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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 of 15(d)
of the Securities and Exchange Act of 1934
--------------------------------
Date of Report (Date of earliest event reported): October 1, 1998
BAYLAKE CORP.
(Exact name of registrant as specified in its charter)
Wisconsin 000-8679 39-1268055
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
217 NORTH FOURTH AVENUE, STURGEON BAY, WISCONSIN 54235
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (920) 743-5551
-----------------------------------------------------------
(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
On October 1, 1998, Baylake Corp. ("Baylake") consummated its
previously announced acquisition of all of the outstanding shares of common
stock of Evergreen Bank, National Association ("Evergreen"). Evergreen has four
full service offices in east central Wisconsin, and has been renamed "Baylake
Bank, NA". At September 30, 1998, Evergreen had estimated total assets of
between $95 and $100 million, although the precise amount of assets is subject
to the discussion below.
Baylake acquired the Evergreen shares pursuant to a Stock Purchase
Agreement dated as of September 2, 1998 among Baylake, M&I Marshall & Ilsley
Bank ("M&I Bank") and Evergreen (the "Agreement"). The Agreement provides that
Baylake acquired the Evergreen shares from M&I Bank, the creditor of Evergreen's
former holding company) for cash payable on May 5, 1999, in a formula amount set
forth in the Agreement. In summary, the formula provides for a payment of the
lesser of (a) $2.0 million or (b) the amount of retained earnings generated by
Evergreen (as defined) from the closing date until April 30, 1999. In addition,
upon the closing of the transaction, Baylake made a cash contribution of $4
million to Evergreen to provide it with additional capital. The 316 outstanding
shares of Evergreen Preferred Stock, $10,000 par (and face) value, remain issued
and outstanding.
Prior to its acquisition by Baylake, Evergreen was the victim of
substantial fraud by former Evergreen insiders. Evergreen's regulators had
discovered extensive financial irregularities at Evergreen which resulted from
unauthorized and/or improper transactions effected by former members of
Evergreen management. Evergreen has been in the process of investigating and
correcting these situations, which process will continue after the transaction.
Evergreen and Baylake therefore may discover additional "assets" on Evergreen's
books which are not valid assets or are otherwise impaired as a result of the
fraud. The ongoing status of these reviews forms part of the reason for the
formula-based purchase price described above, which will cause the purchase
price to vary according to the ultimate determination of Evergreen's financial
condition prior to closing.
Because of the situation and circumstances, Baylake anticipates that
ongoing operations of Evergreen may differ significantly from its past
operations because these former operations were substantially affected by the
unauthorized and improper transactions by former members of Evergreen
management. As a result of these unauthorized activities, Evergreen was
designated a "troubled institution" by the Office of the Comptroller of the
Currency ("OCC") and was also determined to be "critically undercapitalized" and
thus required to address its
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capital needs promptly. Baylake expects that the "troubled institution"
designation to be removed by the OCC upon its demonstration of resolution of
related issues, and believes that with the capital infusion by Baylake discussed
above, it has addressed, on a current basis, Evergreen's regulators' request for
infusion of additional capital.
In connection with the transaction, Daniel F. Maggle, an executive
officer of Baylake, was appointed the president and chief executive officer of
Evergreen. Other officers and employees of Evergreen at the time of the
acquisition, who were not involved in the improper or fraudulent activities, are
expected to be retained.
The acquisition transaction was negotiated at arm's length between
Baylake and the representatives of M&I and Evergreen (none of whom were
affiliated at that time with Baylake, its affiliates, its directors and officers
and their associates). The transaction is being accounted for by Baylake using
the purchase method of accounting.
Item 7. Financial Statements and Exhibits
(a) Financial statements of business acquired:
Baylake is continuing its review to determine whether Evergreen
financial statements (and pro forma financial information of Baylake)
are in fact required to be filed as a result of the relative
significance of Evergreen and its operations to Baylake. Because of the
approximate relative size near the level at which such statements may
or may not be required, and the need to further assess and quantify the
effects of the prior fraudulent activities on Evergreen, that process
has not yet been completed. Not later than 60 days after the due date
of this report, Baylake will either (a) amend this report to confirm
that such financial information is not required, (b) file such
financial statements or information, or (c) request a waiver from the
Securities and Exchange Commission of the requirement to file all or
part of the otherwise required financial information in the event it
cannot reasonably be obtained.
