideration for
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your shares. Upon request, American Stock Transfer &
Trust Company will send you instructions on how to provide
evidence of ownership.
If any certificate representing shares of Western
Alliances common stock is to be issued in a name other
than that in which the certificate for shares surrendered in
exchange is registered, or cash is to be paid to a person other
than the registered holder, it will be a condition of issuance
or payment that the certificate so surrendered be properly
endorsed or otherwise be in proper form for transfer and that
the person requesting the exchange either:
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pay to the exchange agent in advance any transfer or other taxes
required by reason of the issuance of a certificate or payment
to a person other than the registered holder of the certificate
surrendered, or
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establish to the satisfaction of the exchange agent that the tax
has been paid or is not payable.
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Any portion of the purchase price made available to the exchange
agent that remains unclaimed by FICN shareholders for six months
after the effective time of the merger will be returned to
Western Alliance. Any FICN shareholder who has not exchanged
shares of FICNs common stock for the purchase price in
accordance with the merger agreement before that time may look
only to Western Alliance for payment of the purchase price for
these shares and any unpaid dividends or distributions after
that time. Nonetheless, Western Alliance, FICN, the exchange
agent or any other person will not be liable to any FICN
shareholder for any amount properly delivered to a public
official under applicable abandoned property, escheat or similar
laws.
Election
Procedures for Option Holders
If you hold options to purchase shares of FICN common stock, you
will soon receive under separate cover an election form that you
may use to indicate whether your preference is to receive cash
in exchange for the cancellation of your options or to convert
your options into options to purchase shares of Western Alliance
common stock. The election deadline will be the same as for
elections with respect to shares of FICN common stock, which is
5:00 p.m., New York City time, on [ ],
2007, the date prior to the date of the special meeting. To make
an election, an optionholder must submit a properly completed
election form and return it so that the form is actually
received by American Stock Transfer & Trust Company at
or before the election deadline in accordance with the
instructions on the election form. FICN option holders who make
no election with respect to their options, or who do not make a
valid election, will be deemed to have elected to receive cash
in exchange for their options. You may change or revoke your
election by written notice received by American Stock
Transfer & Trust Company prior to the election
deadline. Optionholders will not be entitled to revoke or change
their election following the election deadline, but may exercise
their options in accordance with the terms thereof. Any exercise
of options for which an election has been made will have the
effect of automatically revoking such election. Once an option
is exercised in accordance with its, such exercise cannot be
revoked or undone. All elections will be revoked automatically
if the merger agreement is terminated.
Regulatory
Approvals
For the merger of Western Alliance and FICN to take place, we
must receive approvals from the Federal Reserve Board (the
FRB) and the Nevada Financial Institutions Division
(the NFID). In this section, we refer to these
approvals as the required regulatory approvals.
Western Alliance and FICN have agreed to cooperate to obtain the
required regulatory approvals.
On January 24, 2007, Western Alliance filed with the FRB an
application under the Bank Holding Company Act of 1956, as
amended, for approval of the merger of Western Alliance and
FICN. This filing will require consideration by the FRB of
various factors, including assessments of the competitive effect
of the contemplated transaction, the managerial and financial
resources and future prospects of the companies and banks
involved in the transaction, the effectiveness of the
institutions involved in combating money laundering, the effect
of the contemplated transaction on the convenience and needs of
the communities to be served and the availability of information
needed to determine and enforce compliance with the BHC Act. The
Community Reinvestment Act of 1977, commonly referred to as the
CRA, also requires that the FRB, in deciding whether
to approve the merger, assess the records of performance of the
insured depository
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institutions controlled by Western Alliance and FICN in meeting
the credit and other needs of the communities they serve
including low- and moderate- income neighborhoods. Both First
Independent Bank of Nevada, FICNs only bank, and Bank of
Nevada, Western Alliances lead bank, received
outstanding ratings at their most recent CRA
performance evaluations by the FDIC. Western Alliances
other subsidiary banks received satisfactory ratings
at their most recent CRA evaluations by the FDIC. FRB
regulations require publication of notice and an opportunity for
public comment concerning the application filed in connection
with the merger, and authorize the FRB to hold informal or
formal hearings or meetings in connection with the application
if the FRB, after reviewing the application or other materials,
determines it desirable to do so or receives and acts favorably
upon a request for a hearing or meeting. It is not unusual for
the FRB to receive protests and other adverse comments from
community groups and others. Any hearing or meeting, or comments
provided by third parties, could prolong the period during which
the merger is subject to review by the FRB. The merger may not
be consummated for 30 days after action by the FRB unless
the Department of Justice authorizes a waiting period of
15 days. During either the 15 or 30 day waiting
period, the Department of Justice has authority to challenge the
merger on antitrust grounds. The commencement of an antitrust
action would stay the effectiveness of any approval granted by
the FRB unless a court specifically orders otherwise. If the
Department of Justice does not start a legal action during the
waiting period, it may not challenge the transaction afterward,
except in an action under Section 2 of the Sherman
Antitrust Act.
Application also will be made to the NFID in order to effect the
merger of FICN into Western Alliance. This application will be
subject to the review of the NFID under Chapter 666 of the
Nevada Revised Statutes. In determining whether to approve the
merger of Western Alliance and FICN, the Nevada Commissioner of
Financial Institutions (the Commissioner) will
consider Western Alliances subsidiary depository
institutions records of compliance with the CRA and
whether the proposed transaction will meet the needs of those
counties whose populations are less than 100,000 and whose
residents are not being adequately served by existing financial
institutions. In addition, the Commissioner must also consider
the effect of the proposal on Western Alliance and the banks
that it and FICN control, as well as the effect of the merger on
competition in banking.
Western Alliance and FICN are not aware of any other material
governmental approvals that are required for the merger to take
place that are not described above. If any other approval or
action is required, we expect that we would seek the approval or
take the necessary action.
The merger cannot take place without the required regulatory
approvals, which we have not yet received. There is no assurance
that we will receive these approvals, or if we do, when we will
receive them or that they will not contain a non-customary
condition that materially alters the anticipated benefits and
effects of the merger. Also, there is no assurance that the
Department of Justice will not challenge the merger of Western
Alliance and FICN on antitrust grounds following regulatory
approval, or, if a challenge is made, what the result of a
challenge would be.
Conditions
to the Merger
Under the merger agreement, Western Alliance and FICN are not
obligated to complete the merger unless the following conditions
are satisfied:
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the merger agreement and the merger are approved and adopted by
the affirmative vote of the holders of at least a majority of
the outstanding shares of FICN common stock entitled to vote at
the special meeting;
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all required regulatory approvals are obtained and remain in
full force and effect, all statutory waiting periods related to
these approvals have expired, and none of the regulatory
approvals or statutory waiting periods contains a non-customary
provision that materially alters the benefits for which Western
Alliance bargained in the merger agreement;
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the registration statement to be filed with the SEC to register
the shares of Western Alliance common stock to be issued in the
merger is declared effective by the SEC, and no stop order
suspending the
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effectiveness of the Registration Statement is issued and no
proceedings for that purpose are initiated or threatened by the
SEC; and
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no order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition
preventing the merger or any of the other transactions
contemplated by the merger agreement from taking place is in
effect, and no statute, rule, regulation, order, injunction or
decree is enacted, entered, promulgated or enforced by any
governmental entity which prohibits, restricts or makes illegal
the consummation of the merger.
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Western Alliance is not obligated to complete the merger unless
the following additional conditions are satisfied or waived:
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the representations and warranties of FICN contained in the
merger agreement are true and correct in all material respects
as of the date of the merger agreement and (except to the extent
such representations and warranties speak as of an earlier date)
as of the closing date of the merger as though made on and as of
the closing date;
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FICN performs in all material respects all covenants and
agreements contained in the merger agreement to be performed by
FICN at or prior to the closing date;
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FICN obtains the consents, approvals or waivers of each person
whose consent or approval is required in order to permit the
succession by Western Alliance pursuant to the merger to any
obligation, right or interest of FICN or First Independent Bank
of Nevada under any loan or credit agreement, note, mortgage,
indenture, lease, license or other agreement or instrument;
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no changes, other than changes contemplated by the merger
agreement, in the business, operations, condition (financial or
otherwise), assets or liabilities of FICN or FICN subsidiary
(regardless of whether or not such events or changes are
inconsistent with the representations and warranties given in
the merger agreement) occur that individually or in the
aggregate have or would reasonably be expected to have a
material adverse effect on FICN; and
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each of certain individuals listed in the merger agreement
execute and deliver an agreement containing non-competition,
confidentiality and non-solicitation covenants that are
reasonably satisfactory to Western Alliance.
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FICN is not obligated to complete the merger unless the
following additional conditions are satisfied or waived:
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the representations and warranties of Western Alliance contained
in the merger agreement are true and correct in all material
respects as of the date of the merger agreement and (except to
the extent such representations and warranties speak as of an
earlier date) as of the closing date of the merger as though
made on and as of the closing date;
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Western Alliance performs in all material respects all covenants
and agreements contained in the merger agreement required to be
performed by it at or prior to the closing date;
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the shares of Western Alliance common stock to be issued in the
merger are approved for listing on the NYSE; and
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FICN receives an opinion of counsel that the merger will qualify
as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code.
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Conduct
of FICN Business Pending the Merger
The merger agreement contains various restrictions on the
operations of FICN before the effective time of the merger. In
general, the merger agreement obligates FICN to continue to
carry on its businesses in the ordinary course consistent with
past practices and with prudent banking practices, with specific
limitations on
33
the lending activities and other operations of FICN. The merger
agreement prohibits FICN, without the written consent of Western
Alliance, from:
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declaring or paying any dividends or other distributions on its
capital stock;
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splitting, combining or reclassifying any of its capital stock;
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repurchasing, redeeming or otherwise acquiring any shares of its
capital stock or any securities convertible into or exercisable
for any shares of its capital stock;
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issuing, delivering or selling (or authorizing or proposing to
issue, deliver or sell) any securities, other than the issuance
of additional shares of its common stock upon the exercise or
fulfillment of rights or options issued or existing under
FICNs stock option plan in accordance with their present
terms;
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amending its articles of incorporation or bylaws;
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making capital expenditures aggregating in excess of $25,000;
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entering into any new line of business;
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acquiring an equity interest in the assets of other business
organizations except in connection with foreclosures,
settlements or troubled loan or debt restructurings, or in the
ordinary course of business consistent with prudent banking
practices;
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taking any action that may result in any of its representations
and warranties contained in the merger agreement becoming untrue
or in any of the applicable conditions contained in the merger
agreement not being satisfied;
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changing its methods of accounting in effect at
December 31, 2005, except as required by changes in
regulatory or generally accepted accounting principles;
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adopting, amending, renewing or terminating any plan, policy or
agreement between FICN or its subsidiaries and their employees
or directors, except as required by law or by the merger
agreement;
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entering into, modifying or renewing any agreement or
arrangement providing for the payment to any director, officer
or employer of compensation or benefits other than merit
increases consistent with past business practices, not to exceed
5% of such employees base salary;
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hiring any new employee at an annual rate of compensation in
excess of $70,000;
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paying expenses of any employees or directors for attending
conventions or similar meetings;
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promoting any employee to a rank of vice president or more
senior;
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incurring any indebtedness for borrowed money or assuming the
obligations of a third party, except for short-term borrowings
with a maturity of six months or less in the ordinary course
consistent with past practices;
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selling, purchasing, opening or closing any banking or other
office;
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making any equity investments in real estate, other than in
connection with foreclosures or settlements in lieu of
foreclosures or troubled loan or debt restructurings, in the
ordinary course of business consistent with past banking
practices;
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making any new loans or modifying the terms of any existing
loans with any affiliated person of FICN;
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incurring any deposit liabilities, other than in the ordinary
course of business consistent with past practice;
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purchasing any loans or selling, purchasing or leasing any real
property other than consistent with past practices;
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originating (a) any loans except in accordance with
existing FICN lending policies and practices,
(b) residential mortgage loans in excess of $250,000,
(c) 30 year residential mortgage loans without
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34
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interest rate, terms, appraisal, and underwriting do not make
them immediately available for sale in the secondary market,
(d) unsecured consumer loans in excess of $200,000,
(e) commercial business loans in excess of $1,000,000 as to
any loan or $1,000,000 in the aggregate as to related loans or
loans to related persons, (f) commercial real estate first
mortgage loans in excess of $1,000,000 as to any loan or
$1,000,000 in the aggregate as to related loans or loans to
related borrowers, or (g) modifications
and/or
extensions of any commercial business or commercial real estate
loans in the amounts set forth in the preceding clauses (e)
and (f) other than in the ordinary course of business
consistent with past practice;
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making any investments other than in overnight federal funds and
U.S. Treasuries that have a maturity date that does not
exceed three months;
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selling or purchasing any mortgage loan servicing rights;
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taking any actions that would prevent the transactions
contemplated by the merger agreement from qualifying as a
reorganization under section 368(a) of the Code; or
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agreeing or committing to do any of the actions listed above.
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No
Solicitation
Under the merger agreement, FICN generally may not, and must
instruct its officers, directors, employees, agents and other
representatives not to, maintain, initiate, solicit or encourage
(including by way of furnishing information or assistance) or
take any other action to facilitate any inquiries or the making
of any proposal that constitutes or reasonably may be expected
to lead to any competing proposal. The merger
agreement also prohibits FICN from holding discussions or
negotiations relating to any competing proposal and from
agreeing to or endorsing any competing proposal.
The merger agreement defines a competing proposal as
(i) any inquiry, proposal or offer from any person relating
to any direct or indirect acquisition or purchase of FICN or any
business line of FICN that constitutes 15% or more of the net
revenues, net income or assets of FICN or any of its
subsidiaries or 15% or more of any class of equity securities of
FICN, (ii) any tender offer or exchange offer that if
consummated would result in any person beneficially owing 15% or
more of any class of equity securities of FICN or any of its
subsidiaries or (iii) any merger, consolidation, business
combination, recapitalization, liquidation, dissolution or
similar transaction involving FICN or any of its subsidiaries,
other than the transactions contemplated by the merger agreement.
Notwithstanding the above restrictions, in connection with a
superior competing transaction and subject to other
specified conditions, FICN will be permitted to furnish
information with respect to, or enter into discussions or
negotiations with, any person that makes an unsolicited bona
fide proposal to acquire FICN; provided, however, that
(a) the special meeting FICN shareholders to consider the
merger has not occurred; (b) the FICN board of directors
has determined in good faith, after consultation with outside
counsel, that such action is reasonably required in order to
comply with the boards fiduciary duties to the FICN
shareholders under Nevada law; (c) FICN provides prior
written notice to Western Alliance of its decision to take such
action; (d) FICN receives an executed confidentiality
agreement on terms no less favorable to FICN than those
contained in the confidentiality agreement between Western
Alliance and FICN; and (e) FICN keeps Western Alliance
informed, on a current basis, of the status and details of any
such discussions or negotiations.
The merger agreement defines a superior competing
transaction as any proposal made by a third party to
acquire, directly or indirectly, including pursuant to a tender
offer, exchange offer, merger, consolidation, business
combination, recapitalization, liquidation, dissolution or
similar transaction, for consideration consisting of cash
and/or
securities, more than 50% of the combined voting power of the
shares of FICN common stock then outstanding or all or
substantially all the assets of FICN, and otherwise on terms
which the Board of Directors of FICN after consulting with legal
counsel and FICNs financial advisors, determines in its
good faith judgment to be more favorable to its stockholders
than the merger and for which financing, to the extent required,
is then committed or which if not committed is, in the good
faith judgment of its Board of Directors, reasonably capable of
being obtained by such third party.
35
Expenses;
Breakup Fee
The merger agreement generally provides that all costs and
expenses incurred in connection with the merger agreement and
the transactions contemplated by the merger agreement shall be
paid for by the party incurring such expense. However, if the
merger agreement is terminated by Western Alliance as a result
of FICNs failure to hold the special meeting within a
specified time period, to recommend approval of the merger or to
oppose any third party proposal, the merger agreement provides
for FICN to pay all documented, reasonable costs and expenses of
the terminating party up to $300,000, plus a breakup fee of
$4.8 million. In the event the merger agreement is
terminated by Western Alliance due to FICNs
shareholders not having approved the merger agreement and
(a) after the date of the merger agreement
(December 19, 2006) and before the special meeting
date, there shall have been a third party public
event (as defined in the merger agreement) and
(b) within 12 months following such special meeting,
FICN enters into an agreement for an acquisition
transaction (as defined in the merger agreement) or an
acquisition transaction otherwise occurs, FICN shall pay all
documented, reasonable costs and expenses of Western Alliance up
to $300,000, plus a breakup fee of $4.8 million. In the
event the merger agreement is terminated by Western Alliance due
to FICNs willful material breach of a representation,
warranty, covenant or other agreement contained in the merger
agreement, FICN shall pay all documented, reasonable costs and
expenses of Western Alliance up to $300,000, plus a breakup fee
of $4.8 million. In the event the merger agreement is
terminated by Western Alliance due to FICNs material
breach (not willful) of a representation, warranty, covenant or
other agreement contained in the merger agreement, FICN shall
pay all documented, reasonable costs and expenses of Western
Alliance up to $300,000. In the event FICN has given written
notice to Western Alliance that FICN desires to enter into a
superior competing proposal, FICN shall also pay all documented,
reasonable costs and expenses of Western Alliance up to
$300,000, plus a breakup fee of $4.8 million.
Opinion
of Financial Advisor to FICN
Hovde Financial, Inc. (Hovde) has delivered to the
Board of Directors of FICN its opinion that, based upon and
subject to the various considerations set forth in its written
opinion dated December 19, 2006, the total transaction
consideration to be paid to the shareholders of FICN is fair
from a financial point of view as of such date. In requesting
Hovdes advice and opinion, no limitations were imposed by
FICN upon Hovde with respect to the investigations made or
procedures followed by it in rendering its opinion. The full
text of the opinion of Hovde, dated December 19, 2006,
which describes the procedures followed, assumptions made,
matters considered and limitations on the review undertaken, is
attached hereto as Appendix C. FICN shareholders should
read this opinion in its entirety.
Hovde is a nationally recognized investment banking firm and, as
part of its investment banking business, is continually engaged
in the valuation of financial institutions in connection with
mergers and acquisitions, private placements and valuations for
other purposes. As a specialist in securities of financial
institutions, Hovde has experience in, and knowledge of, banks,
thrifts and bank and thrift holding companies. FICNs board
of directors selected Hovde to act as its financial advisor in
connection with the merger on the basis of the firms
reputation and expertise in transactions such as the merger.
Hovde will receive a fee from FICN for performing a financial
analysis of the merger and rendering a written opinion to the
Board of Directors of FICN as to the fairness, from a financial
point of view, of the merger to FICNs shareholders.
Further, Hovde will receive a fee from FICN for rendering
financial advisory services in connection with the merger, which
is contingent upon the completion of the merger and which is
calculated as a percentage of the consideration paid in
connection with the merger. In addition to its fees and
regardless of whether the merger is consummated, FICN has agreed
to reimburse Hovde for certain of its reasonable
out-of-pocket
expenses and to indemnify Hovde against certain claims, losses
and expenses arising out of the merger or Hovdes
engagement.
Hovdes opinion is directed only to the fairness, from a
financial point of view, of the total transaction consideration,
and, as such, does not constitute a recommendation to any FICN
shareholder as to how the shareholder should vote at the FICN
shareholder meeting. The summary of the opinion of Hovde set
forth in this proxy statement is qualified in its entirety by
reference to the full text of the opinion.
36
The following is a summary of the analyses performed by Hovde in
connection with its fairness opinion. Certain of these analyses
were confirmed in a presentation to the FICN board by Hovde. The
summary set forth below does not purport to be a complete
description of either the analyses performed by Hovde in
rendering its opinion or the presentation delivered by Hovde to
the FICN board, but it does summarize all of the material
analyses performed and presented by Hovde.
The preparation of a fairness opinion involves various
determinations as to the most appropriate and relevant methods
of financial analyses and the application of those methods to
the particular circumstances. In arriving at its opinion, Hovde
did not attribute any particular weight to any analysis and
factor considered by it, but rather made qualitative judgments
as to the significance and relevance of each analysis and
factor. Hovde may have given various analyses more or less
weight than other analyses. Accordingly, Hovde believes that its
analyses and the following summary must be considered as a whole
and that selecting portions of its analyses, without considering
all factors and analyses, could create an incomplete view of the
process underlying the analyses set forth in its report to the
FICN board and its fairness opinion.
In performing its analyses, Hovde made numerous assumptions with
respect to industry performance, general business and economic
conditions and other matters, many of which are beyond the
control of FICN and Western Alliance. The analyses performed by
Hovde are not necessarily indicative of actual value or actual
future results, which may be significantly more or less
favorable than suggested by such analyses. Such analyses were
prepared solely as part of Hovdes analysis of the fairness
of the transaction consideration, from a financial point of
view, to FICN shareholders. The analyses do not purport to be an
appraisal or to reflect the prices at which a company might
actually be sold or the prices at which any securities may trade
at the present time or at any time in the future. Hovdes
opinion does not address the relative merits of the merger as
compared to any other business combination in which FICN might
engage. In addition, as described above, Hovdes opinion to
the FICN board was one of many factors taken into consideration
by the FICN board in making its determination to approve the
merger agreement.
During the course of its engagement, and as a basis for arriving
at its opinion, Hovde reviewed and analyzed material bearing
upon the financial and operating conditions of FICN and Western
Alliance and material prepared in connection with the merger,
including, among other things, the following:
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the merger agreement;
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certain historical publicly available information concerning
FICN and Western Alliance;
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certain internal financial statements and other financial and
operating data concerning FICN;
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certain financial projections prepared by the management of FICN;
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historical market prices and trading volumes of Western Alliance
common stock;
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the nature and terms of recent merger transactions;
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the pro forma ownership of Western Alliance common stock
by the shareholders of FICN relative to the pro forma
contribution of FICNs assets, liabilities, equity and
earnings to the combined company;
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the pro forma impact of the merger on the combined
companys earnings per share, consolidated capitalization
and financial ratios; and
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such other materials and factors as Hovde deemed appropriate.
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Hovde conducted meetings and had discussions with members of
senior management and the board of directors of FICN for
purposes of reviewing the future prospects of FICN. Hovde also
took into account its experience in other transactions, as well
as its knowledge of the commercial banking industry and its
general experience in securities valuations.
In rendering its opinion, Hovde assumed, without independent
verification, the accuracy and completeness of the financial and
other information and relied upon the accuracy of the
representations of the parties contained in the merger
agreement. Hovde also assumed that the financial forecasts
furnished to or discussed with Hovde by FICN were reasonably
prepared and reflected the best currently available estimates
and
37
judgments of senior management of FICN as to the future
financial performance of FICN. Hovde has not made any
independent evaluation or appraisal of any properties, assets or
liabilities of FICN. Hovde assumed and relied upon the accuracy
and completeness of the public and non-public financial
information provided to it by FICN and Western Alliance, relied
upon the representations and warranties of FICN and Western
Alliance made pursuant to the merger agreement, and did not
independently attempt to verify any of such information.
The merger agreement provides that the total merger
consideration shall include additional payments of up to
$3 million in cash to the shareholders of FICN after the
closing and at such times as set forth in the merger agreement
if certain contingencies are satisfied. Hovdes willingness
to render its opinion was not dependent on whether these
contingent payments were made.
