SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of
the Securities Exchange Act of 1934
INVESTORSBANCORP, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 39-1854234
(State of other jurisdiction of (I.R.S. Employer
incorporation) Identification No.)
W239 N1700 Busse Road, Waukesha, Wisconsin 53188
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (414) 523-1000
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.01 per share
(Title of class)
<PAGE>
PART I
Item 1. Description of Business.
The information provided under the caption "Business" in the
Information Statement filed as Exhibit 15 hereto (the "Information
Statement") is incorporated herein by reference.
Item 2. Management's Discussion and Analysis or Plan of Operation.
The information provided under the caption "Business" in the
Information Statement is incorporated herein by reference.
Item 3. Description of Property.
The information provided under the caption "Business" in the
Information Statement is incorporated herein by reference.
Item 4. Security Ownership of Certain Beneficial Owners and
Management.
The information provided under the captions "Description of INVB
Capital Stock" and "Management -- Stock Ownership of Executive Officers
and Directors" in the Information Statement is incorporated herein by
reference.
Item 5. Directors, Executive Officers, Promoters and Control
Persons.
The information provided under the captions "Management --
Directors and Executive Officers of INVB" is incorporated herein by
reference.
Item 6. Executive Compensation.
The information provided under the captions "Management --
Compensation of Directors," "Management -- Executive Compensation" and
"Management -- INVB 1997 Equity Incentive Plan" in the Information
Statement is incorporated herein by reference.
Item 7. Certain Relationships and Related Transactions.
The information provided under the captions "The Distribution"
and "Arrangements Among BMCC, INVB and the Bank" in the Information
Statement is incorporated herein by reference.
Item 8. Description of Securities.
The information provided under the captions "Description of INVB
Capital Stock" and "Certain Antitakeover Effects" in the Information
Statement is incorporated herein by reference.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common
Equity and Other Stockholder Matters.
The information provided under the captions "The Distribution --
Listing and Trading of INVB Common Stock" and "Dividend Policy" in the
Information Statement is incorporated herein by reference.
Item 2. Legal Proceedings.
Not applicable.
Item 3. Changes in and Disagreements with Accountants.
Not applicable.
Item 4. Recent Sales of Unregistered Securities.
The information provided under the caption "The Distribution --
Stock Ownership After the Distribution" in the Information Statement is
incorporated herein by reference.
Item 5. Indemnification of Directors and Officers.
The information provided under the caption "Liability of
Directors and Officers; Indemnification" in the Information Statement is
incorporated herein by reference.
PART F/S
The Registrant is a newly formed corporation that has not been
capitalized and has no assets and no liabilities. Therefore historical
financial information with respect to the Registrant is not available or
applicable. The Pro Forma Financial Data contained in the Information
Statement are incorporated herein by reference.
PART III
Item 1. Index to Exhibits.
The Index to Exhibits is included herein immediately after the
signature page hereof.
Item 2. Description of Exhibits.
The Exhibits filed herewith are described in the Index to
Exhibits included herein.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized.
INVESTORSBANCORP, INC.
Date: July 24, 1997 By: /s/ George R. Schonath
George R. Schonath
President and Chief Executive Officer
<PAGE>
INDEX TO EXHIBITS
The following documents are filed as part of this registration
statement.
Exhibit
Number Description of Document
2(a) Restated Articles of Incorporation of InvestorsBancorp,
Inc.
2(b) Form of By-laws of InvestorsBancorp, Inc.
3 The provisions in registrant's Articles of
Incorporation and By-laws defining the rights of
holders of its equity securities are included in
Exhibits 2(a) and 2(b)
6(a) Form of Management Services and Allocation of
Expenses Agreement between Bando McGlocklin Capital
Corporation and InvestorsBank
6(b)
Form of Tax Allocation and Services Agreement
between InvestorsBancorp., Inc. and InvestorsBank
6(c)
Form of InvestorsBancorp, Inc. 1997 Equity
Incentive Plan
15 Information Statement regarding InvestorsBancorp,
Inc. to be mailed to Bando McGlocklin Capital
Corporation's shareholders
EXHIBIT 2(a)
RESTATED ARTICLES OF INCORPORATION
OF
INVESTORSBANCORP, INC.
The following Restated Articles of Incorporation, duly adopted
pursuant to the authority and provisions of Chapter 180 of the Wisconsin
Statutes, supersede and take the place of the existing Articles of
Incorporation and amendments thereto:
ARTICLE I
The name of the Corporation is InvestorsBancorp, Inc.
ARTICLE II
The period of existence of the Corporation shall be perpetual.
ARTICLE III
The purpose or purposes for which the Corporation is organized
is to carry on and engage in any lawful activity within the purposes for
which corporations may be organized under the Wisconsin Business
Corporation Law, Chapter 180 of the Wisconsin Statutes.
ARTICLE IV
The aggregate number of shares which the Corporation shall have
the authority to issue shall be ten million (10,000,000) shares;
consisting of: (i) nine million (9,000,000) shares of a class designated
as "Common Stock," with a par value of $.01 per share; and (ii) one
million (1,000,000) shares of a class designated as "Preferred Stock,"
with a par value of $.01 per share.
The designation, relative rights, preferences and limitations of
the shares of each class and authority of the Board of Directors of the
Corporation to establish and to designate series of the Preferred Stock
and to fix the variations in the relative rights, preferences and
limitations as between such series, shall be as set forth herein.
A. PREFERRED STOCK.
(1) Series and Variations Between Series. The Board of
Directors of the Corporation is authorized, subject to limitations
prescribed by law and the provisions of this paragraph A, to provide for
the issuance of the Preferred Stock in series, to establish or change the
number of shares to be included in each such series and to fix the
designation, relative rights, preferences and limitations of the shares of
each such series. The authority of the Board of Directors of the
Corporation with respect to each series shall include, but not be limited
to, determination of the following:
(i) The number of shares constituting that series and the
distinctive designation of that series;
(ii) The dividend rate or rates on the shares of that
series and/or the method of determining such rate or rates and the
timing of dividend payments on the shares of such series;
(iii) Whether the dividends on shares of that series
shall be cumulative or non-cumulative;
(iv) Whether and to what extent the shares of that series
shall have voting rights in addition to the voting rights provided by
law, which might include the right to elect a specified number of
directors in any case or if dividends on such series were not paid
for a specified period of time;
(v) Whether the shares of that series shall be convertible
into shares of stock of any other series, and, if so, the terms and
conditions of such conversion, including the price or prices or the
rate or rates of conversion and the terms of adjustment thereof;
(vi) Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such redemption,
including the date or dates upon or after which they shall be
redeemable and the amount per share payable in case of redemption,
which amount may vary under different conditions and at different
redemption dates;
(vii) The rights of the shares of that series in the
event of voluntary or involuntary liquidation, dissolution or winding
up of the Corporation;
(viii) The obligation, if any, of the Corporation to
retire shares of that series pursuant to a sinking fund; and
(ix) Any other relative rights, preferences and limitations
of that series.
Subject to the designations, relative rights, preferences and
limitations provided pursuant to this paragraph A, each share of Preferred
Stock shall be of equal rank with each other share of Preferred Stock.
(2) Dividends. Before any dividends shall be paid or set apart
for payment upon shares of Common Stock, the holders of each series of
Preferred Stock shall be entitled to receive dividends at the rate and at
such times as specified in the particular series. Dividends on shares of
Preferred Stock shall be paid out of any funds legally available for the
payment of such dividends, when and if declared by the Board of Directors.
Such dividends shall accumulate on shares of any series of Preferred Stock
from the date of issuance if so provided for such series.
With respect to any series of Preferred Stock which has
cumulative rights to dividends, any dividend paid upon such series of
Preferred Stock at a time when any accumulated dividends for any prior
period are delinquent shall be expressly declared as a dividend in whole
or partial payment of the accumulated dividend for the earliest dividend
period for which dividends are then delinquent, and shall be so designated
to each shareholder to whom payment is made. All shares of such series of
Preferred Stock shall rank equally and shall share ratably, in proportion
to the rate of dividend of the series, in all dividends paid or set aside
for payment for any dividend period or part thereof upon any such shares.
Except to the limited extent hereinafter provided, so long as
any shares of Preferred Stock shall be outstanding, no dividend, whether
in cash, stock or otherwise, shall be paid or declared nor shall any
distribution be made on the Common Stock, nor shall any Common Stock be
purchased, redeemed or otherwise acquired for value by the Corporation,
nor shall any moneys be paid to or set aside or made available for a
sinking fund for the purchase or redemption of any Common Stock, unless:
(i) All dividends for all past dividend periods
with respect to any series of Preferred Stock which
has cumulative rights to dividends shall have been
declared and a sum sufficient for the payment thereof
set apart; and
(ii) The Corporation shall have set aside all
amounts theretofore required to be set aside as and
for all sinking fund accounts, if any, for the
redemption or purchase of all series of Preferred
Stock for all past sinking fund payment periods or
dates.
The foregoing provisions shall not, however, apply to, or in any way
restrict (x) any acquisition of Common Stock in exchange solely for Common
Stock; (y) the acquisition of Common Stock through application of the
proceeds of the sale of Common Stock; or (z) stock dividends or
distributions payable only in shares of stock having rights and
preferences subordinate to the Preferred Stock.
(3) Liquidation, Dissolution or Winding Up. In case of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, the holders of shares of each series of Preferred Stock shall
be entitled to receive out of the assets of the Corporation in money or
money's worth the amount specified in the particular series for each share
at the time outstanding together, with respect to any series of Preferred
Stock which has cumulative rights to dividends, with all accrued but
unpaid dividends thereon, before any of such assets shall be paid or
distributed to holders of Common Stock. In case of the voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, if
the assets of the Corporation shall be insufficient to pay the holders of
all shares of Preferred Stock then outstanding the entire amounts to which
they may be entitled, the holders of shares of each outstanding series of
Preferred Stock shall share ratably in such assets in proportion to the
respective amounts payable in liquidation.
(4) Voting Rights. The holders of Preferred Stock shall have
only such voting rights as are fixed for shares of each series by the
Board of Directors pursuant to this paragraph A or as are provided by law.
B. COMMON STOCK.
(1) Dividends. Subject to the provisions of this Article IV,
the Board of Directors may, in its sole discretion, out of funds legally
available for the payment of dividends and at such times and in such
manner as determined by the Board of Directors, declare and pay dividends
on the Common Stock.
(2) Liquidation Rights. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation,
after there shall have been paid to or set aside for the holders of shares
of Preferred Stock the full preferential amounts to which they are
entitled, the holders of outstanding shares of Common Stock shall be
entitled to receive pro rata, according to the number of shares held by
each, the remaining assets of the Corporation available for distribution.
(3) Voting Rights. Except as otherwise provided by law and
except as may be determined by the Board of Directors with respect to the
Preferred Stock pursuant to paragraph A of this Article IV, only the
holders of Common Stock shall be entitled to vote for the election of
directors of the Corporation and for all other corporate purposes. Upon
any such vote the holders of Common Stock shall, except as otherwise
provided by law, be entitled to one vote for each share of Common Stock
held by them, respectively.
C. PREEMPTIVE RIGHTS.
Except as the Board of Directors of the Corporation may
otherwise determine from time to time, no shareholder of the Corporation
shall have any preferential or preemptive right to subscribe for or
purchase from the Corporation any new or additional shares of capital
stock of the Corporation or securities convertible into shares of capital
stock, whether now or hereafter authorized.
ARTICLE V
A. POWERS, NUMBER, QUALIFICATIONS, CLASSIFICATION AND
NOMINATION OF DIRECTORS.
The general powers, number, classification and tenure of the
directors of the Corporation shall be as set forth in Section 3.1 of
Article III of the By-laws of the Corporation (and as such Section shall
exist from time to time). Such Section 3.1 of the By-laws, or any
provision thereof, may only be amended, altered, changed or repealed by
the affirmative vote of shareholders holding at least eighty percent (80%)
of the voting power of the then outstanding shares of all classes of
capital stock of the Corporation generally possessing voting rights in the
election of directors, considered for this purpose as a single class;
provided, however, that the Board of Directors, by resolution adopted by
the Requisite Vote (as hereinafter defined), may amend, alter, change or
repeal Section 3.1 of the By-laws, or any provision thereof, without a
vote of the shareholders. As used herein, the term "Requisite Vote" shall
mean the affirmative vote of at least two-thirds of the directors then in
office plus one director.
B. REMOVAL OF DIRECTORS.
Any director may be removed from office with or without cause,
but only by the affirmative vote of shareholders holding at least eighty
percent (80%) of the voting power of the then outstanding shares of all
classes of capital stock of the Corporation generally possessing voting
rights in the election of directors, considered for this purpose as a
single class; provided, however, that if the Board of Directors by
resolution adopted by the Requisite Vote shall have recommended removal of
a director, then the shareholders may remove such director from office
with or without cause by a majority vote of such outstanding shares.
C. VACANCIES.
Any vacancy occurring in the Board of Directors, including a
vacancy created by the removal of a director or an increase in the number
of directors, shall be filled by the affirmative vote of a majority of the
directors then in office, although less than a quorum of the Board of
Directors. Any director so elected shall serve until the next election of
the class for which such director shall have been chosen and until his
successor shall be elected and qualified.
D. AMENDMENTS.
(1) Notwithstanding any other provision of these Articles of
Incorporation, the provisions of this Article V shall be amended, altered,
changed or repealed only by the affirmative vote of shareholders holding
at least eighty (80%) of the voting power of the then outstanding shares
of all classes of capital stock of the Corporation generally possessing
voting rights in the election of directors, considered for this purpose as
a single class.
(2) Notwithstanding the foregoing and any provisions in the By-
laws of the Corporation, whenever the holders of any one or more series of
Preferred Stock issued by the Corporation pursuant to Article IV hereof
shall have the right, voting separately as a class or by series, to elect
directors at an annual or special meeting of shareholders, the election,
term of office, filling of vacancies and other features of such
directorships shall be governed by the terms of the series of Preferred
Stock applicable thereto, and such directors so elected shall not be
divided into classes unless expressly provided by the terms of the
applicable series.
ARTICLE VI
The address of the registered office of the Corporation is W239
N1700 Busse Road, Pewaukee, Wisconsin 53072-0190, in Waukesha County. The
name of the Corporation's registered agent at such address is George R.
Schonath.
ARTICLE VII
The Corporation shall have the express right to acquire and
dispose of its own shares on such terms and conditions as the Board of
Directors may from time to time determine and agree.
ARTICLE VIII
The directors and officers of the Corporation shall be entitled
to such rights of indemnification and otherwise as are provided by law and
by Article IX of the By-laws. Article IX of the By-laws, or any provision
thereof, shall be amended, altered, changed or repealed only by the
affirmative vote of shareholders holding at least eighty percent (80%) of
the voting power of the then outstanding shares of all classes of capital
stock of the Corporation generally possessing voting rights in the
election of directors, considered for this purpose as a single class;
provided, however, that the Board of Directors, by resolution adopted by
the affirmative vote of two-thirds of the directors then in office plus
one director, may amend, alter, change or repeal Article IX of the By-
laws, or any provision thereof, without a vote of the shareholders.
ARTICLE IX
These Articles of Incorporation may be amended solely as
authorized hereby and by law at the time of amendment.
EXHIBIT 2(b)
FORM OF
BY-LAWS
OF
INVESTORSBANCORP, INC.
(a Wisconsin corporation)
<PAGE>
ARTICLE I. OFFICES
1.01. Principal and Business Offices. the corporation may have
such principal and other business offices, either within or without the
State of Wisconsin, as the Board of Directors may designate or as the
business of the corporation may require from time to time.
1.02. Registered Office. The registered office of the
corporation required by the Wisconsin Business Corporation Law to be
maintained in the State of Wisconsin may be, but need not be, identical
with the principal office in the State of Wisconsin, and the address of
the registered office may be changed from time to time by the Board of
Directors or by the registered agent. The business office of the
registered agent of the corporation shall be identical to such registered
office.
ARTICLE II. SHAREHOLDERS
2.01. Annual Meeting. The annual meeting of the shareholders
(the "Annual Meeting") shall be held on the first Thursday in the month of
May of each year, or at such other time and date as may be fixed by
resolution of the Board of Directors. In fixing a meeting date for any
Annual Meeting, the Board of Directors may consider such factors as it
deems relevant within the good faith exercise of its business judgment.
2.02. Purposes of Annual Meeting. At each Annual Meeting, the
shareholders shall elect that number of directors equal to the number of
directors in the class whose term expires at the time of such meeting. At
any such Annual Meeting, only other business properly brought before the
meeting in accordance with Section 2.15 of these by-laws may be
transacted. If the election of directors shall not be held on the date
designated herein, or fixed as herein provided, for any Annual meeting, or
any adjournment thereof, the Board of Directors shall cause the election
to be held at a special meeting of shareholders (a "Special Meeting") as
soon thereafter as is practicable.
2.03. Special Meetings.
(a) A Special Meeting may be called only by (i) the Chief
Executive Officer, (ii) the President, (iii) the Secretary or (iv) the
Board of Directors and shall be called by the Chief Executive Officer or
the President upon the demand, in accordance with this Section 2.03, of
the holders of record of shares representing at least 10% of all the votes
entitled to be case on any issue proposed to be considered at the Special
Meeting.
(b) In order that the corporation may determine the
shareholders entitled to demand a Special Meeting, the board of Directors
may fix a record date to determine the shareholders entitled to make such
a demand (the "Demand Record Date"). The Demand Record Date shall not
precede the date upon which the resolution fixing the Demand Record Date
is adopted by the Board of Directors and shall not be more than 10 days
after the date upon which the resolution fixing the Demand Record Date is
adopted by the Board of Directors. Any shareholder of record seeking to
have shareholders demand a Special Meeting shall, by sending written
notice to the Secretary of the corporation by hand or by certified or
registered mail, return receipt requested, request the Board of Directors
to fix a Demand Record Date. The Board of Directors shall promptly, but
in all events within 10 days after the date on which a valid request to
fix a Demand Record Date is received, adopt a resolution fixing the Demand
Record Date and shall make a public announcement of such Demand Record
Date. If no Demand Record Date has been fixed by the Board of Directors
within 10 days after the date on which such request is received by the
Secretary, the Demand Record Date shall be the 10th day after the first
date on which a valid written request to set a Demand Record Date is
received by the Secretary. To be valid, such written request shall set
forth the purpose or purposes for which the Special Meeting is to be held,
shall be signed by one or more shareholders of record (or their duly
authorized proxies or other representatives), shall bear the date of
signature of each such shareholder (or proxy or other representative) and
shall set forth all information about each such shareholder and about the
beneficial owner or owners, if any, on whose behalf the request is made
that would be required to be set forth in a shareholder's notice described
in paragraph (a)(ii) of Section 2.15 of these by-laws.
(c) In order for a shareholder or shareholders to demand a
Special Meeting, a written demand or demands for a Special Meeting by the
holders of record as of the Demand Record Date of shares representing at
least 10% of all the votes entitled to be cast on any issue proposed to be
considered at a Special Meeting must be delivered to the corporation. To
be valid, each written demand by a shareholder for a Special Meeting shall
set forth the specific purpose or purposes for which the Special Meeting
is to be held (which purpose or purposes shall be limited to the purpose
or purposes set forth in the written request to set a Demand Record Date
received by the corporation pursuant to paragraph (b) of this Section
2.03), shall be signed by one or more persons who as of the Demand Record
Date are shareholders of record (or their duly authorized proxies or other
representatives), shall bear the date of signature of each such
shareholder (or proxy or other representative), and shall set forth the
name and address, as they appear in the corporation's books, of each
shareholder signing such demand and the class and number of shares of the
corporation which are owned of record and beneficially by each such
shareholder, shall be sent to the Secretary by hand or by certified or
registered mail, return receipt requested, and shall be received by the
Secretary within 70 days after the Demand Record Date.
(d) The corporation shall not be required to call a Special
Meeting upon shareholder demand unless, in addition to the documents
required by paragraph (c) of this Section 2.03, the Secretary receives a
written agreement signed by each Soliciting Shareholder (as defined
below), pursuant to which each Soliciting Shareholder, jointly and
severally, agrees to pay the corporation's costs of holding the Special
Meeting, including the costs of preparing and mailing proxy materials for
the corporation's own solicitation, provided that if each of the
resolutions introduced by any Soliciting Shareholder at such meeting is
adopted, and each of the individuals nominated by or on behalf of any
Soliciting Shareholder for election as a director at such meeting is
elected, then the Soliciting Shareholder shall not be required to pay such
costs. For purposes of this paragraph (d), the following terms shall have
the meanings set forth below:
(i) "Affiliate" of any Person (as defined herein) shall
mean any person controlling, controlled by or under common control
with such first Person.
(ii) "Participant" shall have the meaning assigned to such
term in Rule 14a-11 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
(iii) "Person" shall mean any individual, firm,
corporation, partnership, joint venture, association, trust,
unincorporated organization or other entity.
(iv) "Proxy" shall have the meaning assigned to such term
in Rule 14a-1 promulgated under the Exchange Act.
(v) "Solicitation" shall have the meaning assigned to such
term in Rule 14a-11 promulgated under the Exchange Act.
(vi) "Soliciting Shareholder" shall mean, with respect to
any Special Meeting demanded by a shareholder or shareholders, any of
the following Persons:
(A) if the number of shareholders signing the
demand or demands of meeting delivered to the corporation
pursuant to paragraph (c) of this Section 2.03 is 10 or
fewer, each shareholder signing any such demand;
(B) if the number of shareholders signing the
demand or demands of meeting delivered to the corporation
pursuant to paragraph (c) of this Section 2.03 is more than
10, each Person who either (I) was a Participant in any
Solicitation of such demand or demands or (II) at the time
of the delivery to the corporation of the documents
described in paragraph (c) of this Section 2.03 had engaged
or intended to engage in any Solicitation or Proxies for
use at such Special Meeting (other than a Solicitation of
Proxies on behalf of the corporation); or
(C) any Affiliate of a Soliciting Shareholder,
if a majority of the directors then in office determine,
reasonably and in good faith, that such Affiliate should be
required to sign the written notice described in paragraph
(c) of this Section 2.03 and/or the written agreement
described in this paragraph (d) in order to prevent the
purposes of this Section 2.03 from being evaded.
(e) Except as provided in the following sentence, any Special
Meeting shall be held at such hour and day as may be designated by
whichever of the Chief Executive Officer, the President, the Secretary or
the Board of Directors shall have called such meeting. In the case of any
Special Meeting called by the Chief Executive Officer or the President
upon the demand of shareholders (a "Demand Special Meeting"), such meeting
shall be held at such hour and day as may be designated by the Board of
Directors; provided, however, that the date of any Demand Special Meeting
shall be not more than 70 days after the Meeting Record Date (as defined
in Section 2.06 hereof); and provided further that in the event that the
directors then in office fail to designate an hour and date for a Demand
Special Meeting within 10 days after the date that valid written demands
for such meeting by the holders of record as of the Demand Record Date of
shares representing at least 10% of all the votes entitled to be cast on
each issue proposed to be considered at the special Meeting are delivered
to the corporation (the "Delivery Date"), then such meeting shall be held
at 2:00 P.M. local time on the 100th day after the Delivery Date or, if
such 100th day is not a Business Day (as described below), on the first
preceding Business Day. In fixing a meeting date for any Special Meeting,
the Chief Executive Officer, the President, the Secretary or the Board of
Directors may consider such factors as he or it deems relevant within the
good faith exercise of his or its business judgment, including, without
limitation, the nature of the action proposed to be taken, the facts and
circumstances surrounding any demand for such meeting, and any plan of the
Board of Directors to call an Annual Meeting or a Special Meeting for the
conduct of related business.
(f) The corporation may engage regionally or nationally
recognized independent inspectors of elections to act as an agent of the
corporation for the purpose of promptly performing a ministerial review of
the validity of any purported written demand or demands for a Special
Meeting received by the Secretary. For the purpose of permitting the
inspectors to perform such review, no purported demand shall be deemed to
have been delivered to the corporation until the earlier of (i) 5 Business
Days following receipt by the Secretary of such purposed demand and (ii)
such date as the independent inspectors certify to the corporation that
the valid demands received by the Secretary represent at least 10% of all
the votes entitled to be cast on each issue proposed to be considered at
the Special Meeting. Nothing contained in this paragraph (f) shall in any
way be construed to suggest or imply that the Board of Directors or any
shareholder shall not be entitled to contest the validity of any demand,
whether during or after such 5 Business Day period, or to take any other
action (including, without limitation, the commencement, prosecution or
defense of any litigation with respect thereto).
(g) For purposes of these by-laws, "Business Day" shall mean
any day other than a Saturday, a Sunday or a day on which banking
institutions in the State of Wisconsin are authorized or obligated by law
or executive order to close.
2.04. Place of Meeting. The Board of Directors, the Chief
Executive Officer, the President or the Secretary may designate any place,
either within or without the State of Wisconsin, as the place of meeting
for any Annual Meeting or for any Special Meeting, or for any postponement
thereof. If no designation is made, the place of meeting shall be the
principal office of the corporation in the State of Wisconsin. Any
meeting may be adjourned to reconvene at any place designated by vote of
the Board of Directors or by the Chief Executive Officer, the President or
the Secretary.
2.05. Notice of Meeting. Written or printed notice stating the
place, day and hour of any Annual meeting or Special Meeting shall be
delivered not less than 10 days (unless a longer period is required by the
Wisconsin Business Corporation Law) nor more than 70 days before the date
of such meeting, either personally or by mail, by or at the direction of
the Secretary to each shareholder of record entitled to vote at such
meeting and to other shareholders as may be required by the Wisconsin
Business Corporation Law. In the event of any Demand Special Meeting,
such notice of meeting shall be sent not more than 30 days after the
Delivery Date. If mailed, notice pursuant to this Section 2.05 shall be
deemed to be effective when deposited in the United States mail, addressed
to the shareholder at his address as it appears on the stock transfer
books of the corporation, with postage thereon prepaid. Unless otherwise
required by the Wisconsin Business Corporation Law or the articles of
incorporation of the corporation, a notice of an Annual Meeting need not
include a description of the purpose for which the meeting is called. In
the case of any Special Meeting, (a) the notice of meeting shall describe
any business that the Board of Directors shall have theretofore determined
to bring before the meeting and (b) in the case of a Demand Special
Meeting, the notice of meeting (i) shall describe any business set forth
in the statement of purpose of the demands received by the corporation in
accordance with Section 2.03 of these by-laws and (ii) shall contain all
of the information required in the notice received by the corporation in
accordance with section 2.15(b) of these by-laws. If an Annual Meeting or
Special Meeting is adjourned to a different date, time or place, the
corporation shall not be required to give notice of the new date, time or
place if the new date, time or place is announced at the meeting before
adjournment; provided, however, that if a new Meeting Record Date for an
adjourned meeting is or must be fixed, the corporation shall give notice
of the adjourned meeting to persons who are shareholders as of the new
Meeting Record Date.
2.06. Fixing of Record Date. The Board of Directors may fix in
advance a date not less than 10 days and not more than 70 days prior to
the date of any Annual Meeting or Special Meeting as the record date for
the determination of shareholders entitled to notice of, or to vote at,
such meeting (the "Meeting Record Date"). In the case of any Demand
Special Meeting, (i) the Meeting Record Date shall be not later than the
30th day after the Delivery Date and (ii) if the Board of Directors fails
to fix the Meeting Record Date within 30 days after the Delivery Date,
then the close of business on such 30th day shall be the Meeting Record
Date. The shareholders of record on the Meeting Record Date shall be the
shareholders entitled to notice of and to vote at the meeting. Except as
provided by the Wisconsin Business Corporation Law for a court-ordered
adjournment, a determination of shareholders entitled to notice of or to
vote at any Annual Meeting or Special Meeting is effective for any
adjournment of such meeting unless the Board of Directors fixes a new
Meeting Record Date, which it shall do if the meeting is adjourned to a
date more than 120 days after the date fixed for the original meeting.
The Board of Directors may also fix in advance a date as the record date
for the purpose of determining shareholders entitled to take any other
action or determining shareholders for any other purpose. Such record
date shall be not more than 70 days prior to the date on which the
particular action, requiring such determination of shareholders, is to be
taken. The record date for determining shareholders entitled to a
distribution (other than a distribution involving a purchase, redemption
or other acquisition of the corporation's shares) or a share dividend is
the date on which the Board of Directors authorizes the distribution or
share dividend, as the case may be, unless the Board of Directors fixes a
different record date.
2.07. Voting Records. After a Meeting Record Date has been
fixed, the corporation shall prepare a list of the names of all of the
shareholders entitled to notice of the meeting. The list shall be
arranged by class or series of shares, if any, and show the address of and
number of shares held by each shareholder. Such list shall be available
for inspection by any shareholder, beginning two business days after
notice of the meeting is given for which the list was prepared and
continuing to the date of the meeting, at the corporation's principal
office or at a place identified in the meeting notice in the city where
the meeting will be held. A shareholder or his agent may, on written
demand, inspect and, subject to the limitations imposed by the Wisconsin
Business Corporation Law, copy the list, during regular business hours and
at his expense, during the period that it is available for inspection
pursuant to this Section 2.07. The corporation shall make the
shareholders' list available at the meeting and any shareholder or his
agent or attorney may inspect the list at any time during the meeting or
any adjournment thereof. Refusal or failure to prepare or make available
the shareholders' list shall not affect the validity of any action taken
at a meeting of shareholders.
2.08. Quorum and Voting Requirements; Postponements;
Adjournments.
(a) Shares entitled to vote as a separate voting group may take
action on a matter at an Annual Meeting or Special Meeting only if a
quorum of those shares exists with respect to that matter. If the
corporation has only one class of stock outstanding, such class shall
constitute a separate voting group for purposes of this Section 2.08.
Except as otherwise provided in the articles of incorporation of the
corporation or the Wisconsin Business Corporation Law, a majority of the
votes entitled to be cast on the matter shall constitute a quorum of the
voting group for action on that matter. Once a share is represented for
any purpose at any Annual Meeting or Special Meeting, other than for the
purpose of objecting to holding the meting or transacting business at the
meeting, it is considered present for purposes of determining whether a
quorum exists for the remainder of the meeting and for any adjournment of
that meeting unless a new Meeting Record Date is or must be set for the
adjourned meeting. If a quorum exists, except in the case of the election
of directors, action on a matter shall be approved if the votes cast
within the voting group favoring the action exceed the votes cast opposing
the action, unless the articles of incorporation o the corporation or the
Wisconsin Business Corporation Law requires a greater number of
affirmative votes. Unless otherwise provided in the articles of
incorporation of the corporation, each director to be elected shall be
elected by a plurality of the votes cast by the shares entitled to vote in
the election of directors at any Annual Meeting or Special Meeting at
which a quorum is present.
(b) The Board of Directors acting by resolution may postpone
and reschedule any previously scheduled Annual Meeting or Special Meeting;
provided, however, that a Demand Special Meeting shall not be postponed
beyond the 100th day following the Delivery Date. Any Annual Meeting or
Special Meeting may be adjourned from time to time, whether or not there
is a quorum, (i) at anytime, upon a resolution of shareholders if the
votes cast in favor of such resolution by the holders of shares of each
voting group entitled to vote on any matter theretofore properly brought
before the meeting exceed the number of votes cast against such resolution
by the holders of shares of each such voting group or (ii) at any time
prior to the transaction of any business at such meeting, by the Chief
Executive Officer or the President to a resolution of the Board of
Directors. No notice of the time and place of adjourned meetings need be
given except as required by the Wisconsin Business Corporation Law. At
any adjourned meeting at which a quorum shall be present or represented,
any business may be transacted which might have been transacted at the
meeting as originally notified.