(b) Pro forma financial information:
See the discussion in Item 7(a) above.
(c) Exhibits.
See Exhibit Index on the last page of this report, which is
incorporated herein by reference.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BAYLAKE CORP.
Date: October 15, 1998 By: /s/ Steven D. Jennerjohn
------------------------
Steven D. Jennerjohn
Chief Financial Officer
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BAYLAKE CORP.
EXHIBIT INDEX
to
FORM 8-K CURRENT REPORT
Dated as of October 1, 1998
Exhibit Incorporated by Filed
Number Description Reference To Herewith
- --------- ------------ --------------- --------
2.1 Stock Purchase X
Agreement dated as
of September 2,
1998, by and among
Baylake, M&I Bank
and Evergreen*
----------------
*Omitting schedules and exhibits, which will be provided
to the Commission upon request.
5
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EXHIBIT 2.1
----------------------------------------
STOCK PURCHASE AGREEMENT
BY AND AMONG
BAYLAKE CORP.,
M&I MARSHALL & ILSLEY BANK
AND
EVERGREEN BANK, NATIONAL ASSOCIATION
------------------------------------------
Dated as of
September 2, 1998
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TABLE OF CONTENTS
I. UNDERTAKINGS OF THE PARTIES............................................ 1
1.1. Agreements by Baylake and M&I............................... 1
1.2. Consideration............................................... 1
1.3. Ownership of Bank Stock..................................... 2
1.4. Closing Date................................................ 2
1.5. Employees................................................... 2
1.6. Delivery of Certain Communications.......................... 3
II. M&I REPRESENTATIONS AND WARRANTIES.................................... 3
2.1. Organization, Existence and Authority of M&I................ 3
2.2. Validity and Corporate Action............................... 3
III. BANK REPRESENTATIONS AND WARRANTIES.................................. 3
3.1. Organization, Existence and Authority of Bank............... 3
3.2. Capitalization of the Bank.................................. 4
3.3. Call Reports................................................ 4
3.4. Litigation, Claims and Related Matters...................... 4
3.5. Taxes....................................................... 4
3.6. Properties.................................................. 5
3.7. Environmental Matters....................................... 5
IV. BAYLAKE REPRESENTATIONS AND WARRANTIES............................... 6
4.1. Organization, Existence and Authority....................... 6
4.2. Validity and Corporate Action............................... 6
4.3. Accuracy of Information..................................... 7
4.4. Continuing Responsibility................................... 7
4.5. Bank Preferred.............................................. 7
V. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PARTIES.................... 7
5.1. Conditions Precedent to Obligations of All Parties.......... 7
5.2. Conditions Precedent to Obligations of Baylake.............. 8
5.3. Condition Precedent to the Obligations of M&I............... 8
VI. BROKERAGE............................................................. 9
VII. AMENDMENT AND MODIFICATION........................................... 9
i
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VIII. TERMINATION......................................................... 9
8.1. Reasons for Termination..................................... 9
8.2. Liability................................................... 10
IX. MISCELLANEOUS......................................................... 10
9.1. Governing Law............................................... 10
9.2. Entire Agreement; No Oral Modification; Assignment.......... 10
9.3. Captions; Counterparts...................................... 10
9.4. Announcements............................................... 10
9.5. Expenses.................................................... 10
9.6. Notices..................................................... 10
9.7. Rights of Other Parties..................................... 12
EXHIBIT 5.1.(b)
EXHIBIT 5.1.(c)
ii
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of
this 2nd day of September, 1998 by and among Baylake Corp., a Wisconsin
corporation ("Baylake"), Evergreen Bank, National Association, a national
banking association (the "Bank") and M&I Marshall & Ilsley Bank, a Wisconsin
banking corporation ("M&I").