Analysis of Selected Mergers. As part of its
analysis, Hovde reviewed three groups of comparable merger
transactions. The first peer group included transactions, which
have occurred since January 1, 2005, that involved banks in
the United States that had total assets between
$250 million and $600 million (the United States
Merger Group). This United States Merger Group consisted
of the following 22 transactions:
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Buyer
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Seller
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Banner Corp (WA)
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F&M Bank (WA)
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City National Corp. (CA)
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Business Bank Corporation (NV)
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American West Bancorp. (WA)
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Far West Bancorporation (UT)
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Provident Financial Services (NJ)
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First Morris Bank & Trust
(NJ)
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Integra Bank Corp. (IN)
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Prairie Financial Corporation (IL)
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Whitney Holding Corp. (LA)
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Signature Financial Hldgs (FL)
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Bancshares of Florida Inc. (FL)
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Old Florida Bankshares Inc. (FL)
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IBERIABANK Corp. (LA)
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Pulaski Investment Corp. (AR)
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Sterling Bancshares Inc. (TX)
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BOTH Inc. (TX)
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Community Bancorp (NV)
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Valley Bancorp (NV)
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First Charter Corp. (NC)
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GBC Bancorp Inc. (GA)
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First Republic Bank (CA)
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BWC Financial Corp. (CA)
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Mercantile Bankshares Corp. (MD)
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James Monroe Bancorp Inc. (VA)
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Midwest Banc Holdings Inc. (IL)
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Royal American Corporation (IL)
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Western Alliance Bancorp (NV)
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Intermountain First Bancorp (NV)
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Cascade Bancorp (OR)
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F & M Holding Company (ID)
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Wintrust Financial Corp. (IL)
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Hinsbrook Bancshares Inc. (IL)
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Alabama National BanCorp. (AL)
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Florida Choice Bankshares Inc. (FL)
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Whitney Holding Corp. (LA)
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First National Bancshares Inc. (FL)
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ABC Bancorp (GA)
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First National Banc Inc. (GA)
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Cullen/Frost Bankers Inc. (TX)
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Horizon Capital Bank (TX)
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Fulton Financial Corp. (PA)
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SVB Financial Services Inc. (NJ)
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38
Hovde also reviewed comparable mergers involving banks in the
Western United States that had total assets between
$200.0 million and $1.0 billion which have occurred
since January 1, 2005 (the Western U.S. Merger
Group). This Western U.S. Merger Group consisted of
the following 18 transactions:
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Buyer
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Seller
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Banner Corp (WA)
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F&M Bank (WA)
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U.S. Bancorp (MN)
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United Financial Corp. (MT)
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City National Corp. (CA)
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Business Bank Corporation (NV)
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Industrial Bank of Taiwan
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Evertrust Bank (CA)
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Community Bancorp (NV)
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Valley Bancorp (NV)
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First Republic Bank (CA)
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BWC Financial Corp. (CA)
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First Community Bancorp (CA)
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Community Bancorp Inc. (CA)
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Glacier Bancorp Inc. (MT)
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Citizens Development Co. (MT)
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Vineyard National Bancorp (CA)
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Rancho Bank (CA)
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Placer Sierra Bancshares (CA)
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Southwest Community Bancorp (CA)
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Western Alliance Bancorp (NV)
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Bank of Nevada (NV)
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Western Alliance Bancorp (NV)
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Intermountain First Bancorp (NV)
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Cascade Bancorp (OR)
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F & M Holding Company (ID)
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First Community Bancorp (CA)
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Foothill Independent Bancorp (CA)
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First Community Bancorp (CA)
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Cedars Bank (CA)
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East West Bancorp Inc. (CA)
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United National Bank (CA)
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First Community Bancorp (CA)
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First American Bank (CA)
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Pacific Capital Bancorp (CA)
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First Bancshares Inc. (CA)
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In addition, Hovde also reviewed transaction history of
comparable mergers involving banks headquartered in the state of
Nevada (the Nevada Merger Group) with total assets
greater than $100.0 million which have occurred since
January 1, 1990. This Nevada Merger Group consisted of the
following 14 transactions:
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Buyer
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Seller
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City National Corp. (CA)
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Business Bank Corporation (NV)
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Community Bancorp (NV)
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Valley Bancorp (NV)
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Bank Holdings (NV)
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NNB Holdings Inc. (NV)
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Western Alliance Bancorp (NV)
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Bank of Nevada (NV)
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Western Alliance Bancorp (NV)
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Intermountain First Bancorp (NV)
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Community Bancorp (NV)
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Bank of Commerce (NV)
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Zions Bancorp. (UT)
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Pioneer Bancorporation (NV)
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First Security Corp. (UT)
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Comstock Bancorp (NV)
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First Security Corp. (UT)
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XEON Financial Corp. (NV)
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Colonial BancGroup Inc. (AL)
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Commercial Bank of Nevada (NV)
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Zions Bancorp. (UT)
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Sun State Capital Corporation (NV)
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First Security Corp. (UT)
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American Bancorp of Nevada (NV)
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First Security Corp. (UT)
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Continental Bancorporation (NV)
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BankAmerica Corp. (CA)
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Valley Capital Corporation (NV)
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Hovde calculated the medians and averages of the following
relevant transaction ratios in the United States Merger Group,
the Western U.S. Merger Group and the Nevada Merger Group:
the multiple of the offer value to the acquired companys
earnings for the twelve months preceding the announcement date
of the transaction; the tangible book value premium to core
deposits; the multiple of the offer value to the acquired
companys tangible book value; and the multiple of the
offer value to the acquired companys book value. Hovde
compared these multiples with the corresponding multiples for
the merger, valuing the total
39
consideration that would be received pursuant to the merger
agreement at $115.0 million, or $93.60 per FICN fully
diluted share. In calculating the multiples for the merger,
Hovde used FICNs earnings for the twelve months ended
September 30, 2006, and FICNs balance sheet
information as of September 30, 2006. The results of this
analysis are as follows:
Offer
Value to:
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Ratio of
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Tangible
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Book Value
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Premium to
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12 Months
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Core
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Tangible
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Preceding Earnings
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Deposits
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Book Value
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Book Value
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(x)
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(%)
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(%)
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(%)
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First Independent Capital of Nevada
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22.0
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26.2
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384.7
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386.4
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United States Merger Group median
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21.4
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27.6
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318.7
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330.9
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United States Merger Group average
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21.5
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26.9
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327.1
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332.3
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Western U.S. Merger Group
median
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21.3
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25.3
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299.6
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308.8
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Western U.S. Merger Group
average
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21.2
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26.8
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300.1
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315.0
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Nevada Merger Group median
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20.0
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24.9
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298.9
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298.9
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Nevada Merger Group average
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20.3
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24.1
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310.7
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313.4
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Discounted Cash Flow Analysis. Hovde estimated
the present value of all shares of FICN common stock by
estimating the value of FICNs estimated future earnings
stream beginning in 2006. Reflecting FICNs internal
projections and Hovde estimates, Hovde assumed net income in
2006, 2007, 2008, 2009 and 2010 of $4.9 million,
$5.9 million, $6.8 million, $7.8 million, and
$8.9 million, respectively. The present value of these
earnings was calculated based on a range of discount rates
between 12.5% and 15.5%. In order to derive the terminal value
of FICNs earnings stream beyond 2010, Hovde assumed a
terminal value based on a multiple of between 14.2x and 18.2x
applied to free cash flows in 2010. The present value of this
terminal amount was then calculated based on the range of
discount rates mentioned above. These rates and values were
chosen to reflect different assumptions regarding the required
rates of return of holders or prospective buyers of FICNs
common stock. This analysis and its underlying assumptions
yielded a range of value for all the shares of FICNs stock
of approximately $61.9 million (at a 15.5% discount rate
and a 14.2x terminal multiple) to $90.5 million (at a 12.5%
discount rate and a 18.2x terminal multiple) with a midpoint of
$75.4 million (using a 14.0% discount rate and a 16.2x
terminal multiple), compared to total merger consideration of
$115.0 million.
Contribution Analysis. Hovde prepared a
contribution analysis showing percentages of total assets, total
net loans, total deposits, total common equity, and total
tangible equity at September 30, 2006 for FICN and for
Western Alliance, and actual twelve months preceding earnings as
well as expected 2006 and 2007 expected earnings that would be
contributed to the combined company on a pro-forma basis by FICN
and Western Alliance. Expected earnings for FICN reflected
internal projections and expected earnings for Western Alliance
reflected publicly available consensus analyst estimates. The
offer analysis indicated that holders of FICN common stock would
own approximately 8.75% of the pro forma common shares
outstanding of Western Alliance, while contributing a median of
9.07% of the financial components listed above. This pro forma
ownership is based on the total consideration being paid to
FICNs shareholders consisting of 80.0% of Western Alliance
common stock and 20.0% in cash. If total consideration to FICN
shareholders were in the form of 100.0% stock, FICNs
resulting implied pro forma ownership of 10.70% would compare
more favorably than the median contribution value of 9.07%.
40
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FICN
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Contribution
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to WAL
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Total assets
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9.13%
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Total net loans
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9.01%
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Total deposits
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10.04%
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Total equity
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7.07%
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Total tangible equity
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10.78%
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Net income LTM
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11.72%
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Net income 2006
expected
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8.71%
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Net income 2007
expected
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8.76%
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Median FICN Contribution Percentage
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9.07%
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Actual FICN Pro Forma Ownership
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8.75%
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FICN Pro Forma Ownership (adjusted
for cash component)
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10.70%
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Rates of Return to FICN shareholders. Hovde
prepared an analysis of the rates of return for FICN based on a
number of scenarios based on dividend income and stock prices
and their resulting return on investment over a five-year
horizon: (i) FICN standalone, (ii) FICN affiliating in
five years, (iii), FICN affiliating with Western Alliance
assuming the proposed exchange ratio of 2.63114 for the stock
consideration, and (iv) FICN affiliates with Western
Alliance and Western Alliance is subsequently acquired in five
years. The rates of return for the five year period beginning in
2006 are summarized below:
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Rate of
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Scenario
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Return
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FICN Standalone
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15.00%
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FICN Affiliates in 5 years
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19.07%
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FICN Affiliates with Western
Alliance
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27.11%
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FICN Affiliates with Western
Alliance and Western Alliance is acquired in 5 years
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29.79%
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Based upon the foregoing analyses and other investigations
and assumptions set forth in its opinion, without giving
specific weightings to any one factor or comparison, Hovde
determined that the transaction consideration was fair from a
financial point of view to FICN shareholders.
Representations
and Warranties
In the merger agreement, FICN made representations and
warranties to Western Alliance. The material representations and
warranties of FICN are the following:
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the proper organization and good standing of FICN and First
Independent Bank of Nevada;
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insurance of the FICNs deposit accounts by the FDIC;
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capitalization of FICN and First Independent Bank of Nevada and
ownership of shares of First Independent Bank of Nevada;
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existence of corporate power and authority of FICN and First
Independent Bank of Nevada to execute, deliver and perform their
various obligations under the transaction documents;
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board approval of the merger agreement;
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a listing of all consents and approvals required to complete the
merger;
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proper presentation of financial statements;
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FICNs filings with the regulators comply in all material
respects with applicable requirements;
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no brokers fees other than to Hovde, FICNs financial
advisor;
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41
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absence of any material adverse change in FICN;
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absence of legal proceedings;
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timely filing of tax returns and absence of tax claims;
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existence of employee benefit plans and material compliance with
applicable law;
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existence of material contracts and their effectiveness;
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absence of regulatory agreements with banking regulators;
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material compliance with environmental law;
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adequacy of loss reserves;
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existence of properties and assets, absence of encumbrances, and
existence of good title;
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existence of insurance policies;
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operations and licenses in material compliance with applicable
laws;
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existence of loans, their material compliance with applicable
laws, proper organization of loan information, and proper
perfection of security interests;
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a listing of affiliates of FICN;
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labor matters;
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intellectual property matters;
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existence of satisfactory internal controls; and
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anti-takeover provisions inapplicable to the transactions
contemplated by the merger agreement.
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In the merger agreement, Western Alliance made representations
and warranties to FICN. The material representations and
warranties of Western Alliance are the following:
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the proper organization and good standing of Western Alliance;
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capitalization of Western Alliance;
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existence of corporate power and authority of Western Alliance
to execute, deliver and perform its obligations under the
transaction documents;
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a listing of all regulatory consents and approvals to complete
the merger;
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absence of material regulatory agreements or legal proceedings;
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tax matters relating to the merger qualifying as a
reorganization within the meaning of
Section 368(a) of the IRS Code of 1986, as amended;
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proper presentation of financial statements; and
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absence of any material adverse change in Western Alliance.
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Termination
of the Merger Agreement
Before or after FICN shareholders approve the merger agreement,
it may be terminated:
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by mutual written consent of Western Alliance and FICN;
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by Western Alliance or FICN upon written notice if 30 days
pass after any required regulatory approval is denied or
regulatory application is withdrawn at a regulators
request unless action is taken during the 30 day period for
a rehearing or to file an amended application;
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42
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by Western Alliance or FICN if the merger has not taken place on
or before September 30, 2007, unless the failure to
complete the merger by that date is due to the terminating
partys failure to perform or observe its covenants and
agreements in the merger agreement;
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by Western Alliance or FICN if FICNs shareholders do not
approve the merger agreement due to failure to obtain the
required vote at a duly held meeting of shareholders;
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by either Western Alliance or FICN (provided that the
terminating party is not then in breach of any representation,
warranty, covenant or other agreement contained in the merger
agreement that, individually or in the aggregate, would give the
other party the right to terminate the merger agreement) if
there shall have been a breach of any of the representations or
warranties set forth in the merger agreement on the part of the
other party, if such breach, individually or in the aggregate,
has had or is likely to have a material adverse effect on the
breaching party, and such breach is not curable or shall not
have been cured within 30 days following receipt by the
breaching party of written notice of such breach from the other
party thereto or such breach, by its nature, cannot be cured
prior to the closing;
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by either Western Alliance or FICN (provided that the
terminating party is not then in breach of any representation,
warranty, covenant or other agreement contained in the merger
agreement that, individually or in the aggregate, would give the
other party the right to terminate the merger agreement) if
there shall have been a material breach of any of the covenants
or agreements set forth in the merger agreement on the part of
the other party, and such breach is not curable or shall not
have been cured within 30 days following receipt by the
breaching party of written notice of such breach from the other
party thereto or such breach, by its nature, cannot be cured
prior to the closing;
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by Western Alliance, if FICN fails to call and hold within
40 days of the effective date of this registration
statement a special meeting of FICN shareholders to approve the
merger agreement, fails to recommend that FICN shareholders
approve the merger and merger agreement, or fails to oppose a
competing third party proposal; and
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by FICN, if FICN has complied with its obligations regarding
competing proposals and has given written notice to Western
Alliance of its desire to enter into a superior competing
transaction (as defined in the merger agreement) and complied
with the expense and breakup fee provisions described above;
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by FICN, if both of the following conditions are met:
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the weighted average sales price of Western Alliances
common stock (the Western Alliance closing price) on
the New York Stock Exchange for the twenty consecutive trading
days ending on the day following the date that all required
regulatory approvals of the merger are received is less than 85%
of the weighted average sales prices per share of Western
Alliance common stock for the twenty consecutive NYSE trading
days ending on December 18, 2006 (the Western
Alliance starting price); and
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the ratio of the Western Alliance closing price divided by the
Western Alliance starting price is less than the ratio of the
final index price (as defined below) divided by the initial
index price (as defined below) minus 0.15; and
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by Western Alliance, if both of the following conditions are met:
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the Western Alliance closing price is greater than 115% of the
Western Alliance starting price; and
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the ratio of the Western Alliance closing price divided by the
Western Alliance starting price is greater than the ratio of the
final index price (as defined below) divided by the initial
index price (as defined below) plus 0.15.
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For five business days after Western Alliance or FICN receives
notice that the other party intends to exercise its termination
right based on changes in Western Alliances weighted
average sales price and the index price, Western Alliance or
FICN may opt to increase or decrease, respectively, the exchange
ratio according to a formula contained in the merger agreement.
This formula generally provides for an increase or
43
decrease with the effect that the dollar value of the revised
merger consideration per share of FICNs common stock,
based on the Western Alliance closing price, would be equal to
the value that would have been received by a FICN shareholder if
the Western Alliance closing price was the minimum necessary so
that the conditions described above would not have been met. If
Western Alliance or FICN makes the foregoing election, then the
other party will no longer have its right to terminate the
merger agreement and the merger consideration will be revised
accordingly. In the case of any increase or decrease in the
exchange ratio, because the formula is dependent on the future
price of Western Alliances common stock, it is not
possible presently to determine what the adjusted conversion
ratio would be. In general, the ratio would be increased where
FICN had the right to terminate the merger agreement, and,
consequently, more shares of Western Alliance common stock
issued, and the ratio would be decreased where Western Alliance
had the right to terminate the merger agreement, and,
consequently, fewer shares of Western Alliances common
stock issued.
The final index price is defined in the merger agreement as the
arithmetic mean of the daily closing prices of the members of
KBW Regional Bank Index (KRX) for the twenty consecutive NYSE
trading days ending at the close of trading on the determination
date.
The initial index price is defined in the merger agreement as
the arithmetic mean of the daily closing prices of the members
of KBW Regional Bank Index for the twenty consecutive trading
days ending at the close of trading on December 18, 2006.
Amendment
of the Merger Agreement
The merger agreement also permits, subject to applicable law,
the Boards of Directors of Western Alliance and FICN to:
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amend the merger agreement except as provided below;
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extend the time for performance of any of the obligations or
other acts of the other party;
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waive any inaccuracies in the representations and warranties
contained in the merger agreement or in any document delivered
under the merger agreement; or
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waive compliance with any of the agreements or conditions
contained in the merger agreement.
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After approval of the merger agreement by FICNs
shareholders, no amendment of the merger agreement may be made
without further shareholder approval if the amendment would
reduce the amount or change the form of the consideration to be
delivered to FICNs shareholders under the merger agreement.
Resales
of Western Alliances Common Stock Received in the
Merger
Western Alliance is registering the issuance of the shares of
its common stock to be exchanged in the merger under the
Securities Act. The shares will be freely transferable under the
Securities Act, except for shares received by FICN shareholders
who are affiliates of FICN or Western Alliance at the time of
the special meeting. These affiliates only may resell their
shares pursuant to an effective registration statement under the
Securities Act covering the shares, in compliance with
Securities Act Rule 145 or under another exemption from the
Securities Acts registration requirements. This proxy
statement/prospectus does not cover any resales of Western
Alliances common stock by Western Alliance or FICN
affiliates. Affiliates will generally include individuals or
entities who control, are controlled by or are under common
control with FICN or Western Alliance, and may include officers
or directors, as well as principal shareholders of FICN or
Western Alliance.
Employee
Benefits
After the closing date of the merger, except to the extent
Western Alliance, FICN or any FICN subsidiary continues in
effect any FICN benefit plan providing benefits of a similar
type, continuing employees of FICN or any FICN subsidiary will
be eligible for the employee benefits that Western Alliance
provides to its newly-hired employees generally and on
substantially the same terms and basis as is applicable to such
employees. To the extent permitted under applicable law and
Western Alliances benefit plans, each FICN or FICN
subsidiary employee will be given credit with respect to the
satisfaction of limitations as to pre-existing
44
condition exclusions, evidence of insurability requirements and
waiting periods for participation and coverage equal to the
credit that such employee had received as of the effective time
of the merger under the comparable FICN benefit plans.
Dissenters
Appraisal Rights
Under Nevada law, when shareholder approval is required for a
merger and the shareholders are entitled to vote on the merger
pursuant to Sections 92A.120 92A.160 of the
Nevada Revised Statutes, or NRS, any shareholder is entitled to
dissent from the merger and obtain the fair value of his shares
under Sections 92A.300 92A.500 of the NRS. In
this section, we use the term appraisal rights to refer to the
rights set forth in these sections of the NRS. Because FICN
shareholder approval is required for the merger of Western
Alliance and FICN, under Section 92A.380, you are entitled
to appraisal rights in connection with the merger. In accordance
with Sections 92A.300 92A.500, if the merger
takes place, FICN shareholders who do not vote in favor of the
merger will have the right to demand the purchase of their
shares at their fair value if they fully comply with the
provisions of Sections 92A.300 92A.500 of the
NRS. Fair value means the value of the shares immediately before
the merger takes place.
This section presents a brief summary of the procedures set
forth in Sections 92A.300 92A.500 which must be
followed if you wish to assert your appraisal rights in
connection with the merger and demand the purchase of your
shares at their fair value. A complete text of these sections is
attached to this proxy statement/prospectus as Appendix B.
Shareholders asserting their appraisal rights are advised to
seek independent counsel concerning exercising their appraisal
rights. This proxy statement/prospectus constitutes notice to
holders of shares of FICNs common stock concerning the
availability of appraisal rights under Sections 92A.300 to
92A.500 of the NRS.
To assert appraisal rights, shareholders must satisfy all of the
conditions of Sections 92A.420 and 92A.440:
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Before the vote on the adoption of the merger agreement occurs
at the shareholder meeting, each shareholder who wishes to
assert appraisal rights must give written notice to Grant
Markham, Chief Executive Officer of FICN, before the vote is
taken, of the shareholders intent to demand payment for
his or her shares if the merger takes place and shall not vote
or cause or permit to be voted his or her shares in favor of the
proposed merger. Neither voting against, abstaining from voting,
or failing to vote on the adoption of the merger agreement will
constitute notice of intent to demand payment or demand for
payment of fair value within the meaning of Section 92A.420.
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A dissenting shareholder may NOT vote for approval of the merger
agreement. If an FICN shareholder returns a signed proxy but
does not specify in the proxy a vote against adoption of the
merger agreement or an instruction to abstain, the proxy will be
voted FOR adoption of the merger agreement, which will have the
effect of waiving the rights of that FICN shareholder to have
his shares purchased at fair value. Abstaining from voting or
voting against the adoption of the merger agreement will NOT
constitute a waiver of a shareholders rights.
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After the vote is taken at the shareholder meeting, if the
merger is approved, no later than 10 days after the merger
takes place, a written appraisal notice and form, accompanies by
a copy of NRS Sections 92A.300 92A.500
inclusive, will be sent to each shareholder who has given the
written notice described above and did not vote in favor of the
merger. The appraisal notice will state the results of the vote
on the merger agreement, where the payment demand must be sent,
and where and when share certificates, if any, must be
deposited. It will set a date, not fewer than thirty
(30) nor more than sixty (60) days after delivery of
the notice, by which the payment demand must be received from
the dissenting shareholder. The notice will include a form for
demanding payment that will require the shareholder asserting
appraisal rights to certify whether or not the shareholder
acquired beneficial ownership of the shares before
December 19, 2006, the date of the first announcement to
the shareholders and the media of the terms of the proposed
merger and that the shareholder did not vote in favor of the
transaction. The notice will also inform holders of
uncertificated shares to what extent transfer of the
uncertificated shares will be restricted after the payment
demand is received. Please note that shares acquired after
December 19, 2006, referred to in this section as
45
after-acquired shares, may be subject to different treatment in
accordance with Section 92A.470 of the NRS than shares
acquired before that date.
A shareholder who receives an appraisal notice must comply with
the terms of the notice. A shareholder asserting appraisal
rights who does so by demanding payment, depositing his
certificates in accordance with the terms of the notice and
certifying that beneficial ownership was acquired before
December 19, 2006 will retain all other rights of a
shareholder until these rights are cancelled or modified by the
merger. A shareholder who receives an appraisal notice and does
not comply with the terms of the notice is not entitled to
payment for his shares.
Appraisal rights under Sections 92A.400 may be asserted
either by a beneficial shareholder or a record shareholder. A
record shareholder may assert appraisal rights as to fewer than
every share registered in his name only if he objects for all
shares beneficially owned by any one person and notifies FICN in
writing of the name and address of each person on whose behalf
he or she asserts appraisal rights. A beneficial shareholder may
assert appraisal rights as to shares held on his behalf only if
he submits to FICN the shareholder of records written
consent before or at the time he asserts appraisal rights and he
does so for all shares that he beneficially owns or over which
he has the power to direct the vote.
After the merger takes place, or within thirty (30) days
after receipt of a payment demand, Western Alliance will pay in
cash to each shareholder who complied with the terms of the
appraisal notice the amount Western Alliance estimates to be the
fair value of the shares, plus interest. The payment will be
accompanied by FICNs balance sheet as of the end of a
fiscal year ending not more than sixteen (16) months before
the date of payment, an income statement for that year, a
statement of changes in shareholders equity and the latest
available interim financial statements; a statement of
FICNs estimate of the fair value of the shares; an
explanation of how the interest was calculated; and a statement
of the dissenters right to demand payment under NRS
Sections 92A.300 92A.500. Within thirty
(30) days of payment or offered payment, if a dissenting
shareholder believes that the amount paid is less than the fair
value of the shares or that the interest due is incorrectly
calculated, the shareholder may notify FICN in writing of his
own estimate of the fair value of the shares and interest due.