2.09. Conduct of Meeting. The Chief Executive Officer, and in
his absence, the President, and in his absence, a Senior Vice President or
a Vice President in the order provided under Section 4.07, and in their
absence, any person chosen by the shareholders present shall call any
Annual Meeting or Special Meeting to order and shall act as chairman of
such meeting, and the Secretary of the corporation shall act as secretary
of all Annual Meetings and Special Meetings, but, in the absence of the
Secretary, the presiding officer may appoint any other person to act as
secretary of the meeting.
2.10. Proxies. At any Annual Meeting or Special Meeting, a
shareholder entitled to vote may vote in person or by proxy. A
shareholder may appoint a proxy to vote or otherwise act for the
shareholder by signing an appointment form, either personally or by his
attorney-in-fact. An appointment of proxy is effective when received by
the Secretary or other officer or agent of the corporation authorized to
tabulate votes. An appointment is valid for 11 months from the date of
its signing unless a different period is expressly provided in the
appointment form. Unless otherwise provided, a proxy may be revoked at
any time before it is voted, either by written notice filed with the
Secretary or the acting secretary of the meeting or by oral notice given
by the shareholder to the presiding officer during the meeting. The
presence of a shareholder who has filed his appointment of proxy shall not
of itself constitute a revocation. The Board of Directors shall have the
power and authority to make rules establishing presumptions as to the
validity and sufficiency of proxies.
2.11. Voting of Shares.
(a) Each outstanding share shall be entitled to one vote upon
each matter submitted to a vote at an Annual Meeting or Special Meeting,
except to the extent that the voting rights of the shares of any class or
classes are enlarged, limited or denied by the Wisconsin Business
Corporation Law or the articles of incorporation of the corporation.
(b) Shares held by another corporation, if a sufficient number
of shares entitled to elect a majority of the directors of such other
corporation is held directly or indirectly by this corporation, shall not
be entitled to vote at any Annual Meeting or Special Meeting, but shares
held in a fiduciary capacity may be voted.
2.12. Acceptance of Instruments Showing Shareholder Action. If
the name signed on a vote, consent, waiver or proxy appointment
corresponds to the name of a shareholder, the corporation if acting in
good faith, may accept the vote, consent, waiver or proxy appointment and
give it effect as the act of a shareholder. If the name signed on a vote,
consent, waiver or proxy appointment does not correspond to the name of a
shareholder, the corporation may accept the vote, consent, waiver or proxy
appointment and give it effect as the act of the shareholder if any of the
following apply:
(a) The shareholder is an entity and the name signed purports
to be that of an officer or agent of the entity.
(b) the name purports to be that of a personal representative,
administrator, executor, guardian, or conservator representing the
shareholder and, if the corporation requests, evidence of fiduciary status
acceptable to the corporation is presented with respect to the vote,
consent, waiver or proxy appointment.
(c) The name signed purports to be that of a receiver or
trustee in bankruptcy of the shareholder and, if the corporation requests,
evidence of this status acceptable to the corporation is presented with
respect to the vote, consent, waiver or proxy appointment.
(d) The name signed purports to be that of a pledgee,
beneficial owner, or attorney-in-fact of the shareholder and, if the
corporation requests, evidence acceptable to the corporation of the
signatory's authority to sign for the shareholder is presented with
respect to the vote, consent, waiver or proxy appointment.
(e) Two or more persons are the shareholders as co-tenants or
fiduciaries and the name signed purports to be the name of at least one of
the co-owners and the person signing appears to be acting on behalf of all
co-owners.
The corporation may reject a vote, consent, waiver or proxy
appointment if the Secretary or other officer or agent of the corporation
who is authorized to tabulate votes, acting in good faith, has reasonable
basis for doubt about the validity of the signature on its or about the
signatory's authority to sign for the shareholder.
2.13. Waiver of Notice by Shareholders. A shareholder may waive
any notice required by the Wisconsin Business Corporation Law, the article
of incorporation of the corporation or these by-laws before or after the
date and time stated in the notice. The waiver shall be in writing and
signed by the shareholder entitled to the notice, contain the same
information that would have been required in the notice under applicable
provisions of the Wisconsin Business Corporation Law (except that the time
and place of meeting need not be stated) and be delivered to the
corporation for inclusion in the corporate records. A shareholder's
attendance at any Annual Meeting or Special Meeting, in person or by
proxy, waives objection to all of the following: (a) lack of notice or
defective notice of the meeting, unless the shareholder at the beginning
of the meeting or promptly upon arrival objects to holding the meeting or
transacting business at the meeting; and (b) consideration of a particular
matter at the meeting that is not within the purpose described in the
meeting notice, unless the shareholder objects to considering the matter
when it is presented.
2.14. Unanimous Consent without Meeting. Any action required or
permitted by the articles of incorporation of the corporation or these by-
laws or any provision of the Wisconsin Business Corporation Law to b taken
at an Annual Meeting or Special Meeting may be taken without a meeting if
a consent in writing, setting forth the action so taken, shall be signed
by all of the shareholders entitled to vote with respect to the subject
matter thereof.
2.15. Notice of Shareholder Business and Nomination of Directors.
(a) Annual Meetings.
(i) Nominations of persons for election to the Board of
Directors of the corporation and the proposal of business to be
considered by the shareholders may be made at an Annual Meeting (A)
pursuant to the corporation's notice of meeting, (B) by or at the
direction of the Board of Directors or (C) by any shareholder of the
corporation who is a shareholder of record at the time of giving of
notice provided for in this by-law and who is entitled to vote at the
meeting and complies with the notice procedures set forth in this
Section 2.15.
(ii) For nominations or other business to be properly
brought before an Annual Meeting by a shareholder pursuant to clause
(C) of paragraph (a)(i) of this Section 2.15, the shareholder must
have given timely notice thereof in writing to the Secretary of the
corporation. To be timely, a shareholder's notice shall be received
by the Secretary of the corporation at the principal offices of the
corporation not less than 90 days nor more than 120 days prior to the
first Thursday in the month of May; provided, however, that in the
event that the date of the Annual Meeting is advanced by more than 30
days or delayed by more than 60 days from the first Thursday in the
month of May, notice by the shareholder to be timely must be so
received not earlier than the 120th day prior to the date of such
Annual Meeting and not later than the close of business on the later
(x) the 90th day prior to such Annual Meeting and (y) the 10th day
following the day on which public announcement of the date of such
meeting is first made. Such shareholder's notice shall be signed by
the shareholder of record who intends to make the nomination or
introduce the other business (or his duly authorized proxy or other
representative), shall bear the date of signature of such shareholder
(or proxy or other representative) and shall set forth: (A) the name
and address, as they appear on this corporation's books, of such
shareholder and the beneficial owner or owners, if any, on whose
behalf the nomination or proposal is made; (B) the class and number
of shares of the corporation which are beneficially owned by such
shareholder or beneficial owner or owners; (C) a representation that
such shareholder is a holder of record of shares of the corporation
entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to make the nomination or introduce the other
business specified in the notice; (D) in the case of any proposed
nomination for election or re-election as a director, (I) the name
and residence address of the person or person to be nominated, (II) a
description of all arrangements or understandings between such
shareholder or beneficial owner or owners and each nominee and any
other person or persons (naming such person or persons) pursuant to
which the nomination is to be made by such shareholder, (III) such
other information regarding each nominee proposed by such shareholder
as would be required to be disclosed in solicitations of proxies for
elections of directors, or would be otherwise required to be
disclosed, in each case pursuant to Regulation 14A under the Exchange
Act, including any information that would be required to be included
in a proxy statement filed pursuant to Regulation 14A had the nominee
been nominated by the Board of Directors and (IV) the written consent
of each nominee to be named in a proxy statement and to serve as a
director of the corporation if so elected; and (E) in the case of any
other business that such shareholder proposes to bring before the
meeting, (I) a brief description of the business desired to be
brought before the meeting and, if such business includes a proposal
to amend these by-laws, the language of the proposed amendment, (II)
such shareholder's and beneficial owner's or owners' reasons for
conducting such business at the meeting and (III) any material
interest in such business of such shareholder and beneficial owner or
owners.
(iii) Notwithstanding anything in the second sentence
of paragraph (a)(ii) of this Section 2.15 to the contrary, in the
event that the number of directors to be elected to the Board of
Directors of the corporation is increased and there is no public
announcement naming all of the nominees for director or specifying
the size of the increased Board of Directors made by the corporation
at least 70 days prior to the first Thursday in the month of May, a
shareholder's notice required by Section 2.15 shall also be
considered timely, but only with respect to nominees for any new
positions created by such increase, if it shall be received by the
Secretary at the principal offices of the corporation not later than
the close of business on the 10th day following the day on which such
public announcement is first made by the corporation.
(b) Special Meetings. Only such business shall be conducted at
a Special Meeting as shall have been described in the notice of meeting
sent to shareholders pursuant to Section 2.05 of these by-laws.
Nominations of person for election to the Board of Directors may be made
at a Special Meeting at which directors are to be elected pursuant to such
notice of meeting (i) by or at the direction of the Board of Directors or
(ii) by any shareholder of the corporation who (A) is a shareholder of
record at the time of giving such notice of meeting, (B) is entitled to
vote at the meeting and (C) complies with the notice procedures set forth
in this Section 2.15. Any shareholder desiring to nominate persons for
election to the Board of Directors at such a Special Meeting shall cause a
written notice to be received by the Secretary of the corporation at the
principal offices of the corporation not earlier than 90 days prior to
such Special Meeting and not later than the close of business on the later
of (x) the 60th day prior to such Special Meeting and (y) the 10th day
following the day on which public announcement is first made of the date
of such Special Meeting and of the nominees proposed by the Board of
Directors to be elected to such meeting. Such written notice shall be
signed by the shareholder of record who intends to make the nomination (or
his duly authorized proxy or other representative), shall bear the date of
signature of such shareholder (or proxy or other representative) and shall
set forth: (A) the name and address, as they appear on the corporation's
books, of such shareholder and the beneficial owner or owners, if any, on
whose behalf the nomination is made; (B) the class and number of shares of
the corporation which are beneficially owned by such shareholder or
beneficial owner or owners; (C) a representation that such shareholder is
a holder of record of shares of the corporation entitled to vote at such
meeting and intends to appear in person or by proxy at the meeting to make
the nomination specified in the notice; (D) the name and residence address
of the person or persons to be nominated; (E) a description of all
arrangements or understandings between such shareholder or beneficial
owner or owners and each nominee and any other person or persons (naming
such person or persons) pursuant to which the nomination is to be made by
such shareholder; (F) such other information regarding each nominee
proposed by such shareholder as would be required to be disclosed in
solicitations of proxies for elections of directors, or would be otherwise
required to be disclosed, in each case pursuant to Regulation 14A under
the Exchange Act, including any information that would be required to be
included in a proxy statement filed pursuant to Regulation 14A had the
nominee been nominated by the Board of Directors; and (G) the written
consent of each nominee to be named in a proxy statement and to serve as a
director or the corporation if so elected.
(c) General.
(i) Only persons who are nominated in accordance with the
procedures set forth in this Section 2.15 shall be eligible to serve
as directors. Only such business shall be conducted at an Annual
Meeting or Special Meeting as shall have been brought before such
meeting in accordance with the procedures set forth in this Section
2.15. The chairman of the meeting shall have the power and duty to
determine whether a nomination or any business proposed to be brought
before the meeting was made in accordance with the procedures set
forth in this Section 2.15 and, if any proposed nomination or
business is not in compliance with this Section 2.15, to declare that
such defective proposal shall be disregarded.
(ii) For purposes of this Section 2.15, "public
announcement" shall mean disclosure in a press release reported by
the Dow Jones News Service, Associated Press or comparable national
news service or in a document publicly filed by the corporation with
the Securities and Exchange Commission pursuant to Section 13, 14 or
15(d) of the Exchange Act.
(iii) Notwithstanding the foregoing provisions of this
Section 2.15, a shareholder shall also comply with all applicable
requirements of the Exchange Act and the rules and regulations
thereunder with respect to the matters set forth in this Section
2.15. Nothing in this Section 2.15 shall be deemed to limit the
corporation's obligation to include shareholder proposals in its
proxy statement if such inclusion is required by Rule 14a-8 under the
Exchange Act.
ARTICLE III. BOARD OF DIRECTORS
3.1. General Powers; Number and Tenure.
(a) All corporate powers shall be exercised by or under the
authority of, and the business and affairs of the corporation shall be
managed under the direction of, its Board of Directors.
(b) The number of directors of the Corporation shall be five
(5), divided into three (3) classes of two (2), two (2) and one (1)
directors, respectively. At each Annual Meeting the successors to the
class of directors whose term shall expire at the time of such Annual
Meeting shall be elected to hold office until the third succeeding Annual
Meeting, and until such directors' successors are duly elected and, if
necessary, qualified or until there is a decrease in the number of
directors that take effect after the expiration of such directors' term.
(c) Notwithstanding the provisions of Section 3.01(b), the term
of a director who is an officer of the Company shall immediately cease at
any time that such director is no longer an officer of the Company.
3.2. Resignations and Qualifications. A director may resign at any
time by delivering written notice which complies with the Wisconsin
Business Corporation Law to the Chief Executive Officer or to the
corporation. A director's resignation is effective when the notice is
delivered unless the notice specifies a later effective date. Directors
need not be residents of the State of Wisconsin or shareholders of the
corporation.
3.3. Regular Meeting. A regular meeting of the Board of Directors
shall be held without other notice than this by-law immediately after the
Annual Meeting, and each adjourned session thereof. The place of such
regular meeting shall be the same as the place of the Annual Meeting which
precedes it, or such other suitable place as may be announced at such
Annual Meeting. The Board of Directors may provide, by resolution, the
time and place, either within or without the State of Wisconsin, for the
holding of additional regular meetings without other notice than such
resolution.
3.4. Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the Chief Executive Officer, the
President, the Secretary or any two directors. The Chief Executive
Officer, the President or the Secretary may fix any place, either within
or without the State of Wisconsin, as the place for holding any special
meeting of the Board of Directors, and, if no other place is fixed, the
place of the meeting shall be the principal office of the corporation in
the State of Wisconsin.
3.5. Notice; Waiver. Notice of each meeting of the Board of
Directors (unless otherwise provided in or pursuant to Section 3.03) shall
be given by written notice delivered or communicated in person, by
telegram, facsimile or other form of wire or wireless communication, or by
mail or private carrier to each director at his business address or such
other address as a director shall have designated in writing and filed
with the Secretary, in each case not less than 48 hours prior to the time
of the meeting. If mailed, such notice shall be deemed to be effective
when deposited in the United States mail so addressed, with postage
thereon prepaid. If notice be given by telegram, such notice shall be
deemed to be effective when the telegram is delivered to the telegraph
company. If notice is give by private carrier, such notice shall be
deemed to be effective when the notice is delivered to the private
carrier. Whenever any notice whatever is required to be given to any
director of the corporation under the articles of incorporation of the
corporation or these by-laws or any provision of the Wisconsin Business
Corporation Law, a waiver thereof in writing, signed at any time, whether
before or after the time of meeting, by the director entitled to such
notice, shall be deemed equivalent to the giving of such notice. The
corporation shall retain any such waiver as part of the permanent
corporate records. A director's attendance at or participation in a
meeting waives any required notice to him of the meeting unless the
director at the beginning of the meeting or promptly upon his arrival
objects to holding the meeting or transacting business at the meeting and
does not thereafter vote for or assent to action taken at the meeting.
Neither the business to be transacted at, nor the purpose of, any regular
or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
3.6. Quorum. Except as otherwise provided by the Wisconsin Business
Corporation Law or by the articles of incorporation of the corporation or
these by-laws, a majority of the directors set forth in Section 3.01 shall
constitute a quorum for the transaction of business at any meeting of the
Board of Directors, but a majority of the directors present (though less
than such quorum) may adjourn the meeting from time to time without
further notice.
3.7. Manner of Acting. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the
Board of Directors, unless the act of a greater number is required by the
Wisconsin Business Corporation Law or by the articles of incorporation of
the corporation or these by-laws.
3.8. Conduct of Meetings. The Chief Executive Officer, and in his
absence, the President, and in his absence, a Senior Vice President or a
Vice President in the order provided under Section 4.07, and in their
absence, any director chosen by the directors present, shall call meetings
of the Board of Directors to order and shall act as chairman of the
meeting. The Secretary of the corporation shall act as secretary of all
meetings of the Board of Directors but in the absence of the Secretary,
the presiding officer may appoint any Assistant Secretary or any director
or other person present to act as secretary of the meeting. Minutes of
any regular or special meetings of the Board of Directors shall be
prepared and distributed to each director.
3.9. Compensation. The Board of Directors, irrespective of any
personal interest of any of its members, may establish reasonable
compensation of all directors for services to the corporation as
directors, officers or otherwise, or may delegate such authority to an
appropriate committee. The Board of Directors also shall have authority
to provide for or delegate authority to an appropriate committee to
provide for reasonable pensions, disability or death benefits, and other
benefits or payments, to directors, officers and employees and to their
estates, families, dependents or beneficiaries on account of prior
services rendered by such directors, officers and employees to the
corporation.
3.10. Presumption of Assent. A director of the corporation who
is present at a meeting of the Board of Directors or a committee thereof
of which he is a member at which action on any corporate matter is taken
shall be presumed to have assented to the action taken unless any of the
following occurs: (a) the director objects at the beginning of the
meeting or promptly upon his arrival to holding the meeting or transacting
business at the meeting; (b) the director's dissent or abstention from the
action taken is entered in the minutes of the meeting; or (c) the director
delivers written notice that complies with the Wisconsin Business
Corporation Law of his dissent or abstention to the presiding officer of
the meeting before its adjournment or to the corporation immediately after
adjournment of the meeting. Such right to dissent or abstain shall not
apply to a director who voted in favor of such action.
3.11. Committees. The Board of Directors by resolution adopted
by the affirmative vote of a majority of the number of directors set forth
in Section 3.01 may create one or more committees, appoint members of the
Board of Directors to serve on the committees and designate other members
of the Board of Directors to serve as alternates. Alternate members of a
committee shall take the place of any absent member or members at any
meeting of such committee upon request of the Chief Executive Officer or
the President or upon request of the chairman of the meeting. Each
committee shall have two or more members who shall, unless otherwise
provided by the Board of Directors, serve at the pleasure of the Board of
Directors. A committee may be authorized to exercise the authority of the
Board of Directors, except that a committee may not do any of the
following: (a) authorize distributions; (b) approve or propose to
shareholders action that the Wisconsin Business Corporation Law requires
to be approved by shareholders; (c) fill vacancies on the Board of
Directors or, unless the Board of Directors provides by resolution that
vacancies on a committee shall be filled by the affirmative vote of the
remaining committee members, on any Board committee; (d) amend the
articles of incorporation of the corporation; (e) adopt, amend or repeal
by-laws; (f) approve a plan of merger not requiring shareholder approval;
(g) authorize or approve requisition of shares, except according to a
formula or method prescribed by the Board of Directors; and (h) authorize
or approve the issuance or sale or contract for sale of shares, or
determine the designation and relative rights, preferences and limitations
of a class or series of shares, except that the Board of Directors may
authorize a committee to do so within limits prescribed by the Board of
Directors. Unless otherwise provided by the Board of Directors in
creating the committee, a committee may employ counsel, accountants and
other consultants to assist it in the exercise of its authority.
3.12. Telephonic Meetings. Except as herein provided and
notwithstanding any place set forth in the notice of the meeting or these
by-laws, members of the Board of Directors (and any committee thereof) may
participate in regular or special meetings by, or through the use of, any
means of communication by which all participants may simultaneously hear
each other, such as by conference telephone. If a meeting is conducted by
such means, then at the commencement of such meeting the presiding officer
shall inform the participating directors that a meeting is taking place at
which official business may be transacted. Any participant in a meeting
by such means shall be deemed present in person at such meeting. If
action is to be taken at any meeting held by such means on any of the
following: (a) a plan of merger or share exchange; (b) a sale, lease,
exchange or other disposition of substantial property or assets of the
corporation; (c) a voluntary dissolution or the revocation of voluntary
dissolution proceedings; or (d) a filing for bankruptcy, then the identity
of each director participating in such meeting must be verified by the
disclosure at such meeting by each such director of each such director's
social security number to the secretary of the meeting before a vote may
be taken on any of the foregoing matters. For purposes of the preceding
clause (b), the phrase "sale, lease, exchange or other disposition of
substantial property or assets" shall mean any sale, lease, exchange or
other disposition of property or assets of the corporation having a net
book value equal to 10% or more of the net book value of the total assets
of the corporation on and as of the close of the fiscal year last ended
prior to the date of such meeting and as to which financial statements of
the corporation have been prepared. Notwithstanding the foregoing, no
action may be taken at any meeting held by such means on any particular
matter which the presiding officer determines, in his sole discretion, to
be inappropriate under the circumstances for action at a meeting held by
such means. Such determination shall be made and announced in advance of
such meeting.
3.13. Unanimous Consent without Meeting. Any action required or
permitted by the articles of incorporation of the corporation or these by-
laws or any provision of the Wisconsin Business Corporation law to be
taken by the Board of Directors (or any committee thereof) at a meeting
may be taken without a meeting if a consent in writing, setting forth the
action so taken, shall be signed by all members of the Board of Directors
or of the committee, as the case may be, then in office. Such action
shall be effective when the last director or committee member signs the
consent, unless the consent specifies a different effective date.
ARTICLE IV. OFFICERS
4.1. Number. The principal officers of the corporation shall be a
Chief Executive Officer, a President, any number of Senior Vice Presidents
and Vice Presidents, a Secretary, and a Controller, each of whom shall be
elected by the Board of Directors. Such other officers and assistant
officers as may be deemed necessary may be elected or appointed by the
Board of Directors. The Board of Directors may also authorize any duly
appointed officer to appoint one or more officers or assistant officers.
Any two or more offices may be held by the same person.
4.2. Election and Term of Office. The officers of the corporation to
be elected by the Board of Directors shall be elected annually by the
Board of Directors at the first meeting of the Board of Directors held
after each Annual Meeting. If the election of officers shall not be held
at such meeting, such election shall be held as soon thereafter as
conveniently may be. Each officer shall bold office until his successor
shall have been duly elected or until his prior death, resignation or
removal.
4.3. Removal. The Board of Directors may remove any officer and,
unless restricted by the Board of Directors or these by-laws, a officer
may remove any officer or assistant officer appointed by that officer, at
any time, with or without cause and notwithstanding the contract rights,
if any, of the officer removed. Election or appointment shall not of
itself create contract rights.
4.4. Resignations and Vacancies. An officer may resign at any time
by delivering notice to the corporation that complies with the Wisconsin
Business Corporation Law. The resignation shall be effective when the
notice is delivered, unless the notice specifies a later effective date
and the corporation accepts the later effective date. A vacancy in any
principal office because of death, resignation, removal, disqualification
or otherwise, shall be filled by the Board of Directors for the unexpired
portion of the term. If a resignation of a officer is effective at a
later date as contemplated by this Section 4.4, the Board of Directors may
fill the pending vacancy before the effective date if the Board provides
that the successor may not take office until the effective date.
4.5. Chief Executive Officer. The Chief Executive Officer shall be
elected from the membership of the Board of Directors. The Chief
Executive Officer of the Board shall preside at all Annual Meetings and
Special Meetings and at all meetings of the Board of Directors. The Chief
Executive Officer shall be the principal executive officer of the
corporation and, subject to the control of the Board of Directors, shall
in general supervise and control all of the business and affairs of the
corporation. He shall have authority, subject to such rules as may be
prescribed by the Board of Directors, to appoint such agents and employees
of the corporation as he shall deem necessary, to prescribe their powers,
duties and compensation, and to delegate authority to them. Such agents
and employees shall hold office at the discretion of the Chief Executive
Officer. He shall have authority to sign, execute and acknowledge, on
behalf of the corporation, all deeds, mortgages, bonds, stock
certificates, contracts, leases, reports and all other documents or
instruments necessary or proper to be executed in the course of the
corporation's regular business, or which shall be authorized by resolution
of the Board of Directors; and, except as otherwise provided by law or the
Board of Directors, he may authorize any officer or agent of the
corporation to sign, execute and acknowledge such documents or instruments
in his place and stead.
4.6. President. The President shall be the chief operating officer
of the Company. In general he shall perform all duties incident to the
office of chief operating officer and such other duties as may be
prescribed by the Board of Directors from time to time. Except where by
law the signature of the Chief Executive Officer of the corporation is
required, the President shall possess the same power and authority as the
Chief Executive Officer to sign, execute and acknowledge, on behalf of the
corporation, all deeds, mortgages, bonds, stock certificates, contracts,
leases, reports and all other documents or instruments and shall have such
additional power to sign, execute and acknowledge, on behalf of the
corporation, as may be authorized by resolution of the Board of Directors.
During the absence or disability of the Chief Executive Officer, or while
that office is vacant, the President shall exercise the powers and
discharge the duties of the Chief Executive Officer as the principal
executive officer of the Company.
4.7. The Vice Presidents. For purposes of this Section 4.7, Senior
Vice Presidents shall be deemed equivalent to and have the same authority
and duties as Vice Presidents. In the absence of the President or in the
event of his death, inability or refusal to act, or in the event for any
reason it shall be impracticable for the President to act personally, the
Vice President (or in the event there be more than one Vice President, the
Vice Presidents in the order designated by the Board of Directors, or in
the absence of any designation, then in the order of their election) shall
perform the duties of the President, and, when so acting, shall have all
the powers of and be subject to all the restrictions upon the President.
Any Vice President may sign, with the Secretary or Assistant Secretary,
certificates for shares of the corporation and shall perform such other
duties and have such authority as from time to time may be delegated or
assigned to him by the Chief Executive Officer, the President or the Board
of Directors. The execution of any instrument of the corporation by any
Vice President shall be conclusive evidence, as to third parties, of his
authority to act in the stead of the President.
4.8. The Secretary. The Secretary shall: (a) keep the minutes of
Annual Meetings and Special Meetings and of meetings of the Board of
Directors in one or more books provided for that purpose (including
records of actions taken without a meeting); (b) see that all notices are
duly given in accordance with the provisions of these by-laws or as
required by the Wisconsin Business Corporation Law; (c) be custodian of
the corporate records and of the seal of the corporation and see that the
seal of the corporation is affixed to all documents the execution of which
on behalf of the corporation under its seal is duly authorized; (d)
maintain a record of the shareholders of the corporation, in the form that
permits preparation of a list of the names and addresses of all
shareholders, by class or series of shares and showing the number and
class or series of shares held by each shareholder; (e) sign with the
Chief Executive Officer, the President, or a Vice President, certificates
for shares of the corporation, the issuance of which shall have been
authorized by resolution of the Board of Directors; (f) have general
charge of the stock transfer books of the corporation; and (g) in general
perform all duties incident to the office of Secretary and have such other
duties and exercise such authority as from time to time may be delegated
or assigned to him by the President or by the Board of Directors.
4.9. The Controller. The Controller shall: (a) have charge and
custody of and be responsible for all funds and securities of the
corporation; (b) maintain appropriate accounting records; (c) receive and
give receipts for moneys due and payable to the corporation from any
source whatsoever, and deposit all such moneys in the name of the
corporation in such banks, trust companies or other depositaries as shall
be selected in accordance with the provisions of Section 5.04; and (d) in
general perform all of the duties incident to the office of Controller and
have such other duties and exercise such other authority as from time to
time may be delegated or assigned to him by the President or by the Board
of Directors. If required by the Board of Directors, the Controller shall
give a bond for the faithful discharge of his duties in such sum and with
such surety or sureties as the Board of Directors shall determine.
4.10. Assistant Secretaries and Assistant Controllers. There
shall be such number of Assistant Secretaries and Assistant Controllers as
the Board of Directors may from time to time authorize. The Assistant
Secretaries may sign with the Chief Executive Officer, the President or a
Vice President certificates for shares of the corporation the issuance of
which shall have been authorized by a resolution of the Board of
Directors. The Assistant Controllers shall respectively, if required by
the Board of Directors, give bonds for the faithful discharge of their
duties in such sums and with such sureties as the Board of Directors shall
determine. The Assistant Secretaries and Assistant Controllers, in
general, shall perform such duties and have such authority as shall from
time to time be delegated or assigned to them by the Secretary or the
Controller, respectively, or by the President or the Board of Directors.
4.11. Other Assistants and Acting Officers. The Board of
Directors shall have the power to appoint, or to authorize any duly
appointed officer of the corporation to appoint, any person to act as
assistant to any officer, or as agent for the corporation in his stead, or
to perform the duties of such officer whenever for any reason it is
impracticable for such officer to act personally, and such assistant or
acting officer or other agent so appointed by the Board of Directors or
the appointing officer shall have the power to perform all the duties of
the office to which he is so appointed to be a assistant, or as to which
he is so appointed to act, except as such power may be otherwise defined
or restricted by the Board of Directors or the appointing officer.
4.12. Salaries. The salaries of the principal officers shall be
fixed from time to time by the Board of Directors or by a duly authorized
committee thereof, and no officer shall be prevented from receiving such
salary by reason of the fact that he is also a director of the
corporation.
ARTICLE V. CONTRACTS, LOANS, CHECKS
AND DEPOSITS; SPECIAL CORPORATE ACTS
5.1. Contracts. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute or
deliver any instrument in the name of and on behalf of the corporation,
and such authorization may be general or confined to specific instances.
In the absence of other designation, all deeds, mortgages and instruments
of assignment or pledge made by the corporation shall be executed in the
name of the corporation by the Chief Executive Officer, the President or
one of the Senior Vice Presidents or Vice Presidents and by the Secretary,
a Assistant Secretary, the Treasurer or an Assistant Treasurer; the
Secretary or an Assistant Secretary, when necessary or required, shall
affix the corporate seal thereto; and when so executed no other party to
such instrument or any third party shall be required to make any inquiry
into the authority of the signing officer or officers.
5.2. Loans. No indebtedness for borrowed money shall be contracted
on behalf of the corporation and no evidences of such indebtedness shall
be issued in its name unless authorized by or under the authorIty of a
resolution of the Board of Directors. Such authorization may be general
or confined to specific instances.
5.3. Checks, Drafts, etc. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the
name of the corporation, shall be signed by such officer or officers,
agent or agents of the corporation and in such manner as shall from time
to time be determined by or under the authority of a resolution of the
Board of Directors.
5.4. Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in
such banks, trust companies or other depositaries as may be selected by or
under the authority of a resolution of the Board of Directors.
5.5. Voting of Securities Owned by this Corporation. Subject always
to the specific directions of the Board of Directors, (a) any shares or
other securities issued by any other corporation and owned or controlled
by this corporation may be voted at any meeting of security holders of
such other corporation by the Chief Executive Officer of this corporation
if he be present, or in his absence by the President of this corporation
if he be present, or in his absence by any Senior Vice President or Vice
President of this corporation who may be present, and (b) whenever, in the
judgment of the Chief Executive Officer, or in his absence, of the
President, or in his absence, of any Senior Vice President or Vice
President, it is desirable for this corporation to execute a proxy or
written consent in respect to any shares or other securities issued by any
other corporation and owned by this corporation, such proxy or consent
shall be executed in the name of this corporation by the Chief Executive
Officer, the President or one of the Senior Vice Presidents or Vice
Presidents of this corporation, without necessity of any authorization by
the Board of Directors, affixation of corporate seal or countersignature
or attestation by another officer. Any person or persons designated in
the manner above stated as the proxy or proxies of this corporation shall
have full right, power and authority to vote the shares or other
securities issued by such other corporation and owned by this corporation
the same as such shares or other securities might be voted by this
corporation.
5.6. No Nominee Procedures. The corporation has not established, and
nothing in these by-laws shall be deemed to establish, any procedure by
which a beneficial owner of the corporation's shares that are registered
in the name of a nominee is recognized by the corporation as the
shareholder under Section 180.0723 of the Wisconsin Business Corporation
Law.
ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.1. Certificates for Shares. Certificates representing shares of
the corporation shall be in such form, consistent with the Wisconsin
Business Corporation Law, as shall be determined by the Board of
Directors. Such certificates shall be signed by the Chief Executive
Officer, the President, a Senior Vice President or a Vice President and by
the Secretary or a Assistant Secretary. All certificates for shares shall
be consecutively numbered or otherwise identified. The name and address
of the person to whom the shares represented thereby are issued, with the
number of shares and date of issue, shall be entered on the stock transfer
books of the corporation. All certificates surrendered to the corporation
for transfer shall be canceled and no new certificate shall be issued
until the former certificate for a like number of shares shall have been
surrendered and canceled, except as provided in Section 6.06.
6.2. Facsimile Signatures and Seal. The seal of the corporation on
any certificates for shares may be a facsimile. The signature of the
Chief Executive Officer, President, a Senior Vice President or a Vice
President and the Secretary or Assistant Secretary upon a certificate may
be facsimiles if the certificate is manually signed on behalf of a
transfer agent, or a registrar, other than the corporation itself or a
employee of the corporation.
6.3. Signature by Former Officers. In case any officer, who has
signed or whose facsimile signature has been placed upon any certificate
for shares, shall have ceased to be such officer before such certificate
is issued, it may be issued by the corporation with the same effect as if
he were such officer at the date of its issue.
6.4. Transfer of Shares. Prior to due presentment of a certificate
for shares for registration of transfer the corporation may treat the
registered owner of such shares as the person exclusively entitled to
vote, to receive notifications and otherwise to have and exercise all the
rights and power of an owner. Where a certificate for shares is presented
to the corporation with a request to register for transfer, the
corporation shall not be liable to the owner or any other person suffering
loss as a result of such registration of transfer if (a) there were on or
with the certificate the necessary endorsements, and (b) the corporation
had no duty to inquire into adverse claims or has discharged any such
duty. The corporation may require reasonable assurance that said
endorsements are genuine and effective and compliance with such other
regulations as may be prescribed by or under the authority of the Board of
Directors.
6.5. Restrictions on Transfer. The face or reverse side of each
certificate representing shares shall bear a conspicuous notation of any
restriction imposed by the corporation upon the transfer of such shares.
6.6. Lost, Destroyed or Stolen Certificates. The Board of Directors
may direct a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the corporation alleged
to have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming the certificate of stock to be lost,
stolen or destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors may, in its discretion and as a
condition precedent to the issuance thereof, require the person requesting
such new certificate or certificates, or his or her legal representative,
to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to
the certificate alleged to have been lost, stolen or destroyed.
6.7. Consideration for Shares. The Board of Directors may authorize
shares to be issued for consideration consisting of any tangible or
intangible property or benefit to the corporation, including cash,
promissory notes, services performed, contracts for services to be
performed or other securities of the corporation. Before the corporation
issues shares, the Board of Directors shall determine that the
consideration received or to be received for the shares to be issued is
adequate. In the absence of a resolution adopted by the Board of
Directors expressly determining that the consideration received or to be
received is adequate, Board approval of the issuance of the shares shall
be deemed to constitute such a determination. The determination of the
Board of Directors is conclusive insofar as the adequacy of consideration
for the issuance of shares relates to whether the shares are validly
issued, fully paid and nonassessable. The corporation may place in escrow
shares issued in whole or in part for a contract for future services or
benefits, a promissory note, or other property to be issued in the future,
or make other arrangements to restrict the transfer of the shares, and may
credit distributions in respect of the shares against their purchase
price, until the services are performed, the benefits or property are
received or the promissory note is paid. If the services are not
performed, the benefits or property are not received or the promissory
note is not paid, the corporation may cancel, in whole or in part, the
shares escrowed or restricted and the distributions credited.
6.8. Stock Regulations. The Board of Directors shall have the power
and authority to make all such further rules and regulations not
inconsistent with the statutes of the State of Wisconsin as it may deem
expedient concerning the issue, transfer and registration of certificates
representing shares of the corporation.
ARTICLE VII. SEAL
7.1. The Board of Directors may provide a corporate seal in an
appropriate form.
ARTICLE VIII. FISCAL YEAR
8.1. The fiscal year of the corporation shall be as fixed by
resolution of the Board of Directors.
ARTICLE IX. INDEMNIFICATION
9.1. Certain Definitions. All capitalized terms used in this Article
IX and not otherwise hereinafter defined in this Section 9.01 shall have
the meaning set forth in Section 180.0850 of the Statute. The following
terms (including any plural forms thereof) used in this Article IX shall
be defined as follows:
(a) "Affiliate" shall include, without limitation, any
corporation, partnership, joint venture, employee benefit plan, trust or
other enterprise that directly or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control
with, the Corporation.
(b) "Authority" shall mean the entity selected by the Director
or Officer to determine his or her right to indemnification pursuant to
Section 9.04
(c) "Board" shall mean the entire then elected and serving
Board of Directors of the Corporation, including all members thereof who
are Parties to the subject Proceeding or any related Proceeding.
(d) "Breach of Duty" shall mean the Director or Officer
breached or failed to perform his or her duties to the Corporation and his
or her breach of or failure to perform those duties is determined, in
accordance with Section 9.04, to constitute misconduct under Section
180.0851(2)(a)1, 2, 3 or 4 of the Statute.
(e) "Corporation," as used herein and as defined in the Statute
and incorporated by reference into the definitions of certain other
capitalized terms used herein, shall mean this Corporation, including,
without limitation, any successor corporation or entity to this
Corporation by way of merger, consolidation or acquisition of all or
substantially all of the capital stock or assets of this Corporation.
(f) "Director or Officer" shall have the meaning set forth in
the Statute; provided, that, for purposes of this Article IX, it shall be
conclusively presumed that any Director or Officer serving as a director,
officer, partner, trustee, member of any governing or decision-making
committee, employee or agent of an Affiliate shall be so serving at the
request of the Corporation.
(g) "Disinterested Quorum" shall mean a quorum of the Board who
are not Parties to the subject Proceeding or any related Proceeding.
(h) "Party" shall have the meaning set forth in the Statute;
provided, that, for purposes of this Article IX, the term "Party" shall
also include any Director or Officer or employee who is or was a witness
in a Proceeding at a time when he or she has not otherwise been formally
named a Party thereto.
(i) "Proceeding" shall have the meaning set forth in the
Statute; provided, that, in accordance with Section 180.0859 of the
Statute and for purposes of this Article IX, the term "Proceeding" shall
also include all Proceedings (i) brought under (in whole or in part) the
Securities Act of 1933, as amended, the Exchange Act, their respective
state counterparts, and/or any rule or regulation promulgated under any of
the foregoing; (ii) brought before an Authority or otherwise to enforce
rights hereunder; (iii) any appeal from a Proceeding; and (iv) any
Proceeding in which the Director or Officer is a plaintiff or petitioner
because he or she is a Director or Officer; provided, however, that any
such Proceeding under this subsection (iv) must be authorized by a
majority vote of a Disinterested Quorum.
(j) "Statute" shall mean Sections 180.0850 through 180.0859,
inclusive, of the Wisconsin Business Corporation Law, Chapter 180 of the
Wisconsin Statutes, as the same shall then be in effect, including any
amendments thereto, but, in the case of any such amendment, only to the
extent such amendment permits or requires the Corporation to provide
broader indemnification rights than the Statute permitted or required the
Corporation to provide prior to such amendment.
9.2. Mandatory Indemnification. To the fullest extent permitted or
required by the Statute, the Corporation shall indemnify a Director or
Officer against all Liabilities incurred by or on behalf of such Director
or Officer in connection with a Proceeding in which the Director or
Officer is a Party because he or she is a Director or Officer.
9.3. Procedural Requirements.
(a) A Director or Officer who seeks indemnification under
Section 9.2 shall make a written request therefor to the Corporation.
Subject to Section 9.3(b), within 60 days of the Corporation's receipt of
such request, the Corporation shall pay or reimburse the Director or
Officer for the entire amount of Liabilities incurred by the Director or
Officer in connection with the subject Proceeding (net of any Expenses
previously advanced pursuant to Section 9.5).
(b) No indemnification shall be required to be paid by the
Corporation pursuant to Section 9.2 if, within such 60-day period, (i) a
Disinterested Quorum, by a majority vote thereof, determines that the
Director or Officer requesting indemnification engaged in misconduct
constituting a Breach of Duty or (ii) a Disinterested Quorum cannot be
obtained.
(c) In either case of nonpayment pursuant to Section 9.3(b),
the Board shall immediately authorize by resolution that an Authority, as
provided in Section 9.4, determine whether the Director's or Officer's
conduct constituted a Breach of Duty and, therefor, whether
indemnification should be denied hereunder.
(d) (i) If the Board does not authorize an Authority to
determine the Director's or Officer's right to indemnification hereunder
within such 60-day period and/or (ii) if indemnification of the requested
amount of Liabilities is paid by the Corporation, then it shall be
conclusively presumed for all purposes that a Disinterested Quorum has
affirmatively determined that the Director or Officer did not engage in
misconduct constituting a Breach of Duty and, in the case of subsection
(i) above (but not subsection (ii)), indemnification by the Corporation of
the requested amount of Liabilities shall be paid to the Director or
Officer immediately.
9.4. Procedural Requirements.
(a) If the Board authorizes an Authority to determine a
Director's or Officer's right to indemnification pursuant to Section 9.03,
then the Director or Officer requesting indemnification shall have the
absolute discretionary authority to select one of the following as such
Authority:
(i) An independent legal counsel; provided, that such
counsel shall be mutually selected by such Director or Officer and by
a majority vote of a Disinterested Quorum or, if a Disinterested
Quorum cannot be obtained, then by a majority vote of the Board;
(ii) A panel of three arbitrators selected from the panels
of arbitrators of the American Arbitration Association in Wisconsin;
provided, that (A) one arbitrator shall be selected by such Director
or Officer, the second arbitrator shall be selected by a majority
vote of a Disinterested Quorum or, if a Disinterested Quorum cannot
be obtained, then by a majority vote of the Board, and the third
arbitrator shall be selected by the two previously selected
arbitrators, and (B) in all other respects, such panel shall be
governed by the American Arbitration Association's then existing
Commercial Arbitration Rules; or
(iii) A court pursuant to and in accordance with
Section 180.0854 of the Statute.
(b) In any such determination by the selected Authority there
shall exist a rebuttable resumption that the Director's or Officer's
conduct did not constitute a Breach of Duty and that indemnification
against the requested amount of Liabilities is required. The burden of
rebutting such a presumption by clear and convincing evidence shall be on
the Corporation or such other party asserting that such indemnification
should not be allowed.
(c) The Authority shall make its determination within 60 days
of being selected and shall submit a written opinion of its conclusion
simultaneously to both the Corporation and the Director or Officer.
(d) If the Authority determines that indemnification is
required hereunder, the Corporation shall pay the entire requested amount
of Liabilities (net of any Expenses previously advanced pursuant to
Section 9.05), including interest thereon at a reasonable rate, as
determined by the Authority, within 10 days of receipt of the Authority's
opinion; provided, that, if it is determined by the Authority that a
Director or Officer is entitled to indemnification against Liabilities'
incurred in connection with some claims, issues or matters, but not as to
other claims, issues or matters, involved in the subject Proceeding, the
Corporation shall be required to pay (as set forth above) only the amount
of such requested Liabilities as the Authority shall deem appropriate in
light of all of the circumstances of such Proceeding.
(e) The determination by the Authority that indemnification is
required hereunder shall be binding upon the Corporation regardless of any
prior determination that the Director or Officer engaged in a Breach of
Duty.
(f) All expenses incurred in the determination process under
this Section 9.04 by either the Corporation or the Director or Officer,
including, without limitation, all Expenses of the selected Authority,
shall be paid by the Corporation.
9.5. Mandatory Allowance of Expenses.
(a) The Corporation shall pay or reimburse from time to time or
at any time, within 10 days after the receipt of the Director's or
Officer's written request therefor, the reasonable Expenses of the
Director or Officer as such Expenses are incurred; provided, the following
conditions are satisfied:
(i) The Director or Officer furnishes to the Corporation
an executed written certificate affirming his or her good faith
belief that he or she has not engaged in misconduct which constitutes
a Breach of Duty; and
(ii) The Director or Officer furnishes to the Corporation
an unsecured executed written agreement to repay any advances made
under this Section 9.05 if it is ultimately determined by an
Authority that he or she is not entitled to be indemnified by the
Corporation for such Expenses pursuant to Section 9.04.
(b) If the Director or Officer must repay any previously
advanced Expenses pursuant to this Section 9.05, such Director or Officer
shall not be required to pay interest on such amounts.
9.6. Indemnification and Allowance of Expenses of Certain Others.
(a) The Board may, in its sole and absolute discretion as it
deems appropriate, pursuant to a majority vote thereof, indemnify a
director or officer of an Affiliate (who is not otherwise serving as a
Director or Officer) against all Liabilities, and shall advance the
reasonable Expenses, incurred by such director or officer in a Proceeding
to the same extent hereunder as if such director or officer incurred such
Liabilities because he or she was a Director or Officer, if such director
or officer is a Party thereto because he or she is or was a director or
officer of the Affiliate.
(b) The Corporation shall indemnify an employee who is not a
Director or Officer, to the extent he or she has been successful on the
merits or otherwise in defense of a Proceeding, for all Expenses incurred
in the Proceeding if the employee was a Party because he or she was an
employee of the Corporation.
(c) The Board may, in its sole and absolute discretion as it
deems appropriate, pursuant to a majority vote thereof, indemnify (to the
extent not otherwise provided in Section 9.06(b) hereof) against
Liabilities incurred by, and/or provide for the allowance of reasonable
Expenses of, an employee or authorized agent of the Corporation acting
within the scope of his or her duties as such and who is not otherwise a
Director or Officer.
9.7. Insurance. The Corporation may purchase and maintain insurance
on behalf of a Director or Officer or any individual who is or was an
employee or authorized agent of the Corporation against any Liability
asserted against or incurred by such individual in his or her capacity as
such or arising from his or her status as such, regardless of whether the
Corporation is required or permitted to indemnify against any such
Liability under this Article IX.
9.8. Notice to the Corporation. A Director, Officer or employee
shall promptly notify the Corporation in writing when he or she has actual
knowledge of a Proceeding which may result in a claim of indemnification
against Liabilities or allowance of Expenses hereunder, but the failure to
do so shall not relieve the Corporation of any liability to the Director,
Officer or employee hereunder unless the Corporation shall have been
irreparably prejudiced by such failure (as determined, in the case of
Directors or Officers, by an Authority selected pursuant to Section
9.04(a)).
9.9. Severability. If any provision of this Article IX shall be
deemed invalid or inoperative, or if a court of competent jurisdiction
determines that any of the provisions of this Article IX contravene public
policy, this Article IX shall be construed so that the remaining
provisions shall not be affected, but shall remain in full force and
effect, and any such provisions which are invalid or inoperative or which
contravene public policy shall be deemed, without further action or deed
by or on behalf of the Corporation, to be modified, amended and/or
limited, but only to the extent necessary to render the same valid and
enforceable; it being understood that it is the Corporation's intention to
provide the Directors and Officers with the broadest possible protection
against personal liability allowable under the Statute.
9.10. Nonexclusivity of Article IX. The rights of a Director,
Officer or employee (or any other person) granted under this Article IX
shall not be deemed exclusive of any other rights to indemnification
against Liabilities or allowance of Expenses which the Director, Officer
or employee (or such other person) may be entitled to under any written
agreement, Board resolution, vote of shareholders of the Corporation or
otherwise, including, without limitation, under the Statute. Nothing
contained in this Article IX shall be deemed to limit the Corporation's
obligations to indemnify against Liabilities or allow Expenses to a
Director Officer or employee under the Statute.
9.11. Contractual Nature of Article IX: Repeal or Limitation of
Rights. This Article IX shall be deemed to be a contract between the
Corporation and each Director, Officer and employee of the Corporation and
any repeal or other limitation of this Article IX or any repeal or
limitation of the Statute or any other applicable law shall not limit any
rights of indemnification against Liabilities or allowance of Expenses
then existing or arising out of events, acts or omissions occurring prior
to such repeal or limitation, including, without limitation, the right to
indemnification against Liabilities or allowance of Expenses for
Proceedings commenced after such repeal or limitation to enforce this
Article IX with regard to acts, omissions or events arising prior to such
repeal or limitation.
ARTICLE X. AMENDMENTS
10.1. By Shareholders. Except as otherwise provided by the
articles of incorporation of the corporation and these by-laws, the by-
laws of the corporation may be altered, amended or repealed and new by-
laws may be adopted by the shareholders at any Annual Meeting or Special
Meeting at which a quorum is in attendance.
10.2. By Directors. Except as otherwise provided in the articles
of incorporation of the corporation and these by-laws, the by-laws of the
corporation may also be altered, amended or repealed and new by-laws may
be adopted by the Board of Directors by affirmative vote of a majority of
the number of directors present at any meeting at which a quorum is in
attendance; provided, however, that the shareholders in altering,
adopting, amending or repealing a particular by-law may provide therein
that the Board of Directors may not amend, repeal or readopt that by-law.
10.3. Implied Amendments. Any action taken or authorized by the
shareholders or by the Board of Directors, which would be inconsistent
with the bylaws then in effect but is taken or authorized by affirmative
vote of not less than the number of shares or the number of directors
required to amend the by-laws so that the by-laws would be consistent with
such action, shall be given the same effect as though the by-laws had been
temporarily amended or suspended so far, but only so far, as is necessary
to permit the specific action so taken or authorized.
EXHIBIT 6(a)
FORM OF
MANAGEMENT SERVICES AND ALLOCATION OF EXPENSES AGREEMENT
AGREEMENT, made as of this _____ day of ______________, 1997, by and
between InvestorsBank, a Wisconsin banking organization, located at W239
N1700 Busse Road, Pewaukee, Wisconsin ("Bank"), and Bando McGlocklin
Capital Corporation, a _________ corporation, located at W239 N1700 Busse
Road & Highway J, Pewaukee, Wisconsin 53072-0190 ("Bando").
WHEREAS, the Bank and Bando wish to establish a contractual
relationship to permit employees of the Bank to manage the loans (i) made
by Bando as of the date hereof that are either on Bando's balance sheet or
sold by Bando but for which Bando retains servicing obligations and (ii)
originated by the Bank after the date hereof which are purchased by Bando
(in whole or in part) (collectively, the "Bando Loans"), to permit Bank
employees to provide accounting services to Bando and to share certain
overhead and lease expenses as between the Bank and Bando, all in
accordance with the terms and conditions of this Agreement; and
WHEREAS, Bando and the Bank each retain similar loan assets requiring
loan administration services and expertise; and
WHEREAS, the Bank employs persons with the necessary qualifications
and expertise to manage and provide loan administration services to the
Bando Loans and to provide accounting services to Bando; and
WHEREAS, it is in the best interest of the Bank and Bando to share
certain overhead and lease expenses in order to maximize the savings to
the Bank and Bando.
NOW, THEREFORE, for and in consideration of the premises and mutual
covenants contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Loan Management Services.
(a) The Bank shall service and administer the Bando Loans and
shall have full power and authority, acting alone, to do any and all
things in connection with such servicing and administration which the Bank
may deem necessary or desirable including, but not limited to, the
following.
The Bank may waive, modify or vary any term of any Bando Loan or
consent to the postponement of strict compliance with any such term or in
any manner grant indulgence to any obligor if, in the Bank's
determination, such waiver, modification, postponement or indulgence is
not materially adverse to the interests of Bando, provided, however, that,
unless the obligor is in default with respect to the Bando Loan, or such
default is, in the judgment of the Bank, imminent, the Bank may not permit
any modification with respect to any Bando Loan that would change the loan
interest rate, defer or forgive the payment of any principal or interest
(unless in connection with the liquidation of the related Bando Loan), or
extend the final maturity date on such Bando Loan. All out-of-pocket
costs incurred by the Bank, including but not limited to, the cost of
appraisals, title insurance and attorneys' fees shall be added to the
amount owing under the related Bando Loan. Without limiting the
generality of the foregoing, the Bank shall continue and is hereby
authorized and empowered to execute and deliver on behalf of Bando all
instruments of satisfaction or cancellation, or of partial or full
release, discharge and all other comparable instruments, with respect to
the Bando Loans and with respect to any mortgaged properties or other
collateral. If reasonably required by the Bank, Bando shall furnish the
Bank with any powers of attorney and other documents necessary or
appropriate to enable the Bank to carry out its servicing and
administrative duties under this Agreement.
(b) In consideration for the Bank's loan management services to
Bando under this Agreement, the Bank shall charge and Bando shall pay on a
monthly basis a fee equal to one-twelfth of twenty-five (25) basis points
multiplied by the amount of Bando Loans outstanding at the end of the
preceding month plus all of the Bank's out-of-pocket expenses described in
paragraph 1(a).
2. Accounting Services. The Bank shall provide accounting services
to Bando in accordance with the terms of this Agreement, which services
shall include, but not be limited to, the following:
a. Preparation of internal management reports.
b. Preparation of external reports to shareholders and any
applicable regulatory agencies.
The Bank shall maintain a record of the actual time spent by its
employees in providing such accounting services and shall charge and Bando
shall pay on a monthly basis for the actual cost of providing such
services. The actual cost shall be the employee's hourly rate, plus a pro
rata share of the cost of bonuses and other benefits and perquisites of
employment made available to such employee(s).
3. Audits. Bando shall have the authority to audit the activities
and services provided by the Bank on reasonable notice to the Bank and at
Bando's expense during the term of this Agreement.
4. Standard of Care. The Bank shall perform its responsibilities
under this Agreement in accordance with its usual practices and shall
employ or cause to be employed procedures (including collection,
foreclosure and foreclosed property management procedures) and shall
exercise the same degree of care to protect Bando's interest in the Bando
Loans managed by the Bank as it does its own loan assets. So long as the
Bank exercises such care in the servicing and management of the Bando
Loans, it shall not be under any liability to Bando with respect to
anything it may do or refrain from doing in the exercise of its judgment
or which may seem to the Bank to be necessary or desirable in the
servicing and management of the Bando Loans, except for its willful
misconduct.
5. Representations. The Bank has not made and does not make any
representations or warranties, express or implied, with respect to, and
the Bank does not assume and has no responsibility or liability for, the
collectibility, enforceability or the validity of any of the Bando Loans,
the documents evidencing such loans, or the financial condition of any
borrower or any obligor on the loans or collateral securing the loans, or
other information furnished by the Bank to Bando.
6. Overhead Expenses. The Bank and Bando shall share on an equal
50/50 basis, their overhead expenses. These expenses shall include, but
not be limited to, expenses for telephones, receptionist services,
depreciation and other miscellaneous expenses. Bando shall pay these
expenses and shall charge and the Bank shall pay for the Bank's one-half
of the expenses on a monthly basis.
7. Sublease. Bando has entered into a lease agreement with Bando
McGlocklin Real Estate Investment Corp. ("BMREIC") pursuant to which Bando
will lease the Demised Premises (as defined in such lease) for a monthly
rent established in the lease. The lease is a triple net lease. The Bank
acknowledges that Bando may lease a portion of the Demised Premises to
other subtenants. The Bank shall pay Bando on a monthly basis 29.67% of
the amounts due under the lease, including 29.67% of the charges for gas
and maintenance. The Bank shall pay Bando on a monthly basis 50% of
Bando's charges for electricity. At no time shall the Bank be charged any
amount as a result of any action or inaction by any other subtenant which
would require Bando to pay additional amounts under the lease.
8. Netting. The Bank shall subtract from the amount it charges to
Bando for the Loan Management Services and Accounting Services, pursuant
to paragraphs 2 and 3 of this Agreement, the amount the Bank owes to Bando
for overhead and lease payments pursuant to paragraphs 7 and 8 of this
Agreement. The net amount shall be the amount the Bank shall charge and
Bando shall pay on a monthly basis.
9. Noncompetition. Bando agrees that, except as specifically
approved in writing by the Bank, Bando shall not originate any loans
during the term of this agreement and any renewal thereof.
Notwithstanding the foregoing, Bando may, at its option, purchase loan
participations (100% or less) from any other lending institution,
including, but not limited to, the Bank.
10. Term. The term of this Agreement shall be one (1) year from the
effective date of this Agreement, at which time this Agreement shall be
automatically renewed for successive one (1) year terms unless prior to
the original termination date or any subsequent renewal date either party
provides the other party with written notice at least sixty (60) days in
advance of the termination date of its intent that this Agreement not be
automatically renewed upon the occurrence of the next scheduled
termination date. This Agreement may also be terminated at any time by
mutual written consent of the Bank and Bando or by either party if the
other party fails to perform as required by this Agreement. Upon
termination, Bando or its designee shall assume all of the rights and
obligations of the Bank. The Bank shall, upon request of Bando but at the
expense of the Bank, deliver to Bando all documents and records relating
to the Bando Loans and an accounting of amounts collected and held by the
Bank and otherwise use its best efforts to effect the orderly and
efficient transfer of servicing rights and obligations to the assuming
party.
11. Confidentiality. The Bank agrees that it shall not disclose to
any third party any information concerning the customers, trade secrets,
methods, processes or procedures or any other confidential, financial or
business information of Bando of which it learns during the course of its
performance under this Agreement, without the prior consent of Bando.
12. Books and Records. All books and records maintained by or for
Bando shall be the property of Bando and shall be returned or provided to
Bando by the Bank immediately upon Bando's request.
13. Miscellaneous.
a. This Agreement sets forth the entire understanding of the
parties as to its subject matter and may not be modified except in writing
executed by both parties.
b. If any provision of this Agreement is held invalid or
otherwise unenforceable, the validity or enforceability of the remaining
provisions shall not be impaired thereby.
c. This Agreement shall be governed by and construed under the
laws of the State of Wisconsin.
INVESTORSBANK
By
____________________________________________
____________________, Its President
BANDO MCGLOCKLIN CAPITAL CORPORATION
By
_______________________________________
________________, Its _________________
EXHIBIT 6(b)
FORM OF
TAX ALLOCATION AND SERVICES AGREEMENT
THIS AGREEMENT made as of this _____ day of __________, 1997, by and
between InvestorsBancorp, Inc. ("IBC"), and InvestorsBank ("Bank").
WHEREAS, the Bank is a wholly-owned subsidiary of IBC; and
WHEREAS, IBC and the Bank wish to preserve the economic rights and
privileges which would accrue to each from the filing of consolidated
state and federal income tax returns and to set forth the agreement
between them regarding those rights and privileges.
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained in this Agreement, and other good and valuable consideration,
the receipt and sufficiency of which is acknowledged, the parties agree as
follows:
1. Consolidated Return. IBC and the Bank will file consolidated
state and federal income tax returns for the taxable year ending 1997 and
for any subsequent taxable period for which IBC and the Bank are required
or permitted to file a consolidated return. IBC and the Bank agree to
file such consents and other documents and take such action as may be
necessary to carry out the provision of this paragraph.
2. Calculation of Separate Corporate Income Tax Liability.
2.1 Beginning with the tax year 1997 and each tax year thereafter,
the Bank will calculate its state and federal income tax
liability at its pro rata portion of the consolidated state and
federal income tax liability, and not as if it were to file
separate state and federal income tax returns for such periods.
2.2 In computing the Bank's pro rata portion of the consolidated
state and federal income tax liability:
a. The Bank's pro rata portion of the consolidated state and
federal income tax liability will be based on its
percentage of taxable income to consolidated taxable
income, but shall not exceed 100% of consolidated taxable
income. Notwithstanding anything to the contrary contained
in this Agreement, the tax liability of the Bank shall not
exceed, but may be less than, the amount of tax the Bank
would have paid had the Bank filed a separate tax return.
b. Any dividends received by IBC will be assumed to qualify
for the 100% dividend received deduction of section 243 of
the Internal Revenue Code (the "Code") or shall be
eliminated from such calculation in accordance with IRS
Regulation Section 1.1502-14(a)(1).
c. Limitations on the calculation of a deduction or the
utilization of credits or the calculation of a liability
should be made on a consolidated basis.
d. If the Bank has a taxable loss it will receive the benefit
on a pro rata basis only to the extent a consolidated
benefit is booked. Notwithstanding the foregoing, if the
Bank has a tax loss, the benefit the Bank receives shall
not be less than the benefit it would have received if it
had filed a separate tax return. To the extent a deduction
is not allowed or income is excluded on a consolidated
basis, such item of expense or income shall be excluded in
determining taxable income on a pro rata basis.
e. The direct off-sets to tax liability provided for in
section 46 of the Code shall be allocated to the entity
which generated the credit to the extent such credit is
utilized on a consolidated basis.
f. In calculating any carryback or carryover of net operating
losses, adjustments shall be to such prior or subsequent
year's consolidated tax liability as determined under
section 172(b)(1) of the Code.
3. Method of Payment.
3.1 If the Bank is subject to state and federal income tax liability
as computed under paragraph 2 above, the Bank shall pay such sum
in cash to IBC.
3.2 If the Bank is entitled to a refund of state or federal income
tax liability as computed under paragraph 2 above, IBC shall pay
such sum in cash to the Bank.
3.3 IBC agrees to pay the state and federal income tax liability of
IBC and the Bank until termination of this Agreement.
4. Time of Payment. Any amount to be paid by the Bank to IBC or by
IBC to the Bank by reason of paragraph 2 above shall be paid one day prior
to the date on which settlement of a consolidated tax liability is
required to be made by IBC with the appropriate taxing authority for the
period in question.
5. Adjustment of Tax Liability. In the event of any adjustment of
the tax liability under the consolidated state and federal income tax
returns, by reason of the filing of an amended return or claim for refund,
or arising out of an audit by the Internal Revenue Service or other
regulatory agency, the liability of IBC and the Bank under this Agreement
shall be redetermined after fully giving effect to any such adjustments as
if such adjustment had been made as part of the original computation.
6. Computation of Tax for Statutory and GAAP Purposes. The method
for computation of statutory and GAAP tax liability of the Bank will be
the same as the computation for corporate income tax liability as
specified in paragraph 2 above.
7. Services to IBC. If requested by IBC, the Bank shall perform
accounting services for IBC and shall be reimbursed by IBC on a monthly
basis. The Bank shall maintain a record of the actual time spent by its
employees in providing such accounting services and shall charge and IBC
shall pay on a monthly basis for the actual cost of providing such
services. The actual cost shall be the employee's hourly rate, plus a pro
rata share of the cost of bonuses and other benefits and perquisites of
employment made available to such employee(s).
8. Miscellaneous.
8.1 Captions; Counterparts. Captions in this Agreement are for
convenience only and shall not be considered a part hereof or
effect the construction or interpretation of any provision
hereof. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
8.2 Successors; Assigns. The provision and terms of this Agreement
shall be binding on and inure to the benefit of any successor,
by merger, acquisition of assets or otherwise, to any of the
parties to this Agreement.
8.3 Amendment; Modification. This Agreement may be modified or
amended only by written agreement executed by duly authorized
officers of both parties.
8.4 Term. Unless earlier terminated by mutual agreement of the
parties, this Agreement shall remain in effect with respect to
any year for which consolidated federal income tax returns are
filed by IBC and the Bank.
INVESTORSBANCORP, INC.
By
____________________________________________
Its: ______________________________
INVESTORSBANK
By
____________________________________________
Its: ______________________________
EXHIBIT 6(c)
FORM OF
INVESTORSBANCORP, INC.
1997 EQUITY INCENTIVE PLAN
Section 1. Purpose
The purpose of the InvestorsBancorp, Inc. 1997 Equity Incentive
Plan (the "Plan") is to promote the best interests of InvestorsBancorp,
Inc. (together with any successor thereto, the "Company") and its
shareholders by providing key employees of the Company and its Affiliates
(as defined below) with an opportunity to acquire a or increase their
proprietary interest in the Company. It is intended that the Plan will
promote continuity of management and increased incentive and personal
interest in the welfare of the Company by those key employees who are
primarily responsible for shaping and carrying out the long-range plans of
the Company and securing the Company's continued growth and financial
success.