RECITALS:
WHEREAS, Baylake is a Wisconsin corporation and a registered
bank holding company under the Bank Holding Company Act of 1956, as amended (the
"BHC Act"); and
WHEREAS, Baylake desires to purchase all of the shares of
$100.00 par value common stock of the Bank (the "Bank Stock") which M&I will
have the right to sell prior to consummation of the transaction contemplated in
this Agreement, and M&I desires to sell such Bank Stock to Baylake pursuant to
the terms and conditions of this Agreement (the "Stock Purchase").
THEREFORE, in consideration of the mutual covenants of the parties made
in this Agreement and the mutual benefits to be derived from this Agreement, it
is hereby agreed:
I. UNDERTAKINGS OF THE PARTIES
1.1. Agreements by Baylake and M&I. Upon the terms and subject
to the conditions contained in this Agreement, on the Closing Date (as defined
below) M&I will sell, assign, transfer and deliver to Baylake, with good title
to such shares, free and clear of all liens or encumbrances of any type or kind,
and Baylake will accept and purchase from M&I, the 3,700 shares of Bank Stock
which M&I will have a right to sell at that time.
1.2. Consideration. Upon the terms and subject to the
conditions contained in this Agreement, in reliance upon the representations,
warranties and agreements of M&I contained in this Agreement and in
consideration of the sale, assignment, transfer and delivery to Baylake of the
Bank Stock on the Closing Date, Baylake will pay or cause to be paid to M&I on
May 5, 1999 a cash payment (the "Purchase Price") equal to the lesser of (i)
$2,000,000 or (ii) the amount by which the common equity of the Bank on April
30, 1999 exceeds the sum of (a) contributions to common equity of the Bank made
by Baylake from the Closing Date through April 30, 1999, plus, (b) the portion
of common equity of the Bank resulting from retained earnings of the Bank,
earned in the ordinary course of business from the Closing Date through April
30, 1999. In calculating the common equity of the Bank for the purposes of the
preceding sentence, on April 30, 1999, (x) the reserve for loan and lease losses
(the "Reserve"), which shall not be included in common equity (except as
discussed in clause (y)), shall be calculated using
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the formula generally in use by Baylake or as required by any bank regulatory
agency, whichever is greater, and (y) recoveries by the Bank received from
claims under existing, prior or subsequent surety bond claims or other insurance
contracts relating to events occurring prior to the Closing Date and federal and
state income tax refunds for any periods prior to the Closing Date and
collections on loans which are recorded on the books of the Bank on the Closing
Date, whether or not such collections result in a transfer of funds from the
Reserve to the Bank's common equity account or a transfer of funds to the
Reserve, shall all be considered part of common equity of the Bank and shall
accrue to the benefit of M&I in determining the Purchase Price. To the extent
that such recoveries, refunds and collections are identified to the Bank prior
to April 30, 1999 and the funds related to them are received after payment of
the Purchase Price, Baylake and M&I agree that the Purchase Price will be
recalculated and Baylake will pay to M&I any increase resulting in such
recalculation.
1.3. Ownership of Bank Stock.
(a) M&I will promptly initiate the taking of all steps
necessary to enable M&I to foreclose on its security interest in the Bank Stock
and to obtain the right to sell the Bank Stock, free and clear of any liens and
encumbrances or interests of any type or kind of third parties in the Bank
Stock.
(b) The Bank will take all appropriate steps necessary
to assist M&I in complying with Section 1.3(a), including but not limited to,
promptly re-registering the Bank Stock in the name of M&I when such stock is
submitted by M&I, together with duly authorized stock powers or such other
evidence of transfer which the Bank may reasonably require, for
re-registration.
1.4. Closing Date. The term "Closing Date" means the day on
which M&I delivers the Bank Stock, re-registered in the name of M&I, together
with duly authorized stock powers or such other evidence of transfer which
Baylake and the Bank may reasonably require, to Baylake (the "Closing"). The
Closing Date will be the next business day after all of the conditions in
Article V have been satisfied. The Closing will occur at such location which is
mutually agreed upon by M&I, Baylake and the Bank.
1.5. Employees. Following the Closing Date, Baylake will
endeavor to retain as employees of the Bank those persons actively employed by
the Bank on the Closing Date. Nothing in this Section 1.5 is intended to create
any contract right on the part of any such employee. The parties do not intend
that this Section 1.5 apply to Jeffrey P. Dahlman, Dawn Dahlman, Todd R. Doherty
or James Redemann.