If this kind of claim is made by a shareholder, and it cannot be
settled, FICN is required to petition the court to determine the
fair value of the shares and accrued interest within
60 days after receiving the payment demand.
The costs and expenses of a court proceeding will be determined
by the court and generally will be assessed against FICN, but
these costs and expenses may be assessed as the court deems
equitable against all or some of the shareholders demanding
appraisal who are parties to the proceeding if the court finds
the action of the shareholders in failing to accept Western
Alliances offer was arbitrary, vexatious or not in good
faith. These expenses may include the fees and expenses of
counsel and experts employed by the parties.
All written notices of intent to demand payment of fair value
should be sent or delivered to, Grant Markham, Chief Executive
Officer, First Independent Capital of Nevada, 5335 Kietzke Lane
Reno, Nevada 89511. FICN suggests that shareholders use
registered or certified mail, return receipt requested, for this
purpose.
Holders of shares of FICNs common stock considering
demanding the purchase of their shares at fair value should keep
in mind that the fair value of their shares determined under
Sections 92A.300 92A.500 could be more, the
same, or less than the merger consideration they are entitled to
receive under the merger agreement if they do not demand the
purchase of their shares at fair value. Also, shareholders
should consider the federal income tax consequences of
exercising dissenters appraisal rights.
This summary is not a complete statement of the provisions of
the Nevada statutes relating to the rights of dissenting holders
of shares of FICNs common stock and is qualified in its
entirety by reference to Sections 92A.300
92A.500 of the NRS, which are attached as Appendix B to
this document. Holders of shares of FICNs common stock
intending to demand the purchase of their shares at fair value
are urged to review Appendix B carefully and to consult
with legal counsel so as to be in strict compliance with the
requirements for exercising appraisal rights.
46
Support
Agreement
Concurrently with the merger agreement, and as a condition to
Western Alliances willingness to enter into the merger
agreement, Western Alliance and FICNs directors and
executive officers entered into a support agreement pursuant to
which FICNs directors and executive officers have agreed
to vote all of the shares of FICN common stock beneficially
owned by them in favor of the adoption of the merger agreement.
As of the record date, the FICN directors and executive officers
who entered into the support agreement with Western Alliance
collectively held 273,620 shares of FICN common stock which
represented approximately 24.43% of the outstanding FICN common
stock. None of the FICN directors and executive officers were
paid additional consideration in connection with the execution
of such agreement.
In addition to voting their shares of FICN common stock in favor
of the merger, each director and executive officer agreed,
following completion of the merger, not to sell, transfer, or
encumber any shares of Western Alliance common stock received by
such shareholder in connection with the merger for a period of
six months. FICNs directors who are not employees of FICN
also agreed (i) not to exercise any of their FICN options
prior to the closing of the merger, (ii) to elect to have
their FICN options converted to options to purchase shares of
Western Alliance common stock in the merger rather than to elect
cash consideration and (iii) to exercise in full all
options to purchase shares of Western Alliance common stock
received within thirty days of the closing of the merger.
Protection
Agreements
Concurrently with the merger agreement, Western Alliance
required FICNs directors who are not employees of FICN to
enter into protection agreements. These agreements contain
non-competition, non-solicitation and confidentiality provisions
that are designed to protect the business secrets and
confidential information of Western Alliance and to protect the
economic value and benefit of the merger to Western Alliance.
None of the FICN directors who are parties to the protection
agreements were paid additional consideration in connection with
the execution of such agreements.
Interests
of FICN Directors and Executive Officers in the Merger That are
Different Than Yours
Some of the directors and executive officers of FICN have
interests in the merger that are different from, or are in
addition to, the interests of FICN shareholders. The FICN board
of directors was aware of these interests and considered them in
approving the merger agreement. These interests include rights
of certain executive officers under severance agreements with
FICN and rights under stock-based benefit programs. In addition,
John P. Sande, III, Chairman of FICNs board of
directors, is also a partner at the law firm Jones Vargas, which
was retained by FICN in connection with the merger.
Severance Agreements. FICN has previously
entered into severance agreements with Grant Markham, James
DeVolld, Lisa L. Milke, W. Erle Simpson, Michael Hix, Marianne
Buonanno and Robert Francl. The merger would qualify as a change
in control event under these agreements.
The agreements for Messrs. Markham and DeVolld and
Ms. Milke provide that upon a change in control the
applicable individual shall be paid a cash amount equal to three
times the income reported on the individuals IRS
Form W-2
for the year immediately before the year in which the change in
control occurred; provided, however, that such amount will be
reduced as necessary to avoid the application of Internal
Revenue Code Sections 280G and 4999. The payout amounts in
connection with the merger if the merger is completed are
expected to be $664,896 for Mr. Markham, $458,515 for
Mr. DeVolld, and $421,247 for Ms. Milke. In addition,
such agreements provide that if an individual is involuntarily
terminated without cause within twelve months of the change in
control, he or she will be entitled to continue to receive life,
health and disability benefits for a period of up to twelve
months.
The agreements for Messrs. Simpson, Hix, and Francl and
Ms. Buonanno provide that if an individual is involuntarily
terminated without cause or resigns for good reason within one
year after a change in control, the applicable individual shall
be paid a cash amount equal to the income reported on the
individuals IRS
Form W-2
for the year immediately before the year in which the change in
control occurred. The aggregate payout amount under these
agreements in connection with the merger if the merger is
completed and all four of these individuals are terminated
without cause or resign for good reason within one year of the
closing
47
would be $519,414. In addition, such agreements provide that if
an individual is involuntarily terminated without cause within
twelve months of a change in control, he or she will be entitled
to continue to receive life, health and disability benefits for
a period of up to twelve months.
Stock Options. The stock options held by the
directors and executive officers of FICN will be treated the
same as all other stock options under the terms of the merger
agreement. This means that the directors and executive officers
of FICN may choose either to cancel their options to purchase
FICN common stock in exchange for cash consideration or to
convert their options into options to purchase shares of Western
Alliance common stock. See The Merger Merger
Consideration. However, FICNs directors who are not
employees of FICN have agreed (i) not to exercise any of
their FICN options prior to the closing of the merger,
(ii) to elect to have their FICN options converted to
options to purchase shares of Western Alliance common stock in
the merger rather than to elect cash consideration and
(iii) to exercise in full all options to purchase shares of
Western Alliance common stock received within thirty days of the
closing of the merger. See The Merger Support
Agreement.
As of December 31, 2006, the directors and executive
officers of FICN held options to purchase 92,270 shares of
FICN common stock. Assuming all of these options are exchanged
for cash consideration in the merger, the aggregate amount paid
to the directors and officers for these options (net of the
aggregate exercise price thereof) will be approximately
$6.9 million.
Certain Benefit Plans. Grant Markham, James
DeVolld and Lisa L. Milke are participants in the Second Amended
Salary Continuation Agreement. The agreement provides that the
applicable individuals accrued benefit under the agreement
will be paid in a lump sum following a change in control. The
merger would qualify as a change in control event under the
agreement. An aggregate of approximately $600,580 is expected to
be paid under the agreement if the merger is completed.
The directors of FICN are entitled to participate in the
Director Elective Income Deferral Agreement. The agreement
provides that directors that have deferred amounts pursuant to
the agreement shall be entitled to the accelerated payment of
their benefit if they cease to serve as directors within twelve
months of a change in control. The merger would qualify as a
change in control event under the agreement. At Western
Alliances request, FICN intends to terminate the agreement
prior to completion of the merger, triggering payment of an
aggregate of approximately $63,575 to the directors of FICN.
Protection of Directors, Officers and Employees Against
Claims. In addition, Western Alliance has agreed
to indemnify and hold harmless each of FICNs present and
former directors, officers and employees for a period of at
least six years from the effective time of the merger from costs
and expenses arising out of matters existing or occurring at or
before the consummation of the merger to the fullest extent
allowed under applicable law and the articles of incorporation
and bylaws of Western Alliance. Western Alliance has also agreed
that it will maintain FICNs existing directors and
officers liability insurance policy, or provide a policy
providing similar coverage, for the benefit of FICNs
directors and officers who are currently covered by such
insurance, for at least six years from the effective time of the
merger, with respect to acts or omissions occurring prior to the
effective time of the merger, subject to a limit on the cost to
maintain such coverage.
New
Western Alliance Director
Following the completion of the merger, the board of directors
of Western Alliance will appoint Mr. John P.
Sande III, currently the chairman of FICN and First
Independent Bank of Nevada, to Western Alliances board of
directors. Mr. Sande will remain the chairman of First
Independent Bank of Nevada.
Accounting
Treatment
The merger, if completed, will be treated as a purchase by
Western Alliance of FICN for accounting purposes. Accordingly,
under accounting principles generally accepted in the United
States, the assets and liabilities of FICN will be recorded on
the books of Western Alliance at their respective fair values at
the time of the consummation of the merger.
48
MATERIAL
U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE
MERGER
The following summary discusses the material federal income tax
consequences of the merger to FICN shareholders. The summary is
based on the Internal Revenue Code of 1986, as amended (the
Code), the U.S. Treasury regulations
promulgated under the Code and related administrative rulings
and judicial decisions, all as in effect as of the effective
time of the merger, and all of which are subject to change,
possibly with retroactive effect, and to differing
interpretations.
The summary assumes that the holders of shares of FICNs
common stock hold their shares as capital assets. The summary
applies only to holders of shares of FICN common stock that are
U.S. persons. For purposes hereof, a U.S. person is:
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a U.S. citizen or resident, as determined for
U.S. federal income tax purposes;
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a corporation created or organized in or under the laws of the
United States or any political subdivision thereof;
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an estate whose income is includible in gross income for
U.S. federal income tax purposes regardless of its
source; or
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a trust whose administration is subject to the primary
supervision of a U.S. court and which has one or more
U.S. persons who have the authority to control all
substantial decisions of the trust.
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If a partnership holds shares of FICN common stock, the
determination of whether a U.S. person holds the shares
will depend on the residence of the partners and the activities
of the partnership.
This summary is not binding on the Internal Revenue Service and
there can be no assurance that the Internal Revenue Service will
not take a position contrary to one or more of the positions
reflected in this summary or that these positions will be upheld
by the courts if challenged by the Internal Revenue Service. No
ruling from the Internal Revenue Service has been or will be
requested with respect to the merger.
The summary does not address the tax consequences that may be
applicable to particular FICN shareholders in light of their
individual circumstances or to FICN shareholders who are subject
to special tax rules, including:
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tax-exempt organizations;
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mutual funds;
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dealers in securities or foreign currencies;
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banks or other financial institutions;
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insurance companies;
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non-U.S. persons;
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shareholders who acquired shares of FICNs common stock
through the exercise of options or otherwise as compensation or
through a qualified retirement plan;
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shareholders who are subject to the alternative minimum tax;
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traders in securities who elect to apply a
mark-to-market
method of accounting; and
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holders that do not hold their FICN common stock as capital
assets.
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This summary is for general information purposes only. It is not
a complete analysis or discussion of all potential effects of
the merger. It also does not address any consequences arising
under the tax laws of any state, locality, or foreign
jurisdiction or under any federal laws other than those
pertaining to the federal income tax. Each holder of FICN common
stock should consult its tax advisor with respect to the
particular tax consequences of the merger to such holder.
49
The closing of the merger is conditioned upon the receipt by
FICN of an opinion of Jones Vargas that the merger will qualify
as a reorganization within the meaning of Section 368(a) of
the Code. If Jones Vargas does not render such opinion, the
condition may be satisfied if Hogan & Hartson L.L.P.,
counsel to Western Alliance, renders such opinion. The opinion
is not binding on the Internal Revenue Service or the courts;
consequently, no assurances can be given that the Internal
Revenue Service will not assert, or that a court would not
sustain, a position contrary to any of those set forth below. In
addition, if any of the representations or assumptions upon
which such opinions are based are inconsistent with the actual
facts, the U.S. federal income tax consequences of the
merger could be adversely affected. The remainder of this
discussion assumes that the merger will qualify as a
reorganization within the meaning of Section 368(a) of the
Code.
Installment
Method (Holdback Right).
Every holder of FICN common stock will be eligible to receive,
in addition to the combination of cash and stock that such
holder would otherwise receive, a contingent right to an
additional $2.38 per share. This right will be referred to
as the holdback right. In general, if a holder has
not received the entire amount to which it may be entitled under
the holdback right before the end of the year of the merger, the
holder should generally be able to defer the reporting of gain
attributable to the holdback right until cash is received, using
the installment method under Section 453 of the
Code, unless it elects not to use such method. For purposes of
this discussion, year of the merger specifically
means the taxable year of the holder in which the merger
occurred.
Under the installment method, the holder will recognize gain
(but not a loss) in each year equal to the total payments
received with respect to such holders FICN shares in that
year, including payments under the holdback right, multiplied by
a fraction, called the gross profit ratio. To compute the gross
profit ratio, the holder must make the following determinations:
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First, the holder determines the gross profit with
respect to the transaction, which is generally the selling price
less the holders adjusted basis in its FICN shares. Under
Treasury Regulations applicable to any contingent payment
installment sale with a stated maximum selling
price, gross profit is determined, at the end of each
year, by subtracting the holders adjusted basis in the
shares of FICN common stock it exchanged in the merger from the
maximum selling price (which is determined by assuming that the
maximum possible holdback payment will be received at the
earliest possible date). If the gross profit is less than zero,
then the holder recognizes a loss and the installment method is
inapplicable.
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Second, the holder determines the contract price,
which generally means the holders gross selling price with
respect to the FICN shares.
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Third, the holder determines the gross profit ratio,
by dividing the gross profit by the total contract price.
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The precise application of these rules and defined terms will
depend on whether such holder exchanges its FICN common stock
solely for Western Alliance common stock (except for cash
received instead of a fractional share of Western Alliance
common stock) and the holdback right; solely for cash and the
holdback right; or for a combination of stock, cash and the
holdback right.
The holder will recognize gain with respect to every payment for
the share (including both the initial cash payment and any
payment pursuant to the holdback right) equal to the amount of
such payment, multiplied by the gross profit ratio.
Notwithstanding the foregoing, if the installment method
applies, a portion of any cash paid to a holder pursuant to the
holdback right may be deemed to be interest income. The interest
amount will equal the excess of the amount received over its
present value at the time of the merger, calculated using the
short-term applicable federal rate (AFR) as the
discount rate. The AFR is a rate reflecting an average of market
yields on Treasury debt obligations that is published monthly by
the Internal Revenue Service. Any such amount treated as
interest will be ordinary income and will not be treated as
consideration received in the merger.
50
A holder may elect not to use the installment method by properly
reporting all gain or loss recognized with respect to the
merger, under the rules below, on its federal income tax return.
Because the application of the installment method is very
complex and not free from doubt, all holders of FICN common
stock should consult with their own tax advisors regarding the
application of the installment sale rules; the potential
benefits and consequences of electing not to use the installment
method; the effect of using the installment method in
determining the holders alternative minimum tax
computation; the amount of gain to be recognized in the year of
the merger under the installment method; and the computation of
contingent cash consideration to be treated as imputed interest
income.
Exchange
Solely for Cash and Holdback Right.
If, pursuant to the merger, a holder exchanges all of the shares
of FICN common stock actually owned by it solely for cash and
the holdback right, and such holder has not received all
consideration to which it may be entitled under the holdback
right before the end of the year of the merger, that holder will
be subject to the rules described above under Installment
Method (Holdback Right), unless it elects not to use the
installment method.
If such holder elects not to use the installment method, or
recognizes a loss in the merger, then such holder will recognize
gain or loss equal to the difference between (1) the sum of
the cash received and the fair market value of the contingent
payments under the holdback right, and (2) its adjusted tax
basis in the shares of FICN common stock surrendered. Because
the amount of gain or loss recognized must take into account the
fair market value of the holdback right, which is inherently
uncertain, holders are advised to consult their tax advisors.
If the holder receives all consideration to which it may be
entitled under the holdback right by the end of the year of the
merger (or is otherwise not entitled to any additional
consideration under the holdback right after the end of such
year), the installment method will be inapplicable. Such holder
will recognize gain or loss equal to the difference between the
amount of cash received (including cash pursuant to the holdback
right) and its adjusted tax basis in the shares of FICN common
stock surrendered.
Except with respect to imputed interest as provided above under
the heading Installment Method (Holdback Right), any
gain or loss recognized generally will be long-term capital gain
or loss if the holders holding period with respect to the
FICN common stock surrendered is more than one year at the
effective time of the merger, and otherwise will be short-term
capital gain or loss. Individuals generally qualify for
favorable tax rates on long-term capital gains. If, however, any
such holder constructively owns FICN common stock that is
exchanged for Western Alliance common stock in the merger, or
otherwise owns Western Alliance common stock actually or
constructively after the merger, the consequences to such holder
may be similar to the consequences described below under the
heading Exchange for Western Alliance Common Stock, Cash
and Holdback Right, except that the amount of
consideration, if any, treated as a dividend may not be limited
to the amount of such holders gain.
Exchange
Solely for Western Alliance Common Stock and Holdback
Right.
If, pursuant to the merger, a holder exchanges all of the shares
of FICN common stock actually owned by it solely for shares of
Western Alliance common stock and the holdback right, such
holder generally will not recognize any gain or loss except in
respect of cash received instead of a fractional share of
Western Alliance common stock (as discussed below). The
aggregate adjusted tax basis of the shares of Western Alliance
common stock received in the merger will be equal to the
aggregate adjusted tax basis of the shares of FICN common stock
surrendered for such Western Alliance common stock, reduced by
the adjusted tax basis allocable to any fractional shares deemed
received in the merger as described below. The holding period of
the Western Alliance common stock (including fractional shares
deemed received and redeemed as described below) will include
the period during which the shares of FICN common stock were
held.
If the holder receives all consideration to which it may be
entitled under the holdback right by the end of the year of the
merger (or is otherwise not entitled to any additional
consideration under the holdback right
51
after the end of such year), such consideration will generally
be treated as described below in the first paragraph under the
heading Exchange for Western Alliance Common Stock, Cash
and Holdback Right.
If such holder has not received all consideration to which it
may be entitled under the holdback right before the end of the
year of the merger, that holder will be subject to the rules
described above under Installment Method (Holdback
Right). In such case, the holder determines the
gross profit and total contract price
taking into account only the holdback right. Under Proposed
Treasury Regulations, the holder must allocate all of its basis
in the shares of FICN common stock first to the shares of
Western Alliance common stock surrendered in the exchange, to
the extent of the fair market value thereof. Any excess
basis is then allocated to the holdback right, and the
holder must report gain under the installment method as if it
sold property (with a basis equal to the excess
basis) for only the holdback right.
Except with respect to imputed interest as provided above under
the heading Installment Method (Holdback Right), any
recognized gain will generally be long-term capital gain if the
holders holding period with respect to the FICN common
stock surrendered is more than one year at the effective time of
the merger, and otherwise will be short-term capital gain.
Individuals generally qualify for favorable tax rates on
long-term capital gains. If, however, the cash received has the
effect of the distribution of a dividend, the gain will be
treated as a dividend to the extent of the holders ratable
share of FICNs accumulated earnings and profits as
calculated for United States federal income tax purposes. See
Possible Treatment of Cash as a Dividend below.
Exchange
for Western Alliance Common Stock, Cash and Holdback
Right.
If, pursuant to the merger, a holder exchanges all of the shares
of FICN common stock actually owned by it for a combination of
Western Alliance common stock, cash and the holdback right, the
tax consequences to such holder will generally be as follows.
If the holder receives all consideration to which it may be
entitled under the holdback right by the end of the year of the
merger (or is otherwise not entitled to any additional
consideration under the holdback right after the end of such
year), the holder will recognize gain (but not loss) in an
amount equal to the lesser of (1) the amount of gain
realized (i.e., the excess of the sum of the amount of cash and
the fair market value of the Western Alliance common stock
received pursuant to the merger over that holders adjusted
tax basis in its shares of FICN common stock surrendered) and
(2) the amount of cash received pursuant to the merger. For
this purpose, cash includes cash received with respect to the
holdback right. Gain or loss must be calculated separately for
each identifiable block of shares surrendered in the exchange,
and a loss realized on one block of shares may not be used to
offset a gain realized on another block of shares.
If such holder has not received all consideration to which it
may be entitled under the holdback right before the end of the
year of the merger, that holder will be subject to the rules
described above under Installment Method (Holdback
Right). In such case, the holder determines the
gross profit and total contract price
taking into account only the cash consideration and the holdback
right. Under Proposed Treasury Regulations, the holder must
allocate all of its basis in the shares of FICN common stock
first to the shares of Western Alliance common stock surrendered
in the exchange, to the extent of the fair market value thereof.
Any excess basis is then allocated to the other
property received in the merger (both the cash and the holdback
right), and the holder must report gain under the installment
method as if it sold property (with a basis equal to the
excess basis) for the cash consideration and the
holdback right.
Except with respect to imputed interest as provided above under
the heading Installment Method (Holdback Right), any
recognized gain will generally be long-term capital gain if the
holders holding period with respect to the FICN common
stock surrendered is more than one year at the effective time of
the merger, and otherwise will be short-term capital gain.
Individuals generally qualify for favorable tax rates on
long-term capital gains. If, however, the cash received has the
effect of the distribution of a dividend, the gain will be
treated as a dividend to the extent of the holders ratable
share of FICNs accumulated earnings and profits as
calculated for United States federal income tax purposes. See
Possible Treatment of Cash as a Dividend below.
52
The aggregate tax basis of Western Alliance common stock
received (including fractional shares deemed received and
redeemed as described below) by a holder that exchanges its
shares of FICN common stock for a combination of Western
Alliance common stock and cash pursuant to the merger will be
equal to the aggregate adjusted tax basis of the shares of FICN
common stock surrendered, reduced by the amount of cash received
by the holder pursuant to the merger (excluding any cash
received instead of a fractional share of Western Alliance
common stock), and increased by the amount of gain (including
any portion of the gain that is treated as a dividend as
described below but excluding any gain or loss resulting from
the deemed receipt and redemption of fractional shares described
below), if any, recognized by the holder on the exchange. The
holding period of the Western Alliance common stock (including
fractional shares deemed received and redeemed as described
below) will include the holding period of the shares of FICN
common stock surrendered.
Possible
Treatment of Cash as a Dividend.
In general, the determination of whether the gain recognized in
the exchange will be treated as capital gain or has the effect
of a distribution of a dividend depends upon whether and to what
extent the exchange reduces the holders deemed percentage
stock ownership of Western Alliance. As discussed below,
however, dividend treatment will generally not apply to a
minority shareholder in a publicly held corporation whose
relative stock interest is minimal and who exercises no control
with respect to corporate affairs. Gain recognized by such a
holder will generally be treated as capital gain, except with
respect to imputed interest as provided above under the heading
Installment Method (Holdback Right).
For purposes of this determination, the holder is treated as if
it first exchanged all of its shares of FICN common stock solely
for Western Alliance common stock and then Western Alliance
immediately redeemed (the deemed redemption) a
portion of the Western Alliance common stock in exchange for the
cash the holder actually received. The gain recognized in the
deemed redemption will be treated as capital gain if the deemed
redemption is (1) substantially
disproportionate with respect to the holder or
(2) not essentially equivalent to a dividend.
The deemed redemption will generally be substantially
disproportionate with respect to a holder if the
percentage of the voting power and value of the Western Alliance
common stock actually or constructively owned by such holder
immediately after the deemed redemption is less than 80% of both
the voting power and the value of the Western Alliance common
stock actually or constructively owned by such holder
immediately before the deemed redemption.