Section 2. Definitions
As used in the Plan, the following terms shall have the
respective meanings set forth below:
(a) "Affiliate" shall mean any entity that, directly or through
one or more intermediaries, is controlled by, controls, or is under common
control with, the Company.
(b) "Award" shall mean any Option, Stock Appreciation Right,
Restricted Stock or Performance Share granted under the Plan.
(c) "Award Agreement" shall mean any written agreement,
contract, or other instrument or document evidencing any Award granted
under the Plan.
(d) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(e) "Commission" shall mean the United States Securities and
Exchange Commission or any successor agency.
(f) "Committee" shall mean a committee of the Board of
Directors of the Company designated by such Board to administer the Plan
and composed of not less than two directors, each of whom is a "non-
employee director for purposes of Section 16" within the meaning of Rule
16b-3 and each of whom is an "outside director" within the meaning of
Section 162(m)(4)(C) of the Code (or any successor provision thereto).
(g) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
(h) "Excluded Items" shall mean any items which the Committee
determines shall be excluded in fixing Performance Goals, such as any
gains or losses from discontinued operations, any extraordinary gains or
losses and the effects of accounting changes.
(i) "Fair Market Value" shall mean, with respect to any
property (including, without limitation, any Shares or other securities),
the fair market value of such property determined by such methods or
procedures as shall be established from time to time by the Committee.
(j) "Incentive Stock Option" shall mean an option granted under
Section 6(a) of the Plan that is intended to meet the requirements of
Section 422 of the Code (or any successor provision thereto).
(k) "Key Employee" shall mean any officer or other key employee
of the Company or of any Affiliate who is responsible for or contributes
to the management, growth or profitability of the business of the Company
or any Affiliate as determined by the Committee.
(l) "Non-Qualified Stock Option" shall mean an option granted
under Section 6(a) of the Plan that is not intended to be an Incentive
Stock Option.
(m) "Option" shall mean an Incentive Stock Option or a Non-
Qualified Stock Option.
(n) "Participating Key Employee" shall mean a Key Employee
designated to be granted an Award under the Plan.
(o) "Performance Goals" shall mean the following (in all cases
after excluding the impact of applicable Excluded Items):
(i) Return on equity for the Performance Period for the
Company on a consolidated basis.
(ii) Return on investment for the Performance Period (aa)
for the Company on a consolidated basis, (bb) for any one or more
Affiliates or divisions of the Company and/or (cc) for any other
business unit or units of the Company as defined by the Committee at
the time of selection.
(iii) Return on net assets for the Performance Period
(aa) for the Company on a consolidated basis, (bb) for any one or
more Affiliates or divisions of the Company and/or (cc) for any other
business unit or units of the Company as defined by the Committee at
the time of selection.
(iv) Economic value added (as defined by the Committee at
the time of selection) for the Performance Period (aa) for the
Company on a consolidated basis, (bb) for any one or more Affiliates
or divisions of the Company and/or (cc) for any other business unit
or units of the Company as defined by the Committee at the time of
selection.
(v) Earnings from operations for the Performance Period
(aa) for the Company on a consolidated basis, (bb) for any one or
more Affiliates or divisions of the Company and/or (cc) for any other
business unit or units of the Company as defined by the Committee at
the time of selection.
(vi) Pre-tax profits for the Performance Period (aa) for
the Company on a consolidated basis, (bb) for any one or more
Affiliates or divisions of the Company and/or (cc) for any other
business unit or units of the Company as defined by the Committee at
the time of selection.
(vii) Net earnings for the Performance Period (aa) for
the Company on a consolidated basis, (bb) for any one or more
Affiliates or divisions of the Company and/or (cc) for any other
business unit or units of the Company as defined by the Committee at
the time of selection.
(viii) Net earnings per Share for the Performance Period
for the Company on a consolidated basis.
(ix) Net cash provided by operating activities for the
Performance Period (aa) for the Company on a consolidated basis, (bb)
for any one or more Affiliates or divisions of the Company and/or
(cc) for any other business unit or units of the Company as defined
by the Committee at the time of selection.
(x) Market price per Share for the Performance Period.
(xi) Total shareholder return for the Performance Period
for the Company on a consolidated basis.
(p) "Performance Period" shall mean, in relation to Performance
Shares, any period for which a Performance Goal or Goals have been
established.
(q) "Performance Share" shall mean any right granted under
Section 6(e) of the Plan that will be paid out as a Share (which, in
specified circumstances, may be a Share of Restricted Stock).
(r) "Person" shall mean any individual, corporation,
partnership, association, joint-stock company, trust, unincorporated
organization, or government or political subdivision thereof.
(s) "Released Securities" shall mean Shares of Restricted Stock
with respect to which all applicable restrictions have expired, lapsed, or
been waived.
(t) "Restricted Securities" shall mean Awards of Restricted
Stock or other Awards under which issued and outstanding Shares are held
subject to certain restrictions.
(u) "Restricted Stock" shall mean any Share granted under
Section 6(d) of the Plan or, in specified circumstances, a Share paid in
connection with a Performance Share under Section 6(e) of the Plan.
(v) "Rule 16b-3" shall mean Rule 16b-3 as promulgated by the
Commission under the Exchange Act, or any successor rule or regulation
thereto.
(w) "Shares" shall mean shares of common stock of the Company,
$0.01 par value, and such other securities or property as may become
subject to Awards pursuant to an adjustment made under Section 4(b) of the
Plan.
(x) "Stock Appreciation Right" shall mean any right granted
under Section 6(c) of the Plan.
Section 3. Administration
The Plan shall be administered by the Committee; provided,
however, that if at any time the Committee shall not be in existence, the
functions of the Committee as specified in the Plan shall be exercised by
a committee consisting of those members of the Board of Directors of the
Company who qualify as "non-employee directors for purposes of Section 16"
under Rule 16b-3 and as "outside directors" under Section 162(m)(4)(C) of
the Code (or any successor provision thereto). Subject to the terms of
the Plan and without limitation by reason of enumeration, the Committee
shall have full power and authority to: (i) designate Participating Key
Employees; (ii) determine the type or types of Awards to be granted to
each Participating Key Employee under the Plan; (iii) determine the number
of Shares to be covered by (or with respect to which payments, rights, or
other matters are to be calculated in connection with) Awards granted to
Participating Key Employees; (iv) determine the terms and conditions of
any Award granted to a Participating Key Employee; (v) determine whether,
to what extent, and under what circumstances Awards granted to
Participating Key Employees may be settled or exercised in cash, Shares,
other securities, other Awards, or other property, and the method or
methods by which Awards may be settled, exercised, canceled, forfeited, or
suspended; (vi) determine whether, to what extent, and under what
circumstances cash, Shares, other Awards, and other amounts payable with
respect to an Award granted to Participating Key Employees under the Plan
shall be deferred either automatically or at the election of the holder
thereof or of the Committee; (vii) interpret and administer the Plan and
any instrument or agreement relating to, or Award made under, the Plan
(including, without limitation, any Award Agreement); (viii) establish,
amend, suspend, or waive such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the
Plan; and (ix) make any other determination and take any other action that
the Committee deems necessary or desirable for the administration of the
Plan. Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations, and other decisions under or with respect
to the Plan or any Award shall be within the sole discretion of the
Committee, may be made at any time, and shall be final, conclusive, and
binding upon all Persons, including the Company, any Affiliate, any
Participating Key Employee, any holder or beneficiary of any Award, any
shareholder, and any employee of the Company or of any Affiliate.
Section 4. Shares Available for Award
(a) Shares Available. Subject to adjustment as provided in
Section 4(b):
(i) Number of Shares Available. The number of Shares with
respect to which Awards may be granted under the Plan shall be
[100,000]. If, after the effective date of the Plan, any Shares
covered by an Award granted under the Plan, or to which any Award
relates, are forfeited or if an Award otherwise terminates, expires
or is canceled prior to the delivery of all of the Shares or of other
consideration issuable or payable pursuant to such Award, then the
number of Shares counted against the number of Shares available under
the Plan in connection with the grant of such Award, to the extent of
any such forfeiture, termination, expiration or cancellation, shall
again be available for granting of additional Awards under the Plan.
(ii) Limitations on Awards to Individual Participants. No
Participating Key Employee shall be granted Awards under the Plan
that could result in such Participating Key Employee exercising
Options for, or Stock Appreciation Rights with respect to, more than
[15,000] Shares or receiving Awards relating to more than [5,000]
Shares of Restricted Stock or more than [5,000] Performance Shares
under the Plan. Such number of Shares as specified in the preceding
sentence shall be subject to adjustment in accordance with the terms
of Section 4(b) hereof. In all cases, determinations under this
Section 4(a)(ii) shall be made in a manner that is consistent with
the exemption for performance-based compensation provided by Section
162(m) of the Code (or any successor provision thereto) and any
regulations promulgated thereunder.
(iii) Accounting for Awards. The number of Shares
covered by an Award under the Plan, or to which such Award relates,
shall be counted on the date of grant of such Award against the
number of Shares available for granting Awards under the Plan.
(iv) Sources of Shares Deliverable Under Awards. Any
Shares delivered pursuant to an Award may consist, in whole or in
part, of authorized and unissued Shares or of treasury Shares.
(b) Adjustments. In the event that the Committee shall
determine that any dividend or other distribution (whether in the form of
cash, Shares, other securities, or other property), recapitalization,
stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase, or exchange of Shares or
other securities of the Company, issuance of warrants or other rights to
purchase Shares or other securities of the Company, or other similar
corporate transaction or event affects the Shares such that an adjustment
is determined by the Committee to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to
be made available under the Plan, then the Committee may, in such manner
as it may deem equitable, adjust any or all of (i) the number and type of
Shares subject to the Plan and which thereafter may be made the subject of
Awards under the Plan, (ii) the number and type of Shares subject to
outstanding Awards, and (iii) the grant, purchase, or exercise price with
respect to any Award, or, if deemed appropriate, make provision for a cash
payment to the holder of an outstanding Award; provided, however, in each
case, that with respect to Awards of Incentive Stock Options no such
adjustment shall be authorized to the extent that such authority would
cause the Plan to violate Section 422(b) of the Code (or any successor
provision thereto); and provided further that the number of Shares subject
to any Award payable or denominated in Shares shall always be a whole
number.
Section 5. Eligibility
Any Key Employee, including any executive officer or employee-
director of the Company or of any Affiliate, who is not a member of the
Committee shall be eligible to be designated a Participating Key Employee.
Section 6. Awards
(a) Option Awards to Key Employees. The Committee is hereby
authorized to grant Options to Key Employees with the terms and conditions
as set forth below and with such additional terms and conditions, in
either case not inconsistent with the provisions of the Plan, as the
Committee shall determine.
(i) Exercise Price. The exercise price per Share of an
Option granted pursuant to this Section 6(a) shall be determined by
the Committee; provided, however, that such exercise price shall not
be less than 100% of the Fair Market Value of a Share on the date of
grant of such Option.
(ii) Option Term. The term of each Option shall be fixed
by the Committee; provided, however, that in no event shall the term
of any Incentive Stock Option exceed a period of ten years from the
date of its grant.
(iii) Exercisability and Method of Exercise. An Option
shall become exercisable in such manner and within such period or
periods and in such installments or otherwise as shall be determined
by the Committee. The Committee also shall determine the method or
methods by which, and the form or forms, including, without
limitation, cash, Shares, other securities, other Awards, or other
property, or any combination thereof, having a Fair Market Value on
the exercise date equal to the relevant exercise price, in which
payment of the exercise price with respect to any Option may be made
or deemed to have been made.
(iv) Incentive Stock Options. The terms of any Incentive
Stock Option granted under the Plan shall comply in all respects with
the provisions of Section 422 of the Code (or any successor provision
thereto) and any regulations promulgated thereunder. Notwithstanding
any provision in the Plan to the contrary, no Incentive Stock Option
may be granted hereunder after the tenth anniversary of the adoption
of the Plan by the Board of Directors of the Company.
(b) Stock Appreciation Rights. The Committee is hereby
authorized to grant Stock Appreciation Rights to Key Employees. Subject
to the terms of the Plan and any applicable Award Agreement, a Stock
Appreciation Right granted under the Plan shall confer on the holder
thereof a right to receive, upon exercise thereof, the excess of (i) the
Fair Market Value of one Share on the date of exercise over (ii) the grant
price of the Stock Appreciation Right as specified by the Committee, which
shall not be less than 100% of the Fair Market Value of one Share on the
date of grant of the Stock Appreciation Right. Subject to the terms of
the Plan, the grant price, term, methods of exercise, methods of
settlement (including whether the Participating Key Employee will be paid
in cash, Shares, other securities, other Awards, or other property, or any
combination thereof), and any other terms and conditions of any Stock
Appreciation Right shall be as determined by the Committee. The Committee
may impose such conditions or restrictions on the exercise of any Stock
Appreciation Right as it may deem appropriate.
(c) Restricted Stock Awards.
(i) Issuance. The Committee is hereby authorized to grant
Awards of Restricted Stock to Key Employees; provided, however, that
the aggregate number of Shares of Restricted Stock granted under the
Plan to all Participating Key Employees as a group shall not exceed
15,000 (such number of Shares subject to adjustment in accordance
with the terms of Section 4(b) hereof). Non-Employee Directors are
not eligible to be granted Restricted Stock under the Plan.
(ii) Restrictions. Shares of Restricted Stock granted to
Participating Key Employees shall be subject to such restrictions as
the Committee may impose (including, without limitation, any
limitation on the right to vote a Share of Restricted Stock or the
right to receive any dividend or other right or property), which
restrictions may lapse separately or in combination at such time or
times, in such installments or otherwise, as the Committee may deem
appropriate.
(iii) Registration. Any Restricted Stock granted under
the Plan to a Participating Key Employee may be evidenced in such
manner as the Committee may deem appropriate, including, without
limitation, book-entry registration or issuance of a stock
certificate or certificates. In the event any stock certificate is
issued in respect of Shares of Restricted Stock granted under the
Plan to a Participating Key Employee, such certificate shall be
registered in the name of the Participating Key Employee and shall
bear an appropriate legend (as determined by the Committee) referring
to the terms, conditions, and restrictions applicable to such
Restricted Stock.
(iv) Payment of Restricted Stock. At the end of the
applicable restriction period relating to Restricted Stock granted to
a Participating Key Employee, one or more stock certificates for the
appropriate number of Shares, free of restrictions imposed under the
Plan, shall be delivered to the Participating Key Employee, or, if
the Participating Key Employee received stock certificates
representing the Restricted Stock at the time of grant, the legends
placed on such certificates shall be removed.
(v) Forfeiture. Except as otherwise determined by the
Committee, upon termination of employment of a Participating Key
Employee (as determined under criteria established by the Committee)
for any reason during the applicable restriction period, all Shares
of Restricted Stock still subject to restriction shall be forfeited
by the Participating Key Employee; provided, however, that the
Committee may, when it finds that a waiver would be in the best
interests of the Company, waive in whole or in part any or all
remaining restrictions with respect to Shares of Restricted Stock
held by a Participating Key Employee.
(d) Performance Shares.
(i) Issuance. The Committee is hereby authorized to grant
Awards of Performance Shares to Participating Key Employees.
(ii) Performance Goals and Other Terms. The Committee
shall determine the Performance Period, the Performance Goal or Goals
(and the performance level or levels related thereto) to be achieved
during any Performance Period, the proportion of payments, if any, to
be made for performance between the minimum and full performance
levels for any Performance Goal and, if applicable, the relative
percentage weighing given to each of the selected Performance Goals,
the restrictions applicable to Shares of Restricted Stock received
upon payment of Performance Shares if Performance Shares are paid in
such manner, and any other terms, conditions and rights relating to a
grant of Performance Shares. The Committee shall have sole
discretion to alter the selected Performance Goals set forth in
Section 2(p), subject to shareholder approval, to the extent required
to comply with Rule 16b-3 and to qualify the Award for the
performance-based exemption provided by Section 162(m) of the Code
(or any successor provision thereto). Notwithstanding the foregoing,
in the event the Committee determines it is advisable to grant
Performance Shares which do not qualify for the performance-based
exemption under Section 162(m) of the Code (or any successor
provision thereto), the Committee may make such grants without
satisfying the requirements thereof.
(iii) Rights and Benefits During the Performance
Period. The Committee may provide that, during a Performance Period,
a Participating Key Employee shall be paid cash amounts, with respect
to each Performance Share held by such Participating Key Employee, in
the same manner, at the same time, and in the same amount paid, as a
cash dividend on a Share. Participating Key Employees shall have no
voting rights with respect to Performance Shares held by them.
(iv) Payment of Performance Shares. As soon as is
reasonably practicable following the end of the applicable
Performance Period, and subject to the Committee certifying in
writing as to the satisfaction of the requisite Performance Goal or
Goals if such certification is required in order to qualify the Award
for the performance-based exemption provided by Section 162(m) of the
Code (or any successor provision thereto), one or more certificates
representing the number of Shares equal to the number of Performance
Shares payable shall be registered in the name of and delivered to
the Participating Key Employee; provided, however, that any Shares of
Restricted Stock payable in connection with Performance Shares shall,
pending the expiration, lapse, or waiver of the applicable
restrictions, be evidenced in the manner as set forth in Section
6(d)(iii) hereof.
(e) General.
(i) No Consideration for Awards. Awards shall be granted
to Participating Key Employees for no cash consideration unless
otherwise determined by the Committee. Awards of Non-Qualified Stock
Options granted to Non-Employee Directors under Section 6(b) of the
Plan shall be granted for no cash consideration unless otherwise
required by law.
(ii) Award Agreements. Each Award granted under the Plan
shall be evidenced by an Award Agreement in such form (consistent
with the terms of the Plan) as shall have been approved by the
Committee.
(iii) Awards May Be Granted Separately or Together.
Awards to Participating Key Employees under the Plan may be granted
either alone or in addition to, in tandem with, or in substitution
for any other Award or any award granted under any other plan of the
Company or any Affiliate. Awards granted in addition to or in tandem
with other Awards, or in addition to or in tandem with awards granted
under any other plan of the Company or any Affiliate, may be granted
either at the same time as or at a different time from the grant of
such other Awards or awards.
(iv) Forms of Payment Under Awards. Subject to the terms
of the Plan and of any applicable Award Agreement, payments or
transfers to be made by the Company or an Affiliate upon the grant,
exercise, or payment of an Award to a Participating Key Employee may
be made in such form or forms as the Committee shall determine, and
may be made in a single payment or transfer, in installments, or on a
deferred basis, in each case in accordance with rules and procedures
established by the Committee. Such rules and procedures may include,
without limitation, provisions for the payment or crediting of
interest on installment or deferred payments.
(v) Limits on Transfer of Awards. No Award (other than
Released Securities), and no right under any such Award, shall be
assignable, alienable, saleable, or transferable by a Participating
Key Employee or a Non-Employee Director otherwise than by will or by
the laws of descent and distribution (or, in the case of an Award of
Restricted Securities, to the Company); provided, however, that a
Participating Key Employee at the discretion of the Committee may, be
entitled, in the manner established by the Committee, to designate a
beneficiary or beneficiaries to exercise his or her rights, and to
receive any property distributable, with respect to any Award upon
the death of the Participating Key Employee. Each Award, and each
right under any Award, shall be exercisable, during the lifetime of
the Participating Key Employee, only by such individual or, if
permissible under applicable law, by such individual's guardian or
legal representative. No Award (other than Released Securities), and
no right under any such Award, may be pledged, alienated, attached,
or otherwise encumbered, and any purported pledge, alienation,
attachment, or encumbrance thereof shall be void and unenforceable
against the Company or any Affiliate. Notwithstanding anything in
this subsection 6(e)(v) to the contrary, the Committee may also grant
to designate Participating Key Employees the right to transfer
Options, to the extent allowed under Rule 16b-3, subject to terms and
conditions of the Award Agreement.
(vi) Term of Awards. Except as otherwise provided in the
Plan, the term of each Award shall be for such period as may be
determined by the Committee.
(vii) Rule 16b-3 Six-Month Limitations. To the extent
required in order to comply with Rule 16b-3 only, any equity security
offered pursuant to the Plan may not be sold for at least six months
after acquisition, except in the case of death or disability, and any
derivative security issued pursuant to the Plan shall not be
exercisable for at least six months, except in case of death or
disability of the holder thereof. Terms used in the preceding
sentence shall, for the purposes of such sentence only, have the
meanings, if any, assigned or attributed to them under Rule 16b-3.
(viii) Share Certificates; Representation. In addition
to the restrictions imposed pursuant to Section 6(d) and Section 6(e)
hereof, all certificates for Shares delivered under the Plan pursuant
to any Award or the exercise thereof shall be subject to such stop
transfer orders and other restrictions as the Committee may deem
advisable under the Plan or the rules, regulations, and other
requirements of the Commission, any stock exchange or other market
upon which such Shares are then listed or traded, and any applicable
federal or state securities laws, and the Committee may cause a
legend or legends to be put on any such certificates to make
appropriate reference to such restrictions. The Committee may
require each Participating Key Employee or other Person who acquires
an Award or Shares under the Plan by means of an Award originally
made to a Participating Key Employee to represent to the Company in
writing that such Participating Key Employee or other Person is
acquiring the Shares without a view to the distribution thereof.
Section 7. Amendment and Termination of the Plan; Correction of
Defects and Omissions
(a) Amendments to and Termination of the Plan. The Board of
Directors of the Company may at any time amend, alter, suspend,
discontinue, or terminate the Plan; provided, however, that shareholder
approval of any amendment of the Plan shall also be obtained if otherwise
required by: (i) the rules and/or regulations promulgated under Section
16 of the Exchange Act (in order for the Plan to remain qualified under
Rule 16b-3), (ii) the Code or any rules promulgated thereunder (in order
to allow for Incentive Stock Options to be granted under the Plan), or
(iii) the quotation or listing requirements of the Nasdaq National Market
or any principal securities exchange or market on which the Shares are
then traded (in order to maintain the quotation or listing of the Shares
thereon). Termination of the Plan shall not affect the rights of
Participating Key Employees with respect to Awards previously granted to
them, and all unexpired Awards shall continue in force and effect after
termination of the Plan except as they may lapse or be terminated by their
own terms and conditions.
(b) Correction of Defects, Omissions and Inconsistencies. The
Committee may correct any defect, supply any omission, or reconcile any
inconsistency in any Award or Award Agreement in the manner and to the
extent it shall deem desirable to carry the Plan into effect.
Section 8. General Provisions
(a) No Rights to Awards. No Key Employee, Participating Key
Employee or other Person shall have any claim to be granted any Award
under the Plan, and there is no obligation for uniformity of treatment of
Key Employees, Participating Key Employees, or holders or beneficiaries of
Awards under the Plan. The terms and conditions of Awards need not be the
same with respect to each Participating Key Employee.
(b) Withholding. No later than the date as of which an amount
first becomes includible in the gross income of a Participating Key
Employee for federal income tax purposes with respect to any Award under
the Plan, the Participating Key Employee shall pay to the Company, or make
arrangements satisfactory to the Company regarding the payment of, any
federal, state, local or foreign taxes of any kind required by law to be
withheld with respect to such amount. Unless otherwise determined by the
Committee, withholding obligations arising with respect to Awards to
Participating Key Employees under the Plan may be settled with Shares
(other than Restricted Securities), including Shares that are part of, or
are received upon exercise of, the Award that gives rise to the
withholding requirement. The obligations of the Company under the Plan
shall be conditional on such payment or arrangements, and the Company and
any Affiliate shall, to the extent permitted by law, have the right to
deduct any such taxes from any payment otherwise due to the Participating
Key Employee. The Committee may establish such procedures as it deems
appropriate for the settling of withholding obligations with Shares,
including, without limitation, the establishment of such procedures as may
be necessary to satisfy the requirements of Rule 16b-3.
(c) No Limit on Other Compensation Arrangements. Nothing
contained in the Plan shall prevent the Company or any Affiliate from
adopting or continuing in effect other or additional compensation
arrangements, and such arrangements may be either generally applicable or
applicable only in specific cases.
(d) Rights and Status of Recipients of Awards. The grant of an
Award shall not be construed as giving a Participating Key Employee the
right to be retained in the employ of the Company or any Affiliate.
Further, the Company or any Affiliate may at any time dismiss a
Participating Key Employee from employment, free from any liability, or
any claim under the Plan, unless otherwise expressly provided in the Plan
or in any Award Agreement. Except for rights accorded under the Plan and
under any applicable Award Agreement, Participating Key Employees shall
have no rights as holders of Shares as a result of the granting of Awards
hereunder.
(e) Unfunded Status of the Plan. Unless otherwise determined
by the Committee, the Plan shall be unfunded and shall not create (or be
construed to create) a trust or a separate fund or funds. The Plan shall
not establish any fiduciary relationship between the Company and any
Participating Key Employee or other Person. To the extent any Person
holds any right by virtue of a grant under the Plan, such right (unless
otherwise determined by the Committee) shall be no greater than the right
of an unsecured general creditor of the Company.
(f) Governing Law. The validity, construction, and effect of
the Plan and any rules and regulations relating to the Plan shall be
determined in accordance with the laws of the State of Wisconsin and
applicable federal law.
(g) Severability. If any provision of the Plan or any Award
Agreement or any Award is or becomes or is deemed to be invalid, illegal,
or unenforceable in any jurisdiction, or as to any Person or Award, or
would disqualify the Plan, any Award Agreement or any Award under any law
deemed applicable by the Committee, such provision shall be construed or
deemed amended to conform to applicable laws, or if it cannot be so
construed or deemed amended without, in the determination of the
Committee, materially altering the intent of the Plan, any Award Agreement
or the Award, such provision shall be stricken as to such jurisdiction,
Person, or Award, and the remainder of the Plan, any such Award Agreement
and any such Award shall remain in full force and effect.
(h) No Fractional Shares. No fractional Shares or other
securities shall be issued or delivered pursuant to the Plan, any Award
Agreement or any Award, and the Committee shall determine (except as
otherwise provided in the Plan) whether cash, other securities, or other
property shall be paid or transferred in lieu of any fractional Shares or
other securities, or whether such fractional Shares or other securities or
any rights thereto shall be canceled, terminated, or otherwise eliminated.
(i) Headings. Headings are given to the Sections and
subsections of the Plan solely as a convenience to facilitate reference.
Such headings shall not be deemed in any way material or relevant to the
construction or interpretation of the Plan or any provision thereof.
Section 9. Effective Date of the Plan
The Plan shall be effective on the day immediately following its
approval by the shareholders of the Company provided that such approval is
obtained within twelve months following the date of adoption of the Plan
by the Board of Directors of the Company.
EXHIBIT 15
INFORMATION STATEMENT
[LOGO]
COMMON STOCK, PAR VALUE $0.01
This Information Statement is being furnished to shareholders of
Bando McGlocklin Capital Corporation, a Wisconsin corporation ("BMCC"), in
connection with the distribution (the "Distribution") by BMCC to its
shareholders of all of the outstanding shares of common stock, par value
$.01 per share (the "INVB Common Stock"), of its subsidiary,
InvestorsBancorp, Inc., a Wisconsin corporation ("INVB" or the "Company")
owned by BMCC. INVB is a proposed bank holding company organized to own
all of the capital stock of InvestorsBank, a proposed Wisconsin-chartered
bank to be located in Pewaukee, Wisconsin (the "Bank").
It is expected that the Distribution will be made on August __,
1997, on the basis of one share of INVB Common Stock for each 4.17916
shares of common stock, 6 cents par value, of BMCC (the "BMCC Common
Stock") held on August __, 1997 (the "Record Date"). No payment need be
made by shareholders of BMCC for the shares of INVB Common Stock to be
received by them in the Distribution. BMCC shareholders will not be
required to surrender or exchange shares of BMCC Common Stock in order to
receive shares of INVB Common Stock.
There is currently no public market for INVB Common Stock.
Shares of INVB Common Stock will not be listed on any securities exchange,
but INVB expects that quotations for the Common Stock will be reported on
the National Association of Securities Dealer's Over the Counter Bulletin
Board (the "OTC Bulletin Board") under the symbol "INVB."
---------------------------
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO
SEND US A PROXY.
---------------------------
THIS INFORMATION STATEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES. ANY SUCH OFFERING MAY
ONLY BE MADE BY MEANS OF A SEPARATE PROSPECTUS PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND OTHERWISE IN COMPLIANCE WITH APPLICABLE LAW.
The date of this Information Statement is July 23, 1997.
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . iii
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
THE DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . 8
PRO FORMA FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . 9
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Future Capital Requirements . . . . . . . . . . . . . . . . . . 11
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Government Regulation and Monetary Policy . . . . . . . . . . . 11
Dependence on Management . . . . . . . . . . . . . . . . . . . . 11
Lending Risks and Lending Limits . . . . . . . . . . . . . . . . 11
Impact of Interest Rates and Economic Conditions . . . . . . . . 12
Absence of History as a Stand-alone Company . . . . . . . . . . 12
Absence of a Public Market for INVB Common Stock . . . . . . . . 13
Concentration of Share Ownership . . . . . . . . . . . . . . . . 13
Certain Antitakeover Effects . . . . . . . . . . . . . . . . . . 13
THE DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Background of and Reasons for the Distribution . . . . . . . . . 15
Manner of Effecting the Distribution . . . . . . . . . . . . . . 15
Certain Federal Income Tax Consequences of the Distribution . . 16
Stock Ownership After the Distribution . . . . . . . . . . . . . 18
Market for INVB Common Stock . . . . . . . . . . . . . . . . . . 19
Conditions; Termination . . . . . . . . . . . . . . . . . . . . 20
DIVIDEND POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Business Strategy . . . . . . . . . . . . . . . . . . . . . . . 21
Products and Services . . . . . . . . . . . . . . . . . . . . . 22
Market Area . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Bank Premises . . . . . . . . . . . . . . . . . . . . . . . . . 23
Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
BMCC Historical Data . . . . . . . . . . . . . . . . . . . . . . 24
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Directors and Executive Officers of INVB . . . . . . . . . . . . 36
Committees of the INVB Board of Directors . . . . . . . . . . . 37
Compensation of Directors . . . . . . . . . . . . . . . . . . . 37
Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . 37
Stock Ownership of Executive Officers and Directors . . . . . . 37
Executive Compensation . . . . . . . . . . . . . . . . . . . . . 39
INVB 1997 Equity Incentive Plan . . . . . . . . . . . . . . . . 39
SUPERVISION AND REGULATION . . . . . . . . . . . . . . . . . . . . . 44
Supervision and Regulation . . . . . . . . . . . . . . . . . . . 44
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . 44
The Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARRANGEMENTS AMONG BMCC, INVB AND THE BANK . . . . . . . . . . . . . 47
Management Services and Allocation of Expenses Agreement . . . . 47
Tax Allocation and Services Agreement . . . . . . . . . . . . . 48
DESCRIPTION OF INVB CAPITAL STOCK . . . . . . . . . . . . . . . . . . 48
Authorized Capital Stock . . . . . . . . . . . . . . . . . . . . 48
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . 49
CERTAIN ANTITAKEOVER EFFECTS . . . . . . . . . . . . . . . . . . . . 50
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . 50
Advance Notice Procedures . . . . . . . . . . . . . . . . . . . 50
Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Wisconsin Business Combination Statute . . . . . . . . . . . . . 51
Control Share Acquisition Statute . . . . . . . . . . . . . . . 51
LIABILITY OF DIRECTORS AND OFFICERS; INDEMNIFICATION . . . . . . . . 52
AVAILABLE INFORMATION
INVB has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form 10-SB (the "Registration
Statement") under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), with respect to the INVB Common Stock described herein.
This Information Statement does not contain all of the information set
forth in the Registration Statement and the exhibits thereto. For further
information, reference is hereby made to the Registration Statement and
exhibits. Statements contained herein concerning any documents are not
necessarily complete and, in each instance, reference is made to the
copies of such documents filed as exhibits to the Registration Statement.
Each such statement is qualified in its entirety by such reference.