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1.6. Delivery of Certain Communications. Subject to Section
9.4, from the date of this Agreement until the Closing Date, Baylake and M&I
shall provide to each other, when transmitted by either one of them, a copy of
each press release or other public announcement relating to the transactions
under this Agreement, and the Bank shall provide to Baylake any communication
sent by it to its customers generally.
II. M&I REPRESENTATIONS AND WARRANTIES
M&I represents and warrants to Baylake as follows:
2.1. Organization, Existence and Authority of M&I. M&I is a
banking corporation duly organized, validly existing, and in good standing under
the laws of the State of Wisconsin. M&I has full power and authority, including
all licenses, franchises, permits, and other governmental authorizations
required by law, to engage in the business and activities now conducted by it
and, subject to the laws generally applicable to creditors, to take possession
of the Bank Stock as a secured creditor free and clear of liens or encumbrances
of any type or kind.
2.2. Validity and Corporate Action. M&I has all necessary
corporate power and authority to enter into this Agreement, and to perform its
obligations under this Agreement. This Agreement constitutes a valid and legally
binding obligation of M&I. Prior to the Closing M&I will have taken possession
of the Bank Stock.
III. BANK REPRESENTATIONS AND WARRANTIES
Except as provided in the disclosure schedule (the "Disclosure
Schedule") provided by the Bank, the Bank represents and warrants to Baylake as
follows:
3.1. Organization, Existence and Authority of Bank. The Bank
is a banking association duly organized and validly existing under the laws of
the United States of America. The Bank has delivered to Baylake true, accurate
and complete copies of its currently effective Articles of Association and
Bylaws, including all amendments to each of them. The Bank: (i) is duly
authorized to conduct a general banking business, subject to the supervision of
the Office of the Comptroller of the Currency ("OCC") and the Federal Deposit
Insurance Corporation ("FDIC"); (ii) is an insured bank as defined in the
Federal Deposit Insurance Act; (iii) is not authorized to exercise trust powers;
and (iv) has no subsidiaries, except an investment subsidiary incorporated and
operating in the State of Nevada. The Bank has full power and authority,
including all licenses, franchises, permits, and other governmental
authorizations required by law, to engage in the business and activities now
conducted by it and to own the properties now owned by it.
3.2. Capitalization of the Bank. (i) The authorized capital
stock of the Bank consists of 3,700 shares of common stock, par value $100.00
per share, all of which are issued
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and outstanding, and (ii) 350 shares of Non-cumulative Perpetual Preferred
Stock, par value $10,000 per share ("Bank Preferred"), 316 of which are validly
issued, fully paid and nonassessable. All of the outstanding shares of Bank
Stock are validly issued, fully paid and nonassessable. To the best knowledge of
the Bank, none of such presently outstanding shares were issued in violation of
the preemptive rights of any shareholder. To the best knowledge of the Bank,
there are no outstanding options, warrants, conversion rights, subscriptions or
other commitments of any kind directly or indirectly obligating the Bank to
issue any additional shares of capital stock, other equity securities or
securities convertible into capital stock.
3.3. Call Reports. The Bank has delivered to Baylake copies of
each Call Report, in the form filed with Bank Regulatory authorities (the "Call
Reports"), of the Bank, prepared as of December 31 of each of the years 1995,
1996 and 1997, and as of June 30, 1998. To the best knowledge of the Bank, the
June 30, 1998 Call Report has been prepared in accordance with accounting
methods prescribed or accepted by bank regulatory authorities as the case may
be, and in accordance with such accounting principles as may be described or
disclosed therein, and fairly present, in accordance with such accounting
methods, the financial position and results of operation of the Bank as of June
30, 1998 and for the period ending on such date. To the best knowledge of the
Bank, the June 30, 1998 Call Report does not include any material assets or omit
to state any material liabilities, absolute or contingent, or other facts which
inclusion or omission would render the information therein materially inaccurate
or misleading.