Whether the deemed redemption is not essentially
equivalent to a dividend with respect to a holder will
depend upon the holders particular circumstances. At a
minimum, however, in order for the deemed redemption to be
not essentially equivalent to a dividend, the deemed
redemption must result in a meaningful reduction in
the holders deemed percentage stock ownership of Western
Alliance. In general, that determination requires a comparison
of (1) the percentage of the voting power and value of the
Western Alliance common stock actually or constructively owned
by such holder immediately before the deemed redemption and
(2) the voting power and the value of the Western Alliance
common stock actually or constructively owned by such holder
immediately after the deemed redemption. The Internal Revenue
Service has ruled that a minority shareholder in a publicly held
corporation whose relative stock interest is minimal and who
exercises no control with respect to corporate affairs is
generally considered to have a meaningful reduction
even if that shareholder has a relatively minor reduction in its
percentage stock ownership under the above analysis.
If the tests above for capital gain treatment are not met, the
recognized gain will be treated as dividend income to the extent
of the holders ratable share of FICNs accumulated
earnings and profits. Individuals generally qualify for
favorable tax rates on dividends.
In applying the foregoing tests, the constructive ownership
rules of section 318 of the Code apply in comparing the
holders ownership interest in Western Alliance both
immediately after the merger (but before the hypothetical
redemption) and after the hypothetical redemption. Under these
constructive ownership rules, a holder is deemed to own Western
Alliance common stock that is actually owned (and in some cases
53
constructively owned) by certain related individuals and
entities, and is also deemed to own Western Alliance common
stock that may be acquired by such holder or such related
individuals or entities by exercising an option, including an
employee stock option. Moreover, the tests are applied after
taking into account any related transactions undertaken by a
shareholder under a single, integrated plan. Thus, dispositions
or acquisitions by a holder of Western Alliance common stock
before or after the merger that are part of such holders
plan may be taken into account. As these rules are complex, each
holder that may be subject to these rules should consult its tax
advisor.
Cash
Received Instead of a Fractional Share.
A holder who receives cash instead of a fractional share of
Western Alliance common stock will generally be treated as
having received a fractional share and then as having received
such cash in redemption of the fractional share. Gain or loss
generally will be recognized based on the difference between the
amount of cash received instead of the fractional share and the
portion of the holders aggregate adjusted tax basis of the
share of FICN common stock surrendered which is allocable to the
fractional share. Such gain or loss generally will be long-term
capital gain or loss if the holding period for such shares of
FICN common stock is more than one year at the effective time of
the merger.
Information
Reporting and Backup Withholding.
Unless an exemption applies, the exchange agent will be required
to withhold, and will withhold, 28% of any cash payments to
which an FICN shareholder or other payee is entitled pursuant to
the merger, unless the shareholder or other payee provides his
or her tax identification number (social security number or
employer identification number) and certifies that the number is
correct. Each shareholder and, if applicable, each other payee,
is required to complete and sign the
Form W-9
that will be included as part of the transmittal letter to avoid
being subject to backup withholding, unless an applicable
exemption exists and is proved in a manner satisfactory to
Western Alliance and the exchange agent.
The federal income tax consequences set forth above are
based upon present law and do not purport to be a complete
analysis or listing of all potential tax effects that may apply
to a holder of FICNs common stock. The tax effects that
are applicable to a particular holder of FICN common stock may
be different from the tax effects that are applicable to other
holders of FICN common stock, including the application and
effect of state, local and other tax laws other than those
pertaining to the federal income tax, and thus, holders of FICN
common stock are urged to consult their own tax advisors.
Options.
As described above in the section titled Merger
Consideration FICN Stock Options, holders of
options to purchase FICN common stock that are outstanding at
the effective time of the merger may elect either (a) to
cancel their options to purchase FICN common stock in exchange
for cash consideration as provided in the merger agreement or
(b) to convert their options into options to purchase
shares of Western Alliance common stock. Each optionee shall
also be entitled to receive a pro rata portion of a holdback
amount as potentially additional cash consideration. For
optionholders who choose the cash consideration, the cash
payment will be treated as compensation and shall be net of any
applicable withholding tax. The conversion of the options into
options to purchase shares of Western Alliance common stock
should not be a taxable event and former holders of FICN options
who hold options to purchase Western Alliance common stock after
the merger should be subject to the same federal income tax
treatment upon exercise of those options as would have applied
if they had exercised their FICN options. Any amounts received
pursuant to the holdback right will be treated as compensation
when paid and shall be net of any applicable withholding tax.
Holders of FICN options are urged to consult their own tax
advisors as to the specific tax consequences to them of the
merger, including tax return reporting requirements, available
elections, the applicability and effect of federal, state, local
and other applicable tax laws, and the effect of any proposed
changes in the tax laws.
54
SECURITY
OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
Beneficial
Ownership of Western Alliance Stock
The following table sets forth information pertaining to the
beneficial ownership of the outstanding shares of Western
Alliances common stock as of December 31, 2006 by
(a) persons known to Western Alliance to own more than 5%
of the outstanding shares of Western Alliances common
stock, (b) each director and executive officer of Western
Alliance and (c) Western Alliances directors and
executive officers as a group. The information contained herein
has been obtained from Western Alliances records and from
information furnished to Western Alliance by each individual.
Western Alliance knows of no person who owns, beneficially or of
record, either individually or with associates, more than 5% of
Western Alliances common stock, except as set forth below.
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Number of
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Shares
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Percentage
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Beneficially
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of Common
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Beneficial Owner(1)
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Owned
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Stock(2)
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Paul Baker(3)
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365,029
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1.34
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Bruce Beach(4)
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77,868
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*
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William S. Boyd(5)
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759,421
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2.80
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Gary Cady(6)
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65,738
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*
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Duane Froeschle(7)
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225,911
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*
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Dale Gibbons(8)
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106,450
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*
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Arnold Grisham(9)
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22,500
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*
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Steve Hilton(10)
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246,755
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*
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Marianne Boyd Johnson(11)
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4,090,076
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15.10
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James Lundy(12)
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186,795
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*
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Cary Mack(13)
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107,397
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*
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Linda Mahan(14)
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71,984
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*
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Arthur Marshall(15)
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247,096
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*
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Todd Marshall(16)
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642,539
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2.37
|
|
M. Nafees Nagy(17)
|
|
|
866,909
|
|
|
|
3.20
|
|
James Nave(18)
|
|
|
513,844
|
|
|
|
1.90
|
|
George J. Maloof, Jr.
|
|
|
85,853
|
|
|
|
*
|
|
Robert Sarver(19)
|
|
|
3,571,071
|
|
|
|
12.69
|
|
Donald Snyder(20)
|
|
|
210,971
|
|
|
|
*
|
|
Merrill Wall(21)
|
|
|
84,500
|
|
|
|
*
|
|
Larry Woodrum(22)
|
|
|
83,600
|
|
|
|
*
|
|
All directors and executive
officers as a group (21 persons)
|
|
|
12,523,954
|
|
|
|
43.64
|
|
|
|
|
* |
|
Less than one percent |
|
(1) |
|
In accordance with
Rule 13d-3
under the Securities Exchange Act of 1934 (the Exchange
Act), as amended, a person is deemed to be the beneficial
owner of any shares of common stock if such person has or shares
voting power
and/or
investment power with respect to the shares, or has a right to
acquire beneficial ownership at any time within 60 days
from December 31, 2006. As used herein, voting
power includes the power to vote or direct the voting of
shares and investment power includes the power to
dispose or direct the disposition of shares. Shares subject to
outstanding stock options and warrants, which an individual has
the right to acquire within 60 days of December 31,
2006 (exercisable stock options and
exercisable warrants, respectively), are deemed to
be outstanding for the purpose of computing the percentage of
outstanding securities of the class of stock owned by such
individual or any group including such individual only.
Beneficial ownership may be disclaimed as to certain of the
securities. The business |
55
|
|
|
|
|
address of each of the executive officers and directors is
2700 West Sahara Avenue, Las Vegas, Nevada 89102,
Telephone:
(702) 248-4200. |
|
(2) |
|
Percentage calculated on the basis of 27,084,626 shares
outstanding on December 31, 2006. |
|
(3) |
|
Share ownership includes 4,400 shares subject to
exercisable stock options, 68,274 shares subject to
exercisable warrants and 68,274 shares held by a family
trust. |
|
(4) |
|
Share ownership includes 3,200 shares subject to
exercisable stock options, and 72,325 shares held by a
limited liability company. |
|
(5) |
|
Share ownership includes 759,321 shares held by a trust. |
|
(6) |
|
Share ownership includes 14,475 shares subject to
exercisable stock options. |
|
(7) |
|
Share ownership includes 48,100 shares subject to
exercisable stock options, 44,381 shares subject to
exercisable warrants, and 118,952 shares held by a family
trust. |
|
(8) |
|
Share ownership includes 41,350 shares subject to
exercisable stock options. |
|
(9) |
|
Share ownership includes 7,500 shares subject to
exercisable warrants. |
|
(10) |
|
Share ownership includes 4,400 shares subject to
exercisable stock options, 68,274 shares subject to
exercisable warrants, 32,433 shares held by a family trust,
and 136,548 shares held by a limited liability company. |
|
(11) |
|
Share ownership includes 4,400 shares subject to
exercisable stock options, 3,471,526 shares held by certain
grantor annuity retained trusts, 301,422 shares held by two
other trusts, and 240,718 shares held by a limited
partnership. |
|
(12) |
|
Share ownership includes 63,000 shares subject to
exercisable stock options, and 34,137 shares subject to
exercisable warrants. |
|
(13) |
|
Share ownership includes 3,800 shares subject to
exercisable stock options, 10,000 shares held by a family
trust, and 87,497 held by a limited liability company. |
|
(14) |
|
Share ownership includes 31,984 shares subject to
exercisable stock options. |
|
(15) |
|
Share ownership includes 4,400 shares subject to
exercisable stock options, and 235,196 shares held by a
family trust. |
|
(16) |
|
Share ownership includes 4,400 shares subject to
exercisable stock options, and 558,248 shares held by
various trusts. |
|
(17) |
|
Share ownership includes 600 shares subject to exercisable
stock options, 10,516 shares held by two trusts, and
826,029 shares held by Sajan Grat, LLC (the
LLC). Robert E. Clark, a member of the board of
directors of BankWest of Nevada, a wholly owned subsidiary of
Western Alliance, is the manager of the LLC and has sole
investment control over the assets owned by the LLC. |
|
(18) |
|
Share ownership includes 4,400 shares subject to
exercisable stock options, 176,110 shares held by a profit
sharing plan, and 125,818 held by his daughter. |
|
(19) |
|
Share ownership includes 30,000 shares held by
Mr. Sarvers spouse over which he disclaims all
beneficial ownership, 34,750 shares subject to exercisable
stock options, 1,013,880 shares subject to exercisable
warrants, 78,429 shares held in a trust,
166,022 shares held by a limited partnership, and
31,374 shares held by a corporation. |
|
(20) |
|
Share ownership includes 4,400 shares subject to
exercisable stock options, and 95,182 shares held by two
trusts. |
|
(21) |
|
Share ownership includes 32,500 shares subject to
exercisable stock options. |
|
(22) |
|
Share ownership includes 73,600 shares subject to
exercisable stock options. |
56
Beneficial
Ownership of FICN Stock
The following tables set forth information pertaining to the
beneficial ownership of the outstanding shares of FICNs
common stock as of December 31, 2006 by (a) persons
known to FICN to own more than 5% of the outstanding shares of
FICNs common stock, (b) each director of FICN,
(c) each of FICNs executive officers and
(d) FICNs directors and executive officers as a
group. The information contained herein has been obtained from
FICNs records and from information furnished to FICN by
each individual.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
|
|
|
|
|
|
|
|
|
|
Western Alliance
|
|
|
|
Number of Shares of
|
|
|
Percentage of
|
|
|
Common Stock
|
|
|
|
FICN Common Stock
|
|
|
FICN Common
|
|
|
Owned After the
|
|
Beneficial Owner(1)
|
|
Beneficially Owned
|
|
|
Stock(2)
|
|
|
Merger(3)
|
|
|
David R. Belding, shareholder and
former Director
|
|
|
73,059
|
|
|
|
6.09
|
|
|
|
*
|
|
Brett E. Coleman, Director and
Secretary
|
|
|
24,224
|
(4)
|
|
|
2.02
|
|
|
|
*
|
|
Douglas Damon, Director
|
|
|
17,834
|
(5)
|
|
|
1.49
|
|
|
|
*
|
|
James DeVolld, President
|
|
|
21,812
|
(6)
|
|
|
1.82
|
|
|
|
*
|
|
Greg W. Ferraro, Director
|
|
|
7,397
|
(7)
|
|
|
|
*
|
|
|
*
|
|
Jeffrey T. Harris, Director
|
|
|
42,755
|
(8)
|
|
|
3.56
|
|
|
|
*
|
|
Grant R. Markham, Director and CEO
|
|
|
40,911
|
(9)
|
|
|
3.41
|
|
|
|
*
|
|
Lisa L. Milke, CFO, EVP and
Treasurer
|
|
|
19,605
|
(10)
|
|
|
1.63
|
|
|
|
*
|
|
Sandra K. Raffealli, Director
|
|
|
24,508
|
(11)
|
|
|
2.04
|
|
|
|
*
|
|
Richard J. Reviglio, Director
|
|
|
28,419
|
(12)
|
|
|
2.37
|
|
|
|
*
|
|
John Sande, III, Director and
Chairman of the Board
|
|
|
26,780
|
(13)
|
|
|
2.23
|
|
|
|
*
|
|
Jennifer A. Satre, Director
|
|
|
17,976
|
(14)
|
|
|
1.50
|
|
|
|
*
|
|
Leo V. Seevers, Director and Vice
Chairman
|
|
|
40,394
|
(15)
|
|
|
3.37
|
|
|
|
*
|
|
W. Erle Simpson, Senior Vice
President, Credit Administrator
|
|
|
7,575
|
(16)
|
|
|
|
*
|
|
|
*
|
|
G. Blake Smith, Director
|
|
|
33,484
|
(17)
|
|
|
2.79
|
|
|
|
*
|
|
All FICN directors and executive
officers as a group (14 persons)
|
|
|
426,733
|
|
|
|
35.56
|
|
|
|
|
|
|
|
|
* |
|
Less than one percent. |
|
(1) |
|
A person is deemed to be the beneficial owner of any shares of
common stock if such person has or shares voting power
and/or
investment power with respect to the shares, or has a right to
acquire beneficial ownership at any time within 60 days
from December 31, 2006. As used herein, voting
power includes the power to vote or direct the voting of
shares and investment power includes the power to
dispose or direct the disposition of shares. Shares subject to
outstanding stock options which an individual has the right to
acquire within 60 days of December 31, 2006 are deemed
to be outstanding for the purpose of computing the percentage of
outstanding securities of the class of stock owned by such
individual or any group including such individual only.
Beneficial ownership may be disclaimed as to certain of the
securities. The business address of each of the executive
officers and directors is First Independent Capital of Nevada,
5335 Kietzke Lane Reno, Nevada 89511, Telephone:
(775) 828-2000. |
|
(2) |
|
Percentage calculated on the basis of 1,120,074 shares
outstanding on December 31, 2006. |
|
(3) |
|
Assumes a 100% stock election by each individual and that the
weighted average trading price of Western Alliance common stock
for the twenty consecutive trading days ending on the last
trading day prior to the date the merger is completed is
$ per share, which was the closing
price of Western Alliance common stock
on ,
2007, the day prior to the record date. |
|
(4) |
|
Share ownership includes 84 shares subject to exercisable
stock options and 24,140 shares held in a trust. |
|
(5) |
|
Share ownership includes 1,717 shares subject to
exercisable stock options and 16,117 shares held in a trust. |
57
|
|
|
(6) |
|
Share ownership includes 15,002 shares subject to
exercisable stock options and 6,810 shares held in a trust. |
|
(7) |
|
Share ownership includes 84 shares subject to exercisable
stock options. |
|
(8) |
|
Share ownership includes 5,267 shares subject to
exercisable stock options and 37,488 shares held in a trust. |
|
(9) |
|
Share ownership includes 29,417 shares subject to
exercisable stock options. |
|
(10) |
|
Share ownership includes 10,665 shares subject to
exercisable stock options and 8,940 shares held in a trust. |
|
(11) |
|
Share ownership includes 84 shares subject to exercisable
stock options. |
|
(12) |
|
Share ownership includes 84 shares subject to exercisable
stock options. |
|
(13) |
|
Share ownership includes 1,717 shares subject to
exercisable stock options and 25,063 shares held in a trust. |
|
(14) |
|
Share ownership includes 84 shares subject to exercisable
stock options and 17,892 shares held in a trust. |
|
(15) |
|
Share ownership includes 5,267 shares subject to
exercisable stock options and 35,127 shares held in a trust. |
|
(16) |
|
Share ownership includes 5,315 shares subject to
exercisable stock options and 2,260 shares held in a trust. |
|
(17) |
|
Share ownership includes 5,267 shares subject to
exercisable stock options and 28,217 shares held in a trust. |
DIFFERENCES
IN THE RIGHTS OF SHAREHOLDERS
The following is a summary of the material differences between
the rights of shareholders of Western Alliance and the rights of
shareholders of FICN. Since both Western Alliance and FICN are
incorporated in Nevada, these differences arise primarily from
the differences between the articles of incorporation and bylaws
of the two companies. The following information is a summary and
does not purport to be complete. For more complete information,
you should read each of the articles of incorporation and bylaws
of Western Alliance and FICN. To find out where you can obtain
these documents, see Where You Can Find More
Information and Information Incorporated by
Reference.
General
The following summary sets forth the material differences
between the rights of shareholders of Western Alliance and the
rights of shareholders of FICN.
|
|
|
|
|
|
|
Western Alliance
|
|
FICN
|
|
Types of
Shares
|
|
There is currently only one class
of capital stock, common stock; the board of directors has the
authority, without further action by the shareholders, to issue
preferred stock.
|
|
There is currently only one class
of capital stock, common stock. The board of directors is not
authorized to issue preferred stock without further action by
the shareholders.
|
|
|
|
|
|
Special Shareholder
Meetings
|
|
A special meeting of shareholders
may be called only by the chairman of the board or by the board
of directors.
|
|
A special meeting of shareholders
may be called by the chairman of the board, the president, a
vice chairman or a majority of the board of directors, or by one
or more stockholders holding a majority of the outstanding
shares of the company.
|
58
|
|
|
|
|
|
|
Western Alliance
|
|
FICN
|
|
|
|
|
|
|
Undesignated Preferred
Stock
|
|
No shares of preferred stock are
issued and outstanding, and there is no current intent to issue
preferred stock in the immediate future. The board of directors
has the authority, without further action by the stockholders,
to issue from time to time the undesignated preferred stock in
one or more series and to fix the number of shares,
designations, preferences, powers, and relative, participating,
optional or other special rights and the qualifications or
restrictions thereof.
|
|
No shares of preferred stock are
authorized, issued or outstanding.
|
|
|
|
|
|
Amendment of Articles of
Incorporation and Bylaws
|
|
Amendment of the articles of
incorporation, with certain exceptions, requires the approval by
holders of at least two thirds of the outstanding shares of each
class entitled to vote as a separate class on such matters.
|
|
The articles of incorporation may
be amended to the extent and in the manner prescribed by the
laws of the State of Nevada.
|
|
|
|
|
|
|
|
Amendment of the bylaws requires
the approval by holders of at least 80% of the voting power of
the issued and outstanding shares of capital stock or the
approval of at least two thirds of the members of the board of
directors.
|
|
The bylaws may be amended by the
vote or written consent of shareholders entitled to exercise a
majority of the voting power of the company. Subject to this
right, the bylaws may be amended by the board of directors.
|
|
|
|
|
|
Share Warrants
|
|
As of December 31, 2006,
there were warrants outstanding to purchase
1,435,749 shares of common stock, 1,304,054 of which are
currently exercisable at $7.62 per share, and which expire
on June 12, 2010, and 131,695 of which are currently
exercisable at $34.56 per share, and which expire on
September 1, 2013.
|
|
There are currently no warrants
outstanding.
|
|
|
|
|
|
Board of
Directors
|
|
Board of directors has the
authority to issue undesignated preferred stock.
|
|
Board of directors is not
authorized to issue undesignated preferred stock.
|
59
|
|
|
|
|
|
|
Western Alliance
|
|
FICN
|
|
|
|
|
|
|
|
|
The board of directors is divided
into three classes, with one class being elected each year by
the shareholders. Once elected, directors may be removed only by
the affirmative vote of at least 80% of the outstanding common
stock.
|
|
If there are six or more directors
(including vacancies), the directors will be divided into at
least two classes consisting of at least three directors in each
class, with one class being elected each year by the
shareholders. Directors serve until their successors are elected
and may be removed in accordance with Nevada law.
|
MARKET
PRICES AND DIVIDENDS
Market
Prices
Western Alliance common stock is listed on the NYSE under the
symbol WAL. No established trading market exists for
FICN common stock and, to the knowledge of FICNs
management, no purchases or sales of FICN common stock have
occurred since December 19, 2006.
The following table sets forth the high and low trading prices
of shares of Western Alliance common stock as reported on the
NYSE for the periods indicated since its initial public offering
in June, 2005:
|
|
|
|
|
|
|
|
|
|
|
Market Price ($)
|
|
|
|
High
|
|
|
Low
|
|
|
For the First Quarter of 2007
(through ,
2007)
|
|
|
|
|
|
|
|
|
For the Quarter
Ended:
|
|
|
|
|
|
|
|
|
March 31, 2006
|
|
|
37.75
|
|
|
|
28.50
|
|
June 30, 2006
|
|
|
38.44
|
|
|
|
29.95
|
|
September 30, 2006
|
|
|
39.10
|
|
|
|
32.57
|
|
December 31, 2006
|
|
|
37.17
|
|
|
|
31.45
|
|
September 30, 2005
|
|
|
31.50
|
|
|
|
25.75
|
|
December 31, 2005
|
|
|
30.01
|
|
|
|
24.39
|
|
On December 18, 2006, the last trading day before the
execution of the merger agreement, the closing price of Western
Alliances common stock on the New York Stock Exchange was
$34.83.
On ,
2007 the most recent practicable date before the printing of
this document, the closing price of Western Alliances
common stock on the New York Stock Exchange was
$ .
You are advised to obtain current market quotations for Western
Alliance common stock. The market price of Western Alliance
common stock will fluctuate between the date of this joint proxy
statement/prospectus and the completion of the merger. No
assurance can be given concerning the market price of Western
Alliance common stock.
Dividends
Neither Western Alliance nor FICN paid any cash dividends in
2005 and 2006.
Western Alliance has never paid a cash dividend on its common
stock and does not anticipate paying any cash dividends in the
foreseeable future. Western Alliance presently anticipates
continuing the policy of retaining earnings to fund growth for
the foreseeable future.
Western Alliance is a legal entity separate and distinct from
its subsidiary banks and its other non-bank subsidiaries. As a
holding company with no significant assets other than the
capital stock of subsidiaries, it depends upon dividends from
its subsidiaries for a substantial part of its revenue.
Accordingly, the ability to
60
pay dividends depends primarily upon the receipt of dividends or
other capital distributions from its subsidiaries. The
subsidiaries ability to pay dividends to Western Alliance
is subject to, among other things, their earnings, financial
condition and need for funds, as well as applicable federal and
state governmental policies and regulations, which may limit the
amount that may be paid as dividends without prior approval.
FICN has never paid a cash dividend and does not anticipate
paying any cash dividends in the foreseeable future.
WHERE YOU
CAN FIND MORE INFORMATION
Western Alliance is required to file annual, quarterly and
current reports, proxy statements and other information with the
Securities and Exchange Commission and the Federal Deposit
Insurance Corporation, respectively. You may read and copy any
reports, statements or other information that Western Alliance
files with the SEC at the SECs Public Reference Room at
100 F Street, N.W., Washington, D.C. 20549. You may obtain
information on the operation of the Public Reference Room by
calling the SEC at
1-800-SEC-0330.
The SEC maintains an Internet site that contains reports, proxy
and information statements and other information about issuers
that file electronically with the SEC. The address of the
SECs Internet site is
http://www.sec.gov.
Western Alliance can be found on the internet at
http://www.westernalliancebancorp.com. Western Alliances
common stock is traded on the New York Stock Exchange under the
trading symbol WAL.