Copies of these documents may be inspected without charge at the principal
office of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the Regional Offices of the Commission at 7 World Trade
Center, Suite 1300, New York, New York 10049, at Citicorp Center, Suite
1400, 500 West Madison Street, Chicago, Illinois 60661, and at 5670
Wilshire Boulevard, Suite 1100, Los Angeles, California 90036, and copies
of all or any part thereof may be obtained from the Commission upon
payment of the charges prescribed by the Commission. Copies of such
material may also be obtained from the Commission's Web Site
(http://www.sec.gov).
Following the Distribution, INVB will be required to comply with
the reporting requirements of the Exchange Act and will file annual,
quarterly and other reports with the Commission. INVB will also be
subject to the proxy solicitation requirements of the Exchange Act and,
accordingly, will furnish audited financial statements to its shareholders
in connection with its annual meetings of shareholders.
BMCC is subject to the informational requirements of the
Exchange Act, and, in accordance therewith, files reports, proxy
statements and other information with the Commission. Such reports, proxy
statements and other information filed by BMCC with the Commission may be
inspected without charge at the principal office of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 and at the Regional Offices of
the Commission at 7 World Trade Center, Suite 1300, New York, New York
10049; at Citicorp Center, Suite 1400, 500 West Madison Street, Chicago,
Illinois 60661; and at 5670 Wilshire Boulevard, Suite 1100, Los Angeles,
California 90036; and copies of all or any part thereof may be obtained
from the Commission upon payment of charges prescribed by the Commission.
Copies of such information may also be obtained from the Commission's Web
Site (http://www.sec.gov.).
No person is authorized by BMCC or INVB to give any information
or to make any representations other than those contained in this
Information Statement, and, if given or made, such information or
representations must not be relied upon as having been authorized.
SUMMARY
This summary is qualified by the more detailed information set
forth elsewhere in this Information Statement, which should be read in its
entirety, including the discussion of certain factors set forth under
"Risk Factors." Unless the context otherwise requires, as used herein the
terms "INVB", "InvestorsBancorp" or the "Company" includes INVB and the
Bank.
THE DISTRIBUTION
Distributing Company . . . . Bando McGlocklin Capital Corporation, a
Wisconsin corporation.
Shares to be Distributed . . 880,000 shares of INVB Common Stock,
representing all of the outstanding
shares of INVB Common Stock to be held
by BMCC on the Distribution Date.
120,000 shares of the INVB Common Stock
to be outstanding immediately prior to
the Distribution will be owned by George
R. Schonath or certain entities
controlled by Mr. Schonath (the
"Schonath Entities") on the Distribution
Date and will not be distributed in the
Distribution. The shares of INVB Common
Stock were purchased from INVB at a
price of $7.00 per share by both BMCC
and the Schonath Entities. The Board of
Directors of INVB has determined that,
as Chief Executive Officer of the
Company and the Bank, Mr. Schonath
should, directly or indirectly through
the Schonath Entities, hold a
substantial equity interest in INVB in
order to closely align Mr. Schonath's
interests with those of INVB's
shareholders. See "The Distribution -
Stock Ownership After the Distribution"
Distribution Ratio . . . . . One share of INVB Common Stock for each
4.17916 shares of BMCC Common Stock. No
payment need be made by shareholders of
BMCC for the shares of INVB Common Stock
to be received by them in the
Distribution, nor will they be required
to surrender or exchange shares of BMCC
Common Stock in order to receive INVB
Common Stock. See "The Distribution-
Manner of Effecting the Distribution."
Shareholders who hold fewer than 5
shares of BMCC Common Stock will receive
a cash payment in lieu of a fractional
share and will not receive any shares of
INVB Common Stock.
No Fractional Shares . . . . No fractional shares of INVB Common
Stock will be distributed. All
fractional share interests will be
aggregated and sold by the Distribution
Agent and the cash proceeds distributed
to those shareholders otherwise entitled
to a fractional interest. See "The
Distribution--Manner of Effecting the
Distribution."
Federal Income Tax
Consequences to BMCC
Shareholders . . . . . . . . The Distribution will be a taxable event
to BMCC's shareholders for Federal
income tax purposes. The amount of the
Distribution received by each BMCC
shareholder will be treated as a
dividend (i.e., as ordinary income) to
such shareholder to the extent of such
shareholder's pro rata share of BMCC's
current earnings and profits. The
amount of the Distribution received by
each BMCC shareholder that is not
treated as a dividend will first be
treated as a nontaxable return of
capital to the extent of such
shareholder's basis in its BMCC Common
Stock, and then generally as capital
gain. The amount of the Distribution
received by each BMCC shareholder for
Federal income tax purposes will be the
fair market value of the INVB Common
Stock received by such shareholder as of
the Distribution Date. BMCC will make a
determination of the fair market value
of the INVB Common Stock as of the
Distribution Date after such date based
on information and advice to be received
by BMCC from Cleary Gull Reiland &
McDevitt Inc. ("Cleary Gull"). Prior to
January 31, 1998, BMCC will report the
amount of the Distribution received by
each shareholder to such shareholder and
to the IRS on IRS Form 1099-DIV. There
is no assurance that the IRS or the
courts will agree with the amount
determined by BMCC. BMCC shareholders
are urged to consult their own tax
advisors as to the specific tax
consequences to them of the
Distribution. See "THE DISTRIBUTION --
Certain Federal Income Tax Consequences
of the Distribution."
Federal Income Tax
Consequences to BMCC . . . . The Distribution may be a taxable event
to BMCC for Federal income tax purposes.
BMCC will recognize gain upon the
Distribution equal to the excess, if
any, of the fair market value of the
INVB Common Stock on the Distribution
Date over BMCC's tax basis in such
stock. BMCC will not recognize any loss
upon the Distribution, even if its tax
basis in the INVB Common Stock that is
distributed to its shareholders exceeds
the fair market value of such stock on
the Distribution Date. See "THE
DISTRIBUTION -- Certain Federal Income
Tax Consequences of the Distribution."
Relationship with BMCC after
the Distribution . . . . . . As a result of the Distribution, the
Company will cease to be a subsidiary of
or otherwise affiliated with BMCC and
thereafter will operate as an
independent, publicly held company.
However, as indicated under "Management"
certain executive officers of BMCC will
be executive officers and directors of
the Company and the Bank, and will
continue in such dual capacities for an
indefinite period of time. Other than
the initial $6.2 million capital
contribution to be made by BMCC to INVB
immediately prior to the Distribution
Date, no assets of BMCC will be
transferred to INVB or the Bank. BMCC
will retain its entire loan portfolio
from which it derives substantially all
of its revenues and continue its
practice of participating in loans held
by other lending institutions, including
the Bank. The Company, BMCC and the
Bank have also entered into certain
agreements providing for (a) the sharing
of certain facilities and services,
(b) the orderly separation of BMCC, the
Company and the Bank, and (c) the
allocation of certain contracts and
liabilities. See "ARRANGEMENTS AMONG
BMCC, INVB AND THE BANK" and
"MANAGEMENT."
Interests of Certain Persons
in the Distribution . . . . . George R. Schonath, who is currently the
chief executive officer and a director
of BMCC, will be the President and Chief
Executive Officer and a director of INVB
and the Bank. Jon McGlocklin, who is
currently the President, Secretary and a
director of BMCC, will be a Senior Vice
President and a director of INVB and the
Bank. Salvatore L. Bando who is
currently a director at BMCC, will be a
director of INVB and the Bank. Mr.
Schonath, Mr. McGlocklin and Mr. Bando
are expected to resign as directors of
BMCC immediately prior to the
Distribution.
Management of the Company . . Effective as of the Distribution, the
Board of Directors of the Company will
consist of Salvatore L. Bando, Donald E.
Sydow, Terry L. Mather, Jon McGlocklin
and George R. Schonath. See
"Management."
Risk Factors . . . . . . . . Shareholders should consider certain
factors discussed under "Risk Factors."
Background of and Reasons for
the Distribution . . . . The Board of Directors of BMCC (the
"BMCC Board") has determined that
formation of a bank and bank holding
company are in the best interest of BMCC
shareholders due to BMCC's current
business environment. However, due to
certain conflicts between BMCC's status
as a real estate investment trust and
certain conditions required by the
Federal Deposit Insurance Corporation to
approve the formation of the Bank, the
BMCC Board has determined to spin off
BMCC's ownership of INVB and the Bank to
its shareholders, rather than hold them
as subsidiaries. See "The Distribution-
Background of and Reasons for the
Distribution."
Trading Market . . . . . . . There is currently no public market for
INVB Common Stock. The INVB Common
Stock will not be listed on any
securities exchange, but INVB expects
that quotations for INVB Common Stock
will be reported on the OTC Bulletin
Board under the symbol "INVB." Robert
W. Baird & Co. Incorporated ("Baird")
has also advised INVB that, upon
completion of the Distribution, it
intends to act as a market maker in the
Common Stock, subject to applicable laws
and regulatory requirements. See "Risk
Factors-Absence of a Public Market for
INVB Common Stock" and "The
Distribution-Market For INVB Common
Stock."
Record Date . . . . . . . . . August __, 1997.
Distribution Date . . . . . . August __, 1997 (the "Distribution Date").
Commencing on or about the Distribution
Date, Firstar Trust Company (the
"Distribution Agent") will commence
mailing certificates reflecting
ownership of shares of INVB Common Stock
to holders of BMCC Common Stock on the
Record Date. BMCC shareholders will not
be required to make any payment or to
take any other action to receive the
INVB Common Stock to which they are
entitled in the Distribution. "The
Distribution-Manner of Effecting the
Distribution."
Distribution Agent . . . . . Firstar Trust Company will be the
Distribution Agent for the Distribution.
Conditions to the Distribution. The Distribution is conditioned upon,
among other things: (a) the receipt of
all state and federal bank regulatory
approvals necessary for the Bank to
commence its business and (b) the
receipt of any material governmental
approvals and third party consents
necessary to consummate the
Distribution; (c) the absence of any
order, injunction, decree or other legal
restraint or prohibition preventing the
consummation of the Distribution; and
(d) no other event occurring that
prevents the consummation of the
Distribution. The applications to the
applicable federal banking regulators
have been approved. The application to
the Wisconsin state banking regulators
has been approved pending completion of
an inspection immediately prior to
opening for business. The BMCC Board
may, but has no obligation to, waive any
of these conditions. In addition,
regardless of whether these conditions
are satisfied, the BMCC Board has
reserved the right to abandon, defer or
modify the Distribution and the related
transactions described herein at any
time prior to the Distribution Date.
See "The Distribution-Conditions;
Termination."
Principal Businesses of BMCC
after the Distribution . . . After the Distribution, the Bank, on
behalf of BMCC, will manage, service and
administer BMCC's loan portfolio
pursuant to a Management Services and
Allocation of Expenses Agreement (the
"Services and Expenses Agreement"). As
part of the Services and Expenses
Agreement, BMCC has agreed not to
originate any loans, except as
specifically approved in writing by the
Bank. BMCC's principal business
following the Distribution will be to
manage its loan portfolio pursuant to
the Services and Expenses Agreement and
continue its practice of participating
in loans held by third party lending
institutions, including the Bank. BMCC
also intends to expand its real estate
lending business into ownership of real
property, including related buildings
and improvements for lease to small
businesses. Additionally, except for
George R. Schonath and Jon McGlocklin,
all of the officers and employees of
BMCC will cease their employment with
BMCC and will become employees of the
Bank when the Bank commences operations,
which is expected to occur in the third
quarter of 1997. Mr. Schonath and Mr.
McGlocklin will continue as officers of
BMCC in addition to being officers of
INVB and the Bank.
INVESTORSBANCORP
InvestorsBancorp . . . . . . InvestorsBancorp is a proposed bank
holding company that will be a
subsidiary of BMCC on the Distribution
Date. Immediately prior to the
Distribution BMCC will own approximately
88% of the outstanding INVB Common Stock
and the Schonath Entities will own the
remaining approximately 12%.
Immediately after the Distribution, the
shareholders of record of BMCC on the
Record Date will own the approximately
88% of the outstanding INVB Common Stock
previously owned by BMCC and the
Schonath Entities will continue to own
the remaining 12%. See "The
Distribution-Stock Ownership After the
Distribution." INVB will be the sole
shareholder of InvestorsBank.
InvestorsBank . . . . . . . . InvestorsBank will be a newly-organized
Wisconsin-chartered commercial bank with
depository accounts to be insured by the
Federal Deposit Insurance Corporation
(the "FDIC"). The Bank will provide a
full range of commercial and consumer
banking services in its primary service
area in Waukesha County, Wisconsin, as
well as the surrounding extended market
in south-eastern Wisconsin. While all
employees, except Messrs. Schonath and
McGlocklin, will cease their employment
with BMCC and become employees of the
Bank, BMCC will not transfer any of its
assets to the Bank (other than its
initial capital contribution of
$6.2 million). Accordingly, the Bank
will begin its operations as a start-up
entity. The Company and the Bank will
have received all necessary regulatory
approvals, subject to the satisfaction
of certain conditions, prior to the
Distribution. See "Business."
Certain Antitakeover Effects Certain provisions of INVB's Articles of
Incorporation (the "Articles") and
INVB's By-laws (the "By-laws"), as each
will be in effect as of the Distribution
and of applicable Wisconsin corporation
law, have the effect of making more
difficult an acquisition of control of
INVB in a transaction not approved by
INVB's Board of Directors. See
"Description of INVB Capital Stock" and
"Certain Antitakeover Effects."
Post-Distribution Dividend
Policy . . . . . . . . . INVB does not anticipate the payment of
any cash dividends on INVB Common Stock
in the foreseeable future. The
declaration of dividends by INVB will be
subject to the discretion of the Board
of Directors of INVB. INVB has no
operations and will be dependent on
dividends from the Bank to fund any
dividend INVB may declare. However, the
Bank will be subject to certain
restrictions imposed by applicable
banking regulations that may limit its
ability to pay dividends to INVB. See
"Dividend Policy."
Transfer Agent and Registrar Firstar Trust Company will be the
Transfer Agent and Registrar for INVB
after the Distribution.
SELECTED FINANCIAL DATA
Set forth below is the consolidated balance sheet of INVB as of
July 7, 1997 which is derived from and qualified by reference to, and
should be read in conjunction with the balance sheet of INVB and notes
thereto which have been audited by Price Waterhouse LLP and which are
included at the end of this Information Statement. The balance sheet of
INVB set forth below reflects only the initial capitalization of INVB
pursuant to a $1,000 investment by George R. Schonath. The following page
of this Information Statement sets forth the Pro Forma Consolidated
Balance Sheet of INVB after it is capitalized by BMCC and the Schonath
Entities.
INVESTORSBANCORP, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
(Audited)
July 7, 1997
ASSETS
Cash $1,000
------
Total Assets $1,000
======
SHAREHOLDER'S EQUITY
Common Stock, $0.01 par value, authorized
9,000,000 shares; issued and outstanding 143
shares $ 1
Additional paid in capital 999
------
Total Shareholder's Equity $1,000
======
PRO FORMA FINANCIAL DATA
The following is a pro forma consolidated balance sheet of INVB
immediately after it is capitalized pursuant to investments from BMCC and
the Schonath Entities, and assumes that INVB and the Bank are each
capitalized as described herein.
INVESTORSBANCORP, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
(Unaudited)
Assets:
Investments . . . . . . . . . . . . . . . . . . $ -
Loans . . . . . . . . . . . . . . . . . . . . . -
Less: Reserve for losses . . . . . . . . . . . -
---------
Investments, net -
Cash . . . . . . . . . . . . . . . . . . . . . 6,770,000
Fed Funds . . . . . . . . . . . . . . . . . . . -
Other Assets - Capitalized Organizational Costs 230,000
---------
Total Assets $7,000,000
=========
Liabilities and Shareholders' Equity:
Demand Deposits . . . . . . . . . . . . . . . . . $ -
Interest Bearing Deposits . . . . . . . . . . . . -
Short-term borrowings -
----------
Total Liabilities $ -
Common Stock and Other Shareholders' Equity:
Common Stock . . . . . . . . . . . . . . . . . . 10,000
Additional paid-in capital . . . . . . . . . . . 6,990,000
Retained earnings . . . . . . . . . . . . . . . . -
---------
Total Common Stock and Other Shareholders'
Equity . . . . . . . . . . . . . . . . . . $ 7,000,000
---------
Total Liabilities, Common Stock and Other
Shareholders' Equity $ 7,000,000
=========
INTRODUCTION
INVB is a proposed bank holding company that will be a
subsidiary of BMCC on the Distribution Date. BMCC will own approximately
88% of the outstanding INVB Common Stock and the Schonath Entities will
own the remaining approximately 12%. INVB will be the sole shareholder of
the Bank. The Bank will be a newly-organized Wisconsin-chartered
commercial bank. Other than its initial capital contribution of
$6.2 million, no assets of BMCC will be transferred to INVB or the Bank.
The Distribution to BMCC shareholders of all the outstanding shares of
INVB Common Stock owned by BMCC will complete the formation of
InvestorsBank announced by BMCC in January, 1996. The Schonath Entities
are not distributing any of their shares in the Distribution. See "The
Distribution-Stock Ownership After the Distribution."
The Distribution will be effected by transferring all of the
outstanding shares of INVB Common Stock owned by BMCC on the Distribution
Date to Firstar Trust Company, the Distribution Agent, for transfer and
distribution to the holders of BMCC Common Stock as of the Record Date.
It is expected that the Distribution Date will be August __, 1997. The
Distribution will be a taxable event to shareholders of BMCC. See "The
Distribution-Certain Federal Income Tax Consequences of the Distribution."
Shareholders of BMCC with inquiries relating to the Distribution
should call the Distribution Agent at (800) 637-7549, Monday through
Friday, 8:00 a.m. to 5:00 p.m. (Central Time). After the Distribution
Date, shareholders of INVB with inquiries relating to their certificates
of INVB Common Stock should contact the Transfer Agent and Registrar at
(800) 637-7549 Monday through Friday, 8:00 a.m. to 5:00 p.m. (Central
Time).
No action is required by BMCC shareholders in order to receive
the INVB Common Stock to which they are entitled in the Distribution.
RISK FACTORS
Shareholders should carefully consider and evaluate all of the
information set forth in this Information Statement, including the risk
factors listed below. INVB also cautions readers that, in addition to the
historical information included herein, this Information Statement
includes certain forward-looking statements and information that are based
on management's beliefs as well as on assumptions made by and information
currently available to management. When used in this Information
Statement, the words "expect", "anticipate," "intend," "plan," "believe,"
"seek," "estimate," and similar expressions are intended to identify such
forward-looking statements. However, this Information Statement also
contains other forward-looking statements. Such statements are not
guarantees of future performance and involve certain risks, uncertainties
and assumptions, including but not limited to the following factors, which
could cause INVB's future results and shareholder values to differ
materially from those expressed in any forward-looking statements made by
or on behalf of INVB. Many of such factors are beyond INVB's ability to
control or predict. Readers are cautioned not to put undue reliance on
forward-looking statements. INVB disclaims any intent or obligation to
update publicly any forward-looking statements, whether as a result of new
information, future events or otherwise.
Future Capital Requirements
INVB believes that earnings from operations and its additional
paid in capital will be sufficient to satisfy its capital and other
financing requirements for the immediate future; however, no assurance can
be given that such amounts will be sufficient to meet such requirements.
INVB further believes that, if necessary, it will be able to access
capital markets on terms and in amounts that will be satisfactory to it,
although there can be no assurance that will be the case.
Competition
The Company and the Bank will face strong competition for
deposits, loans and other financial services from numerous Wisconsin and
out-of-state banks, thrifts, credit unions and other financial
institutions as well as other entities which provide financial services.
Some of these financial institutions and financial services organizations
with which the Bank will compete are not subject to the same degree of
regulation as the Bank. Many of these financial institutions aggressively
compete for business in the Bank's proposed market area. Most of these
competitors have been in business for many years, have established
customer bases, are larger, have substantially higher lending limits than
the Bank and will be able to offer certain services, including multiple
branches and international banking services, that the Bank can offer only
through correspondents, if at all. In addition, most of these entities
have greater capital resources than the Bank, which, among other things,
may allow them to price their services at levels more favorable to the
customer and to provide larger credit facilities than could the Bank. See
"Business--Market Area" and "Business--Competition."
Government Regulation and Monetary Policy
The Company and the Bank will be subject to extensive state and
federal government supervision and regulation. Existing state and federal
banking laws will subject the Bank to substantial limitations with respect
to loans, purchase of securities, payment of dividends and many other
aspects of its banking business. There can be no assurance that future
legislation or government policy will not adversely affect the banking
industry or the operations of the Bank. Federal economic and monetary
policy may affect the Bank's ability to attract deposits, make loans and
achieve satisfactory interest spreads. See "Supervision and Regulation."
Dependence on Management
The Company and the Bank are, and for the foreseeable future
will be, dependent upon the services of George R. Schonath, the President
and Chief Executive Officer of the Company and the Bank and other senior
managers retained by the Company and the Bank. The loss of any of these
individuals could adversely affect the operations of the Company and the
Bank. See "Business--Employees" and "Management."
Lending Risks and Lending Limits
The risk of nonpayment of loans is inherent in commercial
banking, and such nonpayment, if it occurs, may have a material adverse
effect on the Company's earnings and overall financial conditions as well
as the value of the Common Stock. Moreover, the Bank's focus on small- to
medium-sized businesses may result in a larger concentration by the Bank
of loans to such businesses. As a result, the Bank may assume greater
lending risks than banks which have a lesser concentration of such loans
and tend to make loans to larger companies. Management will attempt to
minimize the Bank's credit exposure by carefully monitoring the
concentration of its loans within specific industries and through prudent
loan application and approval procedures, but there can be no assurance
that such monitoring and procedures will reduce such lending risks.
The Bank's lending limit will initially be approximately
$1,400,000. Accordingly, the size of the loans which most of the Bank's
competitors with larger lending limits are able to offer will be greater.
This limit initially will affect the ability of the Bank to seek
relationships with the area's larger businesses. The Bank expects to
accommodate loan volumes in excess of its lending limit through the sale
of participations in such loans to other banks and financial institutions,
including BMCC. However, there can be no assurance that the Bank will be
successful in attracting or maintaining customers seeking larger loans or
that the Bank will be able to engage in participations of such loans or on
terms favorable to the Bank.
Impact of Interest Rates and Economic Conditions
The results of operations for financial institutions, including
the Bank, may be materially and adversely affected by changes in
prevailing economic conditions, including declines in real estate market
values, rapid changes in interest rates and the monetary and fiscal
policies of the federal government. See "Supervision and Regulation."
The Bank's profitability is in part a function of the spread between the
interest rates earned on investments and loans and the interest rates paid
on deposits and other interest-bearing liabilities. In the early 1990s,
many banking organizations experienced historically high interest rate
spreads. More recently, interest rate spreads have generally narrowed due
to changing market conditions and competitive pricing pressure, and there
can be no assurance that such factors will not continue to exert such
pressure or that such high interest rate spreads will return. Although
economic conditions in the Bank's market area have been generally stronger
than those in other regions of the country, there can be no assurance that
such conditions will continue to prevail. Substantially all the Bank's
loans will be to businesses and individuals in southeastern Wisconsin and
any decline in the economy of this area could have an adverse impact on
the Bank. Like most banking institutions, the Bank's net interest spread
and margin will be affected by general economic conditions and other
factors that influence market interest rates and the Bank's ability to
respond to changes in such rates. At any given time, the Bank's assets
and liabilities will be such that they are affected differently by a given
change in interest rates. As a result, an increase or decrease in rates
could have a positive or negative effect on the Bank's net income, capital
and liquidity. There can be no assurance that the positive trends or
developments discussed in this Prospectus will continue or that negative
trends or developments will not have a material adverse effect on the
Bank. See "Supervision and Regulation."
Absence of History as a Stand-alone Company
INVB and the Bank are newly formed companies. After the
Distribution, BMCC will not provide funds to finance INVB's operations or
for any other purpose. No assets of BMCC other than its initial capital
contribution of $6.2 million to INVB will be transferred to INVB or the
Bank. In addition, after the Distribution, BMCC will have no obligation
to provide assistance to INVB or the Bank except as described in
"Arrangements Among BMCC, INVB and the Bank." Furthermore, BMCC will have
no obligation to enter into new arrangements with INVB and the Bank as the
existing arrangements expire.
Absence of a Public Market for INVB Common Stock
There is currently no public market for INVB Common Stock.
Shares of INVB Common Stock will not be listed on any securities exchange.
Although INVB expects that quotations for INVB Common Stock will be
reported on the OTC Bulletin Board, there can be no assurance as to the
prices or volume at which trading in INVB Common Stock will occur after
the Distribution. Baird has advised INVB that, upon completion of the
Distribution, it intends to act as a market maker in the Common Stock,
subject to applicable laws and regulatory requirements. Making a market
in securities involves maintaining bid and ask quotations and being able,
as principal, to execute transactions in reasonable quantities at those
quoted prices, subject to various securities laws and other regulatory
requirements. The development of a public trading market depends,
however, upon the existence of willing buyers and sellers, the presence of
which is not within the control of INVB, the Bank or any market maker.
Even with a market maker, factors such as the limited size of this
Distribution, the lack of earnings history for INVB and the absence of a
reasonable expectation of dividends within the near future mean that there
can be no assurance of the development in the foreseeable future of an
active and liquid market for the Common Stock. Even if a market develops,
there can be no assurance that a market will continue. Recipients of
Common stock should carefully consider the potentially illiquid and long-
term nature of the shares being distributed hereby.
Until the INVB Common Stock is fully distributed and an orderly
trading market develops, the prices and volume at which trading in such
stock occurs may fluctuate significantly. The prices at which INVB Common
Stock trades will be determined by the marketplace and may be influenced
by many factors, including, among others, INVB's performance and
prospects, the depth and liquidity of the market for INVB Common Stock,
investor perception of INVB and of the banking industry, INVB's dividend
policy, general financial and other market conditions, and domestic and
international economic conditions. In addition, financial markets,
including the over-the-counter market, have experienced extreme price and
volume fluctuations that have affected the market price of many stocks and
that, at times, could be viewed as unrelated or disproportionate to the
operating performance of such companies. Such fluctuations have also
affected the share prices of many newly public issuers. Such volatility
and other factors may materially adversely affect the market price of INVB
Common Stock.
Concentration of Share Ownership
Following the Distribution, the Company's officers and directors
will beneficially own approximately 25.3% of the outstanding shares of
INVB Common Stock, including approximately 17.4% beneficially owned by
George R. Schonath, the Company's President and Chief Executive Officer.
Accordingly, these officers and directors will have the ability to
influence significantly the election of directors and most corporate
actions. Mr. Schonath will also beneficially own warrants to purchase an
additional 100,000 shares of INVB Common Stock, at a price of 110% of his
initial purchase price of $7.00 per share (or $7.70 per share). See
"Management - Stock Ownership of Executive Officers and Directors."
Certain Antitakeover Effects
The Articles and By-laws, and applicable sections of the
Wisconsin Business Corporation Law (the "WBCL") contain several provisions
that may make more difficult the acquisition of control of INVB without
the approval of the INVB Board of Directors. Certain provisions of INVB's
Articles and the By-laws, among other things: (i) classify the INVB Board
of Directors into three classes, each of which serve for staggered three-
year terms; (ii) provide that a director of INVB may be removed by the
shareholders only for cause by the vote of 80% of the stock entitled to
vote generally in the election of directors (the "Voting Stock"); (iii)
provide that shareholders must comply with certain advance notice
procedures in order to nominate candidates for election to the INVB Board
of Directors or to place shareholders' proposals on the agenda for
consideration at meetings of shareholders; and (iv) provide that the
shareholders may amend or repeal any of the foregoing provisions contained
in the Articles or the By-laws only by a vote of 80% of the capital stock
entitled to vote in the election of directors. The WBCL generally imposes
certain restrictions on mergers and other business combinations between
INVB and any holder of 10% or more of the INVB Common Stock if the
holder's acquisition of such position was not approved in advance by the
INVB Board of Directors. See "Description of INVB Capital Stock" and
"Certain Antitakeover Effects."
THE DISTRIBUTION
Background of and Reasons for the Distribution
BMCC was founded in 1980 primarily to provide commercial loans
to companies that were underserved by banks and other traditional
financial institutions. Such loans (and the participation in such loans
held by third-party lending institutions) remain the cornerstone of BMCC's
business. However, beginning in 1994 banks and other traditional
financial institution's began to enter BMCC's markets and compete directly
with BMCC for customers. This competition, coupled with such
institution's traditionally lower cost of capital compared to BMCC, have
had an adverse effect on BMCC's margins. Therefore, the BMCC Board began
exploring the creation of a banking subsidiary to more effectively compete
with traditional financial institutions. The BMCC Board also determined
to convert BMCC from an investment company into a real estate investment
trust ("REIT") in order to increase BMCC's operational flexibility while
maintaining BMCC's favorable tax status. Such conversion was approved by
BMCC's shareholders at the annual meeting of shareholders held on December
17, 1996, and BMCC effected such conversion at the end of 1996.
At the time of the 1996 annual meeting and through February of
1997, it was intended that the Bank would be a subsidiary of BMCC and that
George R. Schonath would be the only other shareholder of the Bank in a
structure that would preserve BMCC's REIT status. However, in March of
1997 the Federal Deposit Insurance Corporation, upon its review of the
proposed structure, required certain changes to the structure that would
have caused BMCC to lose its REIT status. Rather than jeopardize the tax
benefits of BMCC's REIT status, the BMCC Board of Directors decided in
April, 1997 to spinoff the Bank through a distribution of INVB Common
Stock to BMCC's shareholders, while still maintaining Mr. Schonath's
equity position in the Bank through ownership of INVB Common Stock. The
Board determined that the spin-off was the best choice of the limited
options available because it preserved BMCC's favorable tax status and
also created a bank to compete more effectively in the loan market.
Manner of Effecting the Distribution
It is expected that the Distribution will be consummated on August
__, 1997, the Distribution Date. At the time of the Distribution, share
certificates for the INVB Common Stock then owned by BMCC will be
delivered to Firstar Trust Company, as Distribution Agent, for mailing.
On or as soon as practicable after the Distribution Date, the Distribution
Agent will commence mailing the share certificates to holders of BMCC
Common Stock as of the close of business on the Record Date on the basis
of one share of INVB Common Stock for every 4.17916 shares of BMCC Common
Stock held on the Record Date. All such shares of INVB Common Stock will
be validly issued, fully paid, nonassessable and free of preemptive
rights. See "Description of INVB Capital Stock."
No certificates or scrip representing fractional shares of INVB
Common Stock will be issued to BMCC shareholders as part of the
Distribution. The Distribution Agent will aggregate fractional shares
into whole shares and sell them in the open market at then prevailing
prices on behalf of holders who otherwise would be entitled to receive
fractional share interests, and such persons will receive instead a cash
payment in the amount of their pro rata share of the total sale proceeds.
Proceeds from sales of fractional shares will be paid by the Distribution
Agent based upon the average gross selling price per share of INVB Common
Stock of all such sales. BMCC will bear the cost of commissions incurred
in connection with such sales. Such sales are expected to be made as soon
as practicable after the Record Date. None of BMCC, INVB or the
Distribution Agent will guarantee any minimum sale price for the shares of
INVB Common Stock, and no interest will be paid on the proceeds.
No holder of BMCC Common Stock will be required to make any
payment for shares of INVB Common Stock to be received in the Distribution
or to surrender or exchange shares of BMCC Common Stock or to take any
other action in order to receive INVB Common Stock to which the holder is
entitled in the Distribution.
Certain Federal Income Tax Consequences of the Distribution
Introduction. The discussion set forth below is a summary of
certain material United States federal income tax consequences to United
States persons with respect to the Distribution. The discussion does not
purport to be a complete analysis of all of the potential tax effects of
the Distribution or of ownership of INVB Common Stock following the
Distribution. The discussion is limited to United States Federal income
tax matters. The discussion is based upon the Internal Revenue Code of
1986, Treasury regulations, Internal Revenue Service ("IRS") rulings, and
judicial decisions now in effect, all of which are subject to change at
any time, possibly with retroactive effect, by legislative, judicial, or
administrative action.