3.4. Litigation, Claims and Related Matters.
(a) Pending or Threatened Litigation. There is no claim,
action, suit, litigation, proceeding or investigation formally instituted,
pending, or, to the best of the knowledge of it and its officers, threatened
against or affecting the Bank or any of its assets, at law or in equity, or
before any court, arbitration panel or other governmental authority except as
may be set forth in the Disclosure Schedule.
(b) Judgments, Orders, Regulatory Agreements, Etc. The
Bank is not subject to any outstanding judgment, order, writ, injunction or
decree of any court, arbitration panel or other governmental authority.
3.5. Taxes. The Bank has filed with the appropriate
governmental agencies all federal, state and local income, franchise, excise,
sales and use, real and personal property, and other tax returns and reports
required to be filed by it. The Bank: (a) is not delinquent in the payment of
any taxes shown on such returns or reports or on any assessments made against it
relating to any such taxes; (b) is not subject to any pending examination of
income taxes for any year by the Internal Revenue Service or any state tax
agency; (c) has not executed or filed with the Internal Revenue Service or any
state tax agency any agreement extending the period for assessment and
collection of any federal or state tax; or (d) is not a party to any action or
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proceeding, or has not had any claim asserted against it by any governmental
authority for assessment or collection of taxes.
3.6. Properties. Except as set out in the Disclosure Schedule,
the Bank has good and marketable title to all assets and properties, whether
real or personal, tangible or intangible, which it purports to own, including
those set forth on the June 30, 1998 Call Report (except to the extent that such
assets and properties have been disposed of for fair value in the ordinary
course of business since the dates thereof), and such assets and properties are
subject to no liens, mortgages, security interests, encumbrances, or charges of
any kind, except: (a) as may be noted in the Bank Financial Statements; (b)
statutory liens for taxes not yet delinquent; (c) security interests granted
incident to short-term borrowings or to secure deposits of funds by federal,
state, or other government agencies; and (d) as to real estate, encumbrances or
title defects that do not materially impair the use thereof for the purposes for
which it is held. The Bank as lessee has the right under valid and subsisting
leases to occupy, use, possess, and control any and all property leased by it.
3.7. Environmental Matters. To the best knowledge of the Bank:
(i) each property owned or operated by the Bank and the Loan Properties (as
defined below) are in compliance with all applicable federal, state and local
laws including common law, rules, guidance, regulations and ordinances and with
all applicable decrees, orders, judgments, and contractual obligations relating
to the environment, health, safety, natural resources, wildlife or hazardous
materials which are hereinafter defined as chemicals, pollutants, contaminants,
wastes, toxic substances, compounds, products, solid, liquid, gas, petroleum or
other regulated substances or materials which are hazardous, toxic or otherwise
harmful to health, safety, natural resources, or the environment ("Environmental
Laws"), except for violations which, either individually or in the aggregate
would not have a material adverse effect on the Bank; (ii) during and prior to
the period of (a) the Bank's ownership or operation of any of its current
properties, and (b) the Bank's holding of a security interest in a Loan
Property, Hazardous Materials have not been generated, treated, stored,
transported, released or disposed of in, on, under, above, from or affecting any
such property, except in conformance with all Environmental Laws and except,
where such release, generation, treatment, storage, transportation, or disposal
would not have either individually or in the aggregate, a material adverse
effect on Bank; (iii) there is no asbestos or ureaformaldehyde materials in or
on any property owned or operated by the Bank or any Loan Property at
concentrations or in conditions in violation of Environmental Laws and no
electrical transformers or capacitors, other than those owned by public utility
companies, on any such properties contain any PCB's at concentrations or in
conditions in violation of Environmental Laws; (iv) except for properties on
which the Bank has made PECFA loans, there are no underground or aboveground
storage tanks in or under any properties currently owned or operated by the Bank
or any Loan Property; (v) the Bank has not received any notice from any
governmental agency or third party notifying either of them of any Environmental
Claim; (vi) and there are no circumstances with respect to any properties
currently owned or operated by the Bank or any Loan Property that (a) form the
basis on an Environmental Claim against the Bank
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or any properties currently or formerly owned or operated by the Bank or any
Loan Property or (b) cause any properties currently owned or operated by the
Bank or any Loan Property to be subject to any restrictions on ownership,
occupancy, use or transferability under any applicable Environmental Law or
require notification to or consent of any Governmental Authority or third party
pursuant to any Environmental Law.