Western Alliance has filed with the SEC a registration statement
on
Form S-4
under the Securities Act relating to Western Alliances
common stock to be issued to FICNs shareholders in the
merger. As permitted by the rules and regulations of the SEC,
this proxy statement/prospectus does not contain all the
information set forth in the registration statement. You can
obtain that additional information from the SECs principal
office in Washington, D.C. or the SECs internet site
as described above. Statements contained in this proxy
statement/prospectus or in any document incorporated by
reference into this proxy statement/prospectus about the
contents of any contract or other document are not necessarily
complete and, in each instance where the contract or document is
filed as an exhibit to the registration statement, reference is
made to the copy of that contract or document filed as an
exhibit to the registration statement, with each statement of
that kind in this proxy statement/prospectus being qualified in
all respects by reference to the document.
WESTERN
ALLIANCE SHAREHOLDER PROPOSALS
Any proposal which a Western Alliance shareholder wishes to have
included in Western Alliances proxy statement and form of
proxy relating to Western Alliances 2007 annual meeting of
shareholders must be received by Western Alliance at its
principal executive offices at 2700 West Sahara Avenue, Las
Vegas, Nevada 89102, no later than November 17, 2006. All
shareholder proposals must comply with Nevada law and will be
subject to
Rule 14a-8
under the Securities Exchange Act of 1934, as amended.
FICN
SHAREHOLDER PROPOSALS
FICN intends to hold a 2007 annual meeting of shareholders only
if the merger agreement is terminated. Any proposal which an
FICN shareholder wishes to have included in FICNs proxy
statement and form of proxy relating to FICNs 2007 annual
meeting of shareholders should be received by FICN at its
principal executive offices at 5335 Kietzke Lane, Reno, Nevada
89511, within a reasonable time before FICN begins to print and
mail its proxy solicitation materials for the annual meeting. If
a shareholder wishes to present a matter at FICNs 2007
annual meeting that is outside the process for inclusion in the
proxy statement, FICNs bylaws provide that notice must be
given at least 60 calendar days before the date corresponding to
the date on which the proxy materials were mailed for the annual
meeting of the preceding year, and no more than
120 calendar days before that date. A shareholder notice
must provide (i) a reasonable description of the proposed
business to be brought before the annual meeting; (ii) the
name and address of the proposing shareholder and of the
beneficial owner (if any); (iii) the class and number of
shares owned by such shareholder or beneficial owner; and
(iv) any interest held by such shareholder or beneficial
owner. All
61
shareholder proposals must comply with FICNs bylaws and
Nevada law. If the merger agreement is approved and the merger
takes place, FICN will not have an annual meeting of
shareholders in 2007 or subsequent years.
OTHER
MATTERS
We do not expect that any matters other than those described in
this document will be brought before the special meeting. If any
other matters are presented, however, it is the intention of the
persons named in the FICN proxy card to vote proxies in
accordance with the determination of a majority of FICNs
Board of Directors, including, without limitation, a motion to
adjourn or postpone the special meeting to another time
and/or place
for the purpose of soliciting additional proxies in order to
approve the merger agreement or otherwise.
EXPERTS
The consolidated financial statements of Western Alliance
incorporated in this proxy statement/prospectus by reference to
the Annual Report on
Form 10-K
for the year ended December 31, 2005, to the extent and for
the period set forth in their report, have been so incorporated
in reliance on the report of McGladrey & Pullen, LLP,
independent registered public accounting firm, given on the
authority of said firm as experts in auditing and accounting.
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
A representative of McGladrey & Pullen, LLP will be
present at the FICN special meeting. The representative will be
available to respond to appropriate questions.
LEGAL
MATTERS
The validity of Western Alliances common stock to be
issued in the merger has been passed upon by Hogan &
Hartson L.L.P., Washington, D.C. Certain federal income tax
matters described herein will be passed upon by Hogan &
Hartson L.L.P., New York, New York.
INFORMATION
INCORPORATED BY REFERENCE
This proxy statement/prospectus incorporates by reference
certain documents that are not presented herein or delivered
herewith. The SEC allows Western Alliance to incorporate
by reference information into this proxy
statement/prospectus, which means that Western Alliance can
disclose important information to you by referring you to
another document filed separately with the SEC by Western
Alliance. The information incorporated by reference is deemed to
be part of this proxy statement/prospectus, except for any
information superseded by information in this proxy
statement/prospectus. This proxy statement/prospectus
incorporates by reference the documents set forth below that
Western Alliance have previously filed with the SEC. These
documents contain important information about Western Alliance
and its finances.
The following documents filed by Western Alliance with the SEC
are incorporated by reference in and made a part of this proxy
statement/prospectus:
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Western Alliances Annual Report on
Form 10-K
for the year ended December 31, 2005;
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Western Alliances Quarterly Reports on
Form 10-Q
for the quarters ended March 31, 2006, June 30, 2006
and September 30, 2006; and
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Western Alliances Current Reports on
Form 8-K
filed on January 4, 2006, January 18, 2006,
January 27, 2006, April 3, 2006, April 4, 2006,
April 5, 2006, May 2, 2006, July 3, 2006,
July 19, 2006, August 1, 2006, September 19, 2006
and December 20, 2006;
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62
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Western Alliances definitive proxy statement dated
March 23, 2006, filed in connection with its annual meeting
of stockholders held on April 18, 2006; and
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the description of Western Alliances capital stock
contained in its Registration Statement on
Form 8-A
filed with the SEC on June 27, 2005, and all amendments or
reports filed with the SEC for the purpose of updating such
description.
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Western Alliance is also incorporating by reference additional
documents that Western Alliance files with the SEC pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
between the date of this proxy statement/prospectus and the date
on which the special meeting is held.
These documents are available without charge to you if you
call or write to: Dale Gibbons, Chief Financial Officer, Western
Alliance Bancorporation, 2700 West Sahara Avenue, Las
Vegas, Nevada 89102, Telephone:
702-248-4200.
63
Appendix
A
AGREEMENT
AND PLAN OF MERGER
BY AND BETWEEN
WESTERN ALLIANCE BANCORPORATION
AND
FIRST INDEPENDENT CAPITAL OF NEVADA
DATED AS OF
December 19, 2006
TABLE OF
CONTENTS
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Page
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ARTICLE I THE MERGER
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A-1
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1.1
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The Merger
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A-1
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1.2
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Effective Time
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A-1
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1.3
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Effects of the Merger
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A-1
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1.4
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Conversion of FICN Common Stock
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A-1
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1.5
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Options
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A-2
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1.6
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Articles of Incorporation
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A-3
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1.7
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Bylaws
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A-3
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1.8
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Directors and Officers
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A-3
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1.9
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Tax Consequences
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A-3
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ARTICLE II PRORATION;
ELECTION AND EXCHANGE PROCEDURES
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A-4
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2.1
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Proration
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A-4
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2.2
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Election and Exchange Procedures
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A-5
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2.3
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Certain Adjustments
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A-8
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2.4
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Dissenters Rights
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A-8
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ARTICLE III REPRESENTATIONS
AND WARRANTIES OF FICN
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A-8
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3.1
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Corporate Organization
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A-8
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3.2
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Capitalization
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A-9
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3.3
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Authority; No Violation
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A-10
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3.4
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Consents and Approvals
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A-10
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3.5
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Reports
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A-11
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3.6
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Financial Statements; Books and
Records
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A-11
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3.7
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Brokers Fees
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A-11
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3.8
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Absence of Certain Changes or
Events
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A-11
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3.9
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Legal Proceedings
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A-12
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3.10
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Taxes and Tax Returns
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A-12
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3.11
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Employee Plans
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A-13
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3.12
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Certain Contracts
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A-15
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3.13
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Agreements with Regulatory Agencies
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A-15
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3.14
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Environmental Matters
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A-15
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3.15
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Reserves for Losses
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A-16
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3.16
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Properties and Assets
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A-16
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3.17
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Insurance
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A-17
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3.18
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Compliance with Applicable Laws;
Licenses
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A-17
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3.19
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Loans
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A-18
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3.20
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Affiliates
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A-19
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3.21
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Fairness Opinion
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A-19
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3.22
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Labor and Employment Matters
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A-19
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3.23
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Intellectual Property
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A-19
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A-i
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Page
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3.24
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Internal Controls
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A-19
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3.25
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Antitakeover Provisions
Inapplicable
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A-19
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ARTICLE IV REPRESENTATIONS
AND WARRANTIES OF WESTERN
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A-20
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4.1
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Corporate Organization
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A-20
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4.2
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Capitalization
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A-20
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4.3
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Authority; No Violation
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A-20
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4.4
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Consents and Approvals
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A-21
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4.5
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Agreements with Governmental
Entities
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A-21
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4.6
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Legal Proceedings
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A-21
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4.7
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Tax Matters
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A-21
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4.8
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Financial Statements, SEC Filings,
Books and Records
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A-21
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4.9
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Absence of Certain Changes or
Events
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A-22
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ARTICLE V COVENANTS RELATING
TO CONDUCT OF BUSINESS
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A-22
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5.1
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Covenants of FICN
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A-22
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5.2
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Merger Covenants
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A-25
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ARTICLE VI ADDITIONAL
AGREEMENTS
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A-25
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6.1
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Regulatory Matters
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A-25
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6.2
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Access to Information
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A-27
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6.3
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Stockholder Meeting
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A-27
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6.4
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Legal Conditions to Merger
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A-27
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6.5
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Employees
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A-27
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6.6
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Indemnification
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A-28
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6.7
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Subsequent Interim and Annual
Financial Statements
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A-29
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6.8
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Additional Agreements
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A-30
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6.9
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Advice of Changes
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A-30
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6.10
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Current Information
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A-30
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6.11
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Transaction Expenses of FICN
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A-30
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6.12
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Additional Director
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A-30
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6.13
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Holdback
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A-31
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ARTICLE VII CONDITIONS
PRECEDENT
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A-32
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7.1
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Conditions to Each Partys
Obligation To Effect the Merger
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A-32
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7.2
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Conditions to Obligations of
Western
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A-32
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7.3
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Conditions to Obligations of FICN
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A-33
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ARTICLE VIII TERMINATION AND
AMENDMENT
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A-34
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8.1
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Termination
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A-34
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8.2
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Effect of Termination
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A-36
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8.3
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Amendment
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A-36
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8.4
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Extension; Waiver
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A-36
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A-ii
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Page
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ARTICLE IX GENERAL PROVISIONS
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A-37
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9.1
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Closing
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A-37
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9.2
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Nonsurvival of Representations,
Warranties and Agreements
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A-37
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9.3
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Expenses; Breakup Fee
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A-37
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9.4
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Notices
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A-37
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9.5
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Interpretation
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A-38
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9.6
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Counterparts
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A-38
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9.7
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Entire Agreement
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A-38
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9.8
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Governing Law
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A-38
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9.9
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Enforcement of Agreement
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A-38
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9.10
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Severability
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A-39
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9.11
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Publicity
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A-39
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9.12
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Assignment; Limitation of Benefits
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A-39
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9.13
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Additional Definitions
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A-39
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A-iii
AGREEMENT
AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of December 19,
2006 (this Agreement), is entered into by and
between Western Alliance Bancorporation, a Nevada corporation
(Western), and First Independent Capital of
Nevada, a Nevada corporation (FICN).
WHEREAS, the Boards of Directors of Western and FICN have
determined that it is in the best interests of their respective
companies and stockholders to consummate the business
combination transaction provided for herein in which Western
will acquire FICN through the merger of FICN with and into
Western (the Merger);
WHEREAS, contemporaneous with the execution of this Agreement,
each of the directors and executive officers of FICN will
execute an agreement with Western containing certain
non-competition, confidentiality and non-solicitation covenants,
without which covenants Western would not have agreed to the
Merger;
WHEREAS, the parties desire to make certain representations,
warranties and agreements in connection with the Merger and also
to prescribe certain conditions to the Merger; and
WHEREAS, unless otherwise indicated, capitalized terms shall
have the meanings set forth in Section 9.13;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and
intending to be legally bound hereby, the parties agree as
follows:
ARTICLE I
THE MERGER
1.1 The Merger.
Subject to the terms and conditions of this Agreement, in
accordance with the Nevada Revised Statutes
(NRS), at the Effective Time, FICN will merge
into Western, with Western being the surviving corporation
(hereinafter sometimes called the Surviving
Corporation) in the Merger. Upon consummation of the
Merger, the separate corporate existence of FICN shall cease;
provided, however, that the sole operating bank subsidiary of
FICN, First Independent Bank of Nevada
(FIBN), shall become a subsidiary of Western
and its existence shall continue upon consummation of the Merger.
1.2 Effective Time.
The Merger shall become effective on the date and at the time
specified in the articles of merger (the Articles of
Merger) as filed with the Secretary of State of the
State of Nevada. The term Effective Time shall be
the date and time when the Merger becomes effective as set forth
in the Articles of Merger.
1.3 Effects of the Merger.
The Merger shall have the effects set forth in the NRS.
1.4 Conversion of FICN Common Stock.
(a) At the Effective Time, subject to Sections 1.4(b),
1.4(c) and 1.4(d), each share of FICN common stock, par value
$0.01 per share (FICN Common Stock)
issued and outstanding immediately prior to the Effective Time
(excluding Dissenters Shares) shall be converted, at the
election of the holder thereof, in accordance with the
procedures set forth in Section 2.2 and subject to
Sections 2.1 and 2.3, into the right to receive the
following, without interest:
(i) (A) for each share of FICN Common Stock with
respect to which an election to receive cash has been
effectively made and not revoked or lost (collectively, the
Cash Election Shares), pursuant to
Section 2.2 (a Cash Election), the right
to receive in cash from Western, without interest, an amount
equal to $93.60 (the Cash Consideration);
A-1
(B) for each share of FICN Common Stock with respect to
which an election to receive common stock, par value
$0.0001 per share, of Western (Western Common
Stock) has been effectively made and not revoked or
lost (collectively, the Stock Election
Shares), pursuant to Section 2.2
(a Stock Election), the right to
receive from Western that number of shares of Western Common
Stock (the Stock Consideration) determined by
dividing $93.60 by the Base Period Trading Price (as
defined below), as may be adjusted as provided below, computed
to five decimal places (the Exchange Ratio);
provided, however, if the Base Period Trading Price shall
be greater than $39.13, the Exchange Ratio shall be fixed at
2.39203; provided, further, however, that if the Base
Period Trading Price is less than $32.91, the Exchange Ratio
shall be fixed at 2.84412;
(C) for each share of FICN Common Stock other than shares
as to which a Cash Election or a Stock Election has been
effectively made and not revoked or lost, pursuant to
Section 2.2 (collectively, Non-Election
Shares), the right to receive from Western such Stock
Consideration and Cash Consideration as is determined in
accordance with Section 2.1(b); and
(ii) the contingent right (the Contingent
Consideration) to receive an amount in cash equal to a
pro rata portion of up to $3.0 million (the
Holdback Amount) in accordance with
Section 6.13.
The Cash Consideration and Stock Consideration are sometimes
referred to herein collectively as the Base Merger
Consideration. The Base Merger Consideration and the
Contingent Consideration are sometimes referred to herein
collectively as the Merger Consideration).
For purposes of this Agreement, the term Base Period
Trading Price shall mean the weighted average trading
prices per share for Western Common Stock for the twenty
consecutive trading days during which shares of Western Common
Stock are actually traded (as reported on the New York Stock
Exchange) ending on the last trading day immediately preceding
the Closing Date.
(b) No Dissenters Shares shall be converted into the
Merger Consideration pursuant to this Section 1.4, but
instead shall be treated in accordance with the provisions set
forth in Section 2.4(a).
(c) At the Effective Time, all shares of FICN Common Stock
that are owned by FICN as treasury stock and all shares of FICN
Common Stock that are owned directly or indirectly by Western or
FICN, including any shares of FICN Common Stock held by Western
or FICN or any of their respective Subsidiaries in respect of a
debt previously contracted (other than shares that are held by
Western in a fiduciary capacity) shall be canceled and shall
cease to exist and no cash or other consideration shall be
delivered in exchange therefor. All shares of Western Common
Stock that are owned by FICN shall become treasury stock of
Western.
(d) Notwithstanding any other provision of this Agreement
to the contrary, the aggregate Stock Consideration to be issued
or paid shall not exceed an amount of shares of Western Common
Stock equal to one share less than 20% of the total number of
shares of Western Common Stock outstanding immediately prior to
the Effective Time. In the event that the foregoing clauses of
this Section 1.4 result in more Stock Consideration than
specified in the previous sentence, then the aggregate Stock
Consideration calculated under Section 1.4(a) (including
giving effect to Dissenting Shares as if they had been converted
under Section 1.4(a)) shall be reduced on a pro rata basis
to the aggregate amount set forth in the previous sentence.
Notwithstanding any other provision of this Agreement to the
contrary, in the event that (i) there are more than
1,120,074 shares of FICN Common Stock issued and
outstanding, (ii) there are more than 138,579 shares
of FICN Common Stock reserved for issuance upon exercise of
outstanding stock options or otherwise, or (iii) the
weighted average exercise price of all outstanding options to
purchase shares of FICN Common Stock is less than $20.28, then
the aggregate Base Merger Consideration calculated under
Section 1.4(a) (including giving effect to Dissenting
Shares as if they had been converted under Section 1.4(a))
shall be reduced on a pro rata basis.
1.5 Options.
As of the Effective Time, with respect to each such outstanding
and unexercised option granted by FICN to purchase FICN Common
Stock, the optionee shall elect either (a) that each option
shall be canceled and in exchange for such cancellation the
optionee shall receive an amount of cash, without interest,
equal to the product of (i) the excess of (A) the per
share Cash Consideration over (B) the exercise price per
share of such
A-2
option and (ii) the number of shares of FICN Common Stock
subject to such option (the Cash Out
Election), which cash payment shall be treated as
compensation and shall be net of any applicable federal or state
withholding tax or (b) that such option shall be converted
into a right to purchase shares of Western Common Stock in an
amount and at an exercise price determined as provided below
(the Assumption Election), and otherwise
subject to the terms of the FICN 1999 Incentive Stock Option
Plan or the 1999 Nonqualified Stock Option Plan (together, the
FICN Stock Plans), as applicable. If an
optionee fails to make an election prior to the Effective Time,
the optionee shall be deemed to have elected the Cash Out
Election. Each optionee shall be entitled to receive a pro rata
portion of the Holdback Amount pursuant to Section 6.13. If
the Assumption Election is elected with respect to an option,
the following computation shall be applicable:
(1) The number of shares of Western Common Stock subject to
the option immediately after the Effective Time shall be equal
to the number of shares of FICN Common Stock subject to the
option immediately before the Effective Time, multiplied by the
Exchange Ratio, provided that any fractional shares of Western
Common Stock resulting from such multiplication shall be rounded
down to the nearest whole share; and
(2) The exercise price per share of Western Common Stock
under the option immediately after the Effective Time shall be
equal to the exercise price per share of FICN Common Stock under
the option immediately before the Effective Time divided by the
Exchange Ratio, provided that such exercise price shall be
rounded up to the nearest cent.
The adjustment provided herein shall be and is intended to be
effected in a manner which is consistent with
Section 424(a) of the Internal Revenue Code of 1986, as
amended (the Code). The duration and other
terms of the option immediately after the Effective Time shall
be the same as the corresponding terms in effect immediately
before the Effective Time, except that all references to FICN in
the FICN Stock Plans shall be deemed to be references to Western
and the option right so assumed shall be fully vested. FICN
shall comply with the notice requirements set forth in the FICN
Stock Plans and nothing herein shall be construed as preventing
option holders from exercising the same before the Effective
Time in accordance with the terms of the FICN Stock Plans. FICN
and Western shall cooperate to furnish a written form of
election to each optionee informing them of the alternatives
under this Agreement related to the FICN Stock Plans. Prior to
the Effective Time, FICN shall amend the FICN Stock Plans to
allow the assumption of option awards granted thereunder by
Western.
1.6 Articles of Incorporation.
At the Effective Time, the articles of incorporation of Western,
as in effect at the Effective Time, shall be the articles of
incorporation of the Surviving Corporation.
1.7 Bylaws.
At the Effective Time, the bylaws of Western, as in effect
immediately prior to the Effective Time, shall be the bylaws of
the Surviving Corporation.
1.8 Directors and Officers.
At the Effective Time, the directors and officers of Western
immediately prior to the Effective Time shall be the directors
and officers of the Surviving Corporation, subject to
Section 6.12.
1.9 Tax Consequences.
It is intended that the Merger shall constitute a reorganization
within the meaning of Section 368(a) of the Code, and that
this Agreement shall constitute a plan of
reorganization for purposes of the Code.
A-3
ARTICLE II
PRORATION;
ELECTION AND EXCHANGE PROCEDURES
2.1 Proration.
(a) Notwithstanding any other provision contained in this
Agreement, the total number of shares of FICN Common Stock to be
converted into Stock Consideration pursuant to
Section 1.4(a) (the Stock Conversion
Number) shall be equal to the product obtained by
multiplying (x) the number of shares of FICN Common Stock
outstanding immediately prior to the Effective Time by
(y) 0.80. All of the other shares of FICN Common Stock
shall be converted into Cash Consideration (in each case,
excluding shares of FICN Common Stock to be canceled as provided
in Sections 1.4(b) and 1.4(c) and Dissenters Shares).
(b) Within five Business Days after the Effective Time,
Western shall cause the Exchange Agent (as defined below) to
effect the allocation among holders of FICN Common Stock of
rights to receive the Cash Consideration and the Stock
Consideration as follows:
(i) If the aggregate number of shares of FICN Common Stock
with respect to which Stock Elections shall have been made (the
Stock Election Number) exceeds the Stock
Conversion Number, then all Cash Election Shares and all
Non-Election Shares of each holder thereof shall be converted
into the right to receive the Cash Consideration, and Stock
Election Shares of each holder thereof will be converted into
the right to receive the Stock Consideration in respect of that
number of Stock Election Shares equal to the product obtained by
multiplying (x) the number of Stock Election Shares held by
such holder by (y) a fraction, the numerator of which is
the Stock Conversion Number and the denominator of which is the
Stock Election Number, with the remaining number of such
holders Stock Election Shares being converted into the
right to receive the Cash Consideration; and
(ii) If the Stock Election Number is less than or equal to
the Stock Conversion Number (the amount by which the Stock
Conversion Number exceeds the Stock Election Number being
referred to herein as the Shortfall Number),
then all Stock Election Shares shall be converted into the right
to receive the Stock Consideration and the Non-Election Shares
and Cash Election Shares shall be treated in the following
manner:
(A) If the Shortfall Number is less than or equal to the
number of Non-Election Shares, then all Cash Election Shares
shall be converted into the right to receive the Cash
Consideration and the Non-Election Shares of each holder thereof
shall convert into the right to receive the Stock Consideration
in respect of that number of Non-Election Shares equal to the
product obtained by multiplying (x) the number of
Non-Election Shares held by such holder by (y) a fraction,
the numerator of which is the Shortfall Number and the
denominator of which is the total number of Non-Election Shares,
with the remaining number of such holders Non-Election
Shares being converted into the right to receive the Cash
Consideration; or
(B) If the Shortfall Number exceeds the number of
Non-Election Shares, then all Non-Election Shares shall be
converted into the right to receive the Stock Consideration and
Cash Election Shares of each holder thereof shall convert into
the right to receive the Stock Consideration in respect of that
number of Cash Election Shares equal to the product obtained by
multiplying (x) the number of Cash Election Shares held by
such holder by (y) a fraction, the numerator of which is
the amount by which (1) the Shortfall Number exceeds
(2) the total number of Non-Election Shares and the
denominator of which is the total number of Cash Election
Shares, with the remaining number of such holders Cash
Election Shares being converted into the right to receive the
Cash Consideration.
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2.2 Election and Exchange Procedures.
Each holder of record of shares of FICN Common Stock (other than
Dissenters Shares) (Holder) shall have
the right, subject to the limitations set forth in this
Article II, to submit an election in accordance with the
following procedures:
(a) Each Holder may specify in a request made in accordance
with the provisions of this Section 2.2 (herein called an
Election) (x) the number of shares of
FICN Common Stock owned by such Holder with respect to which
such Holder desires to make a Stock Election and (y) the
number of shares of FICN Common Stock owned by such Holder with
respect to which such Holder desires to make a Cash Election.