The discussion does not address the tax consequences of receipt
of the Distribution to taxpayers which are subject to special rules that
do not apply to taxpayers generally, such as life insurance companies,
tax-exempt organizations, regulated investment companies, financial
institutions, broker-dealers in securities, foreign entities, and
nonresident alien individuals.
THE TAX CONSEQUENCES OF RECEIVING THE DISTRIBUTION AND OWNING
INVB COMMON STOCK MAY VARY DEPENDING ON A HOLDER'S PARTICULAR SITUATION.
BMCC SHAREHOLDERS ARE URGED TO CONSULT WITH THEIR OWN TAX ADVISORS
REGARDING THE TAX CONSEQUENCES TO THEM OF RECEIPT OF THE DISTRIBUTION AND
OWNERSHIP OF INVB COMMON STOCK, INCLUDING BUT NOT LIMITED TO THE
APPLICATION TO THEM OF FEDERAL ESTATE AND GIFT, STATE, LOCAL, FOREIGN, AND
OTHER TAX LAWS.
Receipt of the Distribution by BMCC Shareholders. The
Distribution will be a taxable event to BMCC's shareholders for Federal
income tax purposes. The amount of the Distribution received by each BMCC
shareholder for Federal income tax purposes will be the fair market value
of the INVB Common Stock received by such shareholder as of the
Distribution Date (plus the amount of any cash received in lieu of
fractional shares). The amount of the Distribution received by each BMCC
shareholder will be treated as a dividend (i.e., as ordinary income) to
such shareholder to the extent of such shareholder's pro rata share of
BMCC's current earnings and profits as computed for Federal income tax
purposes. The amount of the Distribution received by each BMCC
shareholder that is not treated as a dividend will first be treated as a
nontaxable return of capital to the extent of such shareholder's basis in
its BMCC Common Stock, and then as an amount received by such shareholder
from the sale or exchange of property. The amount that is treated as
received by a BMCC shareholder from the sale or exchange of property will
generally be a capital gain, and the capital gain will be long-term
capital gain if the shareholder has held its BMCC stock for more than one
year. For purposes of determining the amount of the Distribution received
by a BMCC shareholder that constitutes a dividend, the shareholder's pro
rata share of BMCC's current earnings and profits will be based on the
shareholder's percentage ownership of BMCC Common Stock.
Based on BMCC's current earnings and profits it is believed that
a substantial amount of the Distribution will result in the recognition by
BMCC's shareholders of return of capital.
For Federal income tax purposes each BMCC shareholder will
acquire an initial tax basis in such shareholder's INVB Common Stock
received in the Distribution equal to the fair market value of the
property, i.e., the value of the INVB Common Stock that is received by
such shareholder as of the Distribution Date. Each BMCC shareholder's
holding period for INVB Common Stock received in the Distribution will
begin on the Distribution Date. Also, certain special rules, that permit
a deduction for certain dividends received by a corporation, commonly
called the "dividends received deduction," will not apply in the case of
corporations that receive the Distribution. Since BMCC is a REIT, the
dividends paid by BMCC do not qualify for the dividends received
deduction.
As mentioned above, the amount of the Distribution received by
each BMCC shareholder for Federal income tax purposes will be the fair
market value of the property, i.e., the value of the INVB Common Stock
that is received by such shareholder as of the Distribution Date (plus the
amount of any cash received in lieu of fractional shares). BMCC will make
a determination of the fair market value of the INVB Common Stock as of
the Distribution Date after such date based information and advice to be
received by BMCC from Cleary Gull. Prior to January 31, 1998 BMCC will
report the amount of the Distribution received by each shareholder to such
shareholder and to the IRS on IRS Form 1099-DIV.
There is no assurance that the IRS or the courts will agree that
the amount of the Distribution received by a BMCC shareholder is the
amount determined by BMCC, and it is possible that the IRS and the courts
will ultimately determine that BMCC's shareholders, or some of them,
received a larger Distribution for Federal income tax purposes than the
amounts reported to them by BMCC. If the IRS were to challenge the amount
of the Distribution reportable by any BMCC shareholder on such
shareholder's Federal income tax return, then such shareholder would have
to bear the expense and effort of defending against or otherwise resolving
such challenge.
Payment of the Distribution by BMCC. Distributions of property
made by BMCC to its shareholders with respect to their stock, such as the
Distribution, must in certain circumstances be treated as if BMCC sold the
property in a taxable sale at its fair market value. This rule will apply
to the Distribution if BMCC's tax basis in the distributed property is
less than the fair market value of the property at the Distribution Date.
BMCC estimates that if the fair market value of the INVB Common Stock
distributed in the Distribution exceeds BMCC's tax basis in such property
at the Distribution Date, the Distribution will be treated as a taxable
sale to BMCC and BMCC will recognize gain on the Distribution in an amount
equal to the excess of the fair market value of the distributed property
on the Distribution Date over BMCC's tax basis on such property. If,
however, BMCC's tax basis in the INVB Common Stock exceeds the fair market
value of such property on the Distribution Date, then no gain or loss will
be recognized by BMCC on the Distribution. As described above, the amount
of the Distribution (i.e., the fair market value of the property that is
distributed) will be determined by BMCC after the Distribution based on
information and advice to be received by BMCC from Cleary Gull.
Tax Reporting. As indicated above, the amount of the
Distribution received by each BMCC shareholder will be determined by BMCC
after the Distribution is made based on information and advice received by
BMCC from Cleary Gull. After this determination is made (and not later
than January 31, 1998) BMCC will report the amount of the dividend
received by each shareholder to such shareholder and to the IRS on IRS
Form 1099-DIV.
Backup Withholding. Under Section 3406 of the Code and
applicable regulations thereunder, a holder of BMCC Common Stock may be
subject to backup withholding at the rate of 31 percent with respect to
the amount of the Distribution paid to such holder on such stock. If:
(i) the shareholder ("payee") fails to furnish or certify a taxpayer
identification number to BMCC (the "payor"); (ii) the IRS notifies the
payor that the taxpayer identification number furnished by the payee is
incorrect; (iii) there has been a "notified payee underreporting"
described in Section 3406(c) of the Code; or (iv) there has been a "payee
certification failure" described in Section 3406(d) of the Code, then BMCC
generally will be required to withhold an amount equal to 31 percent of
the amount of the Distribution paid to such shareholder with respect to
such Shareholder's BMCC Common Stock. Any amounts withheld under the
backup withholding rules from a payment to a shareholder will be allowed
as a credit against the shareholder's Federal income tax liability or as a
refund.
The foregoing summary of the federal income tax consequences of
the Distribution is for general information only and may not apply to BMCC
shareholders who acquired their shares [in connection with the grant of a
share of restricted stock or otherwise as compensation], who are not
citizens or residents of the United States, or who are otherwise subject
to special treatment under the Code. All BMCC shareholders should consult
their own tax advisors as to the particular tax consequences of the
Distribution to them, including the application of state, local and
foreign tax laws.
Stock Ownership After the Distribution
Immediately after the Distribution, the shareholders of record
of BMCC on the Record Date will own approximately 88% of the then
outstanding shares of INVB Common Stock. The Schonath Entities, as
shareholders of BMCC on the Record Date, will receive approximately 5.4%
of the then outstanding shares of INVB Common Stock pursuant to the
Distribution.
The Schonath Entities will already own 120,000 or 12% of the
outstanding shares of INVB Common Stock immediately prior to the
Distribution. Such shares will be purchased from INVB pursuant to INVB's
initial capitalization at a price of $7.00 per share, the same price paid
by BMCC for its shares. Therefore, immediately after the Distribution,
the Schonath Entities will own approximately 17.4% of the outstanding INVB
Common Stock. The Board of Directors of INVB determined that it would be
in the best interests of INVB's shareholders to have Mr. Schonath, Chief
Executive Officer of INVB, BMCC and the Bank, hold a substantial equity
interest in INVB. In addition, the INVB Board believes that the
investment by Mr. Schonath and the Schonath Entities in INVB of $840,000,
made at the same price as that paid by BMCC for its interest in INVB, will
closely align Mr. Schonath's interests with that of INVB and its
shareholders and provide significant incentive for Mr. Schonath.
The Schonath Entities will also own a warrant to purchase
100,000 additional shares of INVB Common Stock or 10% of the shares then
outstanding, at a price per share equal to $7.70, or 110% of the price
paid for the shares upon the initial capitalization of INVB. Such warrant
was issued in connection with such initial capitalization, and is
exercisable at any time through August ___, 2004. After the Distribution
and assuming no additional shares of INVB Common Stock are issued, upon
exercise of the warrant the Schonath Entities will own approximately 24.9%
of the outstanding shares of INVB Common Stock.
Market for INVB Common Stock
There is currently no public market for INVB Common Stock. The
INVB Common Stock will not be listed on any securities exchange. Although
INVB expects that quotations for INVB Common Stock will be reported on the
OCT Bulletin Board, there can be no assurance as to the prices at which
trading in INVB Common Stock will occur after the Distribution same.
Baird has advised INVB that, upon completion of the Distribution, it
intends to act as a market maker in the Common Stock, subject to
applicable laws and regulatory requirements. Making a market in
securities involves maintaining bid and ask quotations and being able, as
principal, to execute transactions in reasonable quantities at those
quoted prices, subject to various securities laws and other regulatory
requirements. The development of a public trading market depends,
however, upon the existence of willing buyers and sellers, the presence of
which is not within the control of INVB, the Bank or any market maker.
Even with a market maker, factors such as the limited size of this
Distribution, the lack of earnings history for INVB and the absence of a
reasonable expectation of dividends within the near future mean that there
can be no assurance of the development in the foreseeable future of an
active and liquid market for the Common Stock. Even if a market develops,
there can be no assurance that a market will continue. Recipients of
Common stock should carefully consider the potentially illiquid and long-
term nature of the shares being distributed hereby.
Until INVB Common Stock is fully distributed and an orderly
trading market develops, the prices at which trading in such stock occurs
may fluctuate significantly. The prices at which INVB Common Stock trades
will be determined by the marketplace and may be influenced by many
factors, including, among others, INVB's performance and prospects, the
depth and liquidity of the market for INVB Common Stock, investor
perception of INVB and of the banking industry, INVB's dividend policy,
general financial and other market conditions, and domestic and
international economic conditions. In addition, financial markets,
including the OTC Bulletin Board, have experienced extreme price and
volume fluctuations that have affected the market price of many stocks and
that, at times, could be viewed as unrelated or disproportionate to the
operating performance of such companies. Such fluctuations have also
affected the share prices of many newly public issuers. Such volatility
and other factors may materially adversely affect the market price of INVB
Common Stock.
INVB initially will have approximately four thousand
shareholders of record, based on the number of record holders of BMCC
Common Stock on the Record Date. The Transfer Agent and Registrar for the
INVB Common Stock will be Firstar Trust Company. For certain information
regarding options and other equity-based employee benefit awards involving
INVB Common Stock that may become outstanding after the Distribution, see
"Management-INVB 1997 Equity Incentive Plan."
Shares of INVB Common Stock distributed to BMCC shareholders in
the Distribution will be freely transferable, except for securities
received by persons who may be deemed to be "affiliates" of INVB under the
Securities Act of 1933, as amended (the "Securities Act"). Persons who
may be deemed to be affiliates of INVB after the Distribution generally
include individuals or entities that control, are controlled by, or are
under common control with, INVB and may include certain officers and
directors of INVB as well as principal shareholders of INVB, if any.
Persons who are affiliates of INVB will be permitted to sell their shares
of INVB Common Stock only pursuant to an effective registration statement
under the Securities Act or an exemption from the registration
requirements of the Securities Act, such as the exemption afforded by
Section 4(2) of the Securities Act (relating to private sales) or by Rule
144 under the Securities Act.
See "Risk Factors-Absence of a Public Market for INVB Common
Stock."
Conditions; Termination
The Distribution is conditioned upon, among other things: (a)
the receipt of all state and federal bank regulatory approvals necessary
for the Bank to commence operations (b) the receipt of and any material
governmental approvals and third party consents necessary to consummate
the Distribution; (c) the absence of any order, injunction, decree or
other legal restraint or prohibition preventing the consummation of the
Distribution; and (d) no other event occurring that prevents the
consummation of the Distribution. The BMCC Board may, but has no
obligation to, waive any of these conditions. In addition, regardless of
whether these conditions are satisfied, the BMCC Board has reserved the
right to abandon, defer or modify the Distribution and the related
transactions described herein at any time prior to the Distribution Date.
DIVIDEND POLICY
INVB does not anticipate the payment of any cash dividends on
INVB Common Stock in the foreseeable future. The declaration of dividends
by INVB will be subject to the discretion of the Board of Directors of
INVB. INVB has no operations and will be dependent on dividends from the
Bank to fund any dividend INVB may declare. However, the Bank will be
subject to certain restrictions imposed by applicable banking laws that
may limit its ability to pay dividends to INVB.
BUSINESS
General
The Company is a proposed bank holding company organized under
Wisconsin law to own all of the common stock of the Bank. The Bank is
organizing as a Wisconsin-chartered commercial bank with depository
accounts to be insured by the FDIC. The Bank intends to provide a full
range of commercial and consumer banking services in its primary service
area in Waukesha County, Wisconsin (which is in the Milwaukee Metropolitan
area), as well as the surrounding extended market in south-eastern
Wisconsin. The Bank will have received all necessary regulatory approvals
prior to the Distribution Date and assuming BMCC's capital contribution to
the Bank of approximately $6.2 million and the Schonath Entities' capital
contributions of $840,000 immediately prior to the Distribution Date,
anticipates commencing business during July of 1997. The Bank will begin
as a start-up entity with no loan portfolio, no deposits and no other
existing business. On the Distribution Date, all of the employees of BMCC
will cease their employment with BMCC and become employees of the Bank,
except for Messrs. Schonath and McGlocklin who will be officers of both
the Bank and BMCC. BMCC will continue to operate as a real estate
investment trust ("REIT"). As a REIT, BMCC will manage its current loan
portfolio through its relationship with the Bank pursuant to the Services
and Expenses Agreement; continue participating in loans held by third
parties, including the Bank; and expand its real estate lending business
into ownership of real property, including related buildings and
improvements for lease to small businesses.
Background
The liberalization of the interstate banking laws of Wisconsin
in recent years has led to substantial consolidation of the banking
industry. At the same time, recent technological innovations, including
automatic teller machines, automated telephone teller systems and Internet
banking, have reduced the need for and importance of branch banking. In
the opinion of the Company's management, these factors have created a
favorable opportunity for a new commercial bank with headquarters in
Waukesha County. Management of the Company believes that such a bank can
attract those customers who prefer to conduct business with a locally-
managed institution that offers exemplary technologically advanced
personal service, demonstrates an active interest in their businesses and
personal financial affairs and that offers attractive and competitive
interest rates. The Company believes that a locally managed institution
will be able to deliver more timely responses to customer requests,
provide customized financial products or services addressing out-of-the-
ordinary matters and offer the personal attention of personal banking
officers. The Company also believes that by fully utilizing available
automated account technology, it will be able to effectively compete with
larger multi-branch banks. The Bank will seek to take advantage of these
opportunities by emphasizing in its marketing plan the Bank's local
management and the Bank's ties and commitment to the Bank's market area
and by contracting with a data processing company to provide specialized
automated account services to its customers.
The Company and the Bank are both in the organizational and
development stage, have not been capitalized, have no earnings or history
of operations, have no employees, and no current business. BMCC has paid
all organizational expenses of both the Company and the Bank to date and
will pay such expenses through the Distribution Date. BMCC has also
constructed and furnished the building that will serve as the Bank's
offices, and BMCC has negotiated or is in the process of negotiating
contracts on behalf of the Company and the Bank and coordinated the
purchasing, leasing and installation of all equipment necessary for the
Bank to commence operations. Immediately prior to the Distribution Date,
and after the Bank is capitalized, the Bank will commence operations and
all of BMCC's officers and employees, except Mr. Schonath and Mr.
McGlocklin, will leave the employ of BMCC and become employees of the
Bank, and in certain cases, INVB. Mr. Schonath and Mr. McGlocklin will
remain officers of BMCC in addition to becoming officers of INVB and the
Bank. The Bank will lease its offices, furnishings and equipment, from
BMCC after the Distribution. See "Arrangements Among BMCC, INVB and the
Bank."
Business Strategy
A cornerstone of the Bank's business strategy will be to
emphasize the Bank's commitment to personalized customer service and the
Bank's local management and commitment to the Bank's market area. George
R. Schonath, the President and Chief Executive Officer of the Company and
the Bank, has over 35 years of financial services experience in the
greater Milwaukee area. The Company's goal will be to emphasize the
Bank's local focus in order to distinguish the Bank as a very "customer-
driven" organization. The Bank also intends to offer automated account
services and very attractive and competitive interest rates on all of its
interest-bearing accounts. The Bank will strive to establish a high
standard of quality in each service it provides and the employees of the
Bank will be expected to emphasize service in their dealings with
customers. Because the Bank intends to commence operations with a staff
of fewer than 20 full time employees, employees will need to be flexible
in the duties they perform in an effort to satisfy customers.
Employees will be encouraged to be active in the community.
Both Messrs. Schonath and McGlocklin currently hold, and have held in the
past, leadership positions in a number of community organizations, and
intend to continue this active involvement in future years. Other members
of the management team will also be encouraged to volunteer for such
positions.
The Bank intends to implement a marketing campaign utilizing a
variety of local media sources and community-based promotions. The
campaign will emphasize the Bank's independence, local management, special
focus on customer service and its attractive and competitive interest
rates. All employees will be expected to actively market the Bank's
services.
The Bank intends to concentrate on the financial services needs
of individuals and small businesses. The Bank's initial lending limit
will be approximately $1,400,000. Due to the Bank's special relationship
with BMCC and Mr. Schonath's previous experience and relationships with a
number of the region's other financial institutions, the Bank hopes to
originate significant loan volumes in excess of its lending limit and sell
participations in such loans to BMCC and other banks. See "Arrangements
Among BMCC, INVB and the Bank."
Although the Bank may make real estate mortgage loans which
might have been made by BMCC if the Bank were not in existence, it is
impossible to predict if, in fact, any such loans will be made and, if so,
the amount of any such loans. BMCC intends to maintain and service its
mortgage loan portfolio through its relationship with the Bank pursuant to
the Services and Expenses Agreement; continue its business of purchasing
participation interests in real estate mortgage loans held by other
lending institutions; and begin acquiring real property, including related
buildings and improvements for lease to small businesses.
Products and Services
The Bank intends to offer a broad range of deposit services,
including checking accounts, NOW accounts, savings and other time deposits
of various types. The transaction accounts and time certificates will be
tailored to the principal market area at attractive and competitive
interest rates. All deposit accounts will be insured by the FDIC up to
the maximum amount permitted by law. The Bank intends to solicit these
accounts from individuals, businesses, associations, organizations,
commercial financial institutions and government authorities.
The Bank also plans to offer a full range of short to
intermediate term personal and commercial loans. The Bank intends to make
personal loans directly to individuals for various purposes, including
purchases of automobiles, boats and other recreational vehicles, home
improvements, education and personal investments. The Bank anticipates
that substantially all of the residential mortgage loans it generates will
be sold to third party investors. Commercial loans will be made primarily
to small and mid-sized businesses. These loans will generally be secured
and will be available for the acquisition of fixed assets, including real
estate, purchases of equipment and machinery, financing of inventory and
accounts receivable, as well as any other business purpose considered
appropriate.
The Bank currently plans to offer other services, including
credit cards, money orders, traveler's checks and automated teller
services with access to one or more regional or national automated teller
networks. Although the Bank has been involved in discussions with a
number of vendors regarding the provision of such services, the Bank does
not expect to make final decisions with respect to the providers of such
services until approximately 30 days before its commencement of business.
The Bank also intends to establish relationships with correspondent banks
and other financial institutions to provide other services for its
customers.
Market Area
The Bank's primary market area and the location of its main
office will be in Waukesha County, Wisconsin. The secondary market area
of the Bank is expected to include all of southeastern Wisconsin.
Competition
The Bank's intended market area is competitive. The Bank will
face competition from large regional multi-branch banks, smaller local
banks, finance companies, insurance companies, mortgage companies,
securities brokerage firms, money market funds, loan production offices
and other providers of financial services. Most of the Bank's competitors
have been in business for many years, have established customer bases, are
substantially larger, have substantially larger lending limits than the
Bank and can offer certain services, including multiple branches and
international banking services, that the Bank will be able to offer only
through correspondent banks, if at all. In addition, most of these
entities have greater capital resources than the Bank, which among other
things, may allow them to price their services at levels more favorable to
customers and to provide larger credit facilities than could the Bank.
The Company anticipates that the Bank's lending limit of approximately
$1,400,000 together with loan participation arrangements with BMCC,
correspondent banks and others will be adequate to satisfy the credit
needs of most of its customers.
The Company will compete for loans principally through the range
and quality of the services it will provide, interest rates and loan fees.
The Company believes that its personal service philosophy will enhance its
ability to compete favorably in attracting individuals and small
businesses. The Company will actively solicit deposit-related clients and
will compete for deposits by offering customers personal attention,
professional service and competitive interest rates.
Bank Premises
The Bank will sub-lease a portion of the premises at W239 N170
Busse Road, Waukesha, Wisconsin from BMCC. See "Arrangement Among BMCC,
INVB and the Bank." The building was built in 1996. The Bank's
operations will occupy approximately 4,700 square feet of the building.
BMCC leases the building from Bando McGlocklin Real Estate Investment
Corp. ("BMREIC"). BMREIC is not affiliated with BMCC, INVB or the Bank.
However, SKBM, Inc., a company owned by George R. Schonath, the President
and Chief Executive Officer and a director of INVB and the Bank, and Jon
McGlocklin, the Senior Vice President and a director of INVB and the Bank,
provides management services to BMREIC.
Employees
INVB will have only three employees. George R. Schonath will be
President and Chief Executive Officer, Jon McGlocklin will be Senior Vice
President and Secretary, and Susan J. Hauke will be Vice President-
Finance, Controller and Assistant Secretary.
The Bank will commence operations with a staff of fewer than 20
full time employees. George R. Schonath will be the President and Chief
Executive Officer of the Bank, and Jon McGlocklin will be Senior Vice
President. The Bank's other officers will be Susan J. Hauke, Vice
President-Finance, Controller, Treasurer and Secretary; Scott J. Russell,
Senior Vice President and Lending Officer; Joel C. Obermeier, Vice
President-Residential Loans; and Denise L. Kreuger, Personal Banking
Officer. Mr. Schonath will be responsible for overall operations. Mr.
McGlocklin and Mr. Russel will concentrate on business banking. Ms.
Hauke's primary responsibility will be financial, accounting and
administrative matters. Mr. Obermeier will be in charge of residential
loans and Ms. Krueger will coordinate personal banking efforts.
Virtually all data processing services will be purchased on a
contract basis, reducing the number of persons otherwise required to
handle the operational functions of the Bank. Arrangements with a data
processing company have been finalized by BMCC and the Bank will enter
into data processing services contract with such company immediately after
the Bank is capitalized.
In addition to the officers indicated above, it is anticipated
that virtually all of the employees of BMCC that have been involved in day
to day operations will transfer their employment to the Bank when the Bank
commences its operations.
BMCC Historical Data
As discussed above, all employees of BMCC will transfer their
employment to the Bank when the Bank commences operations (except for
Messrs. Schonath and McGlocklin who will serve as officers of both BMCC
and the Bank). The Bank will provide a full range of commercial and
consumer banking services. One aspect of the Bank's business will be the
origination of loans to small businesses, a function which has
historically been performed by BMCC. The following sets forth certain
financial and other historical data for BMCC for the periods indicated.
This data is intended to provide the reader with financial and other data
related to BMCC's loan origination business, substantially all of which
will be assumed by the Bank pursuant to the transfer of employees from
BMCC to the Bank and the terms of the Services and Expenses Agreement
which provides that, except as specifically approved in writing by the
Bank, BMCC will not originate any loans during the term of the Services
and Expenses Agreement and any renewals thereof. Readers should be
cautioned, however, that the Bank will be a start-up entity with no assets
(other than its initial capital), no loan portfolio, no deposits, and no
other existing business and, therefore, while the following financial and
other data may be relevant to an assessment of the Bank's future
performance in the loan origination business, it should not be considered
relevant to an assessment of the Bank's future performance in general.
I. Historical data not restated to reflect change in reporting entity
Prior to January 2, 1997, BMCC and its 100% owned subsidiary, Bando
McGlocklin Small Business Lending Corporation ("BMSBLC") were registered
as investment companies under the Investment Company Act of 1940 ("1940
Act"). Effective January 2, 1997, BMCC and BMSBLC deregistered as
investment companies under the 1940 Act. BMCC continues to operate as a
registrant under the Securities Act of 1933, but now reports under the
Securities Exchange Act of 1934 ("Exchange Act").
Under the 1940 Act, the investments in Bando McGlocklin Investment
Corporation ("BMIC"), a 99% owned subsidiary of BMCC, and Lee Middleton
Original Dolls, Inc., ("Middleton Doll") and License Products, Inc.
("License Products"), two 51% owned manufacturing subsidiaries of BMIC,
were accounted for as common stock investments and stated at "fair value"
as determined in good faith by the Board of Directors. Effective January
2, 1997, under the Exchange Act, these three subsidiaries are
consolidated. This constitutes a change in reporting entity effective
January 2, 1997, which requires a restatement of previously reported
financial positions and results of operations.
The income statement and balance sheet amounts presented in this section
are presented as previously reported on the basis of accounting prescribed
for registered investment companies under the 1940 Act. While the amounts
presented in this section have been derived from the financial statements
in BMCC's Annual Reports to Shareholders, which included the opinion of
BMCC's independent accountants, it should be noted that these amounts have
not been restated to reflect the change in reporting entity. Loans to the
three unconsolidated subsidiaries, and the associated loan loss reserves,
have not been eliminated.
BMCC intends to file a Form 8-K with the Commission to present restated
financial statements for prior periods reflecting the change in reporting
entity as soon as practical.
Reference should be made to page 30 of this document for unaudited
financial information as of December 31, 1996 and March 31, 1997 and for
the three month period ended March 31, 1997 presented under the Exchange
Act, reflecting the consolidation of BMIC, Middleton Doll and License
Products.
Condensed Financial Data
The following is a summary of selected financial data of BMCC for the
periods indicated.
<TABLE>
<CAPTION>
Six Months Year Ended June 30,
ended December
Income Statement Information: 31, 1996(1) 1996 1995 1994
<S> <C> <C> <C> <C>
Interest on loans $ 3,702,185 $ 8,471,061 $ 10,071,440 $ 8,014,846
Total operating income 3,961,673 9,055,146 10,596,534 8,814,532
Interest expense 987,376 3,399,344 5,519,492 3,190,056
Total operating expenses 2,502,107 5,512,944 7,067,392 4,948,252
Net operating income 1,459,566 3,542,202 3,529,142 3,866,280
Net operating income, realized
gain (loss) gain on investments
and change in unrealized
appreciation/depreciation on
investments and securities 2,549,124 3,211,556 2,997,895 2,997,616
Cash dividends paid per share $1.00 $0.96 $1.00 $1.00
<CAPTION>
At June 30,
At December
Balance Sheet Information: 31, 1996 1996 1995 1994
<S> <C> <C> <C> <C>
Loans under management(2) $141,415,840 $137,924,755 $126,969,600 $112,562,155
Loans(3) 72,467,911 77,136,508 85,330,979 103,120,734
Total assets 79,449,366 84,685,928 91,227,492 121,403,075
Short term borrowings 31,468,394 24,288,887 24,292,322 33,316,511
Long term obligations 12,015,286 23,603,990 26,953,334 46,446,667
Preferred stock 16,908,025 16,908,025 16,908,025 17,250,000
Shareholders' equity 17,573,872 18,695,396 21,747,919 23,123,261
(1) During 1996 BMCC changed its year-end from June 30 to December 31.
(2) Loans under management represent all loans which were originated by
BMCC and are still outstanding. Some of the loans have been sold to
third parties, but BMCC still services all the loans.
(3) Loans not sold to third parties.
</TABLE>
Loan Portfolio
The following consolidated schedules of investments categorize BMCC's loan
portfolio by business type for the periods indicated. The loans in BMCC's
portfolio are primarily secured by a first or second mortgage on real
estate.
As of December 31, 1996
Unpaid
Loans Number of Principal
Type of Business Loans Balance or Cost
Wholesale Goods 24 $ 7,945,216
Fabricated Metal Products 16 8,654,715
Industrial Machinery 46 18,794,532
Services 25 4,721,127
Commercial Printing 30 8,108,672
Rubber Products 2 190,247
Instruments and Related Products 8 2,544,897
Construction 12 4,292,195
Electronic Equipment 7 3,526,554
Retail 11 1,630,161
Manufacturing-Miscellaneous 14 7,317,641
Transportation 8 4,548,434
Miscellaneous 3 193,520
--- ----------
Total Loans 206 $72,467,911
=== ==========
As of June 30, 1996
Unpaid
Loans Number of Principal
Type of Business Loans Balance or Cost
Wholesale Goods 29 $10,435,659
Fabricated Metal Products 16 9,019,316
Industrial Machinery 46 20,680,327
Services 27 5,583,330
Commercial Printing 32 13,786,126
Rubber Products 3 234,634
Instruments and Related Products 8 2,871,078
Construction 11 2,423,320
Electronic Equipment 6 2,355,177
Retail 9 1,386,877
Manufacturing-Miscellaneous 16 6,190,012
Transportation 6 2,066,300
Miscellaneous 2 104,352
--- ----------
Total Loans 211 $77,136,508
=== ==========
As of June 30, 1995
Unpaid
Loans Principal
Type of Business Number Balance or Cost
Wholesale Goods 52 $27,194,676
Metalworking Machinery 32 15,847,273
Industrial Machinery 15 3,064,982
Services 26 5,634,046
Commercial Printing 21 9,159,586
Rubber Products 6 2,955,787
Instruments and Related Products 9 1,941,441
Construction 12 4,420,588
Electronic Equipment 5 3,978,147
Retail 6 936,272
Furniture 3 1,093,569
Electrical Goods 6 947,207
Transportation 8 5,011,348
Miscellaneous 8 3,146,057
--- ----------
Total Loans 209 $85,330,979
=== ==========
As of June 30, 1994
Loans Number of Unpaid Principal
Type of Business Loans Balance or Cost
Wholesale Goods 54 $25,619,030
Metalworking Machinery 27 12,559,021
Industrial Machinery 20 9,342,377
Services 27 9,366,145
Commercial Printing 16 7,470,487
Rubber Products 10 5,630,333
Instruments and Related Products 9 5,313,331
Construction 9 5,820,554
Electronic Equipment 7 5,834,150
Retail 7 2,656,676
Furniture 3 2,377,685
Electrical Goods 7 2,047,711
Transportation 7 4,504,940
Miscellaneous 12 4,578,294
--- -----------
Total Loans 215 $103,120,734
=== ===========
Maturities and Sensitivities of Loans to Changes in Interest Rates
As of December 31, 1996 BMCC had loans aggregating $22,083,514 which
mature in one year or less, $77,716,435 which mature after one year but in
less than five years and $42,763,990 which mature after five years.
BMCC also had loans aggregating $16,345,509 that were fixed rates and
$126,218,430 which had variable rates as of December 31, 1996.
The loan numbers that were noted in the above paragraphs represent the
loans under management number as of December 31, 1996 not the loans that
are reflected on the balance sheet.