The following definitions apply for purposes of this Section 3.7: (a) "Loan
Property" means any property in which the Bank holds a security interest, and,
where required by the context, said term means the owner or operator of such
property; (b) "Environmental Claims" shall mean any and all administrative,
regulatory, judicial or private actions, suits, demands, demand letters,
notices, claims, liens, notices of non-compliance or violation, investigations,
injunctions or proceedings relating to (i) any Environmental Law; (ii) any
Hazardous Material including without limitation any abatements, removal,
remedial, corrective or other response action in connection with any Hazardous
Material, Environmental Law or order of a Governmental Authority or (iii) any
actual or alleged damage, injury, threat or harm to health, safety, natural
resources, wildlife, or the environment, which individually or in the aggregate
would have a material adverse effect on the Bank; (c) "Governmental Authority"
shall mean any applicable federal, state, regional, county or local governmental
authority.
The representations and warranties in this Section 3.7 relating to each property
owned or operated by the Bank and the Loan Properties are made to the best
knowledge of the Bank. For purposes of this Article III, the term "best
knowledge of the Bank" shall mean the actual knowledge of the officers of the
Bank.
IV. BAYLAKE REPRESENTATIONS AND WARRANTIES
Baylake represents and warrants to M&I and the Bank as
follows:
4.1. Organization, Existence and Authority. Baylake is a
corporation duly organized, validly existing and in active status under the laws
of Wisconsin and Baylake is a registered bank holding company under the BHC Act.
4.2. Validity and Corporate Action. Baylake has all necessary
corporate power and authority to enter into this Agreement, and to perform its
obligations under this Agreement. This Agreement constitutes a valid and legally
binding obligation of Baylake enforceable in accordance with its terms and has
been approved on behalf of Baylake by all requisite corporate action.
<PAGE> 10
4.3. Accuracy of Information. The statements made by Baylake
in this Agreement, and in any other written disclosures or documents executed
and/or delivered by or on behalf of Baylake to the M&I or the Bank pursuant to
the terms of this Agreement, are, or when made will be, true and correct in all
material respects and do not or will not omit any material facts necessary to
make such statements not misleading. All such statements which are not set forth
in this Agreement shall nevertheless constitute representations and warranties
under this Agreement to the same extent as if set forth in full in this
Agreement.
4.4. Continuing Responsibility. Upon completion of the Stock
Purchase, the Bank will be a subsidiary of Baylake, which shall be responsible
for maintaining the capital of the Bank at such levels as may be required from
time to time by appropriate bank regulatory agencies.
4.5. Bank Preferred. The Stock Purchase will not affect the
rights of the holders of the Bank Preferred. Baylake will use its best efforts
to restore the Bank's capital to a position which will permit the Bank, under
applicable laws and regulations and its Articles of Association, to resume
paying dividends to holders of the Bank Preferred.
V. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PARTIES
5.1. Conditions Precedent to Obligations of All Parties. Each
obligation of any party to any other party to be performed on the Closing Date
shall be subject to the prior satisfaction of the following conditions:
(a) Federal Reserve Approval. The Federal Reserve Board
shall have approved, pursuant to Section 3 of the BHC Act, the acquisition by
Baylake of the Bank and the shares owned by M&I with such approval including no
terms or conditions unacceptable to Baylake or M&I, or shall have waived its
requirement for such approval and any waiting periods prescribed by the BHC Act
shall have expired. The Federal Reserve Bank of Chicago shall have approved the
special dividend from its wholly-owned subsidiary Baylake Bank to Baylake, as
contemplated in Exhibit 5.1(c).
(b) OCC Consent. The OCC shall have consented to the
matters set out in Exhibit 5.1(b), with such consent including no terms or
conditions unacceptable to Baylake or M&I.
(c) FDIC Consent. The FDIC shall have consented to the
matters set out in Exhibit 5.1(c), with such consent including no terms or
conditions unacceptable to Baylake or M&I.
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(d) Other Approval. The Department of Financial
Institutions, Division of Banking of the state of Wisconsin shall have approved
the special dividend from Baylake Bank to Baylake, as contemplated in Exhibit
5.1(c).