(b) Western shall prepare a form reasonably acceptable to
FICN (the Form of Election) which shall be
mailed to the FICNs stockholders entitled to vote at the
Special Meeting so as to permit FICN stockholders to exercise
their right to make an Election prior to the Election Deadline.
Such Form of Election shall explain that failing to make an
election with respect to shares of FICN Common Stock shall
result in such shares being deemed Non-Election Shares and the
consideration for such shares being determined in accordance
with the procedure set forth in Section 2.1(b).
(c) FICN shall make the Form of Election initially
available at the time that Proxy Materials are made available to
the stockholders of FICN, to such stockholders, and shall use
all reasonable efforts to make available as promptly as possible
a Form of Election to any stockholder of FICN who requests such
Form of Election following the initial mailing of the Forms of
Election and prior to the Election Deadline. In no event shall
the Form of Election be made available less than 20 days
prior to the Election Deadline.
(d) Any Election shall have been made properly only if the
Person authorized to receive Elections and to act as Exchange
Agent under this Agreement, which Person shall be designated by
Western (the Exchange Agent), pursuant to an
agreement entered into prior to Closing, shall have received, by
5:00 p.m. local time in the city in which the principal
office of such Exchange Agent is located, on the date of the
Election Deadline, a Form of Election properly completed with an
election noted and signed and accompanied by certificates of the
shares of FICN Common Stock (the FICN Stock
Certificates) to which such Form of Election relates
or by an appropriate customary guarantee of delivery of such
certificates, as set forth in such Form of Election, from a
member of any registered national securities exchange or a
commercial bank or trust company in the United States, provided
that such certificates are in fact delivered to the Exchange
Agent by the time required in such guarantee of delivery.
Failure to deliver shares of FICN Common Stock covered by such a
guarantee of delivery within the time set forth on such
guarantee shall be deemed to invalidate any otherwise properly
made Election and result in such shares being deemed
Non-Election Shares, unless otherwise determined by Western, in
its sole discretion. As used herein, Election
Deadline means 5:00 p.m. on the date that is the
Business Day prior to the date of the Special Meeting.
(e) Any FICN stockholder may, at any time prior to the
Election Deadline, change his or her Election by written notice
received by the Exchange Agent prior to the Election Deadline
accompanied by a properly completed and signed, revised Form of
Election. If Western shall determine in its discretion that any
Election is not properly made with respect to any shares of FICN
Common Stock, such Election shall be deemed to be not in effect,
and the shares of FICN Common Stock covered by such Election
shall, for purposes hereof, be deemed to be Non-Election Shares,
unless a proper Election is thereafter timely made.
(f) Any FICN stockholder may, at any time prior to the
Election Deadline, revoke his or her Election by written notice
received by the Exchange Agent prior to the Election Deadline or
by withdrawal prior to the Election Deadline of his or her FICN
Stock Certificate, or of the guarantee of delivery of such
certificates, previously deposited with the Exchange Agent. All
Elections shall be revoked automatically if the Exchange Agent
is notified in writing by Western or FICN that this Agreement
has been terminated in accordance with Article VIII.
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(g) If any portion of the Merger Consideration is to be
paid to a Person other than the Person in whose name an FICN
Stock Certificate so surrendered is registered, it shall be a
condition to such payment that such FICN Stock Certificate shall
be properly endorsed or otherwise be in proper form for transfer
and the Person requesting such payment shall pay to the Exchange
Agent any transfer or other similar Taxes required as a result
of such payment to a Person other than the registered holder of
such FICN Stock Certificate, or establish to the reasonable
satisfaction of the Exchange Agent that such Tax has been paid
or is not payable. The Exchange Agent (or, subsequent to the
six-month anniversary of the Effective Time, Western) shall be
entitled to deduct and withhold from the Merger Consideration
(including cash in lieu of fractional shares of Western Common
Stock) otherwise payable pursuant to this Agreement to any
holder of FICN Common Stock such amounts as the Exchange Agent
or Western, as the case may be, is required to deduct and
withhold under the Code, or any provision of state, local or
foreign Tax law, with respect to the making of such payment. To
the extent the amounts are so withheld by the Exchange Agent or
Western, as the case may be, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid
to the holder of shares of FICN Common Stock in respect of whom
such deduction and withholding was made by the Exchange Agent or
Western, as the case may be.
(h) After the Effective Time there shall be no further
registration or transfers of shares of FICN Common Stock. If,
after the Effective Time, FICN Stock Certificates are presented
to the Surviving Corporation, they shall be cancelled and
exchanged for the Merger Consideration in accordance with the
procedures set forth in this Article II.
(i) At any time following the six-month anniversary of the
Effective Time, Western shall be entitled to require the
Exchange Agent to deliver to it any remaining portion of the
Merger Consideration not distributed to Holders of shares of
FICN Common Stock that was deposited with the Exchange Agent at
the Effective Time (the Exchange Fund)
(including any interest received with respect thereto and other
income resulting from investments by the Exchange Agent, as
directed by Western), and Holders shall be entitled to look only
to Western (subject to abandoned property, escheat or other
similar laws) with respect to the Merger Consideration, any cash
in lieu of fractional shares of Western Common Stock and any
dividends or other distributions with respect to Western Common
Stock payable upon due surrender of their FICN Stock
Certificates, without any interest thereon. Notwithstanding the
foregoing, neither Western nor the Exchange Agent shall be
liable to any Holder of a FICN Stock Certificate for Merger
Consideration (or dividends or distributions with respect
thereto) or cash from the Exchange Fund in each case delivered
to a public official pursuant to any applicable abandoned
property, escheat or similar Laws.
(j) In the event any FICN Stock Certificates shall have
been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the Person claiming such FICN Stock
Certificate(s) to be lost, stolen or destroyed and, if required
by Western or the Exchange Agent, the posting by such Person of
a bond (or, at the sole discretion of Western, a suitable form
of indemnity and hold harmless agreement in lieu of a bond) in
such sum as Western may reasonably direct as indemnity against
any claim that may be made against it or the Surviving
Corporation with respect to such FICN Stock Certificate(s),
Western shall cause the Exchange Agent to issue the Merger
Consideration deliverable in respect of the shares of FICN
Common Stock represented by such lost, stolen or destroyed FICN
Stock Certificates.
(k) No dividends or other distributions with respect to
Western Common Stock with a record date after the Effective Time
shall be paid to the holder of any unsurrendered FICN Stock
Certificate with respect to the shares of Western Common Stock
represented thereby, and no cash payment in lieu of fractional
shares shall be paid to any such holder pursuant to
subsection (l) below, and all such dividends, other
distributions and cash in lieu of fractional shares of Western
Common Stock shall be paid by Western to the Exchange Agent and
shall be included in the Exchange Fund, in each case until the
surrender of such FICN Stock Certificate in accordance with
subsection (l) below. Subject to the effect of
applicable abandoned property, escheat or similar Laws,
following surrender of any such FICN Stock Certificate there
shall be paid to the Holder of a certificate for Western Common
Stock (a Western Stock Certificate)
representing whole shares of Western Common Stock issued in
exchange therefor, without interest, (i) at the time of
such surrender, the amount of dividends or other distributions
with a
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record date after the Effective Time theretofore paid with
respect to such whole shares of Western Common Stock and the
amount of any cash payable in lieu of a fractional share of
Western Common Stock to which such Holder is entitled pursuant
to subsection (l), and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to such surrender
and with a payment date subsequent to such surrender payable
with respect to such whole shares of Western Common Stock.
Western shall make available to the Exchange Agent cash for
these purposes, if necessary.
(l) No Western Stock Certificates representing fractional
shares of Western Common Stock shall be issued upon the
surrender for exchange of FICN Stock Certificates; no dividend
or distribution by Western shall relate to such fractional share
interests; and such fractional share interests will not entitle
the owner thereof to vote or to any rights as a stockholder of
Western. In lieu of any such fractional shares, each Holder of a
FICN Stock Certificate who would otherwise have been entitled to
receive a fractional share interest in exchange for such FICN
Stock Certificate shall receive from the Exchange Agent an
amount in cash equal to the product obtained by multiplying
(A) the fractional share interest to which such Holder
(after taking into account all shares of FICN Common Stock held
by such holder at the Effective Time) would otherwise be
entitled by (B) the Closing Western Share Value.
Notwithstanding any other provision contained in this Agreement,
funds utilized to acquire fractional shares as aforesaid shall
be furnished by Western on a timely basis and shall in no event
be derived from or diminish the Cash Consideration available for
distribution as part of the Merger Consideration.
(m) Western, in the exercise of its reasonable discretion,
shall have the right to make all determinations, not
inconsistent with the terms of this Agreement, governing
(A) the validity of the Forms of Election and compliance by
any FICN Stockholder with the Election procedures set forth
herein, (B) the manner and extent to which Elections are to
be taken into account in making the determinations prescribed by
Section 2.2, (C) the issuance and delivery of Western
Stock Certificates into which shares of FICN Common Stock are
converted in the Merger and (D) the method of payment of
cash for shares of FICN Common Stock converted into the right to
receive the Cash Consideration and cash in lieu of fractional
shares of Western Common Stock where the holder of the
applicable FICN Stock Certificate has no right to receive whole
shares of Western Common Stock.
(n) Prior to the Effective Time, Western will deposit with
the Exchange Agent certificates representing shares of Western
Common Stock sufficient to pay in a timely manner, and Western
shall instruct the Exchange Agent to timely pay, the aggregate
Stock Consideration. In addition, prior to the Effective Time,
Western shall deposit with the Exchange Agent sufficient cash to
permit prompt payment of the Cash Consideration and cash in lieu
of fractional shares of Western Common Stock, and Western shall
instruct the Exchange Agent to timely pay the Cash Consideration
and cash in lieu of fractional shares of Western Common Stock
where the holder of the applicable FICN Stock Certificate has no
right to receive whole shares of Western Common Stock.
(o) As soon as reasonably practicable after the Effective
Time, Western shall cause the Exchange Agent to mail to each
holder of record of an FICN Stock Certificate(s) which
immediately prior to the Effective Time represented outstanding
shares of FICN Common Stock whose shares were converted into the
right to receive the Merger Consideration pursuant to
Section 1.4 and any cash in lieu of fractional shares of
Western Common Stock to be issued or paid in consideration
therefor who did not complete an Election Form, (i) a
letter of transmittal (which shall specify that delivery shall
be effected, and risk of loss and title to the FICN Stock
Certificate(s) shall pass, only upon delivery of the FICN Stock
Certificate(s) (or affidavits of loss in lieu of such
certificates)) (the Letter of Transmittal) to
the Exchange Agent and shall be substantially in such form and
have such other provisions as shall be determined by Western and
(ii) instructions for use in surrendering the FICN Stock
Certificate(s) in exchange for the Merger Consideration and any
cash in lieu of fractional shares of Western Common Stock to be
issued or paid in consideration therefor upon surrender of such
certificate in accordance with Section 2.2(l) and any
dividends or distributions to which such holder is entitled
pursuant to Section 2.2(k).
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(p) Upon surrender to the Exchange Agent of its FICN Stock
Certificate(s), accompanied by a properly completed Form of
Election or a properly completed Letter of Transmittal, a Holder
of FICN Common Stock will be entitled to receive promptly after
the Effective Time the Merger Consideration (elected or deemed
elected by it, subject to Sections 1.4 and 2.1) in respect
of the shares of FICN Common Stock represented by its FICN Stock
Certificate. Until so surrendered, each such FICN Stock
Certificate shall represent after the Effective Time, for all
purposes, only the right to receive the Merger Consideration and
any cash in lieu of fractional shares of Western Common Stock to
be issued or paid in consideration therefor upon surrender of
such certificate in accordance with Section 2.2(l) and any
dividends or distributions to which such holder is entitled
pursuant to Section 2.2(k).
2.3 Certain Adjustments.
If after the date hereof and on or prior to the Effective Time
the outstanding shares of Western Common Stock shall be changed
into a different number of shares by reason of any
reclassification, recapitalization or combination, stock split,
reverse stock split, stock dividend or rights issued in respect
of such stock, or any similar event shall occur (any such
action, a Western Adjustment Event), the
Exchange Ratio shall be equitably and proportionately adjusted
to provide to the holders of FICN Common Stock the same economic
effect as contemplated by this Agreement prior to such Western
Adjustment Event.
2.4 Dissenters Rights.
(a) Notwithstanding anything in this Agreement to the
contrary and unless otherwise provided by applicable Law, shares
of FICN Common Stock that are issued and outstanding immediately
prior to the Effective Time and that are owned by stockholders
who have properly objected within the meaning of
Sections 92A.300 through 92A.500 of the NRS (the
Dissenters Shares), as further defined
by Sections 92A.005 through 92A.097 of the NRS, shall not
be converted into the right to receive the Merger Consideration
unless and until such stockholders shall have failed to perfect
or shall have effectively withdrawn or lost their right of
payment under applicable Law, in which event such
Dissenters Shares shall thereupon be deemed to have been
converted into and to have become exchangeable, as of the
Effective Time, for the right to receive, without any interest
thereon, the Merger Consideration upon surrender in the manner
provided in Section 1.4(a).
(b) FICN shall give Western (i) prompt notice of any
objections filed pursuant to the NRS that are received by FICN,
withdrawals of such objections and any other instruments served
in connection with such objections pursuant to the NRS and
received by FICN and (ii) the opportunity to direct all
negotiations and proceedings with respect to objections under
the NRS consistent with the obligations of FICN thereunder. FICN
shall not, except with the prior written consent of Western,
(x) make any payment with respect to any such objection,
(y) offer to settle or settle any such objections or
(z) waive any failure to timely deliver a written objection
in accordance with the NRS, subject to FICNs legal duties
and obligations thereunder.
ARTICLE III
REPRESENTATIONS
AND WARRANTIES OF FICN
FICN hereby makes the following representations and warranties
to Western as set forth in this Article III, subject to the
specifically identified exceptions disclosed in writing in the
FICN Disclosure Schedule as of the date hereof, each of which is
being relied upon by Western as a material inducement to enter
into and perform this Agreement. All of the disclosure schedules
of FICN referenced below
and/or
otherwise required of FICN pursuant to this Agreement, which
disclosure schedules shall be cross-referenced to the specific
sections and subsections of this Agreement (and shall only be
deemed an exception to the extent identified) and delivered
herewith, are referred to herein as the FICN Disclosure
Schedule.
3.1 Corporate Organization.
(a) FICN is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada. FICN
has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now
being conducted, and is duly licensed or qualified to do
business in
A-8
each jurisdiction in which the nature of any business conducted
by it or the character or location of any properties or assets
owned or leased by it makes such licensing or qualification
necessary. FICN is registered as a bank holding company with the
Board of Governors of the Federal Reserve System
(FRB) under the Bank Holding Company Act of
1956 (including the regulations promulgated thereunder, the
BHCA). The articles of incorporation and
bylaws of FICN, copies of which are attached at
Section 3.1(a) of the FICN Disclosure Schedule, are true,
correct and complete copies of such documents as in effect as of
the date of this Agreement.
(b) FIBN is a state chartered bank duly organized, validly
existing and in good standing under the laws of the State of
Nevada. Deposit accounts of FIBN are insured by the Federal
Deposit Insurance Corporation (the FDIC)
through the Bank Insurance Fund to the fullest extent permitted
by law, and all premiums and assessments required in connection
therewith have been paid by FIBN. FIBN has the corporate power
and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and
is duly licensed or qualified to do business in each
jurisdiction in which the nature of any business conducted by it
or the character or location of any properties or assets owned
or leased by it makes such licensing or qualification necessary.
The articles of incorporation (charter) and bylaws of FIBN,
copies of which are attached at Section 3.1(b) of the FICN
Disclosure Schedule, are true, correct and complete copies of
such documents as in effect as of the date of this Agreement.
(c) Section 3.1(c) of the FICN Disclosure Schedule
sets forth a true, correct and complete list of all direct or
indirect Subsidiaries of FICN as of the date of this Agreement.
Except as set forth at Section 3.1(c) of the FICN
Disclosure Schedule, FICN owns, directly or indirectly, all of
the issued and outstanding shares of capital stock of each of
its Subsidiaries, free and clear of all liens, charges,
encumbrances and security interests whatsoever, and all of such
shares are duly authorized and validly issued and are fully
paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. No FICN
Subsidiary has or is bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of
capital stock or any other equity security of such Subsidiary or
any securities representing the right to purchase or otherwise
receive any shares of capital stock or any other equity security
of such Subsidiary.
3.2 Capitalization.
(a) The authorized capital stock of FICN consists of
10,000,000 shares of FICN Common Stock and
1,000,000 shares of preferred stock, par value
$0.01 per share (the FICN Preferred
Stock). As of the date hereof, there are
(x) 1,120,074 shares of FICN Common Stock issued and
outstanding and no shares of FICN Common Stock held in
FICNs treasury, (y) 138,579 shares of FICN
Common Stock reserved for issuance upon exercise of outstanding
stock options or otherwise and (z) no shares of FICN
Preferred Stock issued and outstanding. All of the issued and
outstanding shares of FICN Common Stock have been duly
authorized and validly issued and are fully paid, nonassessable
and free of preemptive rights (except for any transfer
restrictions that will lapse due to the transactions set forth
in this Agreement), with no personal liability attaching to the
ownership thereof. Except for the outstanding options under the
FICN Stock Plans, true, complete and accurate copies of which
are set forth in Section 3.2(a) of the FICN Disclosure
Schedule, FICN does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance
of any shares of FICN Common Stock or any other equity security
of FICN or any securities representing the right to purchase or
otherwise receive any shares of FICN Common Stock or any other
equity security of FICN. The names of the optionees, the date of
each option to purchase FICN Common Stock granted, the number of
shares subject to each such option, the expiration date of each
such option, and the price at which each such option may be
exercised under the FICN Stock Plans are set forth in
Section 3.2(a) of the FICN Disclosure Schedule. Since
December 31, 2005, FICN has not issued any shares of its
capital stock, or any securities convertible into or exercisable
for any shares of its capital stock, other than director or
employee stock options granted under the FICN Stock Plans or
shares of FICN Common Stock issuable pursuant to the exercise of
director or employee stock options granted under the FICN Stock
Plans. The weighted average exercise price of all outstanding
options to purchase shares of FICN Common Stock is $20.28.
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(b) The authorized capital stock of FIBN consists of
25,000 shares of common stock, no par value per share
(FIBN Common Stock). As of the date hereof,
there are 14,521 shares of FIBN Common Stock issued and
outstanding, all of which shares are owned by FICN, and no
shares of FIBN Common Stock held in FIBNs treasury. FIBN
does not have and is not bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of
FIBN Common Stock or any other equity security of FIBN or any
securities representing the right to purchase or otherwise
receive any shares of FIBN Common Stock or any other equity
security of FIBN. Except as set forth in Section 3.2(b) of
the FICN Disclosure Schedule, since formation, FIBN has not
issued any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital
stock.
3.3 Authority; No Violation.
(a) FICN has full corporate power and authority to execute
and deliver this Agreement and, subject to receipt of the
required stockholder and regulatory approvals specified herein,
to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly
approved by the Board of Directors of FICN. The Board of
Directors of FICN has directed that this Agreement and the
transactions contemplated hereby be submitted to FICNs
stockholders for approval at the Special Meeting and, except for
the consents and approvals set forth in Section 3.4 below
and the adoption of this Agreement by the a majority of the
outstanding shares of FICN Common Stock, no other corporate
proceedings on the part of FICN (except for matters related to
setting the date, time, place and record date for the Special
Meeting) are necessary to approve this Agreement or to
consummate the transactions contemplated hereby or thereby. This
Agreement has been duly and validly executed and delivered by
FICN and (assuming due authorization, execution and delivery by
Western of this Agreement) will constitute valid and binding
obligations of FICN, enforceable against FICN in accordance with
its terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a
court of equity and by bankruptcy, insolvency and similar laws
affecting creditors rights and remedies generally.
(b) Neither the execution and delivery of this Agreement by
FICN nor the consummation by FICN of the transactions
contemplated hereby or, nor compliance by FICN with any of the
terms or provisions hereof, will (i) violate any provision
of the articles of incorporation or bylaws of FICN and each of
its Subsidiaries or (ii) assuming that the consents and
approvals referred to in Section 3.4 are duly obtained,
(x) violate any Laws applicable to FICN and each of its
Subsidiaries, or any of their respective properties or assets,
or (y) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the
termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the
creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or assets of
FICN and each of its Subsidiaries under, any of the terms,
conditions or provisions of any material note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which FICN and each of its
Subsidiaries is a party, or by which FICN or any of FICNs
properties or assets may be bound or affected.
3.4 Consents and Approvals.
(a) Except for (i) the filing of applications, notices
or waiver requests, as applicable, as to the Merger with the FRB
under the BHCA and with the Nevada Financial Institutions
Division (NFID) under Nevada banking laws or
regulations, and approval of the foregoing applications and
notices, (ii) the filing with the Securities and Exchange
Commission (SEC) of a Registration Statement
on
Form S-4
to register the shares of Western Common Stock that may be
issued in connection with the Merger (such
Form S-4,
and any amendments or supplements thereto, the
Registration Statement), which will include
the proxy statement/prospectus to be used in soliciting the
approval of FICNs stockholders at the Special Meeting
(such proxy statement as amended or supplemented is referred to
herein as the Proxy Materials),
(iii) the approval of this Agreement by the requisite vote
of the stockholders of FICN, (iv) the filing of the
Articles of Merger with the Nevada Secretary of State pursuant
to Nevada law, (v) such consents, approvals, orders,
authorizations, registrations, declarations and filings or
waivers thereof as may be required under applicable federal,
foreign
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and state securities (or related) laws and, if applicable, the
securities or antitrust laws of any foreign country, and
(vii) such filings, authorizations or approvals as may be
set forth in Section 3.4 of the FICN Disclosure Schedule,
no consents or approvals of or filings or registrations with any
court, administrative agency or commission or other governmental
authority or instrumentality (each a Governmental
Entity), or with any third party are necessary in
connection with (1) the execution and delivery by FICN of
this Agreement and (2) the consummation by FICN of the
Merger and the other transactions contemplated hereby.
(b) FICN has no Knowledge of any reason why approval or
effectiveness of any of the consents, approvals, authorizations,
applications, notices, filings or waivers thereof referred to in
Section 3.4(a) cannot be obtained or granted on a timely
basis.
3.5 Reports.
FICN has timely filed all reports, registrations and statements,
together with any amendments required to be made with respect
thereto, it was required to file since December 31, 2003
with (i) the FDIC, (ii) the NFID (iii) the FRB,
(iv) any other state banking commissions or any other state
regulatory authority (each a State
Regulator), and (v) any other self-regulatory
organization (collectively Regulatory
Agencies). Except for normal examinations conducted by
a Regulatory Agency in the regular course of the business of
FICN and its Subsidiaries, to FICNs Knowledge no
Governmental Entity is conducting, or has conducted, any
proceeding or investigation into the business or operations of
FICN or any of its Subsidiaries since December 31, 2003.
3.6 Financial Statements; Books and Records.
FICN has previously delivered to Western true, correct and
complete copies of the consolidated statements of condition of
FICN and its Subsidiaries as of December 31 for the fiscal
years 2004 and 2005 and the related consolidated statements of
income, stockholders equity and cash flows for the fiscal
years 2003 through 2005, inclusive, in each case accompanied by
the audit report of McGladrey & Pullen, LLP,
independent public accountants with respect to FICN, and the
interim financial statements of FICN as of and for the nine
months ended September 30, 2005 and 2006. The financial
statements referred to in this Section 3.6 (including the
related notes, where applicable) fairly present, and the
financial statements referred to in Section 6.7 will fairly
present (subject, in the case of the unaudited statements, to
recurring audit adjustments normal in nature and amount), the
results of the consolidated operations and consolidated
financial condition of FICN and its Subsidiaries for the
respective fiscal periods or as of the respective dates therein
set forth; each of such statements (including the related notes,
where applicable) has been, and the financial statements
referred to in Section 6.7 will be, prepared in accordance
with generally accepted accounting principles in the United
States consistently applied during the periods involved
(GAAP), except in each case as indicated in
such statements or in the notes thereto or, in the case of
unaudited statements. The books and records of FICN have been,
and are being, maintained in all material respects in accordance
with GAAP and any other applicable legal and accounting
requirements.