Risk Elements
BMCC's nonaccrual loans (loans based on facts and circumstances that the
interest is unlikely to be collectible), accruing loans 90 days or more
past due (the principal and interest of which the Board of Directors has
determined is adequately collateralized) and restructured loans (loans
still accruing interest and not 90 days or more past due on which a
concession has been made to the borrower for the repayment of interest) to
small business concerns are summarized in the following table.
<TABLE>
<CAPTION>
At June 30,
At December 31,
1996 1996 1995 1994
<S> <C> <C> <C> <C>
Nonaccrual loans(1) $1,538,000 $ 0 $ 0 $785,351
Accruing loans 90 days or
more past due 127,276 249,119 3,358,380 0
Restructured loans 0 0 0 0
--------- ------- --------- -------
Total nonperforming loans $1,665,276 $249,119 $3,358,380 $785,351
========= ======= ========= ======
(1) Includes loans to unconsolidated, majority owned manufacturing
subsidiaries.
</TABLE>
Analysis of the Loan Loss Reserve
The following sets forth a summary of BMCC's loan loss
reserves for the periods indicated.(1)
<TABLE>
<CAPTION>
At June 30,
At December 31,
1996 1996 1995 1994
<S> <C> <C> <C> <C>
Balance at beginning of period $800,000 $800,000 $650,000 $600,000
Charge-offs:
Domestic:
Real estate-mortgage 0 (2,651) 0 0
--------- --------- ---------- ----------
Recoveries:
Domestic:
Real estate-mortgage 0 0 0 0
--------- --------- ---------- ----------
Net charge-offs 0 (2,651) 0 0
--------- --------- ---------- ----------
Change in loan loss reserves 1,200,000 2,651 150,000 50,000
--------- --------- ---------- ----------
Balance at end of period $2,000,000 $800,000 $800,000 $650,000
========= ========= ========== ==========
Ratio of net charge-offs during
the period to average loans
outstanding during the period 0.00% 0.00% 0.00% 0.00%
===== ===== ===== =====
(1) Includes the loan loss reserve associated with loans to
unconsolidated, majority owned manufacturing subsidiaries.
</TABLE>
The additions to the loan loss reserve were based upon decisions made by
BMCC's management and the Board of Directors.
Impaired Loans
BMCC routinely monitors its loan portfolio for evidence of loan
impairment. A loan is considered impaired when, based on current
information and events, it is probable that BMCC will be unable to collect
all amounts due according to the contractual terms of the loan.
Historically impairment has not been an indicator of loss. In determining
the need for a loss reserve on the impaired loans, management looks to the
underlying collateral. A loss reserve is established if the estimated
value of the underlying collateral is insufficient to cover the impaired
loan. Accrued interest on the impaired loans is considered fully
collectible.
The following table summarizes the impaired loans, loan loss reserve and
the accrued interest.(1)
At December 31, At June 30,
1996 1996 1995 1994
Impaired Loans $2,560,434 $3,039,906 $2,717,931 $1,751,920
Loans Loss
Reserve 1,383,730 583,729 51,943 143,615
Accrued
Interest 51,223 70,601 136,640 100,909
(1) Includes information on loans to unconsolidated, majority owned
manufacturing subsidiaries.
II. Historical data reflecting the change in reporting entity
As discussed on page 24 of this document, effective January 2, 1997 BMCC
and BMSBLC deregistered as investment companies under the 1940 Act. BMCC
continues to operate as a registrant under the Securities Act of 1933, but
now reports under the 1934 Act.
Under the 1940 Act, the investments in BMIC, Middleton Doll and License
Products were accounted for as common stock investments and stated at
"fair value" as determined in good faith by the Board of Directors.
Effective January 2, 1997, under the 1934 Act, these three subsidiaries
are consolidated.
The income statement and balance sheet amounts presented in this section
are presented as required under the 1934 Act. These unaudited amounts
reflect the consolidation of BMIC, Middleton Doll and License Products.
Loans to these consolidated subsidiaries, and the associated loan loss
reserves, have been eliminated.
Condensed Financial Data
The following is a summary of selected financial data of BMCC for the
periods indicated.
Three months ended
March 31, 1997
Income Statement Information:
Interest on loans $2,432,587
Net sales of manufacturing
subsidiaries 3,029,640
Total revenues 5,442,414
Interest expense 1,264,316
Cost of goods sold of
manufacturing subsidiaries 1,637,134
Total expenses 4,293,351
Net income 744,524
Net income per common share $0.20
Cash dividends paid per share $0.00
Weighted average shares 3,717,625
outstanding
Balance Sheet Information: At March 31, 1997 At December 31, 1996
Loans under management(1) $133,187,829 $138,416,220
Loans(2) 105,424,218 69,468,291
Total assets 114,851,133 79,729,297
Short term borrowings 27,543,397 31,468,394
Long term obligations 49,254,216 12,015,286
Preferred stock 16,908,025 16,908,025
Shareholders' equity 16,257,825 15,858,059
(1) Loans under management represent all loans which were originated by
BMCC and are still outstanding. Some of the loans have been sold to
third parties, but BMCC still services all the loans.
(2) Loans not sold to third parties.
Risk Elements
BMCC's nonaccrual loans (loans based on facts and circumstances that the
interest is unlikely to be collectible), accruing loans 90 days or more
past due (the principal and interest of which the Board of Directors has
determined is adequately collateralized) and restructured loans (loans
still accruing interest and not 90 days or more past due on which a
concession has been made to the borrower for the repayment of interest) to
small business concerns are summarized in the following table.
At March 31, 1997 At December 31, 1996
Nonaccrual loans(1) $ 0 $ 0
Accruing loans 90 days or
more past due 377,276 127,276
Restructured loans 0 0
------- -------
Total nonperforming
loans $377,276 $127,276
======= =======
(1) Excludes loans to consolidated manufacturing subsidiaries.
Analysis of the Loan Loss Reserve
The following sets forth a summary of BMCC's loan loss reserves for
periods indicated.(1)
At March 31, 1997 At December 31, 1996
Balance at beginning of period $450,000 $38,791
Charge-offs:
Domestic:
Real estate-mortgage 0 0
-------- --------
Recoveries:
Domestic:
Real estate-mortgage 0 0
-------- --------
Net charge-offs 0 0
-------- --------
Change in loan loss reserve 0 411,209
-------- --------
Balance at end of period $450,000 $450,000
======== ========
Ratio of net charge-offs
during the period to average
loans outstanding during the
period 0.00% 0.00%
===== =====
The additions to the loan loss reserve were based upon decisions made by
the BMCC's management and the Board of Directors.
(1) Excludes the loan loss reserve associated with loans to consolidated
manufacturing subsidiaries.
Impaired Loans
BMCC routinely monitors its loan portfolio for evidence of loan
impairment. A loan is considered impaired when, based on current
information and events, it is probable that BMCC will be unable to collect
all amounts due according to the contractual terms of the loan.
Historically impairment has not been an indicator of loss. In determining
the need for a loss reserve on the impaired loans, management looks to the
underlying collateral. A loss reserve is established if the estimated
value of the underlying collateral is insufficient to cover the impaired
loan. Accrued interest on the impaired loans is considered fully
collectible.
The following table summarizes the impaired loans, loan loss reserve and
the accrued interest.(1)
At March 31, 1997 At December 31, 1996
Impaired Loans $1,176,737 $1,022,434
Loan Loss Reserve 450,000 450,000
Accrued Interest 58,493 51,223
(1) Excludes information on loans to consolidated manufacturing
subsidiaries.
III. Other Historical Data
Loans Sold Data
Since 1994, BMCC has sold loans to third parties. The following table
summarizes the sales and the outstanding balance of loans sold.
Principal
Balance Principal Balance
Sold at Date Percentage Sold at March 31, Recourse
of Sale Sold 1997 Provision
During the six months ended December 31, 1996:
$550,000 58% $544,900 None
97,795 75% 196,977 None
$647,795 $741,877
During the year ended June 30, 1996:
$1,671,644 68%-85% $1,589,263 None
1,757,275 100% 1,723,027 None
$3,428,919 $3,312,290
During the year ended June 30, 1995:
$13,222,580 85% $9,189,813 100%
2,837,677 75%-80% 1,929,486 None
1,455,000 75% -- None
1,605,175 100% -- None
$19,120,432 $11,119,299
Principal
Balance Principal Balance
Sold at Date Percentage Sold at March 31, Recourse
of Sale Sold 1997 Provision
During the year ended June 30, 1994:
$10,397,410 75% $2,995,085 None
During the three months ended March 31, 1997, BMCC repurchased certain
loans which had been sold to third parties, at unpaid principal balances
totalling $32,388,084. As a result of these transactions, the excess
servicing asset and retained loan discount related to the original sale
were reduced $642,319 and $615,763, respectively. Premium expense of
$26,556 was also recognized due to these transactions.
BMCC also sells loans with the option to repurchase them at a later date.
As of March 31, 1997, the balance of loan participations with repurchase
options was $42,754,216. During the three months ended March 31, 1997,
BMCC resold, with an option to repurchase, the loans referred to in the
preceding paragraph at unpaid principal balances totalling $32,388,084.
These sales have been accounted for as secured financings.
For the loans sold with no recourse, BMCC is susceptible to loss on the
loans up to the percentage of the retained interest to the extent the
underlying collateral is insufficient in the event of nonperformance by
the borrower. BMCC's retained interest is subordinated to the portion
sold. For the loans sold with full recourse, BMCC is susceptible to loss
equal to the total principal balance of the loan to the extent the
underlying collateral is insufficient in the event of nonperformance. No
associated loss reserve has been established as of March 31, 1997 for
loans which have been sold.
During the years ended June 30, 1996 and June 30, 1995, BMCC sold loans to
a trust, which issued two classes of certificates as noted in the table
below:
A A
Principal Certificate A B Certificate
Balance Sold to Certificate Certificate Balance at
Sold at Date of Third Interest Sold to March 31,
Sale Party Rate Company 1997
For year ended June 30, 1996:
$8,666,538 $7,453,223 6.938%(1) $1,213,315 $5,959,464
For year ended June 30, 1995:
$6,540,358 $5,246,160 8.00%(2) $1,294,198 $2,138,097
_______________
(1) The interest rate will be reset monthly based upon the 30 day
London Interbank Offered Rate (LIBOR) plus one and one-half
percent.
(2) The interest rate will be reset every three years based upon
the three-year U.S. Treasury Bond yield plus one and one-half
percent.
The B Certificates purchased by BMCC are subordinated to the A
Certificates. The B Certificates receive all excess interest after
expenses. BMCC has risk equal to the B Certificates' principal balances
to the extent the underlying collateral is insufficient in the event of
nonperformance by the borrowers. At March 31, 1997, no associated loss
reserve has been established. Under the terms of the Pooling and
Servicing Agreements BMCC retains servicing rights for all the loans sold.
All the loans that are sold to third parties and to the trusts are sold at
par. Premium income (expense) represents the differential at the time a
portion of a loan is sold between the present valued excess servicing
income on the sold portion and the retained loan discount, and subsequent
to sale, amortization of the retained loan discount and excess servicing
asset. The premium income (expense) for the three months ended March 31,
1997, the six months ended December 31, 1996 and fiscal years ended June
30, 1996, 1995 and 1994 was ($68,727), ($15,209), $78,978, $8,805 and $0,
respectively. The normal servicing fee income is reflected in interest on
loans.
Interest Rate Swaps Information
BMCC enters into interest rate swap agreements primarily as a means of
managing interest rate risk. To the extent that BMCC's variable-rate
loans are funded with fixed-rate debt, BMCC is subject to interest rate
risk. To reduce interest rate risk, BMCC enters into certain interest
rate swaps designed to convert variable-rate loans into fixed-rate loans.
Although these swaps reduce interest rate risk, the potential for profit
or loss on interest rate swaps still exists depending upon fluctuations in
interest rates. In addition, BMCC enters into interest rate swaps in an
attempt to further manage interest rate risk resulting from interest rate
movements.
The following table summarizes the interest rate swap agreements in effect
at March 31, 1997. No funds were borrowed or are to be repaid under these
arrangements.
<TABLE>
<CAPTION>
Current Interest Rates Paid
Original
Company Bank By Notional Expiration
Bank Payment Payment Company By Bank Amount Date
<S> <C> <C> <C> <C> <C> <C>
Firstar Bank Milwaukee, N.A.
Milwaukee, Wisconsin Floating Fixed 5.65625%(3) 8.77000% $10,000,000(6) 06/30/97
Firstar Bank Milwaukee, N.A.
Milwaukee, Wisconsin Floating Fixed 5.56250%(3) 6.53000% 17,500,000 07/07/97
Firstar Bank Milwaukee, N.A.
Milwaukee, Wisconsin Floating Fixed 5.56250%(3) 6.84700% 1,500,000 07/07/97
Firstar Bank Milwaukee, N.A.
Milwaukee, Wisconsin(1) Floating Floating 5.56250%(3) 6.17144%(4) 25,000,000 09/16/97
First Bank National Association
Minneapolis, Minnesota Floating Fixed 5.85156%(2) 10.20000% 12,600,000 09/23/97
Firstar Bank Milwaukee, N.A.
Milwaukee, Wisconsin(1) Floating Floating 5.56250%(3) 6.12950%(5) 35,000,000 10/06/97
Firstar Bank Milwaukee, N.A.
Milwaukee, Wisconsin Floating Fixed 5.59375%(2) 8.50270% 5,000,000 12/11/97
Norwest Bank Minnesota, N.A.
Minneapolis, Minnesota Floating Fixed 5.56250%(3) 5.29000% 15,000,000 09/16/98
First Bank National Association
Minneapolis, Minnesota(1) Floating Fixed 5.47656%(7) 9.20000% 8,000,000(8) 06/16/99
LaSalle National Bank
Chicago, Illinois Floating Fixed 5.62500%(3) 6.34000% 5,400,000 03/21/01
Firstar Bank Milwaukee, N.A.
Milwaukee, Wisconsin Floating Fixed 5.78125%(3) 7.43500% 10,325,000(9) 09/28/01
LaSalle National Bank
Chicago, Illinois Floating Fixed 5.56250%(3) 7.60000% 5,000,000 03/10/05
LaSalle National Bank
Chicago, Illinois Floating Fixed 5.47266%(3) 6.66000% 5,250,000(10) 05/23/05
LaSalle National Bank
Chicago, Illinois Floating Fixed 5.75000%(3) 6.50000% 5,000,000(11) 09/29/05
LaSalle National Bank
Chicago, Illinois Floating Fixed 5.53906%(3) 7.09000% 12,500,000 09/05/06
_______________
(1) Investment Swap.
(2) Adjusted every six months to the six-month London Interbank Offered
Rate (LIBOR) then in effect.
(3) Adjusted every three months to the three-month LIBOR then in effect.
(4) Adjusted every three months to the three-month LIBOR then in effect
plus a premium, currently at .60894%, subject to a 25 basis point
maximum increase at each adjustment period.
(5) Adjusted every three months to the three-month LIBOR then in effect
plus a premium, currently at .567%, subject to a 25 basis point
maximum increase at each adjustment period.
(6) The notional amount decreases by $166,667 each quarter and was
$5,499,991 at March 31, 1997.
(7) Adjusted every month to the one-month LIBOR then in effect.
(8) The notional amount decreases by $83,333 each quarter and was
$5,333,344 at March 31, 1997. $2,583,344 of this contract was
designated as a hedge; $2,750,000 was accounted for as an investment.
(9) The notional amount decreases by $166,667 each quarter and was
$6,658,333 at March 31, 1997.
(10) The notional amount decreases by $100,000 each quarter and was
$4,550,000 at March 31, 1997.
(11) The notional amount decreases by $75,000 each quarter and was
$4,550,000 at March 31, 1997.
</TABLE>
As a result of hedge arrangements, BMCC recognized a $408,728, $732,066,
$1,382,751, $1,193,506 and $2,934,691 reduction in interest expense for
the three months ended March 31, 1997, the six months ended December 31,
1996 and fiscal years ended June 30, 1996, 1995 and 1994, respectively,
In addition, BMCC recognized $112,858, $445,568, $412,129, $73,239 and
$40,591 reduction in interest expense for the three months ended March 31,
1997, the six months ended December 31, 1996 and fiscal years ended June
30, 1996, 1995 and 1994, respectively, as a result of the investment swap
contracts.
MANAGEMENT
Directors and Executive Officers of INVB
Set forth below is certain information concerning the directors
and executive officers of INVB. The INVB Board is currently comprised of
5 directors as indicated in the table below. INVB's Board of Directors is
divided into three classes. Commencing with the annual meeting of
shareholders to be held in 1998, directors for each class will be elected
at the annual meeting of shareholders held in the year in which the term
for such class expires and will serve thereafter for three years. See
"Certain Antitakeover Effects-Board of Directors." It is expected that
the executive officers of INVB following the Distribution Date will be the
persons who currently serve as executive officers of INVB.
Name/Class Age Position and Offices Held
George R. Schonath, Class I 56 President, Chief Executive
Officer and Director
Jon McGlocklin, Class I 53 Senior Vice President,
Secretary and Director
Salvatore L. Bando, Class II 53 Director
Terry L. Mather, Class II 55 Director
Donald E. Sydow, Class III 62 Director
George R. Schonath (President and Chief Executive Officer and Director of
the Company) has served as chief executive officer of BMCC since January
1983, and a director of BMCC since September 1980. Mr. Schonath is
expected to resign as a director of BMCC immediately prior to the
Distribution.
Jon McGlocklin (Senior Vice President of the Company) has served as
President and Secretary of BMCC since November 1991, and as Director of
BMCC since 1980. Mr. McGlocklin is expected to resign as a director of
BMCC immediately prior to the Distribution. Mr. McGlocklin is also a
broadcaster for the Milwaukee Bucks Basketball Club.
Salvatore L. Bando (Director of the Company) has been Senior Vice
President - Director of Baseball Operations of the Milwaukee Brewers
Baseball Club since November 1991. Mr. Bando has also been a Director of
BMCC since 1980 and served as an officer of BMCC until November 1991. Mr.
Bando is expected to resign as a director of BMCC immediately prior to the
Distribution.
Terry L. Mather (Director of the Company) has been a partner of Critical
Solutions, Inc., a business consulting company since 1992.
Donald E. Sydow (Director of the Company) has been President and owner of
Oconomowoc Manufacturing Corp., a manufacturer of ball bearings, since
1983.
Committees of the INVB Board of Directors
Shortly after the Distribution Date, the INVB Board of Directors
is expected to establish an Audit and Finance Committee and a Compensation
Committee. The INVB Board of Directors may also establish other
committees to facilitate its work.
The Audit and Finance Committee, which is expected to be
comprised of at least three non-employee directors, will be primarily
responsible for providing a means of direct contact and communication
between INVB's independent accountants and the INVB Board of Directors.
The Audit and Finance Committee will review (a) INVB's accounting
principles and policies; (b) INVB's internal and independent auditors'
reports; (c) the adequacy of INVB's internal controls; (d) INVB's annual
audited financial statements; and (e) compliance with key regulatory
requirements. The Audit and Finance Committee will also be responsible
for recommending to the Board of Directors the appointment of INVB's
independent accountants, reviewing, approving and recommending to the
Board of Directors INVB's financial policies and strategies, and reviewing
significant capital or other expenditures.
The Compensation Committee will consist of at least three non-
employee directors. Its primary functions will be to review the
performance of INVB's and the Bank's executive officers and make
recommendations to the Board of Directors with respect to the compensation
of INVB's and the Bank's directors and executive officers. In addition,
the Compensation Committee will review INVB's and the Bank's executive
compensation plans in relation to its corporate strategies, INVB's stock
option and other incentive plans, and INVB's and the Bank's plans for
management succession and development.
Compensation of Directors
INVB expects that each non-employee director will receive an
annual retainer of approximately $5,000 and a meeting fee of $750 for each
Board or committee meeting attended.
Annual Meeting
The INVB By-laws provide that the Company's annual meetings of
shareholders will be held the first Thursday of May each year at INVB's
principal office or on such other date and at such other time and place as
may be fixed by resolution of the INVB Board of Directors. The first
annual meeting for which proxies will be solicited from shareholders will
be held in 1998.
Stock Ownership of Executive Officers and Directors
Prior to the Distribution Date no executive officer or director
will beneficially own any shares of INVB Common Stock, except George R.
Schonath. Mr. Schonath will beneficially own approximately 12% of the
outstanding shares of INVB Common Stock immediately after the
capitalization of INVB and the Bank. Mr. Schonath will also beneficially
own a warrant to purchase an additional 10% of the outstanding INVB Common
Stock. See "The Distribution-Stock Ownership After the Distribution."
All of the executive officers and certain of the directors will, however,
receive shares of INVB Common Stock in the Distribution in respect of
shares of BMCC Common Stock held by them on the Record Date. The
following table sets forth the number of shares of BMCC Common Stock
beneficially owned on April 30, 1997 by each of INVB's directors, the
persons expected to serve as directors after the Distribution, the
executive officers named in the Summary Compensation Table below, and all
directors, director nominees and executive officers of INVB as a group.
<TABLE>
<CAPTION>
Percent of
Name/Position at INVB Sole Power Shared Power Aggregate Outstanding
<S> <C> <C> <C> <C>
George R. Schonath/ 24,286 (1)(2) 322,343 (1)(3)(4) 346,629 9.4% (8)
President, Chief
Executive Officer
and director
Jon McGlocklin/Senior 56,046 (1)(5) 193,818 (4)(6)(7) 249,864 6.8% (8)
Vice President and
director
Salvatore L. Bando/director 57,552 (1) 204,661 (4)(6)(7) 262,213 7.1% (8)
Terry L. Mather/director - - - -
Donald E. Sydow/director 5 - 5 *
All executive officers and 137,885 417,697 (4) 555,581 15.0% (9)
directors as a group (5
persons)
_________________________
* Less than one percent
(1) Includes shares held in custodial accounts for minor children.
(2) Includes options to acquire 23,956 shares, which options are
exercisable within 60 days of April 30, 1997.
(3) Includes a total of 28,101 shares held by BMCC's 401(k) profit
sharing plan. Mr. Schonath is a co-trustee for such plan.
(4) Includes a total of 146,097 shares held by BMS Investment
Corporation, all of the outstanding capital stock of which is
owned by Messrs. Bando and McGlocklin and by the Schonath
Entities.
(5) Includes options to acquire 3,000 shares from Mr. McGlocklin,
which options are exercisable within 60 days of April 30, 1997.
(6) Includes shares held by BMCC's 401(k) profit sharing plan on
behalf of this individual only.
(7) Includes shares held jointly with or by spouse and/or by minor
children.
(8) Assumes the exercise of all options exercisable within 60 days
held by this optionee.
(9) Assumes the exercise of all options exercisable within 60 days
held by such group.
</TABLE>
Options to purchase INVB Common Stock and other awards based on
INVB Common Stock are expected to be granted in the future to INVB
directors, officers and employees under INVB's benefit plans. See "-INVB
1997 Equity Incentive Plan."
Executive Compensation
INVB. All of the officers of INVB will also be officers of the
Bank. It is not anticipated that such officers will receive any salary
for serving as officers of INVB.
The Bank. As a recently formed company, the Bank has not paid
any salaries to officers to date. After the Distribution, it is
anticipated that Mr. Schonath will receive an annual salary of $100,000
from the Bank. The other officers of the Bank will receive annual
salaries equivalent to their current annual salaries at BMCC. Bonuses, if
any and benefits and perquisites will be as determined from time to time
by the Compensation Committee of the INVB Board of Directors and by the
Compensation Committee of the Bank's Board of Directors.
INVB 1997 Equity Incentive Plan
General. The purpose of the INVB 1997 Equity Incentive Plan
(the "Plan") is to promote the best interests of the Company and its
shareholders by providing key employees of the Company and the Bank with
an opportunity to acquire a proprietary interest in the Company. The Plan
is intended to promote continuity of management and to provide increased
incentive and personal interest in the welfare of the Company by those key
employees who are primarily responsible for shaping and carrying out the
long-range plans of the Company and securing the Company's continued
growth and financial success.
Administration and Eligibility. The Plan is required to be
administered by a committee of the INVB Board (the "Committee") consisting
of no less than two "outside directors" within the meaning of Section
162(m) of the Internal Revenue Code. In the event that the Committee is
not appointed, the functions of the Committee will be exercised by those
members of the INVB Board of Directors (the "INVB Board") who qualify as
"outside directors" within the meaning of Section 162(m). The
Compensation Committee has been designated as the current administrator of
the Plan. Among other functions, the Committee has the authority to
establish rules for the administration of the Plan; to select the key
employees of the Company and the Bank to whom awards will be granted; to
determine the types of awards to be granted to key employees and the
number of shares covered by such awards; and to set the terms and
conditions of such awards. The Committee may also determine whether the
payment of any proceeds of any award shall or may be deferred by a key
employee participating in the Plan. Subject to the express terms of the
Plan, determinations and interpretations with respect thereto will be in
the sole discretion of the Committee, whose determinations and
interpretations will be binding on all parties.
Any key employee of the Company or the Bank, including any
executive officer or employee-director of the Company who is not a member
of the Committee, is eligible to be granted awards by the Committee under
the Plan.
Awards Under the Plan; Available Shares. The Plan authorizes
the granting to key employees of: (a) stock options, which may be either
incentive stock options meeting the requirements of Section 422 of the
Internal Revenue Code ("ISOs") or non-qualified stock options; (b) stock
appreciation rights ("SARs"); (c) restricted stock; and (d) performance
shares. The Plan provides that up to a total of 100,000 shares of INVB
Common Stock (subject to adjustment as described below) will be available
for the granting of awards thereunder.
If any shares subject to awards granted under the Plan, or to
which any award relates, are forfeited or if an award otherwise
terminates, expires or is canceled prior to the delivery of all of the
shares or other consideration issuable or payable pursuant to the award,
such shares will be available for the granting of new awards under the
Plan. Any shares delivered pursuant to an award may be either authorized
and unissued shares of INVB Common Stock or treasury shares held by the
Company.
Terms of Awards.
Options. Options granted under the Plan to key employees may be
either ISOs or non-qualified stock options. No individual key employee
may be granted options to purchase in excess of 25,000 shares of INVB
Common Stock under the Plan (subject to adjustment as described below).
The exercise price per share of INVB Common Stock subject to
options granted to key employees under the Plan will be determined by the
Committee, provided that the exercise price may not be less than 100% of
the fair market value of a share of INVB Common Stock on the date of
grant. The term of any option granted to a key employee under the Plan
will be as determined by the Committee, provided that the term of an ISO
may not exceed ten years from the date of its grant. Options granted to
key employees under the Plan will become exercisable in such manner and
within such period or periods and in such installments or otherwise as
determined by the Committee. Options may be exercised by payment in full
of the exercise price, either (at the discretion of the Committee) in cash
or in whole or in part by tendering shares of INVB Common Stock or other
consideration having a fair market value on the date of exercise equal to
the option exercise price. All ISOs granted under the Plan will also be
required to comply with all other terms of Section 422 of the Internal
Revenue Code.
SARs. An SAR granted under the Plan will confer on the key
employee holder a right to receive, upon exercise thereof, the excess of
(a) the fair market value of one share of INVB Common stock on the date of
exercise over (b) the grant price of the SAR as specified by the
Committee. The grant price of an SAR under the Plan will not be less than
100% of the fair market value of a share of INVB Common stock on the date
of grant. The grant price, term, methods of exercise, methods of
settlement (including whether the holder of an SAR will be paid in cash,
shares of INVB Common Stock or other consideration), and any other terms
and conditions of any SAR granted under the Plan will be determined by the
Committee at the time of grant. Pursuant to the terms of the Plan, no
individual key employee may be granted SARs thereunder with respect to in
excess of 15,000 shares of INVB Common Stock (subject to adjustment as
described below).
Restricted Stock. Shares of restricted Common Stock granted to
key employees under the Plan will be subject to such restrictions as the
Committee may impose, including any limitation on the right to vote such
shares or receive dividends thereon. The restrictions imposed on the
shares may lapse separately or in combination at such time or times, or in
such installments or otherwise, as the Committee may deem appropriate.
Except as otherwise determined by the Committee, upon termination of a key
employee's employment for any reason during the applicable restriction
period, all shares of restricted stock still subject to restriction will
be subject to forfeiture by the key employee.
The Plan limits the total number of shares of restricted stock
that may be awarded thereunder to 25,000 shares. In addition, no
individual key employee may be granted in excess of 10,000 shares of
restricted stock under the Plan. The foregoing numerical limitations on
the issuance of shares of restricted stock are subject to adjustment as
described below.
Performance Shares. The Plan also provides for the granting of
performance shares to key employees. The Committee will determine and/or
select the applicable performance period, the performance goal or goals
(and the performance level or levels related thereto) to be achieved
during any performance period, The proportion of payments, if any, to be
made for performance between the minimum and full performance levels for
any performance goal and, if applicable, the relative percentage weighting
given to each of the selected performance goals, the restrictions
applicable to shares of restricted stock received upon payment of
performance shares if payment is made in such manner, and any other terms,
conditions and rights relating to the grant of performance shares. Under
the terms of the Plan, the Committee may select from various performance
goals, including return on equity, return on investment, return on net
assets, economic value added, earnings from operations, pre-tax profits,
net earnings, net earnings per share, net cash provided by operating
activities, market price for the INVB Common Stock and total shareholder
return. In conjunction with selecting the applicable performance goal or
goals, the Committee will also fix the relevant performance level or
levels (e.g., a 15% return on equity) which must be achieved with respect
to the goal or goals in order for the performance shares to be earned by
the key employee. The performance goals selected by the Committee under
the Plan may, to the extent applicable, relate to a specific division or
subsidiary of the Company or apply on a Company-wide basis.
Following completion of the applicable performance period,
payment on performance shares granted to and earned by key employees will
be made in shares of INVB Common Stock (which, at the discretion of the
Committee, may be shares of restricted stock) equal to the number of
performance shares payable. The Committee may provide that, during a
performance period, key employees will be paid cash amounts with respect
to each performance share granted to such key employees equal to the cash
dividend paid on a share of INVB Common Stock. Pursuant to the terms of
the Plan, no key employee may receive more than 10,000 performance shares
thereunder (subject to adjustment as described below).
Adjustments. If any dividend or other distribution,
recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase, or
exchange of shares of INVB Common Stock or other securities of the
Company, issuance of warrants or other rights to purchase shares of INVB
Common Stock or other securities of the Company, or other similar
corporate transaction or event affects the shares of INVB Common Stock so
that an adjustment is appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made
available under the Plan, then the Committee will generally have the
authority to, in such manner as it deems equitable, adjust (a) the number
and type of shares subject to the Plan and which thereafter may be made
the subject of awards, (b) the number and type of shares subject to
outstanding awards, and (c) the grant, purchase or exercise price with
respect to any award, or may make provision for a cash payment to the
holder of an outstanding award.
Limits on Transferability. Except as specifically provided for
by the Committee at the time an award is made, no award granted under the
Plan (other than an award of restricted stock on which the restrictions
have lapsed) may be assigned, sold, transferred or encumbered by any
participant, otherwise than by will, by designation of a beneficiary, or
by the laws of descent and distribution. Each award will be exercisable
during the participant's lifetime only by such participant or, if
permissible under applicable law, by the participant's guardian or legal
representative.
Amendment and Termination. The INVB Board may amend, suspend or
terminate the Plan at any time, except that no such action may adversely
affect any award granted and then outstanding thereunder without the
approval of the respective participant. The Plan further provides that
shareholder approval of any amendment thereto must also be obtained if
required by (a) the rules and/or regulations promulgated under Section 16
of the Exchange Act (in order for the Plan to remain qualified under rule
16b-3), (b) the Internal Revenue Code or any rules promulgated thereunder
(in order to allow for ISOs to be granted thereunder) or (c) the quotation
or listing requirements of the exchange or market on which the Common
stock is then traded (in order to maintain the trading of the Common Stock
on such exchange or market).