(e) No Proceeding or Litigation. At the Closing Date,
no suit, action or proceeding shall be pending or overtly threatened and no
liability or claim shall have been asserted against M&I or the Bank, (i)
involving any of the assets, properties, business or operations of the Bank that
might result in a material adverse effect on its financial condition, results of
operations, or business prospects, except as set forth in the Disclosure
Schedule or (ii) before any court or other governmental agency by the federal or
any state government or any other third party in which it is or will be sought
to restrain or prohibit the consummation of the purchase of the Bank Stock by
Baylake or M&I exercising its rights as a secured creditor.
5.2. Conditions Precedent to Obligations of Baylake. Each and
every obligation of Baylake to be performed on the Closing Date shall be subject
to the prior satisfaction of the following conditions, any one or more of which
may be waived by Baylake:
(a) Representations, Warranties and Covenants. All
representations and warranties of M&I and the Bank in this Agreement shall be
true, accurate and complete in all material respects both as of the date of this
Agreement and as of the Closing Date, with the same force and effect as if made
anew as of the Closing Date, except as affected by the transactions contemplated
by this Agreement. M&I and the Bank shall have performed or complied with all of
the covenants, agreements and conditions in this Agreement provided to be
performed or complied with on their part and M&I shall have furnished to Baylake
a certificate signed by one of its Executive Officers to the foregoing effect.
(b) Insurance Coverage. Baylake has obtained directors'
and officers' liability insurance and blanket bond coverage for the Bank
containing standard terms and conditions for such policies or bonds for banks
similar in size to the Bank, the premiums for which are acceptable to Baylake.
(c) Nonaccrual Loans. All loans made by the Bank which
should be placed on nonaccrual status under applicable regulations, guidelines
or policies have been placed on nonaccrual status; and in any event, all loans
past due more than 90 days shall be placed on nonaccrual status. All accrued
interest from any such nonaccrual loans shall have been charged against the
Bank's current earnings.
5.3. Condition Precedent to the Obligations of M&I.
Notwithstanding any language to the contrary in this Agreement (including
Section 8.1) M&I shall not be required to take any irrevocable actions as a
secured creditor of Evergreen of Wisconsin, Inc., owner of 100% of the Bank
Stock, until such time as Baylake and the Bank inform M&I that each is
irrevocably committed to closing the transaction set out in Article I of this
Agreement.
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VI. BROKERAGE
Each party to this Agreement represents and warrants to the
other that there is no broker or finder engaged by it, or known by it to be
involved or in any way connected with the transactions contemplated by this
Agreement. Each party to this Agreement agrees to hold each other party harmless
from and against, and to assist the other in defending, any claim for brokerage
commissions or finder's fees which may arise or be asserted as a result of this
Agreement and the transactions contemplated herein, by reason of any actual or
alleged commitments or acts on the part of the party which so agrees.
VII. AMENDMENT AND MODIFICATION
M&I, Baylake and the Bank, by consent of their respective
Board of Directors (or in the case of Baylake its Executive Committee) or their
officers authorized by such Board of Directors, may amend, modify and supplement
this Agreement in such manner as may be agreed upon by them in writing.
VIII. TERMINATION
8.1. Reasons for Termination. This Agreement may be terminated
at any time before the Closing Date only:
(a) by mutual written consent of the Board of Directors of
M&I, and the Board of Directors of Baylake;
(b) by written notice from Baylake to M&I and the Bank,
authorized by the Board of Directors or Executive Committee of Baylake, if:
(i) any condition set forth in Sections 5.1 or 5.2
of this Agreement has not been substantially satisfied or waived in writing by
October 1, 1998; or
(ii) any warranty or representation made by M&I or
the Bank shall be discovered to have become untrue, incomplete or misleading in
any material respect; or
(iii) M&I or the Bank shall have breached one or more
provisions of this Agreement in any material respect, considering all such
breaches in the aggregate; or
(c) by written notice from M&I to Baylake and the Bank,
authorized by the Board of Directors of M&I, if:
(i) any condition set forth in Section 5.1 of this
Agreement has not been substantially satisfied or waived in writing by October
1, 1998; or
<PAGE> 13
(ii) Baylake shall have breached one or more
provisions of this Agreement in any material respect considering all such
breaches in the aggregate.