3.7 Brokers Fees.
Neither FICN nor any FICN Subsidiary nor any of their respective
officers or directors has employed any broker or finder or
incurred any liability for any brokers fees, commissions
or finders fees in connection with any of the transactions
contemplated by this Agreement, except that FICN has engaged,
and will pay a fee or commission as set forth at
Section 3.7 of the FICN Disclosure Schedule to Hovde
Financial, Inc. (Hovde) in accordance with
the terms of a letter agreement between Hovde and FICN, dated
November 15, 2006, a true, complete and correct copy of
which is attached at Section 3.7 of the FICN Disclosure
Schedule.
3.8 Absence of Certain Changes or Events.
(a) Except as set forth at Section 3.8 of the FICN
Disclosure Schedule, since December 31, 2005
(i) neither FICN nor any of its Subsidiaries has incurred
any material liability, except as contemplated by the Agreement
or in the ordinary course of their business consistent with past
practices and (ii) no event has occurred which has had, or
could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on FICN.
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(b) Since December 31, 2005, FICN and its Subsidiaries
have carried on their respective businesses in the ordinary and
usual course consistent with past practices.
3.9 Legal Proceedings.
(a) Except as set forth at Section 3.9(a) of the FICN
Disclosure Schedule, neither FICN nor any of its Subsidiaries is
a party to any, and there are no pending or, to the Knowledge of
FICN, threatened, legal, administrative, arbitration or other
proceedings, claims, actions or governmental or regulatory
investigations of any nature against FICN or any of its
Subsidiaries.
(b) There is no injunction, order, judgment, decree, or
regulatory restriction imposed upon FICN, any of its
Subsidiaries or the assets of FICN or any of its Subsidiaries.
3.10 Taxes and Tax Returns.
(a) Except as set forth at Section 3.10(a) of the FICN
Disclosure Schedule, (i) all federal, state, local and
foreign Tax Returns required to be filed by or on behalf of FICN
or any of its Subsidiaries have been timely filed or requests
for extensions have been timely filed and any such extension
shall have been granted and not have expired, and all such filed
Tax Returns are complete and accurate in all material respects;
(ii) all Taxes shown on such Tax Returns, all Taxes
required to be shown on Tax Returns for which extensions have
been granted and all other Taxes due and payable by FICN or any
of its Subsidiaries have been paid in full, or FICN has made
adequate provision for such Taxes in accordance with GAAP;
(iii) there is no audit examination, deficiency assessment,
Tax investigation or refund litigation with respect to any Taxes
of FICN or any of its Subsidiaries, and no claim has been made
by any Taxing Authority in a jurisdiction where FICN or any of
its Subsidiaries does not file Tax Returns that FICN or any such
Subsidiary is subject to Tax in that jurisdiction;
(iv) neither FICN nor any of its Subsidiaries has executed
an extension or waiver of any statute of limitations on the
assessment or collection of any material Tax due that is
currently in effect; (v) there are no liens for Taxes on
any of the assets of FICN or any of its Subsidiaries, other than
liens for Taxes not yet due and payable; (vi) FICN and each
of its Subsidiaries has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor,
stockholder or other third party, and FICN and each of its
Subsidiaries has timely complied with all applicable information
reporting requirements under Part III, Subchapter A of
Chapter 61 of the Code and similar applicable state and
local information reporting requirements; (vii) FICN is the
common parent, and all of its Subsidiaries are
members, of an affiliated group of
corporations (as those terms are defined in Section 1504(a)
of the Code) filing consolidated U.S. federal income tax
returns (the FICN Group); (viii) Neither
FICN nor any of its Subsidiaries is or has never been a member
of an affiliated group, or an affiliated, combined,
consolidated, unitary or similar group for state or local Tax
purposes, that includes any other entity that is not a member of
the FICN Group and neither FICN nor any of its Subsidiaries is
liable for any Taxes of any Person (other than FICN and its
Subsidiaries) under Treas. Reg. § 1.1502-6 (or any
similar provision of state, local, or foreign law), as a
transferee or successor, by contract or otherwise;
(ix) Neither FICN nor any of its Subsidiaries is a party to
or bound by any Tax allocation or sharing agreement;
(x) FICN has delivered to Western copies of, and
Section 3.10(a) of the FICN Disclosure Schedule sets forth
a complete and accurate list of, Tax Returns filed with respect
to the taxable periods of FICN ended on or after
December 31, 2001, indicates those Tax Returns that have
been audited by any Taxing Authority and indicates those Tax
Returns that currently are the subject of an audit by any Taxing
Authority; (xi) the unpaid Taxes of FICN and its
Subsidiaries did not, as of the date of any financial statements
of FICN furnished to Western pursuant to Section 3.6,
exceed the reserve for Tax liability (rather than any reserve
for deferred Taxes established to reflect timing differences
between book and Tax income) set forth on the face of such
financial statements (rather than any notes thereto) and do not
exceed that reserve as adjusted for the passage of time through
the Closing Date in accordance with the past custom and practice
of FICN in filing its Tax Returns; (xii) neither FICN nor
any of its Subsidiaries has been a United States real property
holding corporation within the meaning of Section 897(c)(2)
of the Code during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code; (xiii) FICN has
disclosed on its federal income Tax Returns all positions taken
therein that could reasonably be expected to give rise to a
substantial understatement of federal income Tax within the
meaning of Section 6662 of the Code; and (xiv) neither
FICN nor any of its Subsidiaries has entered into or otherwise
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participated in a listed transaction within the
meaning of Treas. Reg. § 1.6011-4(b)(2) or any other
reportable transaction within the meaning of Treas.
Reg. § 1.6011-4(b).
(b) FICN has no Knowledge of any fact or circumstance that
would prevent the transactions contemplated hereby from
qualifying as a reorganization under section 368(a) of the
Code.
(c) For purposes of this Agreement:
Tax means any tax (including any income tax,
capital gains tax, payroll tax, value-added tax, sales tax,
property tax, gift tax, or estate tax), levy, assessment,
tariff, duty (including any customs duty), deficiency, or other
fee, and any related charge or amount (including any fine,
penalty, interest, or addition to tax), imposed, assessed, or
collected by or under the authority of any Taxing Authority or
payable pursuant to any tax-sharing agreement or any other
contract relating to the sharing or payment of any such tax,
levy, assessment, tariff, duty, deficiency, or fee.
Tax Return means any return (including any
information return), report, statement, schedule, notice, form,
or other document or information filed with or submitted to, or
required to be filed with or submitted to, any Taxing Authority
in connection with the determination, assessment, collection, or
payment of any Tax or in connection with the administration,
implementation, or enforcement of or compliance with any law,
regulation or other legal requirement relating to any Tax.
Taxing Authority means any:
(i) nation, state, county, city, town, village, district,
or other jurisdiction of any nature;
(ii) federal, state, local, municipal, foreign, or other
government;
(iii) governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department,
official, or entity and any court or other tribunal);
(iv) multi-national organization or body; or
(v) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature.
3.11 Employee Plans.
(a) Section 3.11(a) of the FICN Disclosure Schedule
sets forth a true and complete list of each employee benefit
plan (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended
(ERISA)), or other employee benefit
arrangement, deferred director fee, bank owned life insurance or
any other agreement, program or policy that is sponsored by,
maintained or contributed to as of the date of this Agreement,
or that has within the last six years been sponsored by,
maintained or contributed to, by FICN or any of the FICN
Subsidiaries or any other entity which together with FICN would
be deemed a single employer within the meaning of
Section 4001 of ERISA or Code Sections 414(b),
(c) or (m) or under which FICN or any such Subsidiary
has any liability (collectively, the Plans).
With respect to the Plans, except as set forth on
Section 3.11(a) of the FICN Disclosure Schedule:
(i) no Plan provides benefits, including, without
limitation, death or medical benefits (whether or not insured),
with respect to current or former employees of FICN or any FICN
Subsidiary beyond their retirement or other termination of
service, other than (A) coverage mandated by applicable
Law, (B) death benefits or retirement benefits under a Plan
that is an employee pension benefit plan (as that
term is defined in Section 3(2) of ERISA),
(C) deferred compensation benefits under a Plan that are
accrued as liabilities on the books of FICN or any FICN
Subsidiary, or (D) benefits the full cost of which is borne
by the current or former employee (or such former or current
employees beneficiary);
(ii) no Plan is a defined benefit plan (as such
term is defined in Section 3(35) of ERISA);
(iii) no Plan is a multiemployer plan (as such
term is defined in Section 3(37) of ERISA);
(iv) no Plan, program, agreement or other arrangement,
either individually or collectively, provides for any payment by
FICN or any FICN Subsidiary that would not be deductible under
Code
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Sections 162(a)(1), 162(m) or 404 or that would constitute
a parachute payment within the meaning of Code
Section 280G after giving effect to the transactions
contemplated by this Agreement, nor would the transactions
contemplated by this Agreement accelerate the time of payment or
vesting, or increase the amount of compensation due to any
employee.
(b) FICN has heretofore delivered or made available to
Western true, correct and complete copies of each of the Plans
and all related documents, including but not limited to
(i) the actuarial report for such Plan (if applicable) for
each of the last five years, (ii) the most recent
determination letter from the IRS (if applicable) for such Plan,
(iii) the current summary plan description (or any other
such summary of the terms and conditions of the Plan) and any
summaries of material modification for such Plan, (iv) all
annual reports (Form 5500 series) for each Plan filed for
the preceding five plan years, (v) all agreements with
fiduciaries and service providers relating to the Plan, and
(vi) all substantive correspondence relating to any such
Plan addressed to or received from the Internal Revenue Service,
the Department of Labor or any other governmental agency.
(c) Except as set forth at Section 3.11(c) of the FICN
Disclosure Schedule:
(i) each of the Plans has been operated and administered in
all material respects in compliance with applicable Laws,
including but not limited to ERISA and the Code;
(ii) each of the Plans intended to be qualified
within the meaning of Section 401(a) of the Code is so
qualified, and (A) any trust created pursuant to any such
Plan is exempt from federal income tax under Section 501(a)
of the Code, (B) each such Plan has received from the
Internal Revenue Service a favorable determination letter to
such effect upon which FICN or a FICN Subsidiary is entitled to
rely as to such matters and which is currently applicable, and
(C) neither FICN nor any FICN Subsidiary is aware of any
circumstance or event which would jeopardize the tax-qualified
status of any such Plan or the tax-exempt status of any related
trust, or which would cause the imposition of any liability,
penalty or tax under ERISA or the Code;
(iii) all contributions or other amounts payable by FICN or
any FICN Subsidiary as of the Effective Time with respect to
each Plan, and all other liabilities of each such entity with
respect to each Plan, in respect of current or prior plan years,
have been paid or accrued in accordance with generally accepted
accounting practices and, to the extent applicable,
Section 412 of the Code;
(iv) Neither FICN nor any FICN Subsidiary has engaged in a
transaction in connection with which FICN or any FICN Subsidiary
could be subject to either a civil penalty assessed pursuant to
Section 409 or 502(i) of ERISA or a tax imposed pursuant to
Section 4975 or 4976 of the Code and no transaction has
occurred which involves the assets of any Plan and which could
subject FICN or any FICN Subsidiary or any of the directors,
officers or employees of FICN or any FICN Subsidiary, or a
trustee, administrator or other fiduciary of any trusts created
under any Plan to a tax or penalty on prohibited transactions
imposed by Section 4975 of the Code or the sanctions
imposed under Title I of ERISA;
(v) to the Knowledge of FICN and any FICN Subsidiary, there
are no pending, threatened or anticipated claims (other than
routine claims for benefits) by, on behalf of or against any of
the plans or any trusts related thereto;
(vi) all Plans could be terminated prior to or as of the
Effective Time without material liability in excess of the
amount accrued with respect to such Plan in the financial
statements referred to in Sections 3.6 and 6.7 hereto; and
(vii) all reports and information required to be filed with
the Department of Labor and IRS or provided to plan participants
and their beneficiaries with respect to each Plan have been
filed or provided, as applicable, and all annual reports
(including Form 5500 series) of such Plans were, if
applicable, certified without qualification by each Plans
accountants and actuaries.
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3.12 Certain Contracts.
(a) Except as set forth at Section 3.12(a) of the FICN
Disclosure Schedule, neither FICN nor any of its Subsidiaries is
a party to or bound by any contract, arrangement or commitment
(i) with respect to the employment of any directors,
officers, employees or consultants, (ii) which, upon the
consummation of the transactions contemplated by this Agreement
will (either alone or upon the occurrence of any additional acts
or events) result in any payment (whether of severance pay or
otherwise) becoming due from Western, FICN, or any of their
respective Subsidiaries to any director, officer or employee
thereof, (iii) which materially restricts the conduct of
any line of business by FICN or any of its Subsidiaries,
(iv) with or to a labor union or guild (including any
collective bargaining agreement) or (v) any of the benefits
of which will be increased, or the vesting of the benefits of
which will be accelerated by the occurrence of any of the
transactions contemplated by this Agreement, or the value of any
of the benefits of which will be calculated on the basis of any
of the transactions contemplated by this Agreement (including as
to this clause (v), any stock option plan, stock
appreciation rights plan, restricted stock plan or stock
purchase plan). Except as set forth at Section 3.12(a) of
the FICN Disclosure Schedule, there are no employment,
consulting and deferred compensation agreements to which FICN or
any of its Subsidiaries is a party. Section 3.12(a) of the
FICN Disclosure Schedule sets forth a list of all material
contracts (as defined in Item 601(b)(10) of
Regulation S-K)
of FICN and its Subsidiaries. Each contract, arrangement or
commitment of the type described in this Section 3.12(a),
whether or not set forth in Section 3.12(a) of the FICN
Disclosure Schedule, is referred to herein as a FICN
Contract, and neither FICN nor any of its Subsidiaries
has received notice of, nor do any executive officers of such
entities know of, any violation of any FICN Contract.
(b) (i) Each FICN Contract is a valid and binding
obligation of FICN and in full force and effect, (ii) FICN
and each of its Subsidiaries has in all material respects
performed all obligations required to be performed by it to date
under each FICN Contract, and (iii) no event or condition
exists which constitutes or, after notice or lapse of time or
both, would constitute, a material default on the part of FICN
or any of its Subsidiaries under any such FICN Contract.
3.13 Agreements with Regulatory Agencies.
FICN is not subject to any
cease-and-desist
or other order issued by, nor is it a party to any written
agreement, consent agreement or memorandum of understanding
with, nor has it adopted any board resolutions at the request of
(each, whether or not set forth on Section 3.13 of the FICN
Disclosure Schedule, a Regulatory Agreement),
any Governmental Entity that restricts the conduct of its
business or that in any manner relates to its capital adequacy,
its credit policies, its management or its business, nor has
FICN been advised by any Governmental Entity that it is
considering issuing or requesting any Regulatory Agreement.
3.14 Environmental Matters.
(a) Each of FICN and its Subsidiaries is in material
compliance with all applicable federal and state laws and
regulations relating to pollution or protection of the
environment (including without limitation, laws and regulations
relating to emissions, discharges, releases and threatened
releases of Hazardous Materials, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials
(hereinafter referred to as Environmental
Laws).
(b) There is no suit, claim, action, proceeding,
investigation or notice pending or, to the Knowledge of FICN,
threatened (or past or present actions or events that could from
the basis of any such suit, claim, action, proceeding,
investigation or notice) in which FICN or any FICN Subsidiary
has been or, with respect to threatened suits, claims, actions,
proceedings, investigations or notices may be, named as a
defendant (x) for alleged material noncompliance (including
by any predecessor), with any Environmental Law or
(y) relating to any material release or threatened release
into the environment of any Hazardous Material, occurring at or
on a site owned, leased or operated by FICN or any FICN
Subsidiary, or to the Knowledge of FICN, relating to any
material release or threatened release into the environment of
any Hazardous Material, occurring at or on a site not owned,
leased or operated by FICN or any FICN Subsidiary.
(c) During the period of FICNs or any FICN
Subsidiarys ownership or operation of any of its
properties, there has not been any material release of Hazardous
Materials in, on, under or affecting any such property.
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(d) To the Knowledge of FICN, neither FICN nor any FICN
Subsidiary has made or participated in any loan to any Person
who is subject to any suit, claim, action, proceeding,
investigation or notice, pending or threatened, with respect to
(i) any alleged material noncompliance as to any property
securing such loan with any Environmental Law, or (ii) the
release or the threatened release into the environment of any
Hazardous Material at a site owned, leased or operated by such
Person on any property securing such loan.
(e) For purposes of this Section 3.14, the term
Hazardous Material means any hazardous waste,
petroleum product, polychlorinated biphenyl, chemical,
pollutant, contaminant, pesticide, radioactive substance, or
other toxic material, or other material or substance regulated
under any applicable Environmental Law.
3.15 Reserves for Losses.
All reserves or other allowances for possible losses reflected
in the financial statements referred to in Section 3.6 as
of and for the year ended December 31, 2005 and the quarter
ended September 30, 3006, complied with all Laws and are
adequate under GAAP. Neither FICN nor its Subsidiaries has been
notified by the FDIC, the NFID or FICNs independent
auditor, in writing or otherwise, that such reserves are
inadequate or that the practices and policies of FICN and its
Subsidiaries in establishing its reserves for the year ended
December 31, 2005 and the quarter ended September 30,
2006, and in accounting for delinquent and classified assets
generally fail to comply with applicable accounting or
regulatory requirements, or that the FDIC, the NFID or
FICNs independent auditor believes such reserves to be
inadequate or inconsistent with the historical loss experience
of FICN and its Subsidiaries. FICN has previously furnished
Western with a complete list of all extensions of credit and
other real estate owned (such real estate,
OREO) that have been classified by any bank
or trust examiner (regulatory or internal) as other loans
specially mentioned, special mention, substandard, doubtful,
loss, classified or criticized, credit risk assets, concerned
loans or words of similar import. FICN agrees to update such
list no less frequently than monthly after the date of this
Agreement until the earlier of the Closing Date or the date that
this Agreement is terminated in accordance with
Section 8.1. All OREO held by FICN and its Subsidiaries is
being carried net of reserves at the lower of cost or net
realizable value.
3.16 Properties and Assets.
Section 3.16 of the FICN Disclosure Schedule lists
(i) all real property owned by FICN and each FICN
Subsidiary, (ii) each real property lease, sublease or
installment purchase arrangement to which FICN or any FICN
Subsidiary is a party, (iii) a description of each contract
for the purchase, sale, or development of real estate to which
FICN or any FICN Subsidiary is a party, and (iv) all items
of FICNs or any FICN Subsidiarys tangible personal
property and equipment with a book value of $25,000 or more or
having any annual lease payment of $10,000 or more. Except for
(a) items reflected in FICNs consolidated financial
statements as of December 31, 2005 referred to in
Section 3.6, (b) exceptions to title that do not
interfere materially with FICNs or any FICN
Subsidiarys use and enjoyment of owned or leased real
property (other than OREO), (c) liens for current real
estate taxes not yet delinquent, or being contested in good
faith, properly reserved against (and reflected on the financial
statements referred to in Section 3.6), and (d) items
listed in Section 3.16(d) of the FICN Disclosure Schedule,
FICN and each FICN Subsidiary have good and, as to owned real
property, marketable and insurable title to all their properties
and assets, free and clear of all liens, claims, charges and
other encumbrances. FICN and each FICN Subsidiary, as lessee,
have the right under valid and subsisting leases to occupy, use
and possess all property leased by them, and neither FICN nor
any FICN Subsidiary has experienced any material uninsured
damage or destruction with respect to such properties since
December 31, 2005. All properties and assets used by FICN
and each FICN Subsidiary are in good operating condition and
repair suitable for the purposes for which they are currently
utilized and comply in all material respects with all Laws
relating thereto now in effect or scheduled to come into effect.
FICN and each FICN Subsidiary enjoys peaceful and undisturbed
possession under all leases for the use of all property under
which they are lessees, and all leases to which FICN is a party
are valid and binding obligations in accordance with the terms
thereof. Neither FICN nor any FICN Subsidiary is in material
default with respect to any such lease, and there has occurred
no default by FICN or any FICN Subsidiary or event which with
the lapse of time or the giving of notice, or both, would
constitute a material default under any such lease. There are no
Laws,
A-16
conditions of record, or other impediments which materially
interfere with the intended use by FICN or any FICN Subsidiary
of any of the property owned, leased, or occupied by them.
3.17 Insurance.
Section 3.17 of the FICN Disclosure Schedule contains a
true, correct and complete list of all insurance policies and
bonds maintained by FICN and any FICN Subsidiary, including the
name of the insurer, the policy number, the type of policy and
any applicable deductibles, and all such insurance policies and
bonds are in full force and effect and have been in full force
and effect since their respective dates of inception. As of the
date hereof, neither FICN nor any FICN Subsidiary has received
any notice of cancellation or amendment of any such policy or
bond or is in default under any such policy or bond, no coverage
thereunder is being disputed and all material claims thereunder
have been filed in a timely fashion. The existing insurance
carried by FICN and FICN Subsidiaries is and will continue to
be, in respect of the nature of the risks insured against and
the amount of coverage provided, sufficient for compliance by
FICN and the FICN Subsidiaries with all requirements of Law and
agreements to which FICN or any of the FICN Subsidiaries is
subject or is party, and is, to FICNs Knowledge,
substantially similar in kind and amount to that customarily
carried by parties similarly situated who own properties and
engage in businesses substantially similar to that of FICN and
the FICN Subsidiaries. True, correct and complete copies of all
such policies and bonds reflected at Section 3.17 of the
FICN Disclosure Schedule, as in effect on the date hereof, have
been delivered to Western.
3.18 Compliance with Applicable Laws; Licenses.
(a) Each of FICN and any FICN Subsidiary has complied in
all material respects with all Laws applicable to it or to the
operation of its business. Neither FICN nor any FICN Subsidiary
has received any notice of any material alleged or threatened
claim, violation, or liability under any such Laws that has not
heretofore been cured and for which there is no remaining
liability.
(b) Each of FICN, its Subsidiaries and employees hold all
material permits, licenses, variances, authorizations,
exemptions, orders, registrations and approvals of all
Governmental Entities (the Permits) that are
required for the operation of the respective businesses of FICN
and its Subsidiaries as presently conducted.
(c) FIBN is well capitalized and well
managed under applicable regulatory definitions, and was
rated outstanding in its most recent examination,
dated October 29, 2001, under the Community Reinvestment
Act of 1977 (the CRA). No further CRA
examination has been noticed to FIBN.
(d) Since December 31, 2003, FICN and each of its
Subsidiaries have timely filed all regulatory reports,
schedules, forms, registrations and other documents, together
with any amendments required to be made with respect thereto,
that they were required to file with any Governmental Entity
(the FICN Documents), and have timely paid
all fees and assessments due and payable in connection
therewith. There is no material unresolved violation or
exception by any of such Governmental Entities with respect to
any report or statement relating to any examinations of FICN or
any of its Subsidiaries. FICN has delivered or made available to
Western a true and complete copy of each material FICN Document
requested by Western.
(e) Neither FICN nor any of its Subsidiaries, nor any of
their directors, officers or employees has been the subject of
any disciplinary proceedings or orders of any Governmental
Entity arising under applicable laws or regulations and no such
disciplinary proceeding or order is pending, nor to the
Knowledge of FICN, threatened.
(f) Since December 31, 2003, neither FICN nor any of
its Subsidiaries, nor to the Knowledge of FICN any other Person
acting on behalf of FICN or any of its Subsidiaries that
qualifies as a financial institution under the
U.S. Anti-Money Laundering Laws has knowingly acted, by
itself or in conjunction with another, in any act in connection
with the concealment of any currency, securities, other
proprietary interest that is the result of a felony as defined
in the U.S. Anti-Money Laundering Laws (Unlawful
Gains), nor knowingly accepted, transported, stored,
dealt in or brokered any sale, purchase or any transaction of
other nature for Unlawful Gains. FICN and each of its
Subsidiaries that qualifies as a financial
institution under the U.S. Anti-Money Laundering Laws
have, during the past three years, implemented such anti-money
laundry
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mechanisms and kept and filed all material reports and other
necessary material documents as required by, and otherwise
complied with, the U.S. Anti-Money Laundering Laws and the
rules and regulations issued thereunder.