Withholding. Not later than the date as of which an amount
first becomes includable in the gross income of a key employee for federal
income tax purposes with respect to any award under the Plan, the key
employee will be required to pay to the Company, or make arrangements
satisfactory to the Company regarding the payment of, any federal, state,
local or foreign taxes of any kind required by law to be withheld with
respect to such amount. Unless otherwise determined by the Committee,
withholding obligations arising with respect to awards under the Plan may
be settled with shares of INVB Common Stock (other than shares of
restricted stock), including shares of INVB Common Stock that are part of,
or are received upon exercise of, the award that gives rise to the
withholding requirement. The obligations of the Company under the Plan
are conditional on such payment or arrangements, and the Company and the
Bank will, to the extent permitted by law, have the right to deduct any
such taxes from any payment otherwise due to the key employee. The
Committee may establish such procedures as it deems appropriate for the
settling of withholding obligations with shares of INVB Common Stock.
Certain Federal Income Tax Consequences.
Stock Options. The grant of a stock option under the Plan will
create no income tax consequences to the key employee. A key employee who
is granted a non-qualified stock option will generally recognize ordinary
income at the time of exercise in an amount equal to the excess of the
fair market value of the INVB Common Stock at such time over the exercise
price. The Company will be entitled to a deduction in the same amount and
at the same time as ordinary income is recognized by the key employee. A
subsequent disposition of the INVB Common Stock will give rise to capital
gain or loss to the extent the amount realized from the sale differs from
the tax basis, i.e., the fair market value of the INVB Common Stock on the
date of exercise. This capital gain or loss will be a long-term capital
gain or loss if the INVB Common Stock has been held for more than one year
from the date of exercise.
In general, a key employee will recognize no income or gain as a
result of exercise of an ISO (except that the alternative minimum tax may
apply). Except as described below, any gain or loss realized by the key
employee on the disposition of the INVB Common Stock acquired pursuant to
the exercise of an ISO will be treated as a long-term capital gain or loss
and no deduction will be allowed to the Company. If the key employee
fails to hold the shares of INVB Common Stock acquired pursuant to the
exercise of an ISO for at least two years from the date of grant of the
ISO and one year from the date of exercise, the key employee will
recognize ordinary income at the time of the disposition equal to the
lesser of (a) the gain realized on the disposition, or (b) the excess of
the fair market value of the shares of INVB Common Stock on the date of
exercise over the exercise price. The Company will be entitled to a
deduction in the same amount and at the same time as ordinary income is
recognized by the key employee. Any additional gain realized by the key
employee over the fair market value at the time of exercise will be
treated as a capital gain. This capital gain will be a long-term capital
gain if the INVB Common Stock has been held for more than one year from
the date of exercise.
Stock Appreciation Rights. The grant of an SAR will create no
income tax consequences for the key employee or the Company. Upon
exercise of an SAR, the key employee will recognize ordinary income equal
to the amount of any cash and the fair market value of any shares of INVB
Common Stock or other property received, except that if the key employee
receives an option or shares of restricted stock upon exercise of an SAR,
recognition of income may be deferred in accordance with the rules
applicable to such other awards. The Company will be entitled to a
deduction in the same amount and at the same time as income is recognized
by the key employee.
Restricted Stock. A key employee will not recognize income at
the time an award of restricted stock is made under the Plan, unless the
election described below is made. However, a key employee who has not
made such an election will recognize ordinary income at the time the
restrictions on the stock lapse in an amount equal to the fair market
value of the restricted stock at such time. The Company will be entitled
to a corresponding deduction in the same amount and at the same time as
the key employee recognizes income. Any otherwise taxable disposition of
the restricted stock after the time the restrictions lapse will result in
capital gain or loss (long-term or short-term depending on the length of
time the restricted stock is held after the time the restrictions lapse).
Dividends paid in cash and received by a participant prior to the time the
restrictions lapse will constitute ordinary income to the participant in
the year paid. The Company will be entitled to a corresponding deduction
for such dividends. Any dividends paid in stock will be treated as an
award of additional restricted stock subject to the tax treatment
described herein.
A key employee may, within 30 days after the date of the award
of restricted stock, elect to recognize ordinary income as of the date of
the award in an amount equal to the fair market value of such restricted
stock on the date of the award. The Company will be entitled to a
corresponding deduction in the same amount and at the same time as the key
employee recognizes income. If the election is made, any cash dividends
received with respect to the restricted stock will be treated as dividend
income to the key employee in the year of payment and will not be
deductible by the Company. Any otherwise taxable disposition of the
restricted stock (other than by forfeiture) will result in capital gain or
loss (long-term or short-term depending on the holding period). If the
key employee who has made an election subsequently forfeits the restricted
stock, the key employee will not be entitled to deduct any loss. In
addition, the Company would then be required to include as ordinary income
the amount of the deduction it originally claimed with respect to such
shares.
Performance Shares. The grant of performance shares will create
no income tax consequences for the key employee or the Company. Upon the
receipt of shares of INVB Common Stock at the end of the applicable
performance period, the key employee will recognize ordinary income equal
to the fair market value of the shares of INVB Common Stock received,
except that if the key employee receives shares of restricted stock in
payment of performance shares, recognition of income may be deferred in
accordance with the rules applicable to such restricted stock. In
addition, the key employee will recognize ordinary income equal to the
dividend equivalents paid on performance shares prior to or at the end of
the performance period. The Company will be entitled to a deduction in
the same amount and at the same time as income is recognized by the key
employee.
Plan Benefits. No awards have been made to date under the Plan
and the Company cannot currently determine the awards that may be granted
in the future to key employees thereunder. Such determinations will be
made from time to time by the Committee.
SUPERVISION AND REGULATION
Supervision and Regulation
The operations of financial institutions, including banks and
bank holding companies, are highly regulated, both at the federal and
state levels. Numerous statutes and regulations affect the business of
the Company and the Bank. To the extent that the information below is a
summary of statutory provisions, such information is qualified in its
entirety by reference to the statutory provisions described. There are
additional laws and regulations having a direct or indirect effect on the
business of the Company or the Bank.
In recent years, the banking and financial industry has been the
subject of numerous legislative acts and proposals, administrative rules
and regulations at both federal and state regulatory levels. As a result
of many of such regulatory changes, the nature of the banking industry in
general has changed dramatically in recent years as increasing competition
and the trend toward deregulation have caused the traditional distinctions
among different types of financial institutions to be obscured. Further
changes along these lines could permit other financially oriented
businesses to offer expanded services, thereby creating greater
competition for the Company and the Bank with respect to services
currently offered or which may in the future be offered by those entities.
Proposals for new legislation or rule making affecting the financial
services industry are continuously being advanced and considered at both
the national and state levels. Neither the Company nor the Bank can
predict the effect that future legislation or regulation will have on the
financial services industry in general or on their businesses in
particular.
The performance and earnings of the Bank, like other commercial
banks, are affected not only by general economic conditions but also by
the policies of various governmental regulatory authorities. In
particular, the Federal Reserve System regulates money and credit
conditions and interest rates in order to influence general economic
conditions primarily through open-market operations in U.S. Government
securities, varying the discount rate on bank borrowings, and setting
reserve requirements against bank deposits. The policies of the Federal
Reserve System have a significant influence on overall growth and
distribution of bank loans, investments and deposits, and affect interest
rates earned on loans and investments. The general effect, if any, of
such policies upon the future business and earnings of the Bank cannot
accurately be predicted.
The Company
As a registered bank holding company, the Company is subject to
regulation under the BHCA and regulations issued thereunder. The BHCA
requires every bank holding company to obtain the prior approval of the
Board of Governors of the Federal Reserve System (the "Board") before it
may merge with or consolidate into another bank holding company, acquire
substantially all the assets of any bank, or acquire ownership or control
of any voting shares of any bank if after such acquisition it would own or
control, directly or indirectly, more than 5% of the voting shares of such
bank.
Under the BHCA, the Company is prohibited, with certain
exceptions, from acquiring direct or indirect ownership or control of more
than 5% of the voting shares of any company which is not a bank or holding
company, and neither the Company nor any subsidiary may engage in any
business other than banking, managing or controlling banks or furnishing
services to or performing services for its subsidiaries. The Company may,
however, own shares of a company the activities of which the Board has
determined to be so closely related to banking or managing or controlling
banks as to be a proper incident thereto, and the holding company itself
may engage in such activities. The Company has no pending acquisition
plans.
As a registered bank holding company, the Company is supervised
and regularly examined by the Board. Under the BHCA, the Company is
required to file with the Board an annual report and such additional
information as may be required. The Board can order bank holding
companies and their subsidiaries to cease and desist from any actions
which in the opinion of the Board constitute serious risk to the financial
safety, soundness or stability of a subsidiary bank and are inconsistent
with sound banking principles or in violation of law. The Board has
adopted regulations which deal with the measure of capitalization for
banking holding companies. Such regulations are essentially the same as
those adopted by the FDIC, described below. The Board's regulations also
provide that its capital requirements will generally be applied on a bank-
only (rather than a consolidated) basis in the case of a bank holding
company with less than $150 million in total consolidated assets. The
Board has also issued a policy statement on the payment of cash dividends
by bank holding companies, wherein the board has stated that a bank
holding company experiencing earnings weaknesses should not pay cash
dividends exceeding its net income or which could only be funded in ways
that weaken the bank holding company's financial health, such as by
borrowing.
Under Wisconsin law, the Company is also subject to supervision
and examination by the Division of Banking of the Wisconsin Department of
Financial Institutions (the "Division"). The Division is empowered to
issue orders to a bank holding company to remedy any condition or policy
which, in its determination, endangers the safety of deposits in any
subsidiary state bank, or the safety of the bank or its depositors. In
the event of noncompliance with such an order, the Division has the power
to direct the operation of the state bank subsidiary and withhold
dividends from the holding company.
The Company, as the holder of the stock of a Wisconsin state-
chartered bank, may be subject to assessment to restore impaired capital
of the bank to the extent provided in Section 220.07, Wisconsin Statutes.
Any such assessment would apply only to the Company and not to any
shareholder of the Company.
Federal law prohibits the acquisition of "control" of a bank
holding company by individuals or business entities or groups or
combinations of individuals or entities acting in concert without prior
notice to the appropriate federal bank regulator. For this purpose,
"control" is defined in certain instances as the ownership of or power to
vote 10% or more of the outstanding shares of the bank holding company.
The Bank
As a state-chartered institution, the Bank is subject to
regulation and supervision by the Division and the Wisconsin Banking
Review Board and is periodically examined by the Division's staff.
Deposits of the Bank are insured by the Bank Insurance Fund administered
by the FDIC and as a result the Bank is also subject to regulation by the
FDIC and periodically examined by its staff.
The Federal Deposit Insurance Act requires that the appropriate
federal regulatory authority -- the FDIC in the case of the Bank (as an
insured state bank which is not a member of the Federal Reserve System) --
approve any acquisition by the Bank through merger, consolidation,
purchase of assets, or assumption of deposits. The same regulatory
authority also supervises compliance by the Bank with provisions of
federal banking laws which, among other things, prohibit the granting of
preferential loans to executive officers, directors, and principal
shareholders of the Bank and of banks which have a correspondent
relationship with the Bank.
Wisconsin banking laws restrict the payment of cash dividends by
state banks by providing that (i) dividends may be paid only out of a
bank's undivided profits, and (ii) prior consent of the Division is
required for the payment of a dividend which exceeds current year income
if dividends declared have exceeded net profits in either of the two
immediately preceding years. The various bank regulatory agencies have
authority to prohibit a bank regulated by them from engaging in an unsafe
or unsound practice; the payment of a dividend by a bank could, depending
upon the circumstances, be considered such an unsafe or unsound practice.
In the event that (i) the FDIC or the Division should increase minimum
required levels of capital; (ii) the total assets of the Bank increase
significantly; (iii) the income of the Bank decreases significantly; or
(iv) any combination of the foregoing occurs, then the Board of Directors
of the Bank may decide or be required by the FDIC or the Division to
retain a greater portion of the Bank's earnings to achieve or maintain the
required capital, thereby reducing the amount available for dividends.
Subsidiary banks of a bank holding company are subject to
certain restrictions imposed by the Federal Reserve Act on any extensions
of credit to the bank holding company or any of its subsidiaries, on
investments in stock or other securities of the bank holding company and
on the taking of such stock or securities as collateral for loans to any
borrower. Under the BHCA and regulations of the Board, a bank holding
company and its subsidiaries are prohibited from engaging in certain tie-
in arrangements in connection with any extension of credit or of any
property or service.
The activities and operations of banks are subject to a number
of additional detailed, complex and sometimes overlapping federal and
state laws and regulations. These include state usury and consumer credit
laws, state laws relating to fiduciaries, the Federal Truth-in-Lending Act
and Regulation Z, the Federal Equal Credit Opportunity Act and Regulation
B, the Fair Credit Reporting Act, the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA"), the Community Reinvestment
Act, anti-redlining legislation and the antitrust laws. The Community
Reinvestment Act includes provisions under which the federal bank
regulatory agencies must consider, in connection with applications for
certain required approvals, including applications to acquire control of a
bank or holding company or to establish a branch, the records of regulated
financial institutions in satisfying their continuing and affirmative
obligations to help meet the credit needs of their local communities,
including those of low and moderate income borrowers.
FDICIA, among other things, establishes five tiers of capital
requirements: well capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized, and critically undercapitalized. The FDIC
has adopted regulations which define the relevant capital measures for the
five capital categories. An institution is deemed to be "well
capitalized" if it has a total risk-based capital ratio (total capital to
risk-weighted assets) of 10% or greater, a Tier I risk-based capital
ration (Tier I capital ratio (Tier I Capital to total assets) of 5% or
greater, and is not subject to a regulatory order, agreement, or directive
to meet and maintain a specific capital level for any capital measure. An
institution is deemed to be "adequately capitalized" if it has a total
risk-based capital ratio of 8% or greater, a Tier I risk-based capital of
4% or greater, and (generally) a Tier I leverage capital ratio of 4% or
greater, and the institution does not meet the definition of a well
capitalized institution. An institution is deemed to be
"undercapitalized" if it has a total risk-based capital ratio less than
8%, or a Tier I risk-based capital ratio less than 4%, or (generally) a
Tier I leverage ratio of less than 4%. An institution is deemed to be
"significantly undercapitalized" if it has a total risk-based capital
ratio less than 6%, or a Tier I risk-based capital ratio less than 3%, or
a Tier I leverage ratio less than 3%. An institution is deemed to be
"critically undercapitalized" if it has a ratio of tangible equity (as
defined in the regulations) to total assets that is equal to or less than
2%. Undercapitalized banks are subject to growth limitations and are
required to submit a capital restoration plan. If an undercapitalized
bank fails to submit an acceptable plan, it is treated as if it is
"significantly undercapitalized." Significantly undercapitalized banks
may be subject to a number of requirements and restrictions, including
orders to sell sufficient voting stock to become adequately capitalized,
requirements to reduce total assets, and cessation of receipt of deposits
from correspondent banks. "Critically undercapitalized" institutions may
not, beginning 60 days after become critically undercapitalized, make any
payment of principal or interest on their subordinated debt.
The Riegle-Neal Interstate Banking and Branching Efficiency Act
of 1994 (the "Riegle Act"), among other things, permits bank holding
companies to acquire banks in any state effective September 29, 1995. The
Riegle Act contains certain exceptions relative to acquisitions. For
example, a holding company may not acquire a bank that has not been in
existence for less than a minimum period established by the home state;
however, the minimum period cannot exceed five years. The Riegle Act
makes a distinction between interstate banking and interstate branching.
Under the Riegle Act, banks can merge with banks in another state
beginning June 1, 1997, unless a state has adopted a law preventing
interstate branching. Under terms of the Riegle Act, an acquiring bank
may not control more than 10 percent of federal or 30 percent of state
total deposits of insured depository institutions. Wisconsin law requires
approval by the Division for all acquisitions of Wisconsin banks, whether
by an in-state or out-of-state purchaser and requires, in an interstate
acquisition, that the acquired bank must have been in existence for at
least five years.
ARRANGEMENTS AMONG BMCC, INVB AND THE BANK
In order to manage and formalize certain of the relationships
among BMCC, INVB and the Bank following the Distribution, certain
agreements described below have been prepared. These agreements will not
be entered into until the Bank commences operations. The agreements
summarized below have been filed as exhibits to the Registration Statement
and the summaries of such agreements are qualified in their entirety by
reference to the full text of such agreements. See "Available
Information."
Management Services and Allocation of Expenses Agreement
The Services and Expenses Agreement will be between BMCC and the
Bank. The Services and Expenses Agreement will provide for, among other
things, the Bank's management and servicing of BMCC's loan portfolio, the
Bank's provision of accounting services to BMCC, the Bank's sublease of
its premises from BMCC, the sharing of certain overhead expenses and
BMCC's agreement not to compete with the Bank in the origination of loans,
all as described below. The Services and Expenses Agreement will have a
one year term that automatically renews each year unless canceled by
either party at least sixty days in advance of the termination date.
Loan Management Services. The Bank agrees to service and
administer BMCC's loan portfolio, and is granted full power and authority
to do any and all things in connection with such servicing and
administration that the Bank deems necessary or desirable. BMCC agrees to
pay the Bank a monthly fee equal to one-twelfth of one-quarter of one
percent multiplied by the aggregate amount of the BMCC loan portfolio at
the end of the preceding month, and also agrees to reimburse the Bank for
certain of its out-of-pocket expenses. This monthly fee is equivalent to
a market rate quoted at arm's length by a major third party administrator
and servicer of loans.
Accounting Services. The Bank agrees to provide accounting
services to BMCC, including, but not limited to the preparation of all
internal management report and all external reports to shareholders and
any applicable regulatory agencies. BMCC agrees to pay the Bank monthly
the Bank's actual cost of providing such services, based upon the number
of hours Bank employees actually work to provide such services.
Sublease. BMCC grants the Bank a sublease for the Bank's
premises, and the Bank agrees to pay BMCC each month an amount equal to
29.67% of the amount BMCC owes to the landlord on the prime lease, and
also agrees to pay BMCC each month an amount equal to 50% of BMCC's
electric utility bill for such month. Payments made pursuant to the
sublease are based upon the Bank's expected pro rata usage of the premises
and electricity.
Overhead Expenses. The Bank and BMCC agree to share equally
certain overhead expenses, including but not limited to, expenses for
telephone service, receptionist services, depreciation and other
miscellaneous expenses.
Noncompete. BMCC agrees that except as specifically approved in
writing by the Bank, it will not originate any loans during the term of
the Services and Expenses Agreement and any renewals thereof. Purchasing
loan participations from the Bank or another lending institution is not
deemed to be an origination for purposes of the Services and Expenses
Agreement.
Tax Allocation and Services Agreement
The Tax Allocation and Services Agreement (the "Tax and Services
Agreement") will be between INVB and the Bank. The Tax and Services
Agreement provides for the allocation of consolidated federal, state and
local tax liabilities between INVB and the Bank and Bank's provision of
accounting services to INVB. INVB agrees to pay the Bank monthly the
Bank's actual cost of providing such accounting services, based upon the
number of hours Bank employees actually work to provide such services.
The Tax and Services Agreement's will remain in effect unless and until
INVB and the Bank no longer file consolidated federal income tax returns.
DESCRIPTION OF INVB CAPITAL STOCK
Authorized Capital Stock
Immediately after the Distribution, INVB's authorized capital
stock will consist of one million shares of preferred stock, par value
$0.01 per share (the "Preferred Stock"), and nine million shares of INVB
Common Stock. Immediately following the Distribution, approximately ____
million shares of INVB Common Stock will be outstanding. All of the
shares of INVB Common Stock that will be outstanding immediately following
the Distribution will be validly issued, fully paid and nonassessable, and
free of preemptive rights. The following summarizes certain provisions of
the Articles as they are expected to be in effect after the Distribution.
Common Stock
The holders of INVB Common Stock will be entitled to one vote
for each share on all matters voted on by shareholders, including
elections of directors, and, except as otherwise required by law or
provided in any resolution adopted by the INVB Board of Directors with
respect to any series of Preferred Stock, the holders of such shares will
possess all voting power. There is no cumulative voting in the election
of directors. Subject to any preferential rights of any outstanding
series of Preferred Stock created by the INVB Board of Directors from time
to time, the holders of INVB Common Stock will be entitled to such
dividends as may be declared from time to time by the INVB Board of
Directors from funds available therefor, and upon liquidation will be
entitled to receive pro rata all assets of INVB available for distribution
to such holders. See "Dividend Policy." Any such series of preferred
stock may be created by the INVB Board of Directors from time to time
without the consent of the holders of the INVB Common Stock. In any such
event, the rights of the holders of the INVB Common Stock will be subject
to the preferential rights of the holders of the preferred stock. See "-
Preferred Stock."
Preferred Stock
The Articles authorizes the INVB Board of Directors to establish
one or more series of classes of Preferred Stock and to determine, with
respect to any series of Preferred Stock, the terms and rights of such
series.
INVB believes that the ability of the INVB Board of Directors to
issue one or more series of Preferred Stock will provide INVB with
flexibility in structuring possible future financings and acquisitions,
and in meeting other corporate needs which might arise. The authorized
shares of Preferred Stock, as well as shares of INVB Common Stock, will be
available for issuance without further action by INVB's shareholders,
unless such action is required by applicable law or the rules of any stock
exchange or automated quotation system on which INVB's securities may be
listed or traded. If the approval of INVB's shareholders is not required
for the issuance of shares of Preferred Stock or INVB Common Stock, the
INVB Board of Directors may determine not to seek shareholder approval.
Although the INVB Board of Directors has no intention at the
present time of doing so, it could issue a series of Preferred Stock that
could, depending on the terms of such series, impede the completion of a
merger, tender offer or other takeover attempt. The INVB Board of
Directors will make any determination to issue such shares based on its
judgment as to the best interests of INVB and its shareholders. The INVB
Board of Directors, in so acting, could issue Preferred Stock having terms
that could discourage an acquisition attempt through which an acquiror may
be able to change the composition of the INVB Board of Directors,
including a tender offer or other transaction that some, or a majority, of
INVB's shareholders might believe to be in their best interests or in
which shareholders might receive a premium for their stock over the then
current market price of such stock.
Copies of the Articles and By-laws are filed as Exhibits to the
Registration Statement and the summaries thereof in this Information
Statement are qualified in their entirety by reference thereto. See
"Available Information."
CERTAIN ANTITAKEOVER EFFECTS
Board of Directors
The By-laws provide that the directors will be divided into
three classes. The By-laws also provide that INVB will have five
directors, which number may be increased or decreased from time to time by
amending the By-laws. Except as provided by law with respect to directors
elected by shareholders of a class or series, any director or the entire
Board of Directors may be removed with or without cause, by the
affirmative vote of the holders of not less than 80% of the voting power
of all capital stock entitled to vote in the election of directors
("Voting Stock") then outstanding, voting together as a single class.
Except as provided by law with respect to directors elected by
shareholders of a class or series, a vacancy on the Board of Directors may
be filled by a majority of the remaining directors, whether or not
sufficient to constitute a quorum.
These provisions would preclude a third party from removing
incumbent directors and simultaneously gaining control of the INVB Board
of Directors by filling the vacancies created by removal with its own
nominees. Under the classified board provisions described above, it would
take at least two elections of directors for any individual or group to
gain control of the INVB Board of Directors. Accordingly, these
provisions could discourage a third party from initiating a proxy contest,
making a tender offer or otherwise attempting to gain control of INVB.
Advance Notice Procedures
The By-laws establish an advance notice procedure for
shareholders to make nominations of candidates for election as directors
or to bring other business before an annual meeting of shareholders of
INVB (the "Shareholder Notice Procedure"). The Shareholder Notice
Procedure provides that only persons who are nominated by, or at the
direction of, the Board of Directors, or by a shareholder who has given
timely written notice to the Secretary of INVB prior to the meeting at
which directors are to be elected, will be eligible for election as
directors of INVB. The Shareholder Notice Procedure also provides that at
an annual meeting only such business may be conducted as has been brought
before the meeting by, or at the direction of, the INVB Board of
Directors, or by a shareholder who has given timely written notice to the
Secretary of INVB of such shareholder's intention to bring such business
before such meeting. Under the Shareholder Notice Procedure, for notice
of shareholder nominations to be made at an annual meeting to be timely,
such notice must be received by INVB not later than the close of business
on the 90th calendar day nor earlier than the close of business on the
120th calendar day prior to the first anniversary of the preceding year's
annual meeting (except that, in the event that the date of the annual
meeting is more than 30 calendar days before or more than 60 calendar days
after such anniversary date, notice by the shareholder to be timely must
be so delivered not earlier than the close of business on the 120th
calendar day prior to such annual meeting and not later than the close of
business on the later of the 90th calendar day prior to such annual
meeting or the 10th calendar day following the day on which public
announcement of a meeting date is first made by INVB). For purposes of
the Shareholder Notice Procedure, the first anniversary of the 1997 annual
meeting will be deemed to be May 1, 1997.
In addition, under the Shareholder Notice Procedure, a
shareholder's notice to INVB proposing to nominate a person for election
as a director or relating to the conduct of business other than the
nomination of directors must contain certain specified information. If
the chairman of a meeting determines that an individual was not nominated,
or other business was not brought before the meeting, in accordance with
the Shareholder Notice Procedure, such individual will not be eligible for
election as a director, or such business will not be conducted at such
meeting, as the case may be.
Although the Shareholder Notice Procedures do not give the INVB
Board of Directors any power to approve or disapprove shareholder
nominations for the election of directors or proposals for action, they
may have the effect of precluding a contest for the election of directors
or the consideration of shareholder proposals if the proper procedures are
not followed and of discouraging or deterring a third party from
conducting a solicitation of proxies to elect its own slate of directors
or to approve its own proposal, without regard to whether consideration of
such nominees or proposals might be harmful or beneficial to INVB and its
shareholders.
Amendment
The Articles provides that the affirmative vote of the holders
of at least 80% of the Voting Stock, voting together as a single class, is
required to amend provisions of the Articles and By-laws relating to
shareholder action without a meeting; the calling of special meetings; the
number, election and term of INVB's directors; the filling of vacancies;
and the removal of directors. The Articles and By-laws provide that the
related By-laws described above (including the Shareholder Notice
Procedure) may be amended only by the INVB Board of Directors or by the
affirmative vote of the holders of at least 80% of the voting power of the
outstanding shares of Voting Stock, voting together as a single class.
Other amendments to the Articles require the affirmative vote of the
holders of at least a majority of the Voting Stock, voting together as a
single class. In all cases, amendments to the Articles require that the
Board of Directors of INVB determine that the proposed amendment is
advisable.
Wisconsin Business Combination Statute
Sections 180.1140 to 180.1144 of the WBCL provide that, subject
to certain exceptions specified therein, any holder of 10% of the voting
stock of a Wisconsin corporation (an "interested shareholder") may not
engage in any merger or other business combination with the corporation
for a three-year period following the date that such shareholder becomes
an interested shareholder unless prior to such date, the board of
directors of the corporation approved the 10% acquisition. After such
three-year period, any such business combination must either (i) have been
approved by the Board prior to the date the shareholder became an
interested shareholder; (ii) have been approved by the affirmative vote of
at least a majority of the outstanding Voting Stock which is not owned by
the interested shareholder or (iii) meet certain fair price and other
conditions.
Control Share Acquisition Statute
Section 180.1150 of the WBCL provides that the voting power of
shares of a Wisconsin corporation held by any person or persons acting as
a group in excess of 20% of the Voting Stock is limited to 10% of the full
voting power of those shares. This restriction does not apply to shares
acquired directly from such corporation or in certain specified
transactions or shares for which full voting power has been restored
pursuant to a vote of the majority of Voting Stock represented at a
meeting of shareholders.
Copies of the Articles and By-laws are filed as Exhibits to the
Registration Statement and the summaries thereof in this Information
Statement are qualified in their entirety by reference thereto. See
"Available Information."
LIABILITY OF DIRECTORS AND OFFICERS; INDEMNIFICATION
The WBCL limits the personal liability of INVB's directors to
the Company and its shareholders for money damages. As a result, neither
INVB nor any INVB shareholder can hold the directors personally liable for
monetary damages, unless the person seeking such damages proves that the
actions of such officer or director constituted (a) a wilful failure to
deal fairly with the Company or its shareholders in connection with a
matter in which the director had a material conflict of interest; (b) a
violation of criminal law, unless the director had reasonable cause to
believe his or her conduct was lawful or no reasonable cause to believe
his or her conduct was unlawful; (c) a transaction from which the director
derived an improper personal benefit; or (d) wilful misconduct.
The INVB Articles provide that INVB will indemnify (a) its
directors and officers, whether serving INVB or, at its request, any other
entity, to the fullest extent required or permitted by the Laws of the
State of Wisconsin now or hereafter in force, including the advance of
expenses under the procedures and to the fullest extent permitted by law
and (b) other employees and agents to such extent as shall be authorized
by the Board of Directors or the By-laws and be permitted by law. The
foregoing rights of indemnification are not exclusive of any other rights
to which those seeking indemnification may be entitled. The Board of
Directors may take such action as is necessary to carry out such
indemnification provisions and is expressly empowered to adopt, approve
and amend from time to time such bylaws, resolutions or contracts
implementing such provisions or such further indemnification arrangements
as may be permitted by law. No amendment of the INVB Articles, or of any
such bylaw, resolution or contract, or repeal of any of their provisions
will limit or eliminate the right to indemnification provided thereunder
with respect to acts or omissions occurring prior to such amendment or
repeal. The INVB By-laws currently contain provisions implementing the
foregoing.
Under current law, directors and officers will be indemnified
when serving in their capacity as directors or officers, unless it is
established that the actions of such officer or director constituted (a) a
wilful failure to deal fairly with the Company or its shareholders in
connection with a matter in which the director had a material conflict of
interest; (b) a violation of criminal law, unless the director had
reasonable cause to believe his or her conduct was lawful or no reasonable
cause to believe his or her conduct was unlawful; (c) a transaction from
which the director derived an improper personal benefit; or (d) wilful
misconduct.
[Include Accountant's Report]
InvestorsBancorp, Inc.
(A Development Stage Company)
BALANCE SHEET
July 7, 1997
ASSETS
Cash $1,000
------
Total Assets $1,000
======
SHAREHOLDER'S EQUITY
Common stock, $0.01 par value, $ 1
authorized 9,000,000 shares; issued
and outstanding 143 shares
Additional paid in capital 999
-------
Total Shareholder's Equity $1,000
======
See accompanying notes to financial statement.
InvestorsBancorp, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENT
Note 1 - Organization and Nature of Business
InvestorsBancorp, Inc. (the "Company") was incorporated under Wisconsin
law on June 12, 1996, for the purpose of holding all of the outstanding
common stock of InvestorsBank (the "Bank"). The Company was capitalized
with a $1,000 contribution. The Company and the Bank to date have
conducted no business, as reflected in the accompanying financial
statement.
Mr. George R. Schonath is the sole shareholder of the Company as of July
7, 1997.
The Company has filed with the Securities and Exchange Commission (the
"SEC") a Registration Statement on Form 10-SB (the "Registration
Statement") under the Securities Exchange Act of 1934, as amended. As of
July 7, 1997 the Registration Statement has not been declared effective by
the SEC.
Note 2 - Summary of Significant Accounting Policies
The Company and the Bank plan to file consolidated income tax returns.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholder and Board
of Directors of InvestorsBancorp, Inc.
In our opinion, the accompanying balance sheet presents fairly, in all
material respects, the financial position of InvestorsBancorp, Inc. (a
Development Stage Company, hereafter referred to as the "company") at July
7, 1997, in conformity with generally accepted accounting principles.
This financial statement is the responsibility of the company's
management; our responsibility is to express an opinion on this financial
statement based on our audit. We conducted our audit of this financial
statement in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statement is free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statement, assessing the
accounting principles used and significant estimates mae by management,
and evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for the opinion expressed
above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Milwaukee, Wisconsin
July 7, 1997