8.2. Liability. In the event of termination of this Agreement
caused otherwise than by material breach of a party to this Agreement, there
shall be no liability on the part of any party to this Agreement, except that
the fees and expenses of each party shall be paid pursuant to Section 9.5 of
this Agreement. Notwithstanding the foregoing, in the event of a material
inaccuracy of the representations and warranties of the Bank discovered prior to
Closing, the only remedy of Baylake and M&I shall be to terminate the
transactions contemplated in this Agreement. The representations and warranties
of the Bank shall not survive the Closing.
IX. MISCELLANEOUS
9.1. Governing Law. This Agreement shall be construed and
interpreted in accordance with the laws of the State of Wisconsin and to the
extent applicable, the laws of the United States of America.
9.2. Entire Agreement; No Oral Modification; Assignment. This
Agreement supersedes any and all prior agreements, understandings and
negotiations between the parties, except for that certain Confidentiality
Agreement entered into between Baylake and the Bank; constitutes the entire
agreement between them; shall not be subject to any modification or termination
made orally or verbally or otherwise than as provided herein.
9.3. Captions; Counterparts. The captions in this Agreement
are for convenience only and shall not be considered a part hereof or affect the
construction or interpretation of any provisions 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.
9.4. Announcements. Public announcements concerning the
transactions contemplated by this Agreement shall be made jointly by, and
subject to the approval of each of, the Bank and Baylake. However, information
which any party is required to submit to its stockholders or any regulatory
agency shall not require the approval of the other party.
9.5. Expenses. Each party to this Agreement will pay the
party's own fees and expenses incurred in connection with the preparation and
performance of this Agreement, including fees and expenses of its counsel,
accountants, and other experts and advisors.
9.6. Notices. All notices and other communications by a party
under this Agreement shall be in writing to all other parties, and shall be
deemed to have been duly given when delivered in person, posted by United States
registered or certified mail, with postage
<PAGE> 14
prepaid, provided to a national overnight courier service for next day delivery,
proof of delivery requested, transmitted by facsimile with proof of
transmission, addressed as follows:
If to Baylake: Baylake Corp.
217 North Fourth Avenue
Sturgeon Bay, Wisconsin 54235
Facsimile No.: (920) 743-7422
Attention: Thomas L. Herlache,
President
with a copy to: Elliot H. Berman
Godfrey & Kahn, S.C.
780 N. Water Street
Milwaukee, Wisconsin 53202
Facsimile No.: (414) 273-5198
If to M&I: M&I Marshall & Ilsley Bank
770 North Water Street
Milwaukee, Wisconsin 53202
Facsimile No.: (414) 765-7625
Attention: Michael A. Hatfield,
Senior Vice President
with a copy to: K. Thor Lundgren
Michael, Best & Friedrich LLP
100 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Facsimile No.: (414) 277-0656
If to the Bank: Evergreen Bank, N.A.
602 Main Street
Poy Sippi, Wisconsin 54967
Facsimile No.: (920) 987-5903
Attention: John C. Cumicek,
Executive Vice President and
Acting Chief Executive Officer
<PAGE> 15
with a copy to: Mr. James D. Friedman
Quarles & Brady
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Facsimile No.: (414) 271-3552
9.7. Rights of Other Parties. Nothing expressed or implied in
this Agreement is intended or shall be construed to confer upon or give any
person, firm or corporation other than the parties to this Agreement any rights
or remedies under or by reason of this Agreement.
IN WITNESS WHEREOF, the parties to this Agreement have caused
this Agreement to be duly executed each on and as of the date first above
mentioned.
BAYLAKE CORP.
By: /s/ Thomas L. Herlache
Thomas L. Herlache, President
M&I MARSHALL & ILSLEY BANK
By: /s/ Michael A. Hatfield
Michael A. Hatfield, Senior Vice President
EVERGREEN BANK, NATIONAL ASSOCIATION
By: /s/ John C. Cumicek
John C. Cumicek, Executive Vice President and
Acting Chief Executive Officer