3.19 Loans.
As of the date hereof:
(a) All loans owned by FICN or any FICN Subsidiary, or in
which FICN or any FICN Subsidiary has an interest, comply in all
material respects with all Laws, including, but not limited to,
applicable usury statutes, underwriting and recordkeeping
requirements and the Truth in Lending Act, the Equal Credit
Opportunity Act, and the Real Estate Settlement Procedures Act,
and other applicable consumer protection statutes and the
regulations thereunder;
(b) All loans owned by FICN or any FICN Subsidiary, or in
which FICN or any FICN Subsidiary has an interest, have been
made or acquired by FICN in accordance with board of
director-approved loan policies and, to the Knowledge of FICN
and any FICN Subsidiary, all of such loans are fully
collectable, except to the extent reserves have been made
against such loans in FICNs consolidated financial
statements at September 30, 2006 referred to in
Section 3.6 or as set forth in Section 3.19(b) of the
FICN Disclosure Schedule. Each of FICN and each FICN Subsidiary
holds mortgages contained in its loan portfolio for its own
benefit to the extent of its interest shown therein; such
mortgages evidence liens having the priority indicated by the
terms of such mortgages, including the associated loan
documents, subject, as of the date of recordation or filing of
applicable security instruments, only to such exceptions as are
discussed in attorneys opinions regarding title or in
title insurance policies in the mortgage files relating to the
loans secured by real property or are not material as to the
collectability of such loans; and all loans owned by FICN and
each FICN Subsidiary are with full recourse to the borrowers
(except as set forth at Section 3.19(b) of the FICN
Disclosure Schedule), and each of FICN and any FICN Subsidiary
has taken no action which would result in a waiver or negation
of any rights or remedies available against the borrower or
guarantor, if any, on any loan. All applicable remedies against
all borrowers and guarantors are enforceable except as may be
limited by bankruptcy, insolvency, moratorium or other similar
laws affecting creditors rights and except as may be
limited by the exercise of judicial discretion in applying
principles of equity. Except as set forth at
Section 3.19(b) of the FICN Disclosure Schedule, all loans
purchased or originated by FICN or any FICN Subsidiary and
subsequently sold by FICN or any FICN Subsidiary have been sold
without recourse to FICN or any FICN Subsidiary and without any
liability under any yield maintenance or similar obligation.
True, correct and complete copies of loan delinquency reports as
of September 30, 2006 prepared by FICN, which reports
include all loans delinquent or otherwise in default, have been
furnished to Western. True, correct and complete copies of the
currently effective lending policies and practices of FICN and
each FICN Subsidiary also have been furnished to Western;
(c) Except as set forth at Section 3.19(c) of the FICN
Disclosure Schedule each outstanding loan participation sold by
FICN or any FICN Subsidiary was sold with the risk of
non-payment of all or any portion of that underlying loan to be
shared by each participant (including FICN or any FICN
Subsidiary) proportionately to the share of such loan
represented by such participation without any recourse of such
other lender or participant to FICN or any FICN Subsidiary for
payment or repurchase of the amount of such loan represented by
the participation or liability under any yield maintenance or
similar obligation. FICN and any FICN Subsidiary have properly
fulfilled in all material respects its contractual
responsibilities and duties in any loan in which it acts as the
lead lender or servicer and has complied in all material
respects with its duties as required under applicable regulatory
requirements;
(d) FICN and each FICN Subsidiary have properly perfected
or caused to be properly perfected all security interests,
liens, or other interests in any collateral securing any loans
made by it and have sufficient and adequate policies of title
insurance to guard against the risk of improper perfection; and
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(e) Section 3.19(e) of the FICN Disclosure Schedule
sets forth a list of all loans or other extensions of credit to
all directors, officers and employees, or any other Person
covered by Regulation O of the Board of Governors of the
Federal Reserve System.
3.20 Affiliates.
Each director, executive officer and other Person who is an
affiliate (within the meaning of Rule 145 under
the Securities Act of 1933, as amended (the Securities
Act)) of FICN is listed at Section 3.20 of the
FICN Disclosure Schedule.
3.21 Fairness Opinion.
FICN has received an opinion from Hovde, acceptable in form and
content to FICN, to the effect that, in its opinion, the
consideration to be paid to the stockholders of FICN hereunder
is fair to such stockholders from a financial point of view (the
Fairness Opinion), and Hovde has consented to
the inclusion of the Fairness Opinion in the Proxy Materials.
3.22 Labor and Employment Matters.
To FICNs Knowledge, and except as set forth in
Section 3.22 of the FICN Disclosure, (a) there are no
labor or collective bargaining agreements to which FICN or any
FICN Subsidiary is a party, (b) there is no labor
organization or union that is certified or recognized as the
collective bargaining representative for any employees of FICN
or any FICN Subsidiary, (c) no unfair labor practice
charges or representation petitions have been filed with the
National Labor Relations Board against, or with respect to,
employees of FICN or any FICN Subsidiary, and neither FICN nor
any FICN Subsidiary has received any notice or communication
reflecting an intention or a threat to file any such complaint
or petition, (d) there are not, and in the preceding twelve
(12) months have not been, any strikes or concerted
refusals to work or any threats thereof by any employee of FICN
or any FICN Subsidiary, and (e) no claim has been asserted
with respect to FICN or any FICN Subsidiary asserting a
violation of present law or regulation relating to employee
relations that, if adversely determined, would reasonably be
expected to have a Material Adverse Effect.
3.23 Intellectual Property.
Section 3.23 of the FICN Disclosure Schedule lists all
(i) material trademarks and tradenames owned by FICN and
any FICN Subsidiary, indicating for each whether or not it is
registered or is the subject of a pending application with the
U.S. Patent and Trademark Office, (ii) software owned
or licensed by FICN any FICN Subsidiary that is material to the
operation of the business of FICN or any FICN Subsidiary,
(iii) patents and patent applications owned or filed by or
on behalf of FICN or any FICN Subsidiary, and (iv) material
licenses and other agreements relating to the foregoing (whether
as licensor or licensee) (the Scheduled IP).
Except as set forth at Section 3.23 of the FICN Disclosure
Schedule, to FICNs Knowledge, no claims are currently
being asserted by any Person challenging or questioning
FICNs or any FICN Subsidiarys right to use any
Scheduled IP or challenging or questioning the validity or
effectiveness of any Scheduled IP.
3.24 Internal Controls.
FICN and its Subsidiaries have devised and maintain a system of
internal accounting controls sufficient to provide reasonable
assurances regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in
accordance with GAAP. None of FICNs or its
Subsidiaries records, systems, controls, data or
information are recorded, stored, maintained, operated or
otherwise wholly or partly dependent on or held by any means
(including any electronic, mechanical or photographic process,
whether computerized or not) which (including all means of
access thereto and therefrom) are not under the exclusive
ownership and direct control of it or its Subsidiaries or
accountants except as would not, individually or in the
aggregate, reasonably be expected to result in a materially
adverse effect on the system of internal accounting controls
described in the preceding sentence.
3.25 Antitakeover Provisions Inapplicable.
The Board of Directors of FICN have taken all action required to
be taken by it in order to exempt the Merger, this Agreement and
the transactions contemplated hereby from, and the Merger, this
Agreement and
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the transactions contemplated hereby are exempt from, the
requirements of any moratorium, control
share, fair price, supermajority,
affiliate transactions, business
combination or other state antitakeover laws and
regulations.
ARTICLE IV
REPRESENTATIONS
AND WARRANTIES OF WESTERN
Western hereby makes the following representations and
warranties to FICN as set forth in this Article IV, each of
which is being relied upon by FICN as a material inducement to
enter into and perform this Agreement.
4.1 Corporate Organization.
Western is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada. Western has
the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now
being conducted, and is duly licensed or qualified to do
business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the
properties or assets owned or leased by it makes such licensing
or qualification necessary. Western is duly registered as a bank
holding company with the FRB. The articles of incorporation and
bylaws of Western, copies of which have previously been made
available to FICN, are true, correct and complete copies of such
documents as in effect as of the date of this Agreement.
4.2 Capitalization.
The authorized capital stock of Western consists of
100 million shares of Western Common Stock, of which
26,977,063 shares were issued (net of zero shares held in
the treasury) at September 30, 2006 and
20,000,000 shares of serial preferred stock, par value
$.0001 per share (Western Preferred
Stock), none of which were outstanding at
September 30, 2006. At such date, there were options
outstanding to purchase 2,275,654 shares of Western Common
Stock and warrants outstanding to purchase 1,452,819 shares
of Western Common Stock. All of the issued and outstanding
shares of Western Common Stock have been duly authorized and
validly issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the
ownership thereof, and upon issuance in accordance with the
terms hereof, the Stock Consideration will be duly authorized
and validly issued, and fully paid, nonassessable and free of
preemptive rights. As of the date of this Agreement, except as
set forth above, Western does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments
or agreements of any character calling for the purchase or
issuance of any shares of Western Common Stock or Western
Preferred Stock or any other equity security of Western or any
securities representing the right to purchase or otherwise
receive shares of Western Common Stock or Western Preferred
Stock.
4.3 Authority; No Violation.
(a) Western has full corporate power and authority to
execute and deliver this Agreement and, subject to receipt of
the required regulatory approvals specified herein, to
consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement, and the consummation
of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of Western. No other
corporate proceedings on the part of Western are necessary to
approve this Agreement or to consummate the transactions
contemplated hereby or thereby. This Agreement has been duly and
validly executed and delivered by Western and (assuming due
authorization, execution and delivery by FICN) and constitutes
the valid and binding obligation of Western, enforceable against
Western in accordance with its terms, except as enforcement may
be limited by general principles of equity whether applied in a
court of law or a court of equity and by bankruptcy, insolvency
and similar law affecting creditors rights and remedies
generally.
(b) Neither the execution and delivery of this Agreement by
Western nor the consummation by Western of the transactions
contemplated hereby will (i) violate any provision of the
articles of incorporation or bylaws of Western or
(ii) assuming that the consents and approvals referred to
in Section 4.4(a) are duly obtained, (x) violate any
Laws applicable to Western or any of its properties or assets,
or (y) violate, conflict with, result
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in a breach of any provision of or the loss of any benefit
under, constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or
cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest,
charge or other encumbrance upon any of the properties or assets
of Western under any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which
Western is a party, or by which it or any of its properties or
assets may be bound or affected.
4.4 Consents and Approvals.
(a) Except for (i) the filing of applications, notices
or waiver requests, as applicable, with the FRB under the BHCA
and the NFID under Nevada banking laws and approval of such
applications and notices, (ii) the filing of the Proxy
Materials with the SEC, (iii) the approval of this
Agreement by the requisite vote of the stockholders of FICN,
(iv) the filing of the Articles of Merger with the Nevada
Secretary of State pursuant to Nevada law, (v) the
registration under the Securities Act of the shares of Western
Common Stock to be issued in the Merger, and (vi) such
consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable
federal, foreign and state securities (or related) laws and, if
applicable, the securities or antitrust laws of any foreign
country, no consents or approvals of or filings or registrations
with any Governmental Entity or with any third party are
necessary in connection with (1) the execution and delivery
by Western of this Agreement and (2) the consummation by
Western of the Merger and the other transactions contemplated
hereby.
(b) Western has no Knowledge of any reason why approval or
effectiveness of any of the consents, approvals, authorizations,
applications, notices or filings referred to in
Section 4.4(a) cannot be obtained or granted on a timely
basis.
4.5 Agreements with Governmental Entities.
Neither Western nor any of its affiliates is subject to any
cease-and-desist
or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding
with, or has adopted any board resolutions at the request of any
Governmental Entity that restricts the conduct of its business
or that in any manner relates to its capital adequacy, its
credit policies, its management or its business, nor has Western
or any of its affiliates been advised by any Governmental Entity
that it is considering issuing or requesting any Regulatory
Agreement.
4.6 Legal Proceedings.
(a) Neither Western nor any of its Subsidiaries is a party
to any, and there are no pending or, to Westerns
Knowledge, threatened, legal, administrative, arbitration or
other proceedings, claims, actions or governmental or regulatory
investigations of any nature against Western or any of its
Subsidiaries which challenge the validity or propriety of the
transactions contemplated by this Agreement.
(b) There is no injunction, order, judgment, decree or
regulatory restriction imposed upon Western, any of its
Subsidiaries or the assets of Western or any of its Subsidiaries
or the assets of Western or any of its Subsidiaries which
challenge the validity or propriety of the transactions
contemplated by this Agreement.
4.7 Tax Matters.
Except as provided in this Agreement, neither Western nor any of
its Subsidiaries or Affiliated Persons has taken or agreed to
take any action, has failed to take any action or knows of any
fact, agreement, plan or other circumstance that could
reasonably be expected to prevent the Merger from qualifying as
a reorganization within the meaning of
Section 368(a) of the Code.
4.8 Financial Statements, SEC Filings, Books and
Records.
Western has previously delivered to FICN true, correct and
complete copies of the consolidated statements of condition of
Western and its Subsidiaries as of December 31 for the
fiscal years 2004 and 2005 and the related consolidated
statements of income, stockholders equity and cash flows
for the fiscal years 2003 through 2005, inclusive, as included
in Westerns
Form 10-K
filed with the SEC, in each case accompanied by
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the audit report of McGladrey & Pullen, LLP,
independent public accountants with respect to Western, and the
interim financial statements of Western as of and for the nine
months ended September 30, 2006 and 2005, as included in
the Western quarterly report on
Form 10-Q
for the period ended September 30, 2006 as filed with the
SEC. The financial statements referred to in this
Section 4.8 (including the related notes, where applicable)
fairly present the results of the consolidated operations and
consolidated financial condition of Western and its Subsidiaries
for the respective fiscal periods or as of the respective dates
therein set forth; each of such statements (including the
related notes, where applicable) comply with applicable
accounting requirements and with the published rules and
regulations of the SEC with respect thereto and each of such
statements (including the related notes, where applicable) has
been prepared in accordance with GAAP, except in each case as
indicated in such statements or in the notes thereto or, in the
case of unaudited statements, as permitted by
Form 10-Q.
Westerns quarterly report on
Form 10-Q
for the quarter ended September 30, 2006 and all reports
filed with the SEC since September 30, 2006 comply in all
material respects with the appropriate accounting requirements
for such reports under rules and regulations of the SEC with
respect thereto, and Western has previously delivered or made
available to FICN true, correct and complete copies of such
reports. The books and records of Western have been, and are
being, maintained in all material respects in accordance with
GAAP and any other applicable legal and accounting requirements.
4.9 Absence of Certain Changes or Events.
(a) Except as set forth in Westerns quarterly report
on
Form 10-Q
for the period ended September 30, 2006 or in any other
filing made by Western with the SEC since September 30,
2006, since September 30, 2006, (i) neither Western
nor any of its Subsidiaries has incurred any material liability,
except as contemplated by this Agreement or in the ordinary
course of their business consistent with their past practices
and (ii) no event has occurred which has had, or is likely
to have, individually or in the aggregate, a Material Adverse
Effect on Western.
(b) Since September 30, 2006, Western and its
Subsidiaries have carried on their respective businesses in the
ordinary and usual course consistent with their past practices.
ARTICLE V
COVENANTS
RELATING TO CONDUCT OF BUSINESS
5.1 Covenants of FICN.
During the period from the date of this Agreement and continuing
until the Effective Time, except as expressly contemplated or
permitted by this Agreement or with the prior written consent of
Western as set forth below (or the failure by Western to respond
to an Expedited Request (as defined below) within the time
period set forth at the conclusion of this Section 5.1),
FICN and each FICN Subsidiary shall carry on their respective
businesses in the ordinary course consistent with past practices
and consistent with prudent banking practices. FICN will use its
reasonable best efforts to (x) preserve its business
organization and that of each FICN Subsidiary intact,
(y) keep available to itself and Western the present
services of the employees of FICN and each FICN Subsidiary and
(z) preserve for itself and Western the goodwill of the
customers of FICN and each FICN Subsidiary and others with whom
business relationships exist. Without limiting the generality of
the foregoing, and except as set forth in Section 5.1 of
the FICN Disclosure Schedule or as otherwise expressly provided
in this Agreement or consented to by Western in writing, FICN
shall not, and shall not permit any FICN Subsidiary to:
(a) declare or pay any dividends on, or make other
distributions in respect of, any of its capital stock;
(b) (i) split, combine or reclassify any shares of its
capital stock or issue, authorize or propose the issuance of any
other securities in respect of, in lieu of or in substitution
for shares of its capital stock except upon the exercise or
fulfillment of rights or options issued or existing pursuant to
the FICN Stock Plans in accordance with their present terms, all
to the extent outstanding and in existence on the date of this
Agreement or (ii) repurchase, redeem or otherwise acquire,
any shares of the capital stock of FICN
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or any FICN Subsidiary, or any securities convertible into or
exercisable for any shares of the capital stock of FICN or any
FICN Subsidiary;
(c) issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock
(including in connection with the ESOP) or any securities
convertible into or exercisable for, or any rights, warrants or
options to acquire, any such shares, or enter into any agreement
with respect to any of the foregoing, other than the issuance of
FICN Common Stock pursuant to stock options or similar rights to
acquire FICN Common Stock granted pursuant to the FICN Stock
Plans and outstanding prior to the date of this Agreement, in
each case in accordance with their present terms;
(d) amend its articles of incorporation, bylaws or other
similar governing document;
(e) directly or indirectly, and will instruct its officers,
directors, employees, accountants, consultants, legal counsel,
investment bankers, advisors, agents and other representatives
(collectively, Representatives), not to,
directly or indirectly, continue or otherwise maintain,
initiate, solicit or encourage (including by way of furnishing
information or assistance), or take any other action to
facilitate, any inquiries or the making of any proposal that
constitutes, or reasonably may be expected to lead to, any
Competing Proposal, or enter into or maintain discussions or
negotiate with any Person in furtherance of or relating to such
inquiries or to obtain a Competing Proposal, or agree to or
endorse any Competing Proposal, or authorize or permit any
Representative of FICN or any of its Subsidiaries to take any
such action, and FICN shall use its reasonable best efforts to
cause the Representatives of FICN and the FICN Subsidiaries not
to take any such action, and FICN shall promptly notify Western
if any such inquiries or proposals are made regarding a
Competing Proposal, and FICN shall keep Western informed, on a
current basis, of the status and terms of any such proposals;
provided, however, that prior to such time as the
stockholders of FICN shall have adopted and approved this
Agreement in accordance with Nevada law, nothing contained in
this Section 5.1(e) shall prohibit the Board of Directors
of FICN from (i), in connection with a Superior Competing
Transaction, furnishing information to, or entering into
discussions or negotiations with, any Person that makes an
unsolicited bona fide Competing Proposal if, and only to the
extent that, (A) the Board of Directors of FICN, after
consultation with and based upon the written advice of
independent legal counsel, determines in good faith that such
action is required for the Board of Directors of FICN to comply
with its fiduciary duties to stockholders imposed by Nevada law,
(B) prior to furnishing such information to, or entering
into discussions or negotiations with, such Person, FICN
provides written notice to Western to the effect that it is
furnishing information to, or entering into discussions or
negotiations with, such Person, (C) prior to furnishing
such information to such Person, FICN receives from such Person
an executed confidentiality agreement with terms no less
favorable to FICN than those contained in the Confidentiality
Agreement by and between Western and Hovde, dated as of
November 15, 2006 (the Confidentiality
Agreement), and (D) FICN keeps Western informed,
on a current basis, of the status and details of any such
discussions or negotiations or (ii) complying with
Rule 14e-2
promulgated under the Securities Exchange Act of 1934;
(f) make capital expenditures aggregating in excess of
$25,000;
(g) enter into any new line of business;
(h) acquire or agree to acquire, by merging or
consolidating with, or by purchasing an equity interest in or
the assets of, or by any other manner, any business or any
corporation, partnership, association or other business
organization or division thereof or otherwise acquire any
assets, other than in connection with foreclosures, settlements
in lieu of foreclosure or troubled loan or debt restructurings,
or in the ordinary course of business consistent with prudent
banking practices;
(i) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties
set forth in this Agreement being or becoming untrue or in any
of the conditions to the Merger set forth in Article VII
not being satisfied, or in a violation of any provision of this
Agreement, except, in every case, as may be required by
applicable Law;
(j) change its methods of accounting in effect at
December 31, 2005 except as required by changes in GAAP or
regulatory accounting principles;
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(k) (i) except as required by applicable Law or this
Agreement or to maintain qualification pursuant to the Code,
adopt, amend, renew or terminate any Plan or any agreement,
arrangement, plan or policy between FICN and any FICN Subsidiary
and one or more of its current or former directors or officers,
(ii) increase in any manner the compensation of any
director, executive officer or other employee who is a party to
a contract relating to employment or severance referenced in
Section 3.12, or pay any benefit not required by any plan
or agreement as in effect as of the date hereof (including,
without limitation, the granting of stock options, stock
appreciation rights, restricted stock, restricted stock units or
performance units or shares), (iii) enter into, modify or
renew any contract, agreement, commitment or arrangement
providing for the payment to any director, executive officer or
employee who is a party to a contract relating to employment or
severance referenced in Section 3.12 of compensation or
benefits, (iv) enter into, modify or renew any contract,
agreement, commitment or arrangement providing for the payment
to any employee who is not a director or executive officer or
who is not a party to a contract relating to employment or
severance referenced in Section 3.12 of compensation or
benefits, other than normal annual cash increases in pay,
consistent with past practice and not exceeding 5% of such
employees base salary or wage, (v) hire any new
employee at an annual compensation in excess of $70,000,
(v) pay expenses of any employees or directors for
attending conventions or similar meetings which conventions or
meetings are held after the date hereof, or (vi) promote to
a rank of vice president or more senior any employee;
(l) except for short-term borrowings with a maturity of six
months or less or borrowings under FICNs existing lines of
credit, in each case in the ordinary course of business
consistent with past practices, incur any indebtedness for
borrowed money (other than deposit liabilities), assume,
guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other individual,
corporation or other entity, except for accepting, negotiating
and paying checks and payment orders in the ordinary course of
its banking business;
(m) sell, purchase, enter into a lease, relocate, open or
close any banking or other office, or file an application
pertaining to such action with any Governmental Entity;
(n) make any equity investment or commitment to make such
an investment in real estate or in any real estate development
project, other than in connection with foreclosure, settlements
in lieu of foreclosure, or troubled loan or debt restructuring,
in the ordinary course of business consistent with past banking
practices;
(o) make any new loans to, modify the terms of any existing
loan to, or engage in any other transactions (other than routine
banking transactions) with, any Affiliated Person of FICN or any
FICN Subsidiary;
(p) incur deposit liabilities, other than in the ordinary
course of business consistent with past practices, including
deposit pricing policies, and which would not change the risk
profile of FICN based on its existing deposit and lending
policies;
(q) purchase any loans or sell, purchase or lease any real
property, except for the sale of real estate that is the subject
of a casualty loss or condemnation or the sale of OREO on a
basis consistent with past practices;
(r) originate (i) any loans except in accordance with
existing FICN lending policies and practices,
(ii) residential mortgage loans in excess of $250,000,
(iii) 30 year residential mortgage loans whose
interest rate, terms, appraisal, and underwriting do not make
them immediately available for sale in the secondary market,
(iv) unsecured consumer loans in excess of $200,000,
(v) commercial business loans in excess of $1,000,000 as to
any loan or $1,000,000 in the aggregate as to related loans or
loans to related Persons, (vi) commercial real estate first
mortgage loans in excess of $1,000,000 as to any loans or
$1,000,000 in the aggregate as to related loans or loans to
related borrowers, or (vii) modifications
and/or
extensions of any commercial business or commercial real estate
loans in the amounts set forth in the preceding clauses (v)
and (vi) other than in the ordinary course of business
consistent with past practice;
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